U.S. Trustee Questions Proposed Boy Scout Sex Abuse Settlement

The trustee expressed concerns about a $20,000 fee for victims who suffered the must severe incidents of Boy Scout sexual abuse to be able to pursue an increased payout

A federal bankruptcy watchdog has raised concerns about a proposed Boy Scouts sexual abuse settlement agreement, which is struggling to gain support from plaintiffs, calling a plan that lets victims of the most severe abuse pursue more money a costly illusion.

U.S. Trustee Andrew Vara, who is part of a Department of Justice program designed to protect the integrity of the bankruptcy system, is raising new misgivings about a proposed $2.7 billion settlement agreement, which has been proposed to resolve thousands of claims involving sexual abuse by Boy Scouts employees and volunteers, which sent the famed organization into Chapter 11 bankruptcy proceedings.

In recent years, decades of claims have emerged that highlighted persistent abuse and coverups within the organization, leading to tens of thousands of lawsuits against the Boys Scouts of America. Each of the complaints raise similar allegations that the organization covered up credible reports involving problems with volunteers and employees, maintaining a set of records known as the “perversion files” dating back to 1944.

Facing clear signs of massive liability, Boy Scouts of America filed for bankruptcy in 2020, to manage and resolve the mounting litigation, which has become the largest sex abuse case involving a single national organization in U.S. history.

Late last year, the organization put forward the $2.7 billion settlement agreement, after getting several insurers to sign on. However, many plaintiffs have refused to agree to the plan, with only about 73% indicating they thought the settlement was fair. The Boy Scouts had hoped for at least 75%.

In advance of a hearing held on February 22, a committee representing the victims dropped its objections to the settlement, when the Boy Scouts agreed to add new child-protection procedures to prevent future abuse. In addition, the organization added an option for victims of the most severe cases of abuse to pursue a larger payout.

However, Vara, who has raised questions about the settlement for some time, is doubtful of the new measures, according to a report published last week by Reuters.

The U.S. Trustee reportedly called the option for higher payouts “illusory”, noting that it would cost victims $20,000 to pursue with no guarantee of success. Vara described the fee as excessive, and questioned how it was calculated.

Even before then, Vara filed an official objection over settlement deal on February 7, indicating the plan includes non-consensual third-party releases of information, which Vara says violates Due Process. He has also attacked the agreement on a number of other technical issues.

Another vote on the settlement is slated for March 7, after which U.S. Bankruptcy Judge Laurie Selber Silverstein has scheduled a hearing on March 14.

Any settlement agreements must be approved by Judge Silverstein, and are required in order to get the Boy Scouts of America out of Chapter 11 bankruptcy proceedings.