Michigan State sues insurance providers for not covering the $500M owed to Larry Nassar victims

Michigan State University is suing more than a dozen of its insurance providers to help cover the $500million settlement the school owes victims of Larry Nassar.

The university reached a settlement with 332 women and girls who were assaulted by the now-imprisoned sports medicine doctor in May.

According to a lawsuit filed by Michigan State on Thursday, none of the 14 insurance companies named have reimbursed the school for any of the costs incurred in the Nassar settlement because they say those claims aren’t legitimate.  

Earlier in the week Michigan State also announced it had halted payments from a separate $10million fund set up for counseling services for the victims amid concerns about possible fraudulent claims.  

Michigan State University is suing 14 of its insurance providers for refusing to cover expenses related to the Larry Nassar case, including a $500million settlement the school owes 332 victims to victims of the disgraced former US Gymnastics team doctor (above)

The suit filed Thursday alleges that Michigan State’s insurance carries aren’t honoring dozens of policies dating back to the late 90s. 

‘We are suing our carriers, including our largest carrier, United Educators, for failing to honor their policies,’ Robert Young, general counsel for MSU, said in a statement.

‘It is disappointing and unfortunate we have to go to court on this matter, but we are hopeful this lawsuit will bring us to speedy resolution and that the insurance companies will honor their contractual obligations.’ 

The suit expresses concern that should the companies refuse to pay, MSU will be on the hook for the more than half a billion dollars of expenses related to the case.  

‘As a result of Defendant Insurers’ breach of their contractual duties under their respective policies, MSU has borne and continues to pay for the entire cost of its investigation and defense with respect to the Underlying Claims, and will likewise bear the full costs of the settlement.’

The largest provider named in the suit is United Educators, which has covered MSU for nearly two decades. 

The court filing says the company ‘actively promoted its policies’ coverage of the types of claims at issue in this case, stating in policy “Coverage Highlights” that its policies cover “vicarious liability for sexual or physical abuse or molestation” and noting on its website that it added personal injury coverage for sexual harassment claims to its general liability policies in 1999 “recognizing that this would have [UE’s general liability policies] encompass the sexual assault-related nature of Title IX claims.”’ 

Interim President John Engler has said all the school’s insurers participated in mediation toward the settlement, which agreed to pay out $425million now and hold $75million in reserve in case other victims come forward.

141 of more than 200 women who were sexually assaulted by Larry Nassar took the stage at the ESPY Awards last week to receive the Arthur Ashe Courage Award

141 of more than 200 women who were sexually assaulted by Larry Nassar took the stage at the ESPY Awards last week to receive the Arthur Ashe Courage Award

In addition to the settlement money, $10million was allocated to the Healing Assistance Fund to provide the sexual assault victims with counseling.

Around $1.1million has been distributed from that fund since June 30, but on Wednesday payments were put on hold after administrators flagged up possible fraudulent claims. 

MSU spokeswoman Emily Guerrant says stopping payments will allow an investigation into the issue. 

An attorney for 180 of the victims John Manly responded to the temporary discontinuation saying he has clients with “some very serious psychological issues” as a result of their abuse.

‘When you say: “We are going to pay your bills,” the victims are entitled to rely on that,’ he told CNN. 

‘They are on medication and receiving therapy two to three times a week, all paid for by the fund.’

Manly added that potential fraud should be rooted out, but the victims should not be punished in the process.  

Nassar was in the news this week after his public defender filed a motion for the disgraced former physician to be re-sentenced by a new judge.

He is currently serving a 60-year federal prison term for child porn possession, then 40 to 175 years in state prison for the sexual assaults. 

The court documents filed Tuesday claim that the 54-year-old was brutally assaulted in May soon after he was released into the general population of prisoners at the United States Penitentiary in Tucson.


‘My family and I will be withdrawing for the remainder of the week to take some much needed time together. This process has been incredibly difficult on all of us, including our young children, so for the remainder of the week I will largely unavailable for comment or appearances. However, my official statement regarding the settlement with MSU is below.

‘I am very grateful to have reached a settlement with MSU that reflects the incredible damage which took place on MSU’s campus. I am thankful that the litigation phase is over so that my sisters and I can move forward.

‘I remain deeply disappointed at the missed opportunity for meaningful reform at the University. My choice to come forward publicly against Larry, and later against the institutions that allowed him to prey on children for decades, was motivated by the need for accountability and reform, so that other little children don’t live the nightmares we lived. This is a passion all of the Sister Survivors share, and one which has not diminished or changed. “Moving forward”, for myself and many others, means continuing to advocate, call for accountability, and stand for those who have yet to have a voice. This includes continuing to advocate for desperately needed accountability and change at USAG and in the USOC. I remain disappointed that resolution was not reached with these other organizations who also enabled a serial predator for decades.

‘I am deeply aware that behind me and my sisters are hundreds of survivors who still have no voice. Who still have no access to the court systems because of outdated and archaic criminal and civil statutes of limitations – some of the worst in the entire country. I renew my call, therefore, for the MI House of Representatives to stand for these survivors, ask themselves “what is right?” and “What does the data truly show?”, and pass the reform package we so desperately need as a first step in legislative reform.

‘The litigation phase is over, but the fight for change and accountability, the fight to give survivors a voice and protect the next generation, has only just begun. We intend to stand united with, and for, ALL survivors of abuse as we work together towards these goals.

‘I am also deeply grateful for the journalists who worked so tirelessly to find and tell the truth so that reform can come. Please continue this fight with us. Sexual assault and the cultural and institutional dynamics that allow it to flourish are everywhere, and need to be uncovered and exposed in all their ugliness.

‘To everyone who has supported us and pushed with us for reform, please know how much your voices have meant to me, and to all of us, through this process. Please keep standing with us – there is so much left to be done.’

-Rachael Denhollander 

Read more at DailyMail.co.uk