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Diocese insurer agrees to pay $15 million

The Diocese of Duluth (News Tribune file photo)

A major insurance settlement will bring another $15 million to victims of child sexual abuse in the Diocese of Duluth.

The settlement with Continental Insurance Company will more than double the pool of funds made available for the 125 claimants in the diocese's bankruptcy, increasing the total to $24.2 million.

The agreement, filed Wednesday in U.S. Bankruptcy Court, makes Continental the fourth of five insurers to come to terms with the diocese, which filed suit in June 2016 to force coverage of claims.

Judge Robert Kressel is expected to approve the agreement at a June 28 hearing, along with the $250,000 settlement reached with Church Mutual Insurance Company last week.

"The diocese, the parishes, the (creditors') committee, and Continental all support the settlement agreement," diocese attorneys Ford Elsaesser and Phillip Kunkel wrote. "The settlement agreement will provide survivors with a necessary mechanism for prompt recovery on their claims, without the expense or delay of proceeding within the tort system."

The diocese has been under Chapter 11 bankruptcy protection since December 2015, when it filed a voluntary petition in wake of a $4.9 million jury verdict in the first case to go to trial under the Minnesota Child Victims Act. The insurance lawsuit came six months later, with the support of the victims' advocates and attorneys.

Catholic Mutual Relief Society of America was the first to settle, agreeing to pay $8.95 million toward an anticipated future settlement with victims. Fireman's Fund Insurance Company also settled its part in the lawsuit, contributing $975,000 that allowed the diocese to continue its legal efforts against other insurers.

As it now stands, only Liberty Mutual Group remains in active litigation with the diocese.

Officials have said the participation of the insurers is an integral step in reaching a reorganization plan that would allow the diocese to adequately compensate victims and emerge from bankruptcy.

The Archdiocese of St. Paul and Minneapolis recently reached a $210 million agreement with more than 400 victims who filed claims in its bankruptcy case, which was initiated nearly a year before the Diocese of Duluth's case.

The archdiocese is paying $40 million of that sum, while its insurers are contributing $170 million.