INDIANAPOLIS (CN) — USA Gymnastics and its insurers have reached a $380 million settlement agreement with sexual abuse survivors that will allow the organization to emerge from bankruptcy.
Arguments in favor of the plan and objections were heard on Monday by U.S. Bankruptcy Judge Robyn Moberly over the course of two hearings in Indianapolis. It was during the second hearing of the day when Moberly gave the court’s final approval of the settlement, saying that plan had been “overwhelmingly accepted by all parties.”
"Today is about the survivors," USA Gymnastics Board Chair Kathryn Carson said in a statement. "They have used their voices to elicit meaningful change and restructuring within USA Gymnastics, and their impact extends far beyond our sport. We are grateful and humbled by their courage and determination to make all sport safer around the world."
The settlement was put forth by USA Gymnastics and a court-appointed committee representing athletes who were sexually abused by former team doctor Larry Nassar. The abuse survivors voted overwhelmingly to approve the plan earlier this month, which brought the plan to the final hearing before the court on Monday.
Now approved, the agreement adds to a $500 million settlement that was reached in 2018 between abuse survivors and Nassar’s former employer Michigan State University. Nassar, 58, is serving a sentence of 40 to 175 years for sexual assault in addition to 60 years on child pornography charges.
After months of negotiations, all but one of the insurance companies with polices that covered the sexual abuse claims had agreed to the USA Gymnastics settlement plan. That lone company, TIG Insurance Company, was one of the parties who objected to the plan prior to the hearing.
However, attorney Catherine Steege, who represents USA Gymnastics, announced at the start of the hearing that TIG no longer objected to the settlement, and she asked Moberly to overrule the few remaining objections.
“I’m happy to report that the parties have reached an agreement on a full settlement,” Steege said.
The state of Indiana had voiced minor objections to the plans, which were quickly overruled by Moberly. However, perhaps the staunchest objections came from the U.S. Trustee Nancy Gargula, who said during the hearing she is standing by the objections raised in her court-submitted brief.
The crux of the U.S Trustee’s objection stems from several third parties that would be released from any further liability under the settlement, but who also have not contributed to the $380 million.
“The U.S. Trustee is acutely aware of the difficult and painful history behind this chapter 11 case and the great harm that many abuse survivors have suffered in the years leading up to this chapter 11 filing,” the filing states. “The plan’s failure to require all released parties to pay meaningful compensation as required by law is no theoretical concern; it ultimately diminishes recoveries for the abuse survivors and other creditors.”
Moberly did not further address these objections in the day's second hearing when she approved the settlement agreement.
Now finalized, the settlement for nearly 500 abuse survivors allows USA Gymnastics to exit bankruptcy and move forward after years of turmoil.
The $380 million price tag is slightly lower than the previously reported $400 million, but still includes several nonmonetary provisions that are meant to make the sport of gymnastics safer.
These measures include a “safe sport policy” which aims to create and enforce new safety and accountability standards for USA Gymnastic clubs. The plan also outlines new streamlined ways for athletes to report misconduct, including an online portal.
USA Gymnastics President and CEO Li Li Leung laid out in a court brief other safety initiatives that she said her organization will take, including changing the way it provides medical care to athletes by creating areas where multiple athletes and members of the medical staff would be present to view all medical encounters.
"USA Gymnastics is deeply sorry for the trauma and pain that survivors have endured as a result of this organization's actions and inactions” Leung said in a statement Monday. "The plan of reorganization that we jointly filed reflects our own accountability to the past and our commitment to the future.”
She added, "Individually and collectively, survivors have stepped forward with bravery to advocate for enduring change in this sport. We are committed to working with them, and with the entire gymnastics community, to ensure that we continue to prioritize the safety, health, and wellness of our athletes and community above all else.”
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