How 3 corporations tied up as much as $1 billion of the cash available for victims of the 2017 North Bay firestorm

While thousands of Northern California wildfire victims wait to be reimbursed from what’s left of a $13.5 billion restitution fund, three large corporations have laid claim to more than $1 billion of that money, potentially tying up individual settlements even longer, The Press Democrat has learned.

The largest corporate claim by far is from Adventist Health, a faith-based nonprofit health care giant that provides services in Paradise, the town devastated by the 2018 Camp Fire.

Court records indicate the health care company sought more than $1 billion, including $500 million in “punitive damages,” from the trust — sums lawyers for victims called “grossly over-inflated“ and ”far in excess of the amount of damage.”

Court records indicate Comcast put in claims for more than $93 million, while AT&T has sought more than $238 million.

The nearly $1.3 billion claimed by the three companies amounts to almost 20% of the $6.75 billion in cash originally set aside in the Fire Victim Trust for people who lost homes, businesses and loved ones in a series of wildfires traced to faulty or poorly maintained Pacific Gas & Electric Co. equipment.

The other half of the trust, which was established after PG&E declared bankruptcy in 2019, was made up of shares of the struggling company’s stock, which until recent months had been trading for far less than its valuation when the fund was formed.

The fund to reimburse victims of the 2017 North Bay wildfires, the 2018 Camp Fire and other PG&E-sparked disasters has always been short on cash. The deficit has forced many fire victims to accept payments years after the fires that so far amount to only 45% of their claims for devastating property loss and emotional damage.

As of Nov. 15, the trust had distributed $5.51 billion to victims and added more than $1 billion to the cash pile through stock sales.

Trust officials declined to disclose the current size of each individual corporate claim — which may have changed through negotiations in ways not visible in the public record — saying claims are privileged information. However, a reference to a $1 billion total appears in a recent letter from a fire victims’ attorney posted to social media.

The Press Democrat confirmed the claims in a recent interview with Trust Administrator Cathy Yanni, who said they totaled “approximately $1 billion.”

Adventist Health is a nonprofit doing business in California and Hawaii that describes itself as a faith-based group with more than 34,000 employees. In Paradise, Adventist’s Feather River Hospital was damaged by the Camp Fire, which killed 85 people as California’s deadliest wildfire in history.

A spokesperson for Adventist Health declined to disclose the current size of the claim, but in a statement, an official said it was for “hundreds of millions of dollars.”

“Our hospital, Adventist Health Feather River, and a number of clinics and other structures were damaged or destroyed by the Camp Fire, resulting in hundreds of millions of dollars in losses,” spokesperson Japhet de Olivera wrote in a text message.

“We are working to recover those losses from the Fire Victim Trust and are hopeful we will reach an appropriate resolution to our claims with the Trust.”

In the months after the Camp Fire, Adventist Health reported that it believed insurance would cover all of the costs of losses to the fire associated with the hospital, including revenue losses, according to April 2019 reporting in the Sacramento Business Journal.

Even while the PG&E bankruptcy deal was being negotiated, lawyers for individual fire victims worried about how much money Adventist could tie up.

“The Adventist Health claims, if successful as filed...would take an enormous amount of money from the wildfire victims,” lawyers negotiating for victims in PG&E’s bankruptcy said in a 2020 court objection to the health care system’s original compensation request.

The committee did not object to AT&T or Comcast’s claims.

AT&T did not respond to Press Democrat requests for comment sent to media relations contacts.

A spokesperson for Comcast said the company sought to replace critical infrastructure that was destroyed in such communities as Paradise and Santa Rosa’s Coffey Park.

“What happened to our infrastructure just like many of the homeowners is utter devastation,” Joan Hammel, the head of Comcast public relations in California, told The Press Democrat. “Comcast is part of those communities and provides services in those communities and was impacted by the fires like those communities.”

She pointed to a company history of charitable work in the wake of the 2017 and 2018 wildfires and said Comcast employees sought to be a part of the rebuild effort.

“We did everything humanly possible to help those folks recover,” she said. Meanwhile, “it’s a matter of course that one would seek (payment) for the damage caused to our infrastructure as a result of the PG&E wildfires.”

The corporations may not actually receive the sums they’ve claimed, and the argument over the payouts could wind up back in front of U.S. Bankruptcy Court Judge Dennis Montali, Yanni told The Press Democrat.

A longtime mediator and “special master” over large corporate litigation settlements, Yanni compared the amounts the companies claimed to an opening offer in a mediation.

“Somebody comes into mediation and makes a demand,” she said. “That's the way the mediation begins. And then the other side makes an offer, and it goes back and forth until hopefully we get to an agreement. This is a little different because it's a claims process. But I think it's a good analogy.”

But even if the claims end up in court amid a protracted dispute, the trust must hold onto the total sums claimed until the matter is resolved, meaning possibly as much as $1.3 billion of the trust’s cash isn’t available for people still waiting to rebuild their lives years after the fires.

The trust must hold the full claims in reserve because the three companies, along with a handful of public institutions and a few legally savvy individual fire victims, preserved a right to “judicial review” that all other fire victims lost when they voted to accept the deal.

When victims file a claim, the trust reviews it and makes an offer. For those who think the offer is unfair, their recourse is limited. Claimants can ask for a second offer.

After that, the bankruptcy deal dictates that the last available pathway is to appeal the trust’s determination to an assigned arbitrator. The trust administrator, however, will ultimately decide whether to accept or overrule the arbitrator’s findings.

While Yanni has said she takes the third-party recommendation very seriously, some have been left unhappy with the process.

By contrast, judicial review allows those few claimants who have it to contest the trust’s final offers in court. Until that process is settled, the trust must reserve 100% of the party’s claim even as other victims are paid out at a 45% rate for now.

Tom Tosdal, a veteran Southern California fire litigation attorney representing 1,047 clients from the Camp, Atlas and Redwood Valley fires with claims on the trust, said the corporations’ claims could become a significant delay to other victims being made whole.

“I don't think it'll be done in negotiations, frankly. I think those claimants have a right to judicial review, and I think ultimately Judge Montali is going to decide them, which delays everything further,” he said.

Nine companies and government entities and five individual fire victims, including two couples, fought in court to preserve their right to sue, an option most others were unaware they had.

In a court filing, the companies teamed up with the public entities in Butte County and argued that denying their right to judicial review was “flatly unlawful.”

“They fought that out and insisted on it, and they got a carve-out,” Tosdal said.

Montali allowed the companies’ objection, though he later rejected appeals from another fire victim, Will Abrams, to apply judicial review more broadly to victims.

“Judicial review provides a handful of victims with a huge financial bargaining chip,” Abrams told The Press Democrat in October.

Abrams, who as a victim and activist has been conducting a largely unsuccessful legal push for increased transparency into bankruptcy court processes, filed a motion last week calling on Montali to recuse himself.

Abrams stated Montali had “the appearance” of a conflict of interest because he seemed personally connected to some of those who managed to secure judicial review.

According to legal experts, conflicts of interest depend on the closeness of the relationship between a judge and a party or lawyer. Acquaintance alone, especially in tight-knit legal communities, is not usually enough to meet the bar, though close friendship could be.

Montali has not yet responded to the allegations, which appeared on the court docket Nov. 17.

One of those who secured judicial review, Debra Grassgreen, represented herself in the bankruptcy as a victim while also serving as counsel for the Baupost Group, a hedge fund that played a significant role in PG&E’s bankruptcy after buying insurance claims on the company for a low price. Financial analysts say Baupost profited considerably through its maneuvering in the bankruptcy.

Grassgreen, a high-powered and longtime bankruptcy attorney, was part of a committee that hosted an event Montali attended in 2005 for the American Bankruptcy Institute. The two also served on a five-member panel on bankruptcy law in 2012, according to Abrams’ filing.

She did not respond to requests for comment.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88

You can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On Twitter @InYourCornerTPD and Facebook @InYourCornerTPD.