WILMINGTON, Del. (Legal Newsline) - A former employee of a firm that processed thousands of sexual-abuse claims submitted to the court overseeing the bankruptcy of the Boy Scouts says recruiters were offered bonuses to sign up claimants and sometimes changed their forms to make the claims more viable, though a lawyer and part-owner of the company calls her claims "completely unbelievable."
The statement was included in a filing by Century Insurance objecting to a plan in which the Scouts would pay $1,500 each to claimants who vote in favor of its plan of reorganization. The group’s insurers have accused plaintiff lawyers of trying to hijack the bankruptcy process by recruiting more than 95,000 abuse claimants to flood the court with claims and overwhelm other creditors.
The incentive payments to claimants on top of that “is vote buying of the worst kind,” Century complained, designed to induce holders of questionable claims to support a plan that will reward plaintiff lawyers with tens of millions of dollars in contingency fees.
To add emphasis to its claim of improper claims submissions, Century cited a statement by Veronica Stenulson, who said she worked in the Montana office of Reciprocity Industries for several months in 2020 taking calls from potential abuse victims and processing their claims. She said she was paid $11 or $12 an hour but got bonuses of up to $1,000 for signing up more than 100 claimants over two weeks.
She described instances where callers who changed their minds about submitting claims were told they’d been withdrawn, but the proof of claim remained on file. She said employees were also told to change the details on some claims to make them “seem more viable.” Claim forms were frequently submitted with electronic signatures, she said. Over the four months she worked at Reciprocity, she said she handled 75 calls a day or 6,000 calls in total and rejected only ten prospective claimants.
Reciprocity is owned in part by Andrew Van Arsdale, a lawyer also active in Abused in Scouting, an alliance of plaintiff lawyers who represent some 14,000 abuse claimants. He denied Stenulson’s claims, saying his firm researched its records and found she handled 1,200 calls that resulted in 258 claims.
"It was completely unbelievable what she put in that declaration," Van Arsdale said.
Century’s allegations are scheduled to be discussed at a hearing Wednesday in U.S. Bankruptcy Court where lawyers will also debate the Boy Scouts’ revised disclosure plan, voting procedures, insurers’ proposal to depose some of the plaintiff lawyers about allegedly fraudulent and invalid claims, and Century’s motion to hold back 20% of attorney fees until the court decides on the reasonableness of billings that now exceed $1,000 an hour.
The bankruptcy appears to be at an impasse now, as plaintiff lawyers assert claims they say are worth more than $100 billion and insurers, who would have to pick up much of that tab, say the claims are poorly documented, inflated or downright false. The Boy Scouts have proposed putting $540 million of the group’s assets and assets from local councils into a trust to pay claims, with insurers on the hook for the rest.
Judge Laurie Selber Silverstein has yet to rule on the insurers’ request to investigate some of the 95,000 claims to make sure they are valid. When it filed for bankruptcy in February 2020, the Boy Scouts faced 275 filed lawsuits and estimated another 1,400 expected claims. After filing, lawyers recruited tens of thousands more clients who claim they were abused by scout leaders.
“The claims pool is plagued with irregularities,” Century says in its latest filing.
Van Arsdale disagreed, saying the law firms he is allied with had 2,000 claims in mediation when the Boys Scouts went into bankruptcy.
"We were out there 14 months before the BSA bankruptcy," as states lengthened their statute of limitations laws, making more former Scouts eligible to sue, he said. "The only cases were filed were where a person in some sort of authority earned a family's trust and harmed someone in unspeakable ways."