State regulators in New York urged insurance companies Thursday not to stand in the way of efforts to settle and provide coverage for decades-old civil claims of child sex abuse brought over the next year through the Child Victims Act, which created a revival period for that litigation.

The state Department of Financial Services, in a guidance, told insurers they should be prepared to promptly approve coverage for those claims, when applicable, or face state action.

"With this action we are helping ensure the claims process works efficiently and effectively by reminding insurers they have an obligation to move quickly so that these survivors finally get some measure of peace," Gov. Andrew Cuomo said.

That doesn't mean state-regulated insurance companies will have to provide coverage for those claims without question, but the agency encouraged them to interpret any ambiguities in their contracts in favor of the policyholder.

When handling claims related to the Child Victims Act, DFS said, insurance companies should have a goal to expedite a prompt and fair settlement with the claimant.

The Child Victims Act was approved by the state Legislature this year to expand opportunities for victims of child sex abuse to bring litigation, or criminal charges, related to their harm.

The law opened a one-year revival window for victims to bring civil claims against their alleged abusers under the law, regardless of when it happened. That window started Aug. 14 and will run until the same day next year.

Cases only have to be filed during that period, not resolved, but the state court system has implemented rules to fast-track that litigation.

The statute of limitations for claims of child sex abuse was also raised by the law. New victims will now have until age 55 to bring civil claims. Criminal charges will be allowed until the victim turns 28, for felony offenses, and 25 for misdemeanors.

Attorneys working with victims to bring civil claims have said it can be challenging to build a case based on events that happened decades ago, but far from impossible. Institutions, like churches, sometimes have documents related to the abuse, and perpetrators often have more than one victim.

The guidance issued Thursday by the state touched on that point by reminding insurers not to demand that facts be verified unless "there are good reasons to do so." Insurers were also directed to maintain any records relevant to claims brought under the Child Victims Act until the litigation is resolved.

As for that litigation, DFS wrote in the guidance that insurers should be prepared to cooperate with the entities that they, or a company they acquired, sold liability coverage applicable to the claims.

"The Department expects Addressees to cooperate fully with the intent of the CVA," the agency wrote. "The CVA highlights the importance of victims' claims being timely reviewed by courts, alternative dispute resolution entities, or other tribunals, to reach appropriate resolutions and provide remedial benefits to victims."

Many of the claims brought during the one-year revival window date back decades, when an entity had a different insurer than it does now. In other cases, their insurer has since been acquired by another company.

In the guidance, DFS asked that, if policy documents have been lost, insurance companies act in good faith with their prior and current policyholders, and respective claimants, to consider other evidence that might determine the details of their agreement.

"We expect our regulated entities to exercise best practices with their prior and current policyholders, and their respective claimants, including properly performing any and all duties to defend CVA-related claims, so that survivors receive the long-overdue relief provided under the Child Victims Act," said DFS Superintendent Linda Lacewell.

The guidance came the same day the Diocese of Rochester became the first religious entity in the state to file for bankruptcy in New York, in the U.S. Bankruptcy Court for the Western District, over a wave of litigation brought under the Child Victims Act.. 

The diocese, in its papers, said it chose to do so because of the liability it was facing from claims filed over the past month under the law.

"In order to respond to claims stemming from the Child Victims Act in an equitable and comprehensive manner … the Diocese shall seek relief through reorganization under the provisions of chapter 11 of title 11 of the United States Code," the church wrote.

The church is represented in the bankruptcy proceeding by attorneys Bond, Schoeneck & King in Syracuse, New York.

The estimated liability of the diocese, according to the filing, ranged from $100 million to $500 million, though it's unclear how much of that was related to claims brought under the Child Victims Act.

Its assets, meanwhile, ranged from $50 million to $100 million, according to the filing.

It wasn't immediately known Thursday if the Rochester diocese is in the same boat as other entities, including the Archdiocese of New York, whose insurers have, so far, been hesitant to provide coverage for claims brought under the Child Victims Act.

The New York archdiocese, in June, filed a lawsuit against its insurers after they wrote in a letter to the church that they weren't planning to cover at least one claim of child sex abuse brought under the law. There haven't been any public updates on that litigation since it was filed.

Rockefeller University, which is also expected to be sued by hundreds of victims over the alleged abuse by one of its former faculty members, has filed a similar lawsuit. There haven't been any updates in that case, either.

Attorneys who've specialized in child sex abuse cases in other states have said that it wouldn't be unlikely for several entities to declare bankruptcy over the next year as they face multiple lawsuit related to the Child Victims Act. 

The advantage to doing so would be a faster legal resolution for victims versus trial, attorneys have said, but bankruptcy filings could also affect the amount offered during settlement talks.

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