Michigan State and 332 of Larry Nassar's victims reach 'historic' $500 million settlement

Show Caption Hide Caption Closing statements given during Larry Nassar hearing Assistant Attorney General Angela Povilaitis gives closing statements during Larry Nassar's Eaton County sentencing hearing. Nassar was sentenced to 40 to 125 years in prison.

EAST LANSING - Michigan State University has agreed to a $500 million settlement with hundreds of women and girls Larry Nassar sexually assaulted, bringing to a close another aspect of the scandal now in its 20th month.

The settlement and the details were announced in a statement from attorneys representing victims and the university. A portion of the settlement — $75 million — will be held back in the event of future lawsuits filed against MSU over Nassar.

The lawsuits, filed in federal court in Grand Rapids and state courts in California, claim that MSU, USA Gymnastics and others failed to protect Nassar's victims from his sexual abuse.

Despite the high dollar figure, several of the victims said they were disappointed the university didn't agree to institutional reforms as part of the settlement and vowed to continue pushing for those and for legislative reforms.

Attorneys for the plaintiffs and defendants met on Monday and Tuesday in a mediation session. The settlement was agreed to by the university's Board of Trustees during a conference call held Tuesday night, according to the statement. The agreement comes as a result of the second round of settlement talks, with the first ending in December after five months, and only relates to the university and its current or former employees named as defendants.

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Rachael Denhollander, the first woman to publicly say that Nassar abused her, has been credited by many of the other victims who came forward as the reason they did so, ultimately forming the "army of survivors" or "sister survivors" as they've referred to themselves.

"I am thankful that the historic settlement amount at least in part reflects the horrific nature of what took place at MSU," she said in a statement. "However, I am deeply disappointed at the missed opportunity for meaningful reform and change at the University.

"My sisters and I have said from the beginning that coming forward was to push for accountability and needed reform, and there is much work left to be done."

Amanda Thomashow reported Nassar to MSU in 2014, prompting a Title IX investigation that ended with the university telling her that she wasn't sexually assaulted and that she misunderstood what happened because she didn't understand "nuanced difference" between sexual assault and an appropriate medical procedure.

"I think that this is a step in the right direction," she said of the settlement. "But I think there’s a lot more work to be done at MSU and institutions across the country."

Thomashow is considering a run for MSU's Board of Trustees.

And Larissa Boyce, who along with Thomashow, Denhollander and others testified during a state House committee on a package of bills inspired by Nassar's crimes, said she's happy with the settlement and hopes it sends a message to other institutions.

"I am disappointed that we were not able to come to an agreement with non-monetary requests ... even something as simple as a true apology," she said in a statement. "I will not rest until we see changes in policy at MSU and state legislation in order to further shine a light on the culture of abuse that exists in our society.

"Writing a check does not bring healing to me as a survivor. We still have a long way to go in order to ensure our children are safer and people will be held accountable for their actions or inaction. My healing will come through our continued fight to protect our children."

Brian Breslin, the chairman of MSU's Board of Trustees who isn't seeking re-election, said he hopes the agreement represents progress.

"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 in a statement. "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."

MSU spokeswoman Emily Guerrant said the university has not determined how it will pay for the settlement or how much will be covered by its insurance providers.

MSU has paid nine law firms more than $11.3 million to represent it and its current and former employees in the civil litigation and state and federal investigations related to Nassar’s crimes. At least $2.5 million of that total has gone law firms handling insurance aspects related to Nassar's crimes and the lawsuits.

It's likely MSU has multiple liability insurance policies and it’s possible for an organization its size to have $500 million in coverage, although the university’s out-of-pocket costs could still be in the tens of millions, Lars Powell, an insurance expert at the University of Alabama who is not involved with MSU, said Wednesday. It’s likely the insurers were part of the settlement discussions, he said.

"I would guess that whatever settlement they reached would be the amount of insurance they carry," said Powell, who is director of the Alabama Center for Insurance Information & Research. "They wouldn't just agree to the settlement, nor would the plaintiffs agree to that settlement, if the insurers weren't on board."

One caveat, he said, is that medical malpractice and other professional liability insurance policies often say explicitly that they will not cover sexual misconduct. That could create the possibility for MSU to end up in a court fight with insurers.

Nassar, 54, formerly of Holt, worked at MSU and with USA Gymnastics for decades. Sexual assault claims against Nassar were first made public by the Indianapolis Star in September 2016, in a story that included Denhollander's experience.

'Historic settlement'

In August 2017, when the number of victims suing was less than half of what it is now, the lawsuits entered mediation for the first time.

It was seven months after Tiffany Thomas Lopez, a former MSU softball player who said Nassar abused her several times from 1998 to 2000, filed the first lawsuit against MSU, in a state court in California. She’s said that she told several MSU trainers about the abuse but nothing was done to stop it.

A month later, in January 2017, Denhollander and 17 women and girls filed the first federal lawsuit against MSU and USA Gymnastics related to Nassar.

Three weeks after Denhollander's lawsuit, Boyce filed a lawsuit with 11 other victims and said she had raised concerns to Kathie Klages, the longtime MSU women's gymnastics coach, in 1997 along with another woman who was also a plaintiff on that lawsuit. Boyce has said she was discouraged from filing an official complaint against Nassar.

By the middle of March 2017, the number of women and girls who had filed lawsuits stood at 78. Later that month, Thomashow filed her lawsuit and by late June 2017, the number of women and girls suing MSU and USAG was at 119.

The five-month first mediation phase ended in December 2017, just days before Nassar was sentenced to 60-years in federal prison on three child pornography charges. The following month, Nassar's sentencing hearing on 10 sexual assault charges split between two state courts began.

His seven-day marathon sentencing in Ingham County, covered by national and international media outlets, pushed his crimes and his connection to MSU to a level not seen before.

Lindsey Lemke, a former MSU gymnast, was among the 156 who made victim impact statements during that sentencing. She harshly criticized the university during her statement and said on Wednesday that she hopes the settlement with MSU is a sign of real change at the university.

"This has been a very long and exhausting road, especially for those who have been so vocal from the very beginning of this case," she said in a statement. "This settlement from Michigan State is a huge victory for the survivors as it is the real first sign of accountability that we've seen."

Just days before Nassar’s Ingham County sentencing began, MSU filed a motion to dismiss the lawsuits, saying that as a state institution it "retains absolute immunity from liability" for his actions. It also argued that the statute of limitations had expired and some plaintiffs lacked standing for protection under the federal Title IX law.

The settlement does not include confidentiality agreements or non-disclosure agreements, according to the release from attorneys and the university, and is only between victims and MSU and the university's current and former employees, not USA Gymnastics and the others who have been sued.

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"Michigan State has shown leadership by its willingness to begin closing this dark chapter," Jamie White, one of the attorneys suing MSU, told the State Journal. "The victims of Nassar can never be made whole but this is a step in the right direction."

Many of the victims have said Nassar abused them at MSU, but also at Twistars gymnastics club in Dimondale, Nassar’s home in Holt or at USA Gymnastics sponsored events.

"USA Gymnastics is very encouraged by the settlement in principle recently made by Michigan State University and the attorneys for the Larry Nassar survivors," the organization said in a statement. "We remain committed to continuing our mediation efforts to reach resolution as well."

A message was left seeking comment from an attorney for John Geddert, who is being sued along with his Dimondale gym Twistars.

John Manly, an attorney representing many of the victims, thanked the other attorneys who represented victims and the mediator.

"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," he said in a statement. "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."

David Mittleman, an attorney for 111 of the plaintiffs, said there are plans to continue settlement talks with USA Gymnastics, the U.S. Olympic Committee and Geddert.

"Because of the brave, strong army of survivors that brought light to the darkness of the largest university sex assault case in history, we have arrived at a fair and just resolution with MSU," he said.

Robert Young, special counsel to MSU and former state Supreme Court justice, said in a statement that "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. 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."

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Michigan Attorney General Bill Schuette's office prosecuted Nassar on sexual assault charges and is currently conducting an investigation of sexual misconduct at MSU.

"I am pleased for the survivors of Larry Nassar's mistreatment that this settlement is occurring," Schuette said in a statement. "This is about justice for the survivors; each of the women who came forward deserve justice. Those who spoke at the many days of sentencing remain in my thoughts every day, and their strength is an inspiration to us all."

MSU finances

The Nassar scandal sparked a flurry of legislation after his state court sentencing in January.

Among the bills still being debated in the Legislature are ones that would extend the statutes of limitations for both criminal charges and civil lawsuits in sex assault cases and make those extensions retroactive to the late 1990s, when the first accusations against Nassar were raised to MSU officials.

Interim MSU President John Engler opposed the proposals, saying it would raise the price tag for MSU to settle lawsuits and that students and taxpayers would shoulder much of the burden.

But state Sen. Curtis Hertel Jr., D-Meridian Township, whose district includes MSU's campus, said the bills may have forced the university back to the negotiating table.

"For all the talk of, 'the sky is falling' by some at MSU ... while this is certainly a large of sum of money, it certainly doesn't look like it's going to be the end of MSU," Hertel said, adding that he still believes the legislation is needed "because it's never just been about MSU for me."

Engler has said any settlement costs will be covered by tuition and state aid. Some lawmakers have said no state aid should be used. University officials have said their legal expenses are being paid with non-endowment investment income.

MSU brought in $859 million in tuition revenue in 2016-17, according to its audited financial statements. That's 29% of its total revenue of $2.9 billion.

On the other side of the ledger, the university has $1.1 billion in outstanding debt. Ashley Ramchandani, a credit analyst with S&P Global Ratings, said it considers MSU to be in good shape financially with debt and could likely add some if needed.

MSU also ended the last fiscal year with $1.1 billion in unrestricted net assets. That's money that isn't legally contracted to a certain project, but often is set aside for particular projects.

The two biggest chunks of what MSU has set aside its unrestricted net assets for are infrastructure ($557 million) and programs ($400 million).

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David Jesse of the Detroit Free Press contributed to this report. Contact Matt Mencarini at (517) 267-1347 or mmencarini@lsj.com. Follow him on Twitter @MattMencarini.