Pretty good read. Reporter looked into MSU and PSU to get a feel for what to expect at OSU. Spoke with victims attorneys and insurance reps. Oh, and over 50 victims are former football players from OSU, some of whom played in the NFL.
Ohio State athlete-abuse scandal: How big will the financial impact be? Who will pay?
James Pilcher, Cincinnati Enquirer
https://www.cincinnati.com/story/ne...use-scandal-how-much-cost-who-pay/3767031002/
Two Big Ten schools have paid more than $700 million to victims of sex abuse scandals linked to their athletic programs.
Ohio State appears likely to join the group, with mediation sessions scheduled next month for athletes who have sued the university, with more lawsuits likely on the way.
So, how large could a settlement for the victims of Dr. Richard Strauss be? Who will ultimately foot the bill? Since the abuse occurred at the main campus, could there be a financial penalty for the Ohio State regional campuses in Mansfield, Marion, Newark, Lima and Wooster?
Based on the examples of Penn State and Michigan State universities, Ohio State could be looking at settlement costs in the hundreds of millions.
Ohio State does carry some legal liability insurance, but it isn't clear yet whether the policy will cover damages from Strauss' case.
If the school isn't fully insured or its insurance claim isn't paid in full, an Enquirer review of the PSU and MSU cases along with interviews of experts shows the long-term financial implications for Ohio State could include:
Support local journalism: Buy a subscription
Here's what happened and some financial issues the school faces in light of the scandal:
177 victims over nearly 20 years
Ohio State officials last week released an independent study detailing that Strauss, a former team doctor and student health center worker, sexually abused at least 177 male students at the school over nearly two decades. Nearly 9 in 10 of the students were student-athletes, primarily from the wrestling, gymnastics and track teams, the report shows.
Aside from the report, a lawyer representing more than 50 former athletes who claim they were sexually abused by Strauss told The Enquirer most of those clients were football players from the school’s storied program.
Trainers, coaches and even high-ranking school officials knew about the doctor's actions but didn't stop him, the report said. The abuse occurred from 1979 to 1997.
The report moved Ohio Gov. Mike DeWine this week to call for an end to the statute of limitation for various sex crimes. Ohio State launched the third-party investigation in April 2018.
In releasing the report, Ohio State President Michael Drake offered “profound regret and sincere apologies to each person who endured Strauss’ abuse.” He called it a “fundamental failure” of the institution and thanked survivors for their courage.
Strauss killed himself in 2005.
Dozens of former football players, wrestlers and track participants hired lawyers and approached the school about the allegations, which led to the $6.2 million independent investigation by Seattle-based law firm Perkins Cole and ultimately the 232-page report released last week.
One of those lawyers is Michael Wright of Dayton, Ohio, who says he represents more than 60 athletes from throughout Ohio and the U.S. He says more than 50 were football players, including some former NFL players. Wright says none of the men is willing to come forward publicly at this point.
"I would not think that Ohio State would have any problem paying these men what they deserve for their suffering. ... It is a huge and very stable financial institution," Wright said, adding that he plans to file lawsuits in federal court if no settlements are reached.
Insurance 'looms large' in mediation
The current plaintiffs are set to meet with a mediator sometime next month.
Kenneth Feinberg, a nationally known mediator who handled the mediation and payouts in the Penn State case as well as many sexual abuse cases against the Roman Catholic Church nationally, says the initial discussions will create some ground rules for a possible settlement.
First, the mediator will have to determine just how much Ohio State has available to pay out.
"That could be everything from general funds to a special football fund to something else," Feinberg said in an interview. "But the point of the discussion is not to determine the source of the funds but how much is available."
Then the discussion will center around who is eligible, how they will need to prove they qualify and whether they would get a chance to appeal any settlement decisions.
While the source of the funds isn't an immediate concern, Feinberg acknowledged that "the insurance issue looms large in these cases."
Who insures Ohio State?
University officials declined to comment for this story. They did confirm Ohio State is not part of a statewide legal insurance coalition that includes 12 other state universities, including the University of Cincinnati and Miami University. The coalition allows the 12 to pool resources when facing legal settlements.
Ohio State contracts separately with its own insurance firm – United Educators of Bethesda, Maryland – to cover itself for any legal liability. The company took over the insurance contract in May 2017.
School officials did not immediately respond to open records requests for those insurance contracts, how much the school pays for legal insurance or what OSU's deductible is.
Normally, such an insurance company would cover any lawsuits against the school. But the incidents happened well before United Educators took over the liability policy.
That means Ohio State could be forced to go back to its previous insurers for coverage, or pay settlements from other sources since Strauss' abuses took place before United Educators took Ohio State as a client.
In addition, an insurance company could balk at paying out a policy if it is proven that Strauss' supervisors and top Ohio State officials knew about the abuse and turned a blind eye.
If so, the university would need to turn to other sources of money, including any cash reserves as well as bonds (borrowing) to cover the costs.
That's why the cases of Penn State and Michigan State can be instructive.
Penn State: $220 million and counting
Penn State has paid out more than $220 million total since 2013 in the aftermath of the discovery that former assistant football coach Jerry Sandusky had sexually abused young boys for years at the university.
Those costs included more than $60 million in direct settlements to the victims, although Penn State's insurance company paid for most of those settlements.
United Educators, however, did not pay for claims stemming from incidents after 2001, when a second incident involving Sandusky was reported to senior Penn State officials.
"We understand that having sexual predators on campus is a risk all educational institutions face," said Robb Jones, United Educators senior vice president and general counsel for resolutions management. "As a group, United Educators has decided that if they don’t do the right thing, then they don’t have coverage."
Penn State used the interest from other loans to also pay for settlements.
Feinberg says it took about a year to complete the settlement mediation with about 30 victims in the Penn State case.
But the school has not yet raised tuition because of those payments, and the Pennsylvania Board of Regents ordered a temporary tuition freeze last year.
No insurance yet for Michigan State
MSU is in the midst of paying out more than $500 million in settlements to victims of Dr. Larry Nassar, who also served as the team doctor for USA Gymnastics.
Nassar was convicted of child molestation in 2017 and sentenced to 60 years in federal prison on top of up to 175 years in state prison. He has been accused of sexually abusing dozens, if not hundreds, of young female gymnasts in his practice.
MSU tried to get United Educators to cover the costs of the settlement.
But the company denied coverage, saying the policy did not cover Nassar's work as a doctor at the MSU hospital, where most of the abuse allegedly occurred against athletes who were not students at the school. United Educators argued the hospital's medical malpractice insurance should instead apply.
MSU has sued the insurance company and the case is still in court. In the meantime, the school has taken out $500 million in bonds to borrow the money needed to pay the settlements to the survivors, some of whom include former Olympic gymnastics stars.
That led rating agencies such as Moody's to lower the economic outlook for the school as well as MSU's bond rating, meaning future loans will come with higher interest rates.
The school has not yet raised tuition because of the payments, but MSU officials have not ruled that out if the insurance company eventually does not pay for the settlements.
Is Ohio State any different?
The lawyer who helped lead settlement talks for many of the MSU survivors also now represents some of the former Ohio State athletes.
John Manley says the similarities between Ohio State and MSU include the fact that Strauss was the team doctor for the U.S. Olympic wrestling team at one point as well.
But he says that Ohio State may have helped its cause in settlement talks by releasing the independent investigation.
"We have still to see an independent review from Michigan State to this day, and the school still is trying to rely on a statute of limitations," Manley said.
"What the university needs to do now is come clean and work with these men and compensate them for their suffering. Most of them still love Ohio State, but they were abused and that stunted their sexual maturity forever."
Manley also says MSU has now suffered "billions in brand damage that will take decades to unravel."
"Ohio State may have the chance to avoid some of that here," he said.
https://www.cincinnati.com/story/ne...use-scandal-how-much-cost-who-pay/3767031002/
Ohio State athlete-abuse scandal: How big will the financial impact be? Who will pay?
James Pilcher, Cincinnati Enquirer
https://www.cincinnati.com/story/ne...use-scandal-how-much-cost-who-pay/3767031002/
Two Big Ten schools have paid more than $700 million to victims of sex abuse scandals linked to their athletic programs.
Ohio State appears likely to join the group, with mediation sessions scheduled next month for athletes who have sued the university, with more lawsuits likely on the way.
So, how large could a settlement for the victims of Dr. Richard Strauss be? Who will ultimately foot the bill? Since the abuse occurred at the main campus, could there be a financial penalty for the Ohio State regional campuses in Mansfield, Marion, Newark, Lima and Wooster?
Based on the examples of Penn State and Michigan State universities, Ohio State could be looking at settlement costs in the hundreds of millions.
Ohio State does carry some legal liability insurance, but it isn't clear yet whether the policy will cover damages from Strauss' case.
If the school isn't fully insured or its insurance claim isn't paid in full, an Enquirer review of the PSU and MSU cases along with interviews of experts shows the long-term financial implications for Ohio State could include:
- Academic budget cuts.
- Lower bond ratings, making it more expensive to borrow money.
- The risk of lower enrollment due to damage to its reputation.
Support local journalism: Buy a subscription
Here's what happened and some financial issues the school faces in light of the scandal:
177 victims over nearly 20 years
Ohio State officials last week released an independent study detailing that Strauss, a former team doctor and student health center worker, sexually abused at least 177 male students at the school over nearly two decades. Nearly 9 in 10 of the students were student-athletes, primarily from the wrestling, gymnastics and track teams, the report shows.
Aside from the report, a lawyer representing more than 50 former athletes who claim they were sexually abused by Strauss told The Enquirer most of those clients were football players from the school’s storied program.
Trainers, coaches and even high-ranking school officials knew about the doctor's actions but didn't stop him, the report said. The abuse occurred from 1979 to 1997.
The report moved Ohio Gov. Mike DeWine this week to call for an end to the statute of limitation for various sex crimes. Ohio State launched the third-party investigation in April 2018.
In releasing the report, Ohio State President Michael Drake offered “profound regret and sincere apologies to each person who endured Strauss’ abuse.” He called it a “fundamental failure” of the institution and thanked survivors for their courage.
Strauss killed himself in 2005.
Dozens of former football players, wrestlers and track participants hired lawyers and approached the school about the allegations, which led to the $6.2 million independent investigation by Seattle-based law firm Perkins Cole and ultimately the 232-page report released last week.
One of those lawyers is Michael Wright of Dayton, Ohio, who says he represents more than 60 athletes from throughout Ohio and the U.S. He says more than 50 were football players, including some former NFL players. Wright says none of the men is willing to come forward publicly at this point.
"I would not think that Ohio State would have any problem paying these men what they deserve for their suffering. ... It is a huge and very stable financial institution," Wright said, adding that he plans to file lawsuits in federal court if no settlements are reached.
Insurance 'looms large' in mediation
The current plaintiffs are set to meet with a mediator sometime next month.
Kenneth Feinberg, a nationally known mediator who handled the mediation and payouts in the Penn State case as well as many sexual abuse cases against the Roman Catholic Church nationally, says the initial discussions will create some ground rules for a possible settlement.
First, the mediator will have to determine just how much Ohio State has available to pay out.
"That could be everything from general funds to a special football fund to something else," Feinberg said in an interview. "But the point of the discussion is not to determine the source of the funds but how much is available."
Then the discussion will center around who is eligible, how they will need to prove they qualify and whether they would get a chance to appeal any settlement decisions.
While the source of the funds isn't an immediate concern, Feinberg acknowledged that "the insurance issue looms large in these cases."
Who insures Ohio State?
University officials declined to comment for this story. They did confirm Ohio State is not part of a statewide legal insurance coalition that includes 12 other state universities, including the University of Cincinnati and Miami University. The coalition allows the 12 to pool resources when facing legal settlements.
Ohio State contracts separately with its own insurance firm – United Educators of Bethesda, Maryland – to cover itself for any legal liability. The company took over the insurance contract in May 2017.
School officials did not immediately respond to open records requests for those insurance contracts, how much the school pays for legal insurance or what OSU's deductible is.
Normally, such an insurance company would cover any lawsuits against the school. But the incidents happened well before United Educators took over the liability policy.
That means Ohio State could be forced to go back to its previous insurers for coverage, or pay settlements from other sources since Strauss' abuses took place before United Educators took Ohio State as a client.
In addition, an insurance company could balk at paying out a policy if it is proven that Strauss' supervisors and top Ohio State officials knew about the abuse and turned a blind eye.
If so, the university would need to turn to other sources of money, including any cash reserves as well as bonds (borrowing) to cover the costs.
That's why the cases of Penn State and Michigan State can be instructive.
Penn State: $220 million and counting
Penn State has paid out more than $220 million total since 2013 in the aftermath of the discovery that former assistant football coach Jerry Sandusky had sexually abused young boys for years at the university.
Those costs included more than $60 million in direct settlements to the victims, although Penn State's insurance company paid for most of those settlements.
United Educators, however, did not pay for claims stemming from incidents after 2001, when a second incident involving Sandusky was reported to senior Penn State officials.
"We understand that having sexual predators on campus is a risk all educational institutions face," said Robb Jones, United Educators senior vice president and general counsel for resolutions management. "As a group, United Educators has decided that if they don’t do the right thing, then they don’t have coverage."
Penn State used the interest from other loans to also pay for settlements.
Feinberg says it took about a year to complete the settlement mediation with about 30 victims in the Penn State case.
But the school has not yet raised tuition because of those payments, and the Pennsylvania Board of Regents ordered a temporary tuition freeze last year.
No insurance yet for Michigan State
MSU is in the midst of paying out more than $500 million in settlements to victims of Dr. Larry Nassar, who also served as the team doctor for USA Gymnastics.
Nassar was convicted of child molestation in 2017 and sentenced to 60 years in federal prison on top of up to 175 years in state prison. He has been accused of sexually abusing dozens, if not hundreds, of young female gymnasts in his practice.
MSU tried to get United Educators to cover the costs of the settlement.
But the company denied coverage, saying the policy did not cover Nassar's work as a doctor at the MSU hospital, where most of the abuse allegedly occurred against athletes who were not students at the school. United Educators argued the hospital's medical malpractice insurance should instead apply.
MSU has sued the insurance company and the case is still in court. In the meantime, the school has taken out $500 million in bonds to borrow the money needed to pay the settlements to the survivors, some of whom include former Olympic gymnastics stars.
That led rating agencies such as Moody's to lower the economic outlook for the school as well as MSU's bond rating, meaning future loans will come with higher interest rates.
The school has not yet raised tuition because of the payments, but MSU officials have not ruled that out if the insurance company eventually does not pay for the settlements.
Is Ohio State any different?
The lawyer who helped lead settlement talks for many of the MSU survivors also now represents some of the former Ohio State athletes.
John Manley says the similarities between Ohio State and MSU include the fact that Strauss was the team doctor for the U.S. Olympic wrestling team at one point as well.
But he says that Ohio State may have helped its cause in settlement talks by releasing the independent investigation.
"We have still to see an independent review from Michigan State to this day, and the school still is trying to rely on a statute of limitations," Manley said.
"What the university needs to do now is come clean and work with these men and compensate them for their suffering. Most of them still love Ohio State, but they were abused and that stunted their sexual maturity forever."
Manley also says MSU has now suffered "billions in brand damage that will take decades to unravel."
"Ohio State may have the chance to avoid some of that here," he said.
https://www.cincinnati.com/story/ne...use-scandal-how-much-cost-who-pay/3767031002/
