MSU settles
School pays Nassar victims $500M.
A grim process will be undertaken in the coming weeks to determine how much each of the roughly 300 survivors of Larry Nassar’s sexual assaults will receive as part of the $500 million settlement with Michigan State University.
While the news release that announced the settlement Wednesday didn’t state how the process will work, the case likely will follow similar abuse cases — like those settled by the Catholic church across the country — involving dozens of victims. An independent arbitrator, typically a retired judge, is brought in to assign a dollar amount that each abuse survivor will get.
John Manly, who represents more than half of Nassar’s known victims, told USA TODAY he couldn’t give details of exactly how the allocation process will work in this case, but he summarized how similar cases he’s worked were handled.
“There are going to be a variety of factors that will be taken into account,” said Manly, who represented many of the more than 500 abuse victims who settled with the Archdiocese of Los Angeles in 2007. “The number of times somebody is abused doesn’t necessarily mean he or she will get more. Some people are abused once and are never the same. I’ve had plaintiffs who were abused on multiple occasions who ended up better off in life than a person abused once. You have to look at a lot of other factors.”
James White, another attorney who represents Nassar’s victims, also declined to talk about the settlement specifically, but he said his past cases were handled in the same way Manly detailed.
“There’s a review by a third party where different variables will be taken into account and (an arbitrator) makes recommendations,” White told USA TODAY.
Those variables are plentiful and in abuse cases often hard to quantify.
“People think there’s some matrix the arbitrator uses to make a decision,” Raymond P. Boucher, who sued and settled with three Catholic archdioceses in Southern California. “You can’t just divide it up evenly and give everyone the same, like what happens in class-action lawsuits against pharmaceutical and medical device companies.”
The arbitrator, typically chosen by lawyers representing the victims, has access to the case files for each victim that detail the abuse. If there are questions about a victim’s case, the arbitrator could request more information from the lawyer representing that victim, Boucher said.
“They’re going to look at the nature and extent of the abuse and what psychological, physical and emotional im- pact it had,” said Boucher, who was not connected to any of the lawsuits involving Michigan State. “They’re going to want to know what lasting legacy that abuse had on the victim.”
The process could be completed in as few as three months. Boucher said the money will likely be fully distributed by year’s end.
Once the victim agrees to the allocation process, he or she is bound by whatever amount the arbitrator sees fit to award. The victims in the Michigan State case could opt out now and sue Michigan State individually.
A total of $425 million will be available to the current pool of victims who sued and another $75 million is set aside for victims who have yet to come forward. Of the $500 million, about a third will go to legal fees.
“There isn’t enough money in the world to compensate what was done to these victims,” Boucher said. “There’s no money that can bring them back to a place where they were before they were abused. Any dollar amount would be inadequate, but at the same time that’s the best our system can do.”
Interim Michigan State president John Engler has long said the costs will be covered by tuition and state aid. Lawmakers have said no state aid should be used.
The school 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. If MSU’s reputation has suffered from the scandal, it could see a drop in the number of students enrolling, which could lower that income.
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.