Nasser Lawsuits Force USA Gymnastics Bankruptcy Filing

Nasser Lawsuits Force USA Gymnastics Bankruptcy Filing

Dr. Larry Nasser, the longtime USA Gymnastics and Michigan State University team physician, did more than abuse the trust of hundreds of young gymnasts, including Olympic athletes. He literally abused them and molested them sexually under the auspices of examining them.  

In 2016, Nasser was finally arrested for abusing girls as young as six. In January 2018, he was sentenced for up to 175 years in prison, on top of the 60 years he was already serving on federal child pornography charges. The judge minced no words: “I just signed your death warrant,” she said at the sentencing. Although Nasser will spend the rest of his life in jail, his young victims are still seeking redress for the damage he caused them.

On December 5, 2018, USA Gymnastics filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Southern District of Indiana, the result of more than 100 lawsuits filed by 350 survivors of Nasser’s victims.

There’s another lawsuit involved. The U.S. Olympic Committee (“USOC”) filed a Section 8 decertification complaint against USA Gymnastics to remove it as the sport’s national governing body.

The Cost of Settlements

Earlier in 2018, Michigan State University agreed to pay $500 million to settle many of the lawsuits filed against it. Meanwhile, USA Gymnastics estimated the cost of settling the Nasser lawsuits would cost up to $150 million, an amount characterized by attorneys representing the gymnasts as “laughably low.”

That’s the primary reason for the bankruptcy filing, as USA Gymnastics went through months of mediation without reaching a settlement. At the filing, USA Gymnastics listed its assets as between $50 to $100 million. The organization’s board decided to declare bankruptcy voluntarily and having the court make the decision on claims was the best approach.

When a settlement is reached, the organization’s insurance company will pay the claims, as USA Gymnastics doesn’t have the assets necessary to pay these claims, according to board chairman Kathryn Carson. She was elected chairman just last week.

Revoking Governing Body Status

Carson says she is hopeful the USOC will cooperate, much as the insurance companies have. That cooperation, however, seems unlikely, and should the USOC succeed in revoking USA Gymnastic’s status as the sport’s governing body of its sport, for all intents and purposes USA Gymnastics will no longer exist.

This is at a time when the Tokyo Summer Olympics is less than two years away. However, USA Gymnastic has lost most of its major sponsors, who beat a fast retreat once the Nasser abuse story broke.

Although USA Gymnastics representatives believe their bankruptcy filing puts the USOC’s status decision on hold, that’s not the way the USOC views it. USOC representatives claim the bankruptcy filing doesn’t affect the Section 8 claim.

There is one thing for certain. The bankruptcy filing will put a stop to further discovery and depositions relating to lawsuits filed by Nasser victims, at least temporarily. It’s possible that stoppage could prove permanent.  

A lawyer for many Nasser victims criticized this stoppage, saying it is a “devastating development” in finding out “who knew what and when” relating to the abuse case. He would like Congress to get involved so that those who enabled Nasser would face their day in court.

If you have been subjected to improper sexual conduct in or out of the workplace, contact our sexual harassment lawyers at the Whistleblower Law Group today. We can be reached by phone at 877.858.8018, by email at [hidden email].

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