Michigan State University has made settlements with five of 13 insurance companies sued in 2018 after they refused to pay out liability claims.
The companies have agreed to pay MSU a total of $113.35 million so far, University Spokesperson Emily Guerrant confirmed. The money is being used to pay back the over $500 million in settlements the university agreed to pay victims of ex-MSU doctor and now convicted sexual predator Larry Nassar in 2018.
MSU has reached settlements with National Union Fire Insurance Co. and American Home Assurance Co. for a combined $5.9 million; Michigan Universities Self Insurance Corp. for $7.45 million; Genesis Management and Insurance Services Corp. for $10 million; and $90 million with their largest carrier, United Educators.
"MSU paid the Nassar settlement to survivors back in 2018. Subsequently, the university has been engaged in lawsuits with various companies over what we feel is money owed to us for the claims we’ve made," Guerrant said in an email. "The insurance companies have disagreed, which is why we’re in court."
The lawsuit, filed in July 2018, says the complaint revolves around the insurers’ failure to provide MSU insurance coverage, pursuant to multiple insurance contracts, for numerous lawsuits and claims against MSU as a result of Nassar’s actions.
According to Guerrant, the first wave of survivors received their payment in late 2018, and the second wave of survivors received payment as their individual cases have reached settlement with the university.
According to the notice of assignment, MSU repeatedly asked the insurers to acknowledge their coverage obligations under their respective policies, and the insurers did not.
The university has yet to settle with: United National Insurance Co., Federal Insurance Co., Westchester Surplus Lines Insurance Co., Ironshore Specialty Insurance Co., The Doctors Co. and Sompo International. According to the court docket, the case against TIG Insurance Co. and American Insurance Co. Corp. has been dismissed without prejudice, so the university could sue them again under the same allegations.
In May of 2018 the university agreed to settle claims of 333 complaints, paying $500 million in settlements, the lawsuit file said. The total in settlements has since surpassed the original $500 million.
By January 2020, settlements reached $498 million. The first settlement with 325 survivors of Nassar's abuse totaled around $425 million. The other $75 million was to be used for the remaining survivors.
MSU and the survivors first agreed to the settlement in May 2018. The Board of Trustees approved a motion to sell bonds to cover the settlement about a month later.
"After the Nassar settlements were made with survivors, the university bonded for additional money to pay these settlements (similar to borrowing). Any money we get through settlements with the insurance companies, the university uses to pay back what we’ve borrowed," Guerrant said.
In September 2019 there was a motion to dismiss the cases, but Guerrant said it was part of the legal process.
The university is still working toward settlements with the second wave of survivors and as of April 2020 they have settles nearly 200 additional claimants from the second wave, Guerrant said.
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