Skip to main content

Not Quite a Perfect Ten: USA Gymnastics Finally (Hand)springs into Action with $215 Million Settlement Offer for Nassar Abuse Survivors

Photo of gymnastics trophies
IMG_4008A, 2009 Wisconsin State Gymnastics meet @ popo.uw23 on Flickr: https://flic.kr/p/7qMatu

By Brigitta Glunk*

“How much is a little girl worth? How much is a young woman worth?”[1]

Warm-Up: Introduction

 In a Twitter post on Thursday, January 30, Rachael Denhollander answered her own question: “How much is a little girl worth? Apparently far less than the damage she’s incurred. I am beyond disappointed. Again.”[2] Ms. Denhollander posted this in direct response to a new $215 million settlement offer proposed by USA Gymnastics earlier that day in a hopeful attempt to resolve the continuing scandal surrounding former team doctor Larry Nassar.[3] Nassar, a former Michigan State University physician and USA Gymnastics team doctor, received a sentence of 40 to 125 years in prison after pleading guilty to “state and federal charges ranging from child pornography to sexual misconduct” in February 2018.[4] This sentence followed accusations from over 150 women who claimed Nassar “sexually abused them under the guise of providing medical treatment.”[5]

Separately, more than 300 individuals, including Olympic gymnasts, sued USA Gymnastics for “failing to protect them from Mr. Nassar.”[6] Since the sexual abuse allegations first became national news in 2016, a series of additional scandals plagued USA Gymnastics, the 200,000-member organization which governs American gymnastics.[7] Such scandals include a 2018 Senate investigation finding that USA Gymnastics and the U.S. Olympic and Paralympic Committee “knowingly concealed” the abuse, the organization’s filing for bankruptcy in 2018, the filing of criminal charges against former employees, a “revolving door of presidents,” and “even the possible removal of [USA Gymnastics’] status as the U.S. governing body for the sport.”[8]

Handstand or Grandstand? The Settlement Offer

The settlement offer proposed on January 30, 2020 “comes nearly two years after Michigan State University reached a $500 million settlement with the victims of Nassar’s abuse” in a separate proceeding.[9] The $215 million offer is “part of a reorganization plan filed in federal bankruptcy court for the Southern District of Indiana” which would “enable [the organization] to emerge from bankruptcy” and resolve as many as 400 claims currently pending against USA Gymnastics.[10] This plan not only consists of the actual settlement offer, but also contains “benchmarks that obligate USA Gymnastics to continue to enhance athlete safety,” such as appointing a Vice President of Athlete Health and Wellness, publishing an updated Safe Sport Policy, and commencing “new educational initiatives focused on athlete safety.”[11] The organization asserts that these changes stem from refocused goals, with USA Gymnastics President and CEO Li Li Leung stating that the organization’s “top priority remains athlete safety.”[12]

The $215 million itself, which has been criticized as a relatively low amount compared to the $500 million Michigan State settlement, purports to offer the sexual abuse survivors “the full value of the only assets available to pay [the organization’s] claims – USA Gymnastics’ insurance policies.”[13] Leung noted that the $215 million is “the amount the insurance carriers have agreed to provide at this point,” though she remains hopeful that “discussions will continue and more money will be [available]” to the survivors.[14] Should the plaintiffs agree to accept the settlement, the insurers of Twistars Gymnastics Club, an organization located near Lansing, Michigan where abuse by Nassar occurred in September 2009 and September 2011, have agreed to supplement the settlement with an additional $2.125 million.[15]

If the survivors choose to settle, the proceeds of the insurance policies are to be “paid into a trust and will be distributed to survivors by a trustee.”[16] This method of distribution follows the same approach utilized in the allocation of the Michigan State settlement as well as in other abuse cases and would result in “[e]ach of the more than 500 accusers of Mr. Nassar . . . receiv[ing] about $250,000 to $300,000.”[17] Critics of the offer note the discrepancy between this offer and that of the Michigan State settlement, in which survivors individually “received an average of $1.25 million,” with one attorney involved in the present case even suggesting that the $215 million offer is “[p]ayment akin to the amount reached in a car crash settlement, not a case involving hundreds of sexual assaults.”[18] Also notable is the lack of contribution to the settlement by the U.S. Olympic and Paralympic Committee, who would purportedly be “protect[ed] . . . from further litigation” through USA Gymnastics’ proposed plan.[19] Should the plaintiffs opt to reject the settlement, litigation would proceed with USA Gymnastics named as a defendant and the relevant insurance carriers maintaining “responsib[ility] for defending cases brought by survivors and paying any judgments” on behalf of USA Gymnastics.[20]

Split Decision: Potential Outcomes

The survivors of Nassar’s abuse are now faced with a critical decision: vote as a group to accept USA Gymnastics’ settlement and resolve all of their outstanding claims or continue pursuing separate lawsuits against the organization.[21] Should the survivors opt to follow the litigation route, there is the possibility that they would receive compensation in excess of the settlement offer, with the potential to “collect any judgments from insurance policies available to USA Gymnastics.”[22] The outcome of this vote is particularly critical in that “[w]hichever option the survivors as a whole accept will apply to all members of the survivor class.”[23] In order for the claimants to accept the offer as a class, “[a]t least half the claimants who vote have to approve the agreement, and the majority needs to represent at least two-thirds of the monetary value of the settlement.”[24] Alternatively, “the claimants could also vote down the measure and pursue their lawsuits to collect any judgments from insurance policies available to USA Gymnastics or they could not vote on it at all and discuss how to go forward.”[25]

With the 2020 Tokyo Summer Olympics looming closer every day, USA Gymnastics remains under considerable pressure to resolve these legal disputes and receive approval for a bankruptcy exit plan as soon as possible.[26] The organization remains optimistic that the dispute will be resolved through settlement, with Board Chair Kathryn Carson stating: “Our strong preference remains to achieve a fully consensual settlement plan and we intend to continue negotiations with the survivors and our insurance carriers to reach that goal.”[27] The survivors, on the other hand, do not appear to agree, as one media outlet suggests that “[p]rospects for approval appear dim.”[28] Attorney John Manly, who represents “many of the accusers, including Olympic gymnasts Aly Raisman and McKayla Maroney[,]” has spoken out against the settlement offer, asserting that the plan is “not just unworkable” but “unconscionable” and that “there’s a better chance of Donald Trump endorsing Bernie Sanders than the victims accepting this offer.”[29] Now that USA Gymnastics set forth their settlement offer, all they can do is sit back and wait for the survivors’ decision, which may very well be determinative of the fate of their entire organization.[30] In the meantime, Americans across the nation who have watched this devastating case progress continue to remain haunted by an impossible and unanswerable question: “How much is a little girl worth?”[31]   

*Staff Writer, Jeffrey S. Moorad Sports Law Journal, J.D. Candidate, May 2021, Villanova University Charles Widger School of Law

 

[1] See Read Rachael Denhollander’s full victim impact statement about Larry Nassar, CNN (Jan. 30, 2018), https://www.cnn.com/2018/01/24/us/rachael-denhollander-full-statement/index.html (providing Ms. Denhollander’s full statement to Judge Aquilina and Larry Nassar at Nassar’s sentencing hearing on January 24, 2018). Ms. Denhollander was the first woman to publicly accuse Nassar of sexual abuse. Id.

[2] See Rachael Denhollander (@R_Denhollander), Twitter (Jan. 30, 2020, 10:02 PM, https://twitter.com/R_Denhollander/status/1223079199008788480?s=20 (responding to USA Gymnastics’ settlement offer to sexual abuse survivors proposed January 30, 2020).

[3] See Michael Levenson, U.S.A. Gymnastics Offers $215 Million to Larry Nassar Victims, N.Y. Times (Jan. 30, 2020), https://www.nytimes.com/2020/01/30/sports/USA-gymnastics-nassar.html (detailing $215 million settlement offer made by USA Gymnastics on January 30, 2020).

[4] David Matthews, USA Gymnastics offers $215 million settlement to Larry Nassar victims, New York Daily News (Jan. 31, 2020) (describing Nassar’s numerous state and federal charges); see also Levenson, supra note 3 (stating Nassar’s 2018 sentence).

[5] Holly Yan, USA Gymnastics files for bankruptcy after hefty lawsuits over Larry Nassar, CNN (Dec. 5, 2018), https://www.cnn.com/2018/12/05/us/usa-gymnastics-files-for-bankruptcy/index.html (offering background information regarding Nassar’s abuse of hundreds of young women and girls).

[6] Levenson, supra note 3 (noting number of plaintiffs bringing claims against USA Gymnastics in present case).

[7] See Yan, supra note 5 (mentioning numerous scandals faced by USA Gymnastics since outpouring of sexual abuse claims involving Nassar).

[8] Id.; see also Levenson, supra note 3 (“U.S.A. Gymnastics has been roundly criticized for its handling of the scandal. In July, a Senate investigation found that U.S.A. Gymnastics and the United States Olympic and Paralympic Committee ‘knowingly concealed’ Mr. Nassar’s abuse. The investigation described ‘alarming and dysfunctional systems’ that allowed emotional, physical and sexual abuse to persist in sports including gymnastics, swimming, figure skating and taekwondo. The report prompted senators to push for more stringent legal accountability for Olympic and athletic governing bodies that fail to protect athletes.”).

[9] Levenson, supra note 3 (noting period of time since Michigan State University settlement accepted by Nassar abuse victims). “The [Michigan State University] settlement was believed to be the largest ever reached in a sexual abuse case involving an American university.” Id.

[10] Id.; see also Yan, supra note 5 (estimating that “there are 350 to 400 claims nationwide” pending against USA Gymnastics).

[11] USA Gymnastics files plan to emerge from bankruptcy; provides $215 million for survivors of sexual abuse with alternative for survivors to pursue litigation, USA Gymnastics (Jan. 30, 2020), https://usagym.org/pages/post.html?PostID=25141 (detailing reorganization plan and settlement offer in press release from USA Gymnastics News).

[12] Id. (“Under the plan, USA Gymnastics continues its commitment to athlete safety as the organization shifts to be more athlete-centric.”).

[13] Id. (claiming that USA Gymnastics’ $215 million settlement offer provides survivors “access to . . . the only assets available” at organization). 

[14] Will Graves, Nassar survivors offered $215M settlement by USA Gymnastics, AP (Jan. 30, 2020), https://apnews.com/c910ae90a6357a5b376a63170cc0b8b0 (quoting USA Gymnastics President and CEO Li Li Leung).

[15] See Levenson, supra note 3 (noting involvement of Twistars Gymnastics Club in Nassar sexual abuse scandal and their contribution to USA Gymnastics’ settlement offer); see also USA Gymnastics, supra note 11 (announcing Twistars’ contribution to settlement amount).

[16] USA Gymnastics, supra note 11 (describing procedure for distribution of settlement money should survivors agree to accept offer).

[17] Id. (comparing distribution approach offered here to those utilized in other abuse cases, including Michigan State University Nassar settlement); see also Levenson, supra note 3 (quoting plaintiffs’ attorney regarding estimated amount received by each survivor should they opt to accept settlement offer).

[18] Levenson, supra note 3 (providing opinion of plaintiffs’ attorney regarding amount of settlement money offered by USA Gymnastics).

[19] Paulina Cachero, USA Gymnastics offered to pay Larry Nassar survivors an estimated $250,000 each – their attorney says the settlement is ‘DOA’, Insider (Jan. 31, 2020), https://www.insider.com/larry-nassar-survivors-reject-usa-gymnastic-215-million-settlement-2020-1 (noting lack of financial contribution by U.S. Olympic and Paralympic Committee to USA Gymnastics’ settlement offer and questioning proposed plan’s impact on future litigation against Committee).

[20] USA Gymnastics, supra note 11 (stating next steps should survivors choose to reject settlement offer and instead pursue litigation).

[21] See id. (detailing two options for Nassar abuse survivors: accept settlement or pursue litigation).

[22] Id. (mentioning potential for damages should survivors choose litigation route).

[23] Id. (establishing that survivors’ vote for or against settlement will be applicable to whole survivor class).

[24] Graves, supra note 14 (describing settlement acceptance process for survivor class).

[25] Id. (illustrating alternative options should survivor class choose not to accept settlement offer).

[26] See id. (“The organization hopes to have a bankruptcy exit plan of some kind approved ahead of the Tokyo Olympics, which begin in July.”).

[27] See Levenson, supra note 3 (quoting USA Gymnastics’ Board Chair Kathryn Carson regarding settlement negotiations with Nassar abuse survivors).

[28] Id. (noting negative response by survivors to January 2020 settlement offer).

[29] Id. (quoting plaintiffs’ attorney regarding survivors’ likely response to settlement offer).

[30] See USA Gymnastics, supra note 11 (establishing importance of reorganization plan – including settlement offer – in allowing organization to “emerge from bankruptcy”).

[31] See CNN, supra note 1 (quoting Rachael Denhollander’s full victim impact statement about Nassar presented to judge at Nassar’s sentencing hearing).