USA Gymnastics Bankrupt in Nassar Lawsuits

As USA Gymnastics is now discovering, defending a sexual abuse lawsuit can be a financial nightmare. While lawsuits related to the alleged abuse of sports doctor Larry Nassar continue to be filed against the organization, USA Gymnastics filed bankruptcy in the Southern District of Indiana in early December.

Growing Number of Nassar Lawsuits

Over the last year, more than 100 lawsuits have been filed related to the alleged sexual abuse committed by Dr. Larry Nassar, longtime team physician for USA Gymnastics. Nassar, a physician based at Michigan State, oversaw medical treatment for young gymnasts in the USA Gymnastics system.

Over 350 gymnasts have identified themselves as victims of Nassar’s sexual abuse, including several high profile Olympic athletes.

USA Gymnastics is also named as a defendant in the Nassar lawsuits, based on its alleged failure to protect the young athletes from sexual abuse. In addition to the private lawsuits, the U.S. Olympic Committee has filed a Section 8 Complaint to remove USA Gymnastics as the national governing body for the sport.

The U.S. Olympic Committee is responsible for supervising those organizations that provide support, protection, and services to United States Olympic athletes. It is the Committee’s position that USA Gymnastics no longer has the capacity or capability to do so, based on the extent of the Nassar sexual abuse scandal.

As a result of similar lawsuits filed against Michigan State, the university agreed to pay $500 million to Nassar abuse victims as part of a victim’s compensation fund. USA Gymnastics estimates its costs to settle the matter with Nassar victims could possibly exceed $100 million.

USA Gymnastics has been unsuccessful in its attempt to reach a settlement through mediation, with the Nassar lawsuit plaintiffs relying on its insurance carriers to provide the necessary funds. The organization continues to negotiate policy limits with its insurance carriers.

Impact on Pending Lawsuits

Upon filing of the bankruptcy petition, all pending legal and administrative claims against USA Gymnastics have been stayed. The organization believes the bankruptcy filing will expedite payments to the sexual abuse survivors, although attorneys representing Nassar’s victims remain skeptical.

For many of Nassar’s sexual abuse victims, the bankruptcy filing continues a pattern of failure on the part of USA Gymnastics to protect the young athletes from abuse.

Insiders believe USA Gymnastics’ filing for bankruptcy was a direct result of the U.S. Olympic Committee’s decision to begin the process of revoking the organization’s status as the sport’s national governing board. Without that role, USA Gymnastics would face almost certain dissolution.

Under Chapter 11 bankruptcy protection, no assets can be taken away from the organization by any debtor, including the U.S. Olympic Committee, which has its own complaints filed against USA Gymnastics. Without its title of national governing board, it would be extremely difficult for the organization to raise revenue or attract promising Olympic-level athletes.

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