USA Gymnastics on Thursday filed a plan to emerge from bankruptcy that offers survivors of Larry Nassar’s sexual abuse $215 million to settle their lawsuits over the governing body’s failure to protect them.
Under the plan, filed with the U.S. Bankruptcy Court for the Southern District of Indiana, survivors would be asked to vote on whether to accept $215 million, which is the amount USA Gymnastics’ insurers are willing to pay to resolve the claims.
Survivors also could opt to continue to pursue their lawsuits and collect whatever compensation USA Gymnastics’ insurers make available. Whatever option most of the survivors accept would apply to all.
Li Li Leung, president and CEO of USA Gymnastics, called the plan a step forward while making clear that she strongly hoped the litigation would be resolved through ongoing mediation that produced a mutually agreeable settlement instead.
“We’re hopeful that mediation will continue,” Leung said in a telephone interview. “At the end of the day, the only meaningful assets we have to offer are our insurance policies.”
The plan was swiftly rejected by John Manly, the attorney who represents roughly 200 of the more than 500 litigants. In a telephone interview, Manly characterized it as “laughable” and demonstrating “complete disregard for the athletes.”
He faulted the plan for lacking “critical, structural plans” to ensure the safety of future gymnasts and for ignoring survivors’ request for the disclosure of documents related to years of Nassar’s abuse. Manly particularly objected to the fact that the plan failed to include any money from the U.S. Olympic and Paralympic Committee, whose leadership had been aware of the abuse and sought to cover it up.
USA Gymnastics’ $215 million offer is less than half of the $500 million settlement Michigan State reached in May 2018 with 332 alleged victims of Nassar, the disgraced former sports physician who also worked on its campus.
By Manly’s estimate, under USA Gymnastics’ offer, the average compensation for 511 plaintiffs would be $250,000 to $300,000.
“I’ve got clients, many of them, who were abused hundreds and hundreds of times who will need lifetime therapy,” Manly said. “That doesn’t come close to covering that, let alone loss of earnings and the horrendous toll.”
Facing more than 100 lawsuits from Nassar victims, USA Gymnastics filed for bankruptcy in December 2018. That was the most expedient way, according to board chair Kathryn Carson, to resolve the claims and compensate the victims.
The bankruptcy proceedings also put on hold any effort by the USOPC to decertify USA Gymnastics as the sport’s national governing body.
For USA Gymnastics’ settlement offer to be accepted, a majority of the gymnasts making claims against the organization would have to approve it. Moreover, that majority must represent at least two-thirds of the monetary settlement at issue.
If survivors vote to accept the settlement, insurers for Twistars USA Gymnastics Club, where Nassar also committed abuse, would contribute an additional $2.125 million. The total would then be placed in a trust, with a judge ultimately deciding how to apportion it.
USA Gymnastics officials would like to resolve the claims, a key step in emerging from bankruptcy, before the 2020 Tokyo Olympics get underway in late July.
In Manly’s view, that’s not plausible.
“This is going to overshadow Tokyo,” Manly said. “This is what they chose.”