The Sports Examiner

LANE ONE: Stunning joint request by USA Gymnastics and Nassar survivors to order USOPC and insurer CEOs to a settlement conference

The U.S. Bankruptcy Court for the Southern District of Indiana

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It’s a little hard to believe that USA Gymnastics and the survivors of abuse by former team physician Larry Nassar could be on the same side about anything. But, more and more, they are.

Last week, the two sides joined forces to oppose the petitions by 2004 Olympic silver medalist Terin Humphrey and an unnamed former gymnast to join the list of claimants now, having missed the filing deadline by more than a year.

Then, the two groups – USA Gymnastics and the group representing the survivors in settlement negotiations, the “Additional Tort Claimants Committee of Sexual Abuse Survivors” – filed a remarkable joint motion late Thursday evening (20th), asking Judge Robin Moberly of the U.S. Bankruptcy Court for the Southern District of Indiana to order “certain parties to participate in a settlement conference conducted by this Court.

Those “certain parties” are the insurers involved in the case and the United States Olympic & Paralympic Committee.

The motion itself then went into substantial detail about its request, in unusually frank language:

“Judge [Gregg] Zive conducted mediations on August 11 and 12, 2020 with the participation of Mr. [Paul] Van Osselaer. No settlement was reached. The members of the Survivors’ Committee attended the mediation sessions as did USAG’s Chief Executive Officer, Li Li Leung, and its Board Chair, Kathryn Carson. The insurers for USAG and USOPC did not bring their CEOs to the mediation session. Moreover, not all of the carriers brought persons with ultimate, unrestricted settlement authority.”

“The insurance carriers for USAG and USOPC did not comply with this Court’s June 19 Order to make meaningful settlement offers. USAG and the Survivors’ Committee consider the insurance carriers’ positions to be in violation of this Court’s June 19, 2020 Order and believe that the carriers have acted in bad faith with the goal of delaying this case for their own economic benefit.”

“By this Motion, USAG and the Survivors’ Committee seek entry of an order directing the Committee, USAG, USOPC, and the insurance carriers for USAG and USOPC to attend a settlement conference to be conducted by this Court via teleconference.

“The Debtor and the Survivors’ Committee further request that the Court direct each of the insurance carriers to bring their chief executive officers and all other persons necessary for final, unrestricted settlement authority to attend the settlement conference.

“USAG and USOPC should be directed to bring their leadership teams, including their chief executive officers and board chairs. The Debtor and the Survivors’ Committee also request that the Court extend the deadline for filing an amended plan and disclosure statement to a date following such settlement conference.” (Single paragraph expanded for readability.)

The legal argument that followed in the motion also contained the first public statement from the Survivors’ Committee indicating a preference for a settlement:

“Before launching another round of litigation on these and other issues, USAG and the Survivors’ Committee believe that it is in everyone’s best interests for this Court to conduct a settlement conference to determine if costly and protracted litigation can be avoided.”

The motion states that the Bankruptcy Court is in an especially good position to try and bring all sides together since it will not be the site of any trial for any of the abuse cases (most of which will be in state courts in Michigan). And the motion did not mince words about the requested compliance:

“To ensure that all parties participate fully, the Survivors’ Committee and the Debtor further request that the insurance carriers be ordered to bring their chief executive officers and all persons necessary for final, unrestricted settlement authority to the settlement conference. USAG and USOPC should be directed to bring their leadership teams, including their chief executive officers and board chairs.”

A companion filing requested that a hearing be held this Wednesday (26th) to shorten the time required to inform all parties, so that (1) a pre-conference can be held to structure the settlement conference itself and (2) schedule the settlement conference – to be held by videoconference – for sometime in September.

This is a radical change in the flow of this case, which has droned on since the original 5 December 2018 filing date. For months, the apparent goal of the Survivors’ Committee has been to frustrate any settlement attempts by USA Gymnastics and attack not only the insurance proceeds available to USAG, but also the U.S. Olympic & Paralympic Committee, even asking for an advisor to determine how much the USOPC could pay and still function (that request was denied by the Court).

Now, the Survivors’ Committee appears to be willing to settle, perhaps in part due to the passage of time – and a lot more time will pass if there is no settlement and each survivor will have to file her own case – as well as the economic uncertainties on all sides due to the coronavirus pandemic.

Let’s be clear, the money in this case belongs to the multiple insurers and to the USOPC. The proposed re-organization plan submitted by USA Gymnastics and its insurers last February offered a total of $217.125 million to 517 claimants already certified in the case, who would not have to go to trial to claim their shares. The Survivors’ Committee has said that’s not enough and it is not clear what will suffice. But any other money can come only from the insurers – whose exposure is defined by the limits of the policies they issued – or the USOPC.

(And it is worth noting that for the USOPC, neither Chief Executive Sarah Hirshland nor Board Chair Susanne Lyons have “unrestricted settlement authority,” which belongs to the USOPC Board of Directors.)

Replies are due today and ACE Insurance Company (formerly Chubb) filed an objection this morning, stating:

“ACE does not oppose a settlement conference, but does oppose ordering any particular senior executive of ACE or any parent company to participate, as no basis is provided for that extraordinary measure. The Motion contains several vague, unsupported broadsides against ‘the insurers for USAG and USOPC.’”

Judge Moberly has some scheduling options open to her. In addition to the already-scheduled hearing for this Wednesday (26th), there is also a hearing schedule for 3 September, all to take place remotely. Stay tuned!

Rich Perelman

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