Parents testify at Bradley settlement hearing

A Superior Court judge expects to rule on a landmark settlement in the class-action civil suit against Lewes pedophile pediatrician Earl Bradley no later than Monday, Nov. 19.

While the $123 million settlement will allow Beebe Medical Center to avoid bankruptcy, three parents of victims told Delaware Superior Court Judge Joseph Slights III no amount of money would ever repair the damage Bradley caused.

One mother said her 8-year-old had threatened to kill herself because of Bradley’s abuse. The mother said while Beebe Medical Center will be able to move on, “my life has been put on hold because of this.”

She said she was disappointed she had received no apology from any defendant during the hearing. While the impact of the settlement on Beebe Medical Center had been discussed at length, she said she’s disappointed the hearing did not focus on psychological and other difficulties victims are experiencing because of Bradley's crimes.

She said she is not sure how a fair amount of money can be determined, based on what Bradley's victims have gone through.

One parent, dressed simply in a yellow shirt and jeans, requested the judge prevent the media from broadcasting or publishing images of Bradley. Calling Bradley a pig, she said every time she merely views his face, it creates new trauma. She also said this case was not about money, and she was glad everyone had come together to settle it.

A third parent, a father in dark jeans and a varsity jacket, said he wasn't worried about the money, but he is concerned about the what will be done going forward to serve the needs of Bradley's victims.

Beebe President and CEO Jeffrey Fried said after Bradley’s crime came to light, the hospital’s fiscal situation became so dire, that in April 2012, Beebe retained bankruptcy council because they were not sure a settlement was going to be reached. He said immediately after the Bradley case became public,  Beebe’s bond rating was downgraded, causing the hospital to default on some of its outstanding debt and costing the hospital an estimated $43 million.

Fried said from the beginning, the hospital wanted to settle the case and help Bradley’s victims and their families.

He also said if the settlement were approved, early indications are Beebe’s bond rating would be upgraded.

One victim’s parent however, was skeptical of Beebe’s financial troubles, saying during a break in the hearing that while she has no problem with the settlement, Beebe’s bankruptcy has no bearing on what victims are going through.

“Who cares about the bankruptcy of a hospital?” she said.

Delaware Superior Court Judge Joseph Slights III listened to a full day of testimony during a Nov. 13 hearing in Wilmington before taking the matter under advisement.

The proposed settlement suit is expected to settle claims against Bradley, Beebe Medical Center and the Medical Society of Delaware as well as several doctors named in the suit for failing to report they suspected Bradley could be sexually abusing children.

Alex Pires, a member of the board of directors of Beebe Medical Foundation and a key player during negotiations, said he was frightened for the future of the hospital when Bradley's crimes against children were made public. "As soon as I saw this case, I thought that could be the end of Beebe," he said.

Attorneys said the decision marks the first time a sexual-abuse case was settled through a class action. Also unprecedented is the mechanism by which victims will be compensated, they said.

"It's not perfect, but I think it's fair," Pires said.

Several other witnesses discussed the specifics of the settlement and how it was reached. Jim Murray, who served as Beebe Medical Center's liaison with its insurance companies, said what is unusual about this case is that there were no depositions by victims, and no discovery took place.

While Bradley was arrested in December 2009, it wasn't until February 2012 that the insurance companies agreed to a specific monetary settlement. Beebe had already agreed to contribute nearly $6 million of its own funds when in June, the insurers finally offered a settlement of $110 million.

The plaintiffs rejected that offer, walking out on further negotiations.

But a chance meeting in a Philadelphia office building bathroom led the plaintiffs back to the negotiating table, where, Murray said, the insurance companies agreed to a $120 million settlement.  An additional $3 million was added to the total settlement from the insurance carrier of the Medical Society of Delaware and the accused doctors.

Murray said avoiding bankruptcy for Beebe Medical Center was a victory for both sides, because the hospital will continue to serve the community and the victims won't have to go through years of bankruptcy litigation before they receive compensation.

Difficult case to settle

Former Delaware Supreme Court Justice Joe Walsh, a mediator in the case, said he at first doubted the case could be resolved because of the sheer number of victims involved.

He said he was convinced there was no alternative other than a settlement; any alternative, he said, would have resulted in bankruptcy for Beebe and reduced compensation for victims. The cases would "keep the courts tied up for years and years," he said.

Walsh also said the insurance companies wanted a decision in the case to be final to in order to end their responsibility and avoid further cross claims against Beebe.

Walsh said he had never been involved in a case of this magnitude and that this settlement was the best result all parties could hope for.

Pires said the hospital was never going to survive this case if it sought to fight the allegations.

He said hospital CEO Fried made the decision not to fight the allegations because the extremely high number of cases would have made it impossible to fight all of them.

Pires also worried the insurance companies would refuse to pay the claims, driving Beebe into bankruptcy. He agreed that the settlement offered the best possible path to resolving the claims and compensating victims.

Insurance proceeds fuel settlement

Murray said the difficulty in dealing with the insurance companies stemmed from the fact that Beebe had five different policies during the time Bradley is known to have or is suspected of having abused children in Delaware, from 1994 until his arrest in 2009. Walsh said all the policies were easily available through Beebe’s recordkeeping.

During the years of Bradley’s worst attacks on children – 2007-09 – Beebe was primarily covered by policies from Arch Insurance and Endurance Insurance, both of New York; both had almost iron-clad exclusions for cases of sexual abuse. Arch and Endurance ended up contributing the least of all the companies, $1.6 million from Arch and $1.25 million from Endurance, Murray said.

Murray said the largest contributor was American Service Insurance Company, which paid $71 million. The company had insured Beebe from 2003-08 with policies totaling $110 million. Murray said during the years Asilink provided insurance, the number of claims against Bradley was also very high.

The second largest contributor – $26 million – was Princeton Insurance, of Princeton, N.J., which insured Beebe from 1997 to 2003 with policies totaling $126 million. While Princeton was the longest-running insurer of Beebe during the years Bradley abused patients, 1994-2009, Murray said insurance proceeds for two of those years had already been tapped by an unrelated malpractice case. Few of Bradley’s most violent assaults took place during that period, he said.

The remaining $3.8 million of insurance money came from St. Paul’s, now owned by Travelers, which insured Beebe from 1994 to 1997. Murray said there were fewer claims during this early time period.

Walsh said a class action settlement was the only real alternative in this case in order to avoid “a race to the courthouse” which could deplete the available assets for everyone.

“It’s difficult in hindsight to understand the extent of the horrible acts that took place here,” he said. “Trying to pick up responsibility and compensate victims for that was a daunting task.”

Walsh said most of the nearly 18 months of negotiations were focused on Beebe's insurance carriers; insurance carriers for the medical society and doctors did not enter the picture until the last three to four months.

How money will be divided

Also called to the stand was attorney and former Philadelphia Court of Common Pleas Judge Thomas Rutter, who has been appointed administrator of the settlement money, which will be placed in a trust under the ultimate supervision of the Court of Chancery. Rutter said the settlement is beneficial for victims because it keeps them from being deposed or put on the stand and forced to relive their trauma.

Rutter will be assisted in the allocation process – which divides victims into categories based on the level of abuse they suffered – by Dr. Anne Steinberg, a pediatrician and expert in treating child sexual abuse cases. Rutter said Steinberg would help him document and evaluate how Bradley’s abuse has affected each victim in the class.

From there, they will separate victims into the different categories, with the monetary amount based on the level of abuse. Rutter said he would err on the side of inclusion in the allocation as opposed to exclusion.

Attorney for plaintiffs Craig Karsnitz said still-unidentified victims may join the suit until Friday, Dec. 14.

Karsnitz said the settlement was the third-largest settlement in U.S. history. In summing up what a settlement means, Karsnitz quoted Winston Churchill’s line after the Battle of Britain.  “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

“We are far from finished in this case,” Karsnitz said.

Karsnitz described the settlement as historic in that it has taken the matter out of litigation and put it in the context of providing benefits to Bradley’s victims.

Slights allowed any victims in attendance to speak privately to an attorney and to speak in open court. The three parents who spoke in court did not have to identify themselves publicly; they wrote their names on a piece of paper for the court record. While few victim families were present, they stood out in the room full of lawyers.

Attorneys in the case are not permitted to comment on the particulars of the settlement until after Slights approves it.

Bradley was convicted in August 2011 on 24 counts of rape, assault and sexual exploitation of 86 children, although he was originally indicted for sexually abusing more than 100 children. Delaware Supreme Court upheld an appeal of his conviction in September.

Bradley is serving 14 life sentences and 164 years in prison at the James T. Vaughn Correctional Institute in Smyrna.