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Insurance carriers' claims that unvetted and potentially fraudulent civil suits have flooded the Boy Scouts of America bankruptcy are part of "wasteful and ugly games" the companies are playing in an effort to distract from their liabilities, plaintiffs firms involved in the proceedings have alleged in new court filings.
On Feb. 5 numerous law firms filed responses to a series of motions that insurance carriers Century and The Hartford entered late last month, requesting additional discovery into the methods lawyers used to process and submit claims into the bankruptcy litigation. The requested discovery included delving into attorneys' alleged use of lead generation and litigation funding companies.
"Since the debtors filed for bankruptcy, Hartford and Century (together, the 'insurers') have attacked the professionals involved whenever possible, including the debtors' counsel and the law firms that represent the vast majority of survivors. The motion is a continuation of these attacks and is filled with invective and unsubstantiated allegations of fraud and misconduct," the response filed by David Molton of Brown Rudnick said.
The response was filed on behalf of the Coalition of Abused Scouts for Justice, which, the carriers alleged, was at the forefront of a group of firms that "engineered an aggressive, nationwide campaign to generate claims that channeled respondents to a website with information that encouraged the presentation of seemingly plausible claims." The carriers alleged this was done in an effort to flood the docket and gain control of the bankruptcy. The move, the carriers claimed, resulted in the number of civil suits swelling from 1,400 to 95,000.
The carriers' motions seek discovery from attorneys based in Pennsylvania, New York, Texas and elsewhere.
In its response the Coalition of Abused Scouts for Justice argued that the discovery was improper for a bankruptcy proceeding, and that any vetting would need to be done by a trust post-confirmation. The group also argued that the carriers and debtors are withholding information about prior settlements, or similar settlements involving abuse by members of the Catholic Church, and that this information would better help facilitate the bankruptcy negotiations.
"The insurers should not be permitted to launch an extremely broad and expensive discovery campaign involving thousands of victims of sexual abuse without first making information that is readily identifiable and in their possession, custody and control available to other parties," the coalition said.
Several law firms, including Philadelphia's Eisenberg, Rothweiler, Eisenberg Winkler & Jeck, which is involved in a similar group called Abused in Scouting, joined the coalition's response.
Houston-based attorney Timothy Kosnoff, who is also part of the Abused in Scouting group, filed his own response, arguing that the carriers' motions were intended to "harass and burden" the plaintiffs attorneys, as well as to waste time.
"The fact is that Mr. Kosnoff did the hard work of assuring himself that there was evidentiary support, or likely would be upon further investigation, for each proof of claim that he signed," the response, filed by Delaware attorney David Wilks, said. "Mr. Kosnoff based his conclusions upon claimant information that was carefully and systematically collected, preserved and organized in a reliable fashion."
The coalition also argued that the requested discovery creates an obstacle to resolving the bankruptcy proceedings, noting it would cause delays, tens of thousands of additional documents for discovery, and would require dozens of additional depositions.
Further, the coalition argued that the carriers presented no evidence to support their claims that the civil suits were unvetted. The coalition said that large increases in claims typically happen in bankruptcies as the bar date for filing such claims approaches, and that some of the allegedly unvetted claims the carriers pointed to included those filed by elderly and unrepresented abuse survivors.
"The insurers refuse to consider that the large number of claims is logically attributable to the decades of sexual abuse perpetrated by adults affiliated with Scouting," the coalition said. "Despite lodging salacious attacks on law firms that are dedicated to helping victims of sexual abuse, the insurers offer a paltry six examples of what they claim to be 'outright fraud.' And, the insurers fail to identify any causal link between these six examples and the attorney advertising."
In an emailed statement, Tancred Schiavoni of O'Melveny & Myers, who is counsel for Century, said the coalition did not provide evidence to refute the carriers' claims.
"The most revealing thing about the latest filing by the 'coalition' is what it does not say," Schiavoni said in the email. "The coalition does not cite or provide the declaration of a single person to refute any of the detailed factual declarations and expert statements filed by Hartford and Century in support of the motion. Nor does the coalition's filing dispute the substance of what Hartford and Century offered as proof."
Philip Anker of Wilmer Cutler Pickering Hale and Dorr, who is representing Hartford, did not return a call seeking comment.
Max Mitchell
Max Mitchell is ALM's Regional Managing Editor for The Legal Intelligencer, New Jersey Law Journal, Delaware Business Court Insider and Delaware Law Weekly. Follow him on Twitter @MMitchellTLI. His email is [email protected].