US Supreme Court lets $2.46 billion Boy Scouts sex abuse settlement proceed

A view of the U.S. Supreme Court building on the first day of the court’s new term in Washington, U.S. October 3, 2022. REUTERS/Jonathan Ernst/File Photo

By Dietrich Knauth

(Reuters) – The U.S. Supreme Court on Thursday allowed the Boy Scouts of America’s $2.46 billion settlement with sexual abuse victims to move forward, lifting a temporary pause imposed in response to an appeal by 144 former scouts who opposed the agreement.

The court’s order supersedes one issued by Justice Samuel Alito on Feb. 16 temporarily freezing the settlement to give the full court more time to consider a Feb. 9 request by abuse claimants who sought to block the settlement from moving forward while they pursue appeals.

The Boy Scouts filed for bankruptcy in 2020 after several U.S. states enacted laws letting accusers sue over decades-old abuse allegations. The organization ultimately reached a settlement, approved in court in 2022, that would pay between $3,500 and $2.7 million to abuse victims.

The settlement involves more than 82,000 men who have said they were abused as children by troop leaders while in the Boy Scouts. More than 86% of abuse survivors voted to support the Boy Scouts settlement in bankruptcy court.

The 144 abuse claimants contend the deal unlawfully stops them from pursuing lawsuits against organizations that are not bankrupt, such as churches that ran scouting programs, local Boy Scouts councils and insurers that provided coverage to the Boy Scouts organization.

They have argued that the case should remain on hold until the Supreme Court decides whether U.S. bankruptcy courts are allowed to wipe away legal claims against non-bankrupt people and organizations, an issue that the court is considering in an appeal of OxyContin maker Purdue Pharma’s bankruptcy.

In that case, the court will decide whether the company’s owners, members of the wealthy Sackler family, can receive immunity in exchange for paying up to $6 billion to settle thousands of lawsuits over the company’s allegedly misleading marketing of its powerful pain medication.

The trustee in charge of administering the Boy Scouts settlement, retired bankruptcy judge Barbara Houser, said shortly after Alito issued his order that the freeze would suspend all work on the settlement, including evaluating claims and mailing checks to abuse survivors. The settlement trust has already paid nearly $8 million to more than 3,000 abuse claimants.

(Reporting by Dietrich Knauth and Andrew Chung in New York; Editing by Will Dunham)