“The Plan provides the means for settling and paying all Claims asserted against the Debtor.”
That sentence sums up the outcome of Monday’s revised re-organization plan for USA Gymnastics that will begin the process for ending the hundreds of claims against the organization, primarily from the sexual abuse activities of former national team physician Larry Nassar.
Coming into today’s hearing at the U.S. Bankruptcy Court for the Southern District of Indiana, only TIG Insurance Company had not agreed to settle in line with negotiations involving USA Gymnastics, the U.S. Olympic & Paralympic Committee and the Survivors’ Committee, a group of nine women who had suffered abuse and were representing the interests of all abused gymnasts.
But TIG Insurance did reach agreement – announced today – and the Plan notes:
“Through the Plan, the Survivors’ Committee offers to fully and finally resolve all Abuse Claims and the [Future Claims Representative] Claim against the Debtor and its Related Persons, the USOPC and its Related Persons, the Karolyis and their Related Persons, the Settling Insurers, and the Non-Debtor CGL Settling Insurer Covered Persons. This is a compromise resolution of the contested Abuse Claims based upon a reasonable assessment of the risks and potential costs of continued litigation.”
This really is the beginning of the end. In legal terms, the 10 involved insurers will buy back their policies from, primarily, USA Gymnastics and the USOPC with the proceeds going into a Trust that will be used to pay the abuse claimants according to a points scale, and others based on a negotiated settlement of their claim amount. The settlement also includes resolution of the accompanying claims against the Twistars gym in Indianapolis, at which Nassar was also involved.
The amounts that the insurers will pay:
● Virginia Surety: $27.0 million (unchanged from prior)
● National Casualty: $200.0 million (unchanged)
● TIG Insurance: $45.0 million, down from $106.2 million (-58%)
● CIGNA Insurance: $17.5 million (unchanged)
● National Union: $8.5 million (unchanged)
● Gemini Insurance: $2.4 million (unchanged)
● Great American: $35.0 million (unchanged)
● Philadelphia Indemnity: $1.9 million (unchanged)
● Twistars insurers: $2.1 million (unchanged)
The total for the abuse claims is now $339,457,311, down from the $400,659,129 previously demanded. This revised amount was approved by the Survivors’ Committee and will be used for eventual distribution to the abuse claimants.
The “Effective Date of the plan” is in the future and is the date after which distributions can be made. The plan must be officially confirmed by the court and then signed by all of the relevant parties. But this is going to happen fairly quickly.
In addition to the monetary claims, USA Gymnastics has undertaken a lengthy series of actions to prevent a recurrence of the Nassar horror. These were expanded in the final plan, notably:
● “The Debtor has charged all of its employees with supporting and encouraging athlete wellness. For example, the Debtor’s Chief Communications and Marketing Officer is responsible for incorporating the message of safety in all communications, and the Debtor’s Chief of Staff and Human Resources is responsible for ensuring that there is an internal, organizational culture of prioritizing safety. As part of this initiative, all new staff members receive SafeSport training within their first week with the organization.”
● “The Debtor has streamlined the reporting process by creating a dedicated, toll-free number, 833-844-SAFE; the safe sport email address of firstname.lastname@example.org; and online reporting at usagym.org/safesport. In addition to reporting violations of the Safe Sport code to USA Gymnastics, members are required to immediately report suspected child abuse, including sexual abuse, to law enforcement and to the Center [for SafeSport]. The Debtor will set up a reporting portal that is accessible through use of a QRC code and a hotline for ease of reporting by a person or child. The reporting portal and/or hotline will be user friendly and make it easy for even a child to report abuse. The Debtor will promptly provide all reporting information that it receives to the Center. The Survivors’ Committee may make additional suggestions to aid in ease of use of the portal.”
● “USAG will work with the Survivors’ Committee to address issues that currently exist with the Center’s performance and USAG will help facilitate that communication with the Center, including, but not limited to, using its best efforts to arrange for a video conference with the Debtor, the Survivor’s Committee and the Center’s decision-makers and those with the ability to assist in implementing changes to the reporting process and procedures thereafter, including expediting timing of the investigation and its conclusion.”
A November 2020 change in the USA Gymnastics Board structure was noted, in that “At least 1 of USAG’s directors will be a survivor. At least 1 member of USAG’s Safe Sport Committee and at least 1 member of USAG’s Athlete Health and Wellness Council will be a survivor.”
Today’s agreement between all parties will begin the process of closure of the USA Gymnastics bankruptcy case, with the federation due to come out of bankruptcy in early 2022. The abuse scandal will be settled as to the survivors, but the USOPC still has a paused de-certification proceeding against USA Gymnastics; no mention of this was made in the USOPC statement on the agreement. Further, the U.S. Congress could de-certify USA Gymnastics as well, but for now, today’s agreement is a major step forward to continue the healing process that has shaken the U.S. Olympic Movement badly over the past five years.
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