Nassar settlement scraps push for some reforms

Beth LeBlanc, and Kim Kozlowski
The Detroit News

East Lansing — Victims of Larry Nassar agreed to give up some of their efforts to strengthen Michigan’s laws on sexual abuse complaints as part of a $500 million settlement with Michigan State University, an attorney said Wednesday.

Vince Finaldi, a lawyer for victims, said the settlement specifically requires victims to pull their support for proposed legislation that seeks to end governmental immunity as it relates to sexual abuse. That is a shield MSU has maintained as being vital to protect itself from litigation.

“That was a big, important issue for MSU ... the immunity,” said Finaldi, who represents about 175 of the plaintiffs with his partner, John Manly.

Even without the governmental immunity provision that is part of statute of limitations bills, the settlement provides for the victims and the goals they hoped to accomplish in filing their lawsuits, he said.

More: Legal experts: MSU didn’t violate Open Meetings Act

“You have to look at what the overall benefit is in terms of what you are trying to achieve,” Finaldi said. “Our goals have always been to shine a light on what happened, to shine a light on policies and procedures to make sure this never happens again in the future.”

A source close to the university, however, said that the tentative deal reached Tuesday was contingent on Michigan lawmakers dropping the legislative package before the Legislature. Nassar victims were to pull their support, the source said, at which point it was expected that the Republican Legislature would follow suit.

The settlement also requires the victims to withdraw their support for a bill that would waive minors from legal notice requirements in such lawsuits, Manly said.

Some Nassar victims, however, remained steadfast Wednesday that they continue to support the package of bills that would extend protections.

“I renew my call,” Rachael Denhollander wrote in a social media post for the Legislature to “stand for these survivors, ask themselves ‘what is right?’ and ‘What does the data truly show?’ and pass the reform package we so desperately need as a first step in legislative reform.”

Even if statute of limitations bills are dropped, all of the current Nassar victims involved in the settlement with the university would still be covered, the source said.

That condition comes as the university grapples with how to afford the settlement it announced Wednesday with the 332 women and girls who say they were sexually assaulted by the disgraced MSU sports doctor.

The university will use a combination of insurance money, bonding and uncommitted funds — including delaying building projects and hiring faculty — to pay out the settlement. It’s exploring tightening budgets and possibly raising tuition to repay the needed bonds, according to the source.

Sponsoring state lawmakers and Nassar accusers announced in February the legislation that would nix governmental immunity for institutions that did know or should have known an employee was a child sexual abuser, and allow victims to file anonymously in the state Court of Claims.

The legislative measure also would extend the criminal statute of limitations from 10 years to 30 years past the age of majority and the civil statute of limitations from three years or one year past the age of majority to 10 years for adults and 30 years past the age of majority for children. The proposal also would make the law retroactive to 1997.

State Sen. Margaret O’Brien, R-Portage, said she was not privy to details of the settlement, nor had she spoken with any of the victims as of Wednesday afternoon.

As such, she said she’s uncertain whether the settlement contained any conditions pertaining to her statute of limitations bills.

“My votes have not been negotiated away, but I’ve always been open to amendment ideas, anything to get this across the finish line,” O’Brien said.

The bills have been opposed by several organizations that maintain the legislation will result in a flood of lawsuits in cases where witnesses are unable to remember details or evidence is no longer available.

Shortly before the bills were scheduled to be discussed in committee Wednesday, Rep. Klint Kesto said he was unaware of a provision in the settlement that would require victims to pull their endorsement of the bills.

Kesto, R-Commerce Township, said the committee will continue to take testimony on the bills, which he said have been both supported and opposed by victims of child sexual abuse.

“The Nassar survivors have said all along this isn’t about Nassar,” Kesto said. “This bill is more than that. …The whole package is about putting together the right policies.”

A spokesman for the House speaker said he expects to speak with MSU interim President John Engler soon.

“Obviously mediation is a private conversation between the parties, and the state Legislature was not involved,” said Gideon D’Assandro, a spokesman for Speaker Tom Leonard, R-Dewitt. “President Engler will brief Speaker Leonard soon on the details just so we can make sure the Legislature stays on top of the issues as we continue reforms and the budget.”

A historic settlement

Earlier Wednesday, MSU announced it reached the $500 million settlement following several rounds of mediation. The settlement requires MSU to pay $425 million to claimants and $75 million toward a trust fund for any future claimants.

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

The agreement is one of the largest sexual assault settlements in history, far eclipsing the agreement Penn State University reached with victims in the wake of the Jerry Sandusky child abuse scandal. Penn State’s agreement was reached with 33 victims, whereas MSU had nearly 10 times more plaintiffs. Lawsuits from victims of Sandusky ended up costing $109 million in settlements. That’s roughly $3.3 million for each victim on average, whereas the MSU settlement averages $1.28 million per victim.

The former Nittany Lions assistant football coach is serving 30-60 years in prison for the sexual abuse of boys.

The $425 million in MSU’s settlement will be put into a qualified settlement fund. After attorneys’ fees and other costs are subtracted, a special mediator will evaluate criteria of each victim, such as when the assaults occurred, how many times, whether the survivor was a minor at the time or the assault involved touching versus penetration, said Okemos-based David Mittleman, an attorney representing some of the victims.

Each victim could get between $250,000 and $2.5 million, Mittleman said.

But those amounts could go up since there are other defendants who have yet to settle with the victims, including USA Gymnastics, the United States Olympics Committee, Gedderts’ Twistars USA and John Geddert, where Nassar worked, he said.

“Due to the brave, strong army of survivors that was created, a fair and just settlement was reached with MSU,” Mittleman said. “It’s not just about the money but the things that are being done as well.”

MSU spokeswoman Emily Guerrant on Wednesday said she had no additional comment on how the university would pay for the settlement. MSU’s insurance policy with United Educators shows there is a $39 million limit for sexual molestation. But it is unclear what that policy will cover, the university has said.

The MSU Board of Trustees agreed to a settlement via conference call Tuesday night, according to the release.

Trustee Brian Breslin addressed the settlement in a statement posted on the university website Wednesday morning:

“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,” he said. “We recognize the need for change on our campus and in our community around sexual assault awareness and prevention.”

Trustee Joel Ferguson said Engler and Special Counsel Robert Young Jr. spoke with trustees via conference call at 10 p.m. Tuesday to discuss the negotiations. Engler and Young were in California at the time, Ferguson said.

After hearing from Young and Engler, the board reached a “consensus” regarding the approval of the settlement, but it did not take a formal vote, Ferguson said. He said the board will officially vote on the settlement when it is presented with a written agreement.

“We brought closure to the victim survivors, and we now clear our plate so we can work hard to make sure nothing like this can ever happen again,” Ferguson told The Detroit News. “This is not the end. This is just the beginning.”

Nassar, who served as an MSU, U.S. National Women’s Gymnastics Team and U.S. Olympic team doctor for two decades, pleaded guilty to federal child pornography charges and 10 counts of criminal sexual conduct in Michigan state courts. He was sentenced to 60 years in prison on federal child pornography charges and up to 175 years by state courts on sex abuse charges.

The settlement allows MSU to avoid the additional negative publicity and uncertainty of a jury trial, according to Peter Henning, a law professor at Wayne State University.

MSU now can begin to close a “wound that was continuing to fester” and move forward with its search for a president.

“No one was going to come in and take this job as long as this was hanging over their heads; there was just too much uncertainty,” Henning said. “Now, Michigan State has bought certainty.”

That “certainty” comes none too soon.

In early May, Moody’s Investors Service downgraded MSU’s long-term rating from Aa1 to Aa2 because of the “heightened financial risk” triggered by the Nassar lawsuits and continued scrutiny from the U.S. Department of Education, the Attorney General’s Office and the NCAA. The report from Moody’s listed a settlement of sexual abuse claims as a factor that could lead to an upgrade.

More than money sought

Morgan McCaul, one of Nassar’s accusers involved in the MSU lawsuit, said the settlement is a relief but isn’t complete without assurances of a safer campus at MSU.

“I’m pleased that we’re finally seeing some kind of institutional accountability here,” said McCaul, now a sophomore at the University of Michigan. “It’s taken years to get to this point, and we still have multiple institutions that aren’t willing to take that first step. That being said, it’s clear to me that no amount of money will ever make anything better.”

Amanda Thomashow, another Nassar accuser, echoed that sentiment.

“This is a step in the right direction, but there is a lot more work to be done. This was never about money. It was and is about cultural change, and my sister survivors and I will not rest until we live in a world that empowers survivors, not their abusers,” she said.

Young, who represented the university during mediation talks, said MSU is pleased to have reached a “fair” agreement.

“We appreciate the hard work both sides put into the mediation, and the efforts of the mediator, which achieved a result that is responsible and equitable,” read a statement from the former Michigan Supreme Court justice, who was appointed in February by Engler.

The settlement, which includes no confidentiality or nondisclosure agreements, does not address additional claims against John Geddert, Gedderts’ Twistars USA, USA Gymnastics, the United States Olympic Committee, or Bela and Martha Karolyi.

Denhollander, whose 2016 complaint against Nassar spurred hundreds of other women to come forward, said she is grateful litigation is finished and will continue to seek accountability and reform with her “sister survivors.”

“‘Moving forward,’ for myself and many others, means continuing to advocate, call for accountability, and stand for those who have yet to have a voice,” Denhollander wrote in a Facebook post Wednesday. “This includes continuing to advocate for desperately needed accountability and change at USAG and in the USOC. I remain disappointed that resolution was not reached with these other organizations who also enabled a serial predator for decades.”

The first civil lawsuits were filed in January 2017 against MSU, Nassar and other institutions such as USA Gymnastics and Gedderts’ Twistars USA, a Lansing-area gymnastics club. The earliest lawsuits were filed by a handful of Nassar accusers but have since multiplied.