“Michigan State settles Larry Nassar lawsuits for $500 million” (Lansing State Journal):
Michigan State University has agreed to a $500 million settlement with the hundreds of women and girls who say Larry Nassar sexually assaulted them, bringing to a close another aspect of the scandal now in its 20th month.
The settlement and the details were announced in a statement from attorneys representing victims and the university. A portion of the settlement — $75 million — will be held back in the event of future lawsuits filed against MSU over Nassar.
MSU has paid nine law firms more than $11.3 million to represent it and its current and former employees in the civil litigation and state and federal investigations related to Nassar’s crimes.
MSU spokeswoman Emily Guerrant said the university has not determined how it will pay for the settlement or how much will be covered by its insurance providers.
To date, MSU has paid law firms at least $2.5 million to handle insurance aspects related to Nassar’s crimes and the lawsuits.
It’s likely MSU has multiple liability insurance policies and it’s possible for an organization its size to have $500 million in coverage ,although the university’s out-of-pocket costs could still be in the tens of millions, Lars Powell, an insurance expert at the University of Alabama who is not involved with MSU, said Wednesday. It’s likely the insurers were part of the settlement discussions, he said.
“I would guess that whatever settlement they reached would be the amount of insurance they carry,” said Powell, who is director of the Alabama Center for Insurance Information & Research. “They wouldn’t just agree to the settlement, nor would the plaintiffs agree to that settlement, if the insurers weren’t on board.”
The reader comments on the corresponding New York Times article are mostly along the lines of “It should be way more”:
This settlement is about a billion dollars short if they really wanted to send message.
This is a travesty of justice. $1.5mm per gymnast for years of abuse?
So, let me get this straight: $1.5+ million each to 332 victims is supposed to wash away the foul memories of a monster who manhandled and abused them?
There are a few folks who respond to this emotional situation with logical arguments (the sure sign of being a total asshole?):
Lifelong Democrat: Let the funds for this settlement be paid by the athletic department, which has proximate responsibility, rather than from academics. So MSU has to drop some sports, or cut back on athletic “scholarships,” that’s a price they ought to have to pay. (Response from Kara Nemsi: There is no way to separate academic and athletic departments. It will be the students who will pay for this through their tuition and debt.)
(from a man, obviously): I certainly sympathize with the women who were abused, but $500 million could fund a lot of scholarships, new classrooms and laboratories. [He hasn’t visited our Boston suburb. He would learn that building a new K-8 school for 440 town children plus 84 Metco-program children (sorted by race identity) and 20 teachers’ kids will cost roughly $100 million in a best-case scenario.]
This weblog is a safe space for thoughts that would get us all defriended on Facebook. Let’s think about all of the above from the perspective of a Bermuda-based insurer…
If we take the NYT commenters as representative of a likely jury pool, and also look at the total amount (more than $100 for every Michigan resident who has a job), shouldn’t liability insurance rates for employers, universities, etc. rise? Without higher rates, who will rush to line up to pay out the next $500 million? If rates do rise, that has to be passed on to consumers as higher prices, right? Since money invested in the U.S. has to earn a comparable return to what it would yield in a less exposed-to-litigation society, prices must go up to maintain the same profit percentage given a rise in the cost of liability insurance.
Will economic historians look back at the 2010s as the beginning of the Era of #MeToo Inflation?
- How can young Americans adapt to a post-Weinstein world? (Consider Erin Andrews, for example. A jury found that that she had suffered $55 million in damages from being filmed naked by a guest in an adjacent hotel room. As that is typically more than a hotel would have to pay for negligently killing a guest, it would have been impossible to predict an award of this size and, again, likely impossible to insure against.)
- “Fixing Flint’s contaminated water system could cost $216m, report says” (Guardian)
- Some figures on venture capital investment in Michigan companies ($500 million would be roughly two years of all VC funding)