University to pay out US$500m to sexual abuse victims

Attorneys representing 332 survivors of abuse by former Michigan State University doctor Larry Nassar in lawsuits against Michigan State University (MSU) and attorneys for the university have announced a global settlement in principle worth US$500 million dollars to victims of his sexual abuse.

Of the US$500 million settlement total, US$425 million will be paid to current claimants and US$75 million dollars will be set aside in a trust fund to protect any future claimants alleging sexual abuse by Larry Nassar.

Survivors' attorney John Manly said: “This historic settlement came about through the bravery of more than 300 women and girls who had the courage to stand up and refuse to be silenced.

“It is the sincere hope of all of the survivors that the legacy of this settlement will be far-reaching institutional reform that will end the threat of sexual assault in sports, schools and throughout our society.”

Robert Young, special counsel to MSU, said: "Michigan State is pleased that we have been able to agree in principle on a settlement that is fair to the survivors of Nassar's crimes.”

Former MSU president Lou Anna K Simon resigned from her post in January over allegations that the university failed to act when Nassar’s conduct was reported to at least 14 MSU representatives over the two decades before Nassar’s arrest.

The disgraced former USA Gymnastics team doctor was an MSU professor of osteopathic medicine and worked at the university from 1997 to 2016.

On 24 January Nassar was sentenced to between 40 and 175 years in prison for seven counts of felony criminal sexual conduct involving abuse of athletes in his care, as reported by University World News. He had pleaded guilty to 10 counts of first-degree sexual misconduct in two counties.

During Nassar’s sentencing hearing 156 girls, including former MSU athletes, gave impact statements on the effects of the abuse they had suffered at his hands. Another two dozen submitted private letters to the court to be taken into consideration.

A number of them directed their anger not only at Nassar, but also at MSU for its handling of the case. Several victims stated they told MSU coaches, trainers and officials about the abuse at various points over the years but felt pressured to drop the matter or angry at the lack of action taken.

The settlement in principle was agreed to by the MSU Board of Trustees during a conference call held last Tuesday night, according to a statement posted by MSU. There will be no confidentiality agreements or non-disclosure agreements attached to the settlement.

The settlement applies to only Michigan State University and MSU individuals sued in the litigation. It does not, for instance, address claims against USA Gymnastics or the United States Olympic Committee.

John Engler, MSU interim president, said in a statement: “A successful mediation has been a priority for the university and for me since I arrived on campus in February. The entire MSU community has worked hard at changes to make sure a monster like Larry Nassar could never hide again on our campus.

“We also are working every day to prevent sexual misconduct on our campus and have a community that respects women and all who work or visit here.

“Today’s announcement is important in the healing process, not only for the survivors, but also for the university as we collectively move forward. I thank all who have worked so hard to get to this fair and equitable outcome.”

Brian Breslin, chair of the MSU Board of Trustees, in a statement on the settlement, said: “We are truly sorry to all the survivors and their families for what they have been through, and we admire the courage it has taken to tell their stories. We recognise the need for change on our campus and in our community around sexual assault awareness and prevention.

“A successful resolution to the litigation is a positive step in moving us all forward. We will continue working as a board to address the necessary changes and improvements that are needed at our university.”

The settlement is nearly five times as high as the US$109 million that Pennsylvania State University paid out to more than 30 survivors of abuse by former assistant football coach Jerry Sandusky and is thought to be the highest of any payout related to sexual misconduct and a university, according to Inside Higher Ed.

The question now is how MSU will find the funds to pay such a large sum. Engler said in March that the money needed for settlements in lawsuits filed against MSU by victims of Nassar would likely come from students and Michigan taxpayers. He said the university didn’t have anywhere to turn to for the funds other than tuition or state aid, the Indianapolis Star reported.

On 3 May Moody’s Investors Service downgraded MSU’s long-term bond rating in view of the “heightened financial risk from the growing number of lawsuits related to sexual abuse claims made by victims of former employee, Larry Nassar”.

It said the risk was compounded by the continued scrutiny facing the university’s senior leadership from federal and state entities, including the US Department of Education and the State Attorney General, as well as the National Collegiate Athletic Association, for its handling of sexual abuse claims.

Another factor cited is that the Michigan Legislature is considering numerous bills that could negatively impact the university financially, as well as legislation potentially driving change to governance practice.