Sexual abuse survivors have made it clear they will not accept a settlement offer from USA Gymnastics that releases the U.S. Olympic and Paralympic Committee (USOPC) without it making a significant financial contribution.

They have a powerful ally: the judge overseeing the case.

During a Feb. 10 status call, U.S. Bankruptcy Judge Robyn Moberly took the USOPC to task, saying it needed to be “actively participating, particularly with their pocketbook.”

“It isn’t news to anybody on this phone call, nor is it news to me, that the U.S. Olympic Committee needs to be an active participant, and I mean beyond just throwing in their insurance coverage in this,” Moberly said, according to a transcript of the call obtained by USA TODAY Sports.

(The U.S. Olympic Committee is now known as the U.S. Olympic and Paralympic Committee.)

The USOPC disagreed with Moberly’s characterization in a response provided by spokesman Jon Mason, and said she might not be aware of its involvement in the proposed $215 million settlement. “Virtually all” of the funds for the settlement are from policies that insure the USOPC, it told USA TODAY Sports, and a “substantial contribution” are from policies that only cover the USOPC.

The USOPC said it could not give a dollar figure, or say what percentage of the settlement it is solely responsible for, because the court has ordered that mediation proceedings remain confidential.  

“We understand the judge has never heard directly from the USOPC on these issues, and so may not have the benefit of a complete set of facts,” the USOPC said in response to a series of questions from USA TODAY Sports. “But we have been an active participant in the mediation for nearly a year, and we look forward to the opportunity to clarify any issues in these proceedings.”

Olympic champions Simone Biles and Aly Raisman are among more than 500 girls and young women who have sued USA Gymnastics, saying they were sexually abused by Larry Nassar, their coach or someone else affiliated with the sport. The lawsuits were put on hold when USA Gymnastics filed for bankruptcy in December 2018, and the federation must reach a settlement with survivors as part of its plan to emerge from the proceedings.

If not, the judge could dismiss the bankruptcy and allow the lawsuits to resume.

"Still want answers from USAG and USOPC. Wish they BOTH wanted an independent investigation as much as the survivors & I do," Biles said Saturday on Twitter, posting as she traveled to a national team training camp.

"And don't THEY also want to know HOW everything was allowed to happen and WHO let it happen so it NEVER HAPPENS AGAIN?" Biles added. "Shouldn't people be held accountable?"

USA Gymnastics announced Jan. 30 that it was offering the survivors $215 million. In a Feb. 21 disclosure letter that spelled out the specifics, the federation said the sum would be $217.125 million, with the insurers for a gym owned by former U.S. Olympic coach John Geddert contributing $2.125 million.

The payments would be distributed based on “the geographic location of the abuse.” Gymnasts who said they were abused at the Olympics, a national team training center or a national team event would receive the most money, roughly $1.25 million each before attorney's fees. Gymnasts abused at a USA Gymnastics-sanctioned event would get almost $509,000 each, while gymnasts abused at a “non-USAG location” – the gym where they trained, for example – would get a little less than $175,000 each.

Attorneys representing the survivors criticized the tiered system, calling it outrageous that payments would be determined based on where the abuse happened rather than the abuse itself, as has been the case in many other lawsuits.

“That’s the grossest thing I’ve ever heard, and an insult,” said John Manly, who represents many of the women abused by Nassar, the longtime team physician for USA Gymnastics and Michigan State.

But the larger issue is with the release of third-party defendants, which essentially protects them from any future legal action by the survivors.

The USOPC is among those that would be released in the proposed settlement, along with former USA Gymnastics CEO Steve Penny;former U.S. national team coordinators Martha and Bela Karolyi; and Don Peters, a former coach who has been banned for life for sexual misconduct involving a minor.

“That’s like the Weinstein Co. saying you can’t sue Harvey if we pay you,” Manly said, referring to the Hollywood producer who was convicted Feb. 24 of rape and sexual assault after dozens of women came forward to accuse him of abuse.

“No. It doesn’t work that way.”

Participating with their pocketbook

While the practice is not uncommon in bankruptcy cases involving lawsuits, legal experts said very rarely are releases granted without something being given in exchange. Money for the settlement, perhaps. Or information about the wrongdoing that led to the original lawsuit.

It is, essentially, a hedging of bets against the possibility of being found liable for greater damages and having to disclose sensitive information, and the court takes a dim eye of third parties getting off too easily.

“The law generally requires if a third party is going to get released, you have to make a substantial contribution in exchange for that release. You don’t just get it for free,” said Rob Kugler, a Minneapolis attorney who has represented sexual abuse survivors in lawsuits against the Catholic church.

“It’s not clear to me that these third parties are making any contributions.”

Indeed, the only third party who clearly has is Geddert, currently suspended pending an investigation for allegations of misconduct by the U.S. Center for SafeSport.

The USOPC, like USA Gymnastics, appears to be making the argument that the only money it has to offer for a settlement is through its insurance coverage. But the survivors and their attorneys aren’t buying that, a doubt echoed by Pamela Foohey, an associate professor of law at Indiana University who specializes in bankruptcy, commercial law and consumer law.

USA Gymnastics and the USOPC might be not-for-profits, but that doesn’t mean they don’t make money, Foohey said. Sponsorship deals, TV contracts and ticket sales all generate income, and the USOPC had enough money to give disgraced former CEO Scott Blackmun a $2.4 million severance after he stepped down in February 2018.

The USOPC brought in almost $323 million in 2018, according to its tax form. It said it had net assets of nearly $266 million.

There’s no reason both organizations can’t use their future earnings to fund a bigger settlement, Foohey said. Which is what Moberly seemed to be indicating on the call earlier this month.

“Unless … they have absolutely no exposure whatsoever, and their lawyers are telling them, you're good to go, because you're as pure as the driven snow on this issue, then they ought to be, as I said, actively participating, particularly with their pocketbook,” Moberly said of the USOPC.

“So that's a communication that needs to be made to them if they're not on the phone today.”

While the USOPC said it is prepared to go to trial if Moberly would dismiss the bankruptcy case, it also said there is “further room” to negotiate.

“We believe everyone would be better served by a settlement and hope the committee will engage in negotiations,” the USOPC said.

Manly and Brian Cornwell, who represents another large group of survivors, declined to put a dollar figure on an acceptable settlement. In 2018, Michigan State agreed to pay survivors $500 million.

More than money

But the settlement is about more than money, Manly and Cornwell said. Survivors have been asking for a full accounting of what USA Gymnastics and the USOPC knew about Nassar, as well as why neither organization did more to protect young athletes from abuse.

They also want Penny and the Karolyis, who they say fostered the culture that made the sport ripe for abuse, to face some kind of reckoning.

"This is a massive coverup," Raisman said Saturday, blasting the USOPC and USA Gymnastics in a series of tweets. "The only way for anyone to know what really happened is if someone forces them to release ALL documents & data to investigate."

As it is written now, however, the settlement does not include anything like that.

“That’s a classic symptom in the culture of hiding sexual abuse,” said Tim Hale, an attorney who has represented hundreds of sexual abuse survivors in lawsuits against the Boy Scouts and several Catholic organizations.

“Because the hierarchy doesn’t want anyone to know.”

According to the disclosure letter, the survivors have until May 8 to vote on the settlement offer. But it’s unlikely to even get that far.

There is a hearing later this month on a motion to dismiss by the survivors, and Moberly could decide to grant that.

More likely, there will be an agreement to return to mediation.

“I think what you’re going to see here is a lot of arguing back and forth, and the survivors committee pushing the third parties to both give more disclosures and contribute more money,” Foohey said.

“I would not expect it to settle anytime soon,” she added. “Particularly given the judge is indicating she wants the parties to negotiate more.”