Boy Scouts Abuse Victims Risk Losing Millions Over Filing Errors

Several hundred former Boy Scouts are at risk of losing out on millions of dollars in sex abuse compensation due to paperwork errors made when voting on the organization’s $2.46 billion bankruptcy settlement.

The Boy Scouts of America abuse survivors are now relying on a bankruptcy court judge to let them correct their nearly two-year-old mistakes to collect from the largest sex abuse settlement in US history. They cite confusion from a lengthy and complicated form in which they inadvertently chose to receive a one-time, expedited payment of just $3,500 instead of pursuing potential six- or seven-figure recoveries.

“Making that decision on the plan was a huge, huge deal,” said Timothy C. Hale of Nye Stirling Hale Miller & Sweet LLP, an attorney for a victim who mistakenly selected the expedited payment. “I’m just pulling my hair out that this guy who had been raped multiple times is now looking at just a four-figure recovery.”

Claims processing in mass tort bankruptcies can be complex in order to account for a wide range of parties and variety of injuries. The immense size and scope of the Boy Scouts bankruptcy case, coupled with the provision for a one-time expedited payment, added to the confusion for many claimants.

The requests will be heard at a Nov. 20 hearing in front of Judge Laurie Selber Silverstein of the US Bankruptcy Court for the District of Delaware. But they face stiff opposition from the court-approved settlement trustee, who has roundly rejected attempts by survivors or their attorneys to change payment elections.

Trustee Barbara Houser, herself a former bankruptcy judge, has told the court that while she’s sympathetic to the roughly 500 claimants asking to correct their bankruptcy plan ballots, the plan doesn’t permit the trustee to grant the relief. Allowing hundreds or thousands of claimants to modify their payment elections at this stage of the process “would result in significant delays and complications in trust claims administration and accounting,” Houser said in court filings.

The trustee declined to provide additional comment for this story. Boy Scouts declined to comment, noting the matter is between claimants and the trust.

Complex Procedures

Hundreds of abuse claimants have highlighted the complexity of the 23-page ballot they had to fill out before the Boy Scouts of America could finalize the abuse settlement. Lengthy, dense ballots are commonly sent to creditors in large Chapter 11 cases—and many creditors in mass tort cases have little experience with legal paperwork.

The ballot included two questions: one asking the claimants to indicate whether they wanted to approve the bankruptcy plan, and another on whether they wanted to receive an expedited, one-time $3,500 payment—an unusual provision in mass tort bankruptcies. Many said they were confused by the way the questions were posed or didn’t understand the consequence of choosing the quick-pay option: they would be unable to pursue additional payouts.

“I can’t believe I didn’t read it close enough to understand it,” said Susan Dunn, the sister of incarcerated claimant Gerard Edwin Burns who has power of attorney on his behalf. “I was going to stick it in some CDs so he could have some cash when he gets out when he’s almost 70.”

Burns was imprisoned on sexual assault charges.

The youth organization’s bankruptcy plan was the product of more than two years of legal wrangling and negotiations that began in 2020. The plan created a victims’ trust to administer claims and distribute funds to about 82,000 former scouts who allege they were abused as children by scout leaders or volunteers.

For the most part, individual payments are being decided based on complex formulas and an abuse claim matrix. Trust administrators evaluate the strength of claims based on submitted answers to questionnaires. They determine allocations based on a number of factors, including severity of abuse, where it occurred, and psychological impact.

About 7,300 people chose the expedited pay option, which relieves them of having to provide more substantial details of the abuse they say they suffered.

Some abuse claimants say they mistakenly selected a lower payout option when they filled out ballots to vote on the Boy Scouts’ bankruptcy plan.

Attorney Andrew Van Arsdale of AVA Law Group, who has requested that the court allow over 230 of his clients to correct their ballots, said he believes he was just following instructions from the judge to let his clients fill out the ballots themselves instead of doing it for them.

Allowing lawyers to complete bankruptcy plan ballots on their clients’ behalf has caused problems for Silverstein before. The judge indicated during a September 2021 hearing in the Boy Scouts case that she would be looking closely at the ballot certifications due in part to issues she had encountered as part of a separate bankruptcy case.

In the Imerys Talc America Inc. case in 2021, she denied a plaintiff law firm’s motion to switch the votes of over 15,000 talc claimants to vote in favor of the company’s plan to establish an asbestos injury trust.

Silverstein found in the Imerys case that Bevan & Associates LPA Inc. conducted no diligence to discern whether its clients had been exposed to talc. She held that the firm improperly switched clients’ votes without consulting them.

The judge told attorneys in the Boy Scouts case that she appreciated concerns raised “that each individual survivor’s vote needs to be appropriately reflected in a ballot.”

Legal Hurdles

Complex settlements, like the one pieced together by the Boy Scouts, “always end up with people having errors in their claims forms,” said Sam Dolce, an attorney whose firm specializes in delivering settlement funds to plaintiffs.

Modification requests and appeals are common in large mass tort cases, and they have in the past worked out in favor of claimants, he said.

Allowing ballot modifications as the Boy Scouts trust slogs through the difficult task of evaluating claims and preparing payments could depend on how the bankruptcy judge interprets language in the plan voting documents.

“The uniqueness of the circumstance merits the trustee giving these people some slack,” said Hale, the attorney at Nye Stirling. “This is a truly unprecedented proceeding that was forced on these survivors.”

Don Robson, a retired commercial fisherman who alleges he was fondled by a scout leader during an outdoor trip in Oregon in the 1960s, said he spent his whole life without a computer and didn’t understand the language in the plan voting documents that he received.

“I don’t know why they couldn’t have one page written out for the layman,” said Robson, a Van Arsdale client who permitted Bloomberg Law to use his full name. “I remember looking at it and thinking, this isn’t even written in English.”

Realizing the Mistake

Houser argued in court documents that allowing some claimants to change their ballot elections would only harm the rest who are waiting to make their case for their payouts.

“The expense, confusion, and procedural difficulties in allowing all claimants to change their elections now, nearly two years after they originally made these decisions, would be immense and would only serve to delay compensation to the tens of thousands of claimants who have not expressed a desire to change their elections,” she said.

Many of the survivors and their attorneys didn’t realize the mistake until the trust opened up an online portal for processing claims in August. The reality of the error has elicited motions from several law firms to allow ballot modifications and avoid the disposition of claims for far less than they could be paid out from the settlement trust.

“This is complicated, and these are folks that don’t have the level of sophistication and education that lawyers do,” Van Arsdale said.

Another Van Arsdale client, who preferred to provide only his first name Charles in an interview with Bloomberg Law, said he realized the mistake as soon as he submitted his ballot electronically, but all attempts to amend the choice afterwards were unsuccessful.

Charles, who was a scout in Southern California, alleges he was masturbated by a scout master during a car trip in the mid 1960s. AVA Law believes the claim should pay out around $150,000.

“This is not the case of someone who changed their mind,” said Charles. “This is a person who made a mistake on a form coming from a law office in a case that’s been going on for years.”

The case is In re Boy Scouts of America, Bankr. D. Del., No. 20-10343.