The U.S. Supreme Court lifted the administrative stay on the Boy Scouts of America’s $2.46 billion sex abuse settlement, allowing the process of evaluating and paying claims to resume.
The stay issued by Justice Samuel Alito on February 16 had put the settlement on hold while the court considered a separate case regarding releases in bankruptcy settlements based on an application from 144 of more than 82,000 abuse claimants.
There were no noted dissents from the court’s brief order. It would have taken five votes to grant the emergency request.
The stay threatened to delay the process, which could have left victims waiting indefinitely for settlement payments for crimes that occurred decades ago.
The settlement is meant to address more than 82,000 sexual abuse claims from former scouts who allege they were assaulted as children.
The group of victims – 144 people out of more than 82,000 who filed claims against the Boy Scouts – argued the Supreme Court should halt the settlement while it considers a similar legal dispute in a separate and significant appeal involving Purdue Pharma, the maker of the opioid OxyContin.
In the case of Purdue, he Sackler family that ran the pharmaceutical firm and made its fortune selling the highly addictive drug, agreed to pay $6 billion in exchange for being shielded from future civil lawsuits.
Many victims of the opioid crisis say the Sacklers shouldn’t be able to avoid those costly lawsuits for damages.
In the Boy Scouts case, a handful of the victims wanted to be able to sue independent councils or third-party organizations, such as churches and civic groups, that supported those programs. Those third-party groups contributed more than $2.4 billion to a settlement trust for victims and, under the agreement, are shielded from future civil lawsuits.
Critics of such arrangements say courts are generally not authorized to block such lawsuits. Supporters say that without the protections for third-party groups, major bankruptcy deals like the ones for Purdue and the Boy Scouts would never take effect.
The 3rd US Circuit Court of Appeals, which is reviewing a broader appeal of the settlement, denied a request last year to pause the agreement in the meantime. A lower court found that, unlike the Purdue case, the Boy Scout reorganization was so much further along that it would have been difficult to halt.
With the stay vacated, the Scouting Settlement Trust announced it would immediately resume processing claims from survivors of abuse within the Boy Scouts organization. The Trust had already paid nearly $8 million to over 3,000 claimants before the stay was issued.
“This is a significant step forward for survivors who have waited years for justice and compensation,” said a spokesperson for the settlement trust. “We are committed to processing claims fairly and efficiently, and we are grateful to the Supreme Court for allowing us to move forward.”
The decision comes as a relief to many abuse survivors who had expressed concern about the delay.
Some worried that the stay would further traumatize victims and delay their access to much-needed financial assistance. Others feared it could jeopardize the entire settlement, leaving them without compensation.
However, not everyone welcomes the development.
A group of 144 abuse claimants had challenged the settlement, arguing that it unfairly protects local councils and other affiliates of the Boy Scouts from liability.
The group had petitioned the Supreme Court to block the settlement, and Justice Alito’s initial stay was seen as a victory for their cause.
The Supreme Court’s decision to lift the stay does not necessarily indicate how it will rule on the merits of the 144 claimants’ challenge. The court is still considering the separate case involving releases in bankruptcy settlements, and its decision in that case could have implications for the Boy Scouts settlement.
After about two hours of oral argument in the Purdue case in December it wasn’t clear which way the justices were leaning on the issues of third-party liability protection.
Justices Elena Kagan, a Barack Obama nominee, and Brett Kavanaugh, who was named by Donald Trump, both questioned disrupting a plan that the vast majority of opioid victims and their families supported.
The Supreme Court temporarily halted the Purdue settlement in August.
“It’s overwhelming, the support for this deal, and among people who have no love for the Sacklers, among people who think that the Sacklers are pretty much the worst people on earth, they’ve negotiated a deal which they think is the best that they can get,” Kagan said during the December arguments.
The Boy Scouts of America filed for bankruptcy in 2020, citing the overwhelming number of abuse claims it faced. The $2.46 billion settlement was designed to compensate victims of abuse within the organization, while also allowing the youth group to continue operating.
The organization received Silverstein’s approval for the settlement meant to compensate more than 82,000 men up to $2.7 million for the most severe cases of abuse, but it also included a quick pay option for claimants who wish to collect $3,500 and avoid a lengthier evaluation of their abuse claims.
On Monday, Feb. 5, U.S. Bankruptcy Judge Laurie Selber Silverstein ruled that claimants who opted to take an expedited distribution from the settlement trust cannot change their minds to return to the more typical claims evaluation process.
Retired Judge Barbara J. Houser, a former chief United States bankruptcy judge in the Northern District of Texas, became the trustee of the Trust on April 19, 2023.
As Trustee, Judge Houser is ultimately responsible for resolving all abuse claims and managing all of the diverse assets.
The reorganization plan that created the settlement trust was approved in the Bankruptcy Court for the District of Delaware despite strong opposition from a host of insurance companies.
Judge Houser filed a breach-of-contract and bad-faith lawsuit against more than 90 insurance companies who opposed the $2.4 billion bankruptcy settlement.
When it sought bankruptcy protection in February 2020, the BSA had been named in about 275 lawsuits and told insurers it was aware of another 1,400 claims.
The huge number of claims filed in the bankruptcy was the result of a nationwide marketing effort by personal injury lawyers working with for-profit claims aggregators to drum up clients, according to plan opponents.
The BSA’s largest insurers negotiated settlements for a fraction of the billions of dollars in potential liability exposure they faced. Other insurers, many of which provided excess coverage above the liability limits of the underlying primary policies, refused to settle. They argue that the procedures for distributing funds from a proposed compensation trust would violate their contractual rights to contest claims, set a dangerous precedent for mass tort litigation, and result in grossly inflated payments.
The lifting of the stay marks a significant development in the ongoing legal saga surrounding the Boy Scouts of America and its history of sex abuse.
While the path forward remains uncertain, the decision offers a glimmer of hope for survivors seeking justice and compensation.