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A recent filing in the civil lawsuit between Michigan State University and victims of former sports medicine physician Larry Nassar reveals more details regarding the parties' historic $500 million settlement, including a controversial provision that required the end of legislation inspired by the sexual misconduct scandal. 

The filing last week in U.S. District Court in Grand Rapids marks the first time the MSU settlement has been released publicly. The $500 million settlement was agreed to in principle in May and approved by the MSU Board of Trustees in June.

MSU has said it will pay the settlement through bonds, which the university will repay through insurance, investments and interest. 

The agreement, which is expected to be completely signed next week, required the failure of Senate Bills 875 and 877, and the failure or amendment of Senate Bill 872. The first two bills would have stripped institutions of governmental immunity in certain cases involving sexual assault and Senate Bill 872 would have opened a retroactive window for sexual assault victims to file time-barred claims.

The settlement language does not specify how the bills would fail, but a few days after MSU reached the settlement in May, legislators dropped the governmental immunity bills and tailored the retroactivity bill so that it only applied to Nassar victims.

The settlement’s reference to the legislation indicates an agreed-upon outcome that would result from victims pulling their support for the legislation, said Bob Young, the former Michigan Supreme Court justice who negotiated the settlement for MSU and is now vice president and general counsel at the university.

“People can say whatever they want and they can continue to support it covertly,” Young told The Detroit News. “The only way we could assure ourselves that their support had been withdrawn was a demonstrable result. That’s why it’s worded that way.”

When asked whether the settlement put pressure on lawmakers to drop the legislation, Young said he didn’t know, but argued that in the lead-up to the settlement, lawmakers certainly were under “direct pressure” to pass the legislation.

Lawmakers were not privy to the negotiations between MSU and victims, but the settlement did relieve the “elevated tension” at committee hearings on the post-Nassar bills, said state Rep. Klint Kesto, the chairman of the House Law and Justice Committee responsible for the changes to the Nassar legislation.

Kesto, R-Commerce Township, speculated that the hours of testimony during committee hearings helped to shape the settlement -- not the other way around.

“How can two separate entities make an agreement that then lawmakers have to abide by?” he said.

The idea that the settlement language would be binding on legislators is “preposterous,” Young said. He said the agreement also does not bar lawmakers from passing similar legislation in the future.

“We just wanted the plaintiffs to know if the bills passed, we didn’t have a deal,” Young said.

Plaintiffs in the case were not instructed “to do or not do anything,” said David Mittleman, a Lansing-area lawyer who represented 111 of the 333 victims in the lawsuit.

“They’re citizens and they had a right to observe the legislation,” that was being considered, Mittleman said. “The legislators are the ones that ultimately made their decision based on their constituents.”

The settlement filed last week also clarifies the purpose of the $75 million set aside for future claimants. The money is part of a litigation reserve fund, Young said, and, as such, MSU can use up to 8 percent of the $75 million to defend itself against future claimants.

“If there’s a meritorious claim, we’ll settle it,” Young said. “If not, we’ll litigate it.”

After two years, whatever is left in the litigation reserve will be redistributed to the original 333 victims.

The settlement also requires victims to cooperate with MSU in its “insurance coverage proceedings."

MSU is not certain what shape that cooperation will take, Young said, but insurance companies could “make demands of proofs that only the plaintiffs can supply.”

The filing last week in U.S. District Court also details the agreement that would appoint Judge William Bettinelli to allocate the $425 million to the 333 plaintiffs.

Bettinelli will be paid a base rate of $250,000 for the task. He’ll also charge $450 per hour, plus a 12 percent administrative fee for interviews with victims or a review if a victim asks him to reconsider her claim.

The average award for Nassar's accusers is expected to be $1.2 million — 10 to 14 times what sexual assault victims typically receive in Michigan. That total could increase should victims settle with other defendants such as USAG, the United States Olympic Committee, Twistars USA Gymnastics Club and John Geddert.

The amount each victim receives will differ based on the circumstances of each case, including whether the victim was a minor when the assaults occurred, how many times they saw Nassar and whether penetration was involved, Mittleman said. The allocation for attorney fees and costs will differ based on each victim’s retainer agreement.

Once everyone signs the settlement next week, MSU will have 30 days to deposit the $425 million into a qualified settlement fund.

eleblanc@detroitnews.com

(517) 371-3661

 

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