MSU reaches $500M settlement with Nassar victims

Beth LeBlanc and Kim Kozlowski
The Detroit News

East Lansing — Michigan State University has reached a $500 million settlement with 332 women and girls who said they were assaulted by disgraced former MSU sports medicine doctor Larry Nassar, according to the women’s attorneys on Wednesday.

Following several rounds of mediation, the announced settlement requires MSU to pay $425 million to claimants and $75 million toward a trust fund for any future claimants.

The MSU Board of Trustees agreed to a settlement via conference call Tuesday night.

MSU 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. 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.”

Added Trustee Dianne Byrum: “I am pleased a settlement has been reached with the brave young women whose lives have been impacted by this tragic situation. Today’s settlement is an important step forward and we must continue working to change the culture at MSU to ensure this never happens again.”

Trustee Joel Ferguson said MSU Interim President John 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.”

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. 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, 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 said she had no additional comment on how the university would pay for the settlement on Wednesday. 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 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 certainly.”

That “certainty” comes none too soon.

In early May, Moody’s Investors Service downgraded MSU’s longterm 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.

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.”

Ron French, a parent of one of Nassar’s victims and a former Detroit News reporter, said the settlement doesn’t make up for MSU’s failures and all that his daughter has lost.

“There’s no amount of money my family wouldn’t trade for this not to have happened,” French said. “A settlement doesn’t end the nightmares my daughter has every night, or make her less afraid of doctors. Anyone who tries to reduce this to red ink on a balance sheet still doesn’t get it. There was a monster operating with impunity at Michigan State for years, and no one did anything about it.”

John Manly, one of the lawyers representing Nassar victims involved in the MSU lawsuit, said the historic settlement was because of women 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,” Manly said in a statement.

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 interim MSU President John Engler.

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

Rachael 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.”

Attorney Mick Grewal, who represents more than 100 victims, said it was a long process, but the “courage and hard work of the survivors made this settlement happen.”

“Sexual assault is no longer taboo to discuss and is in the light because of them,” Grewal said. “There is still much work to be done, but getting the MSU settlement was a good first step towards global resolution.”

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.

Other defendants in the federal lawsuits included the Board of Trustees and a number of current and former MSU employees: Kathie Klages, William Strampel, Dr. Douglas Dietzel, Dr. Jefrey Kovan, Dr. Brooke Lemmen and Kristine Moore.

Bill Forsyth, special counsel appointed by Attorney General Bill Schuette to investigate MSU’s handling of Nassar complaints, said his investigation is open and ongoing, but the resolution of the civil case is important for closure.

Schuette, whose office handled the criminal case against Nassar, said he was pleased with the resolution.

"This is about justice for the survivors; each of the women who came forward deserve justice,” Schuette said in a statement. “Those who spoke at the many days of sentencing remain in my thoughts every day, and their strength is an inspiration to us all.”

Schuette, meanwhile on Wednesday, announced a complaint alleging license violations, including negligence and incompetence, has been filed against Nassar’s former boss, Strampel, who was dean of the osteopathic medical school.

In early January, just before more than 150 women and girls testified about Nassar’s sexual abuse, MSU filed motions to dismiss the lawsuits. Their arguments: MSU is a governmental entity and immune to being sued, and the statute of limitations had expired on many claims.

But heading into mediation this spring, parties on both sides had expressed confidence in a new mediator, Layn Phillips, a former U.S. attorney and a former federal judge in Oklahoma with a respected reputation for bringing parties to resolution.

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.

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