How Much Is a Little Girl Worth?: The Painful Financial Fallout of the Larry Nassar Case
Jan. 24, 2018, Rachael Denhollander walked into a Michigan courtroom to speak about the sexual abuse she suffered as a child from Larry Nassar. She was the last in an extraordinary procession of nearly 150 women to offer an impact statement at the sentencing hearing of the longtime USA Gymnastics and Michigan State University doctor.
Standing at a podium facing Nassar as her words were beamed out worldwide, Denhollander, a former gymnast—and now herself an attorney, an advocate for child safety, and a 34-year-old mother of four—concluded her statement with a question:
“How much is a little girl worth?”
For decades, Nassar’s work as a doctor treating athletes at Michigan State University (MSU) and for USA Gymnastics helped give him unfettered access to girls and young women that he serially sexually abused. Since Denhollander became the first survivor to publicly accuse the doctor of abuse, in September 2016, an estimated 500 women have come forward saying that they, too, were abused by Nassar. Some experts on the case think that number could eventually pass 1,000. In July 2017, Nassar pleaded guilty to child pornography charges, and months later, he pleaded guilty to multiple counts of sexual assault of minors. He will likely spend the rest of his life behind bars. In May 2018, MSU agreed to pay a $500 million settlement to victims who had sued the university, among the largest sums ever paid in relation to sex-abuse claims.
As a consequence of that financial victory, Denhollander’s question has taken on a painfully literal meaning.
While the settlement represented the end of one long, difficult story, it signaled the beginning of another. Survivors like Denhollander have been deep in negotiations with lawyers and mediators over the disbursement of the settlement funds. In a process that involves an awkward combination of apologetic recognition, dispassionate mathematics, and, often, a torturous recounting of abuse, hundreds of women are learning what their suffering was “worth” in dollar terms.
Roughly a year into the mediation process, many of the survivors have now received their answers—in decisions about their payouts, known as allocations. For one woman, it was a low five-figure sum that will help her retire credit card debt and relocate; for another, it was an amount in the high six figures, enough to cover bills related to her mental health treatment and to enable her to work with other survivors. For a third, it’s a donation to a nonprofit she cares about. For each, the check will be worth considerably less than its face value, after taxes and attorneys’ fees. And for many, the money itself is a hurtful reminder of the abuse that took place.
The idea of a process that attaches financial value to acts of abuse is appealing to no one, presenting a challenging tangle of money, law, and trauma. Advocates and survivors are the first to say that settlements are more about a sense of justice than about money; no sum could ever compensate for the damage done. At its worst, the process can feel like an invasive haggle that reduces the experience of profound harm to a flat dollar figure. “It’s the trauma you went through, basically, being ranked against [that of] other girls,” says Grace French, a Nassar survivor who works in marketing and is a cofounder of the Army of Survivors, a nonprofit that helps those who have experienced abuse. “I do think a lot of girls are still struggling with that after getting that number.”
Still, there’s an undeniable need for a systematic way to quantify the harm of abuse. The funds can enable survivors to afford therapy, help with medical bills, or provide reimbursement for lost work time, as well as acknowledge pain and suffering. And for institutions accused of harboring or covering up for an abuser, settlements offer an opportunity for restitution. It’s a chance to acknowledge the harm they’ve enabled and commit to a new, better path—but also to close the book on their liability, since plaintiffs who receive disbursements generally agree not to sue again.
The disbursement talks also bear an important distinction: They’ve become arguably the most visible example to date of how the process works in sex-abuse cases. Unlike plaintiffs in past settlements, many Nassar survivors haven’t signed the “silence clauses,” or nondisclosure agreements, that are often insisted upon by the institutions making the payments. (Indeed, the magnitude of Nassar’s admitted crimes may have taken away any leverage MSU might have had to press for such clauses.)
Rachael Denhollander, a former gymnast, was the first woman to publicly accuse Larry Nassar of sexual abuse.
Simon Bruty—Sports Illustrated
Denhollander and French and many other survivors have retained the right to talk not only about the abuse they underwent but also about the difficulty of getting financial redress—and they’re using their voices. That, in turn, has put them in the vanguard of a broader trend catalyzed by the #MeToo movement: a growing pressure on both not-for-profit institutions and private companies to publicly acknowledge and address problems of abuse and harassment within their ranks.
“It’s not a lawyer’s decision; it’s a client’s decision whether to accept or reject an offer,” says David Mittleman, a Lansing-based lawyer who represents more than 100 of the women in the MSU settlements. “And many want to be on the side of alerting the public.”
Over the past 18 months, Denhollander and dozens of other Nassar survivors spoke with me about their experiences, offering a detailed description of a corner of the law that is often shrouded in secrecy. Some elements of any settlement process, including details of specific conversations between survivors and mediators, are shielded by legal confidentiality rules. But together, the survivors’ accounts offer a close look at the protocols of a system that can wield tremendous influence, in ways that victims of abuse can find both empowering and upsetting.
“It’s fair to say that MSU’s approach to the settlement and related lawsuits is a legal-first approach,” Emily Guerrant, a spokeswoman for the school, said in a statement. “I think we, as a university, have learned a lot about dealing with sexual assault and survivors, and realize that we’ve made mistakes during the past few years in how survivors were treated.”
Denhollander says that she’s keenly aware of the system’s flaws and equally aware that the vast majority of sexual-assault survivors seldom receive any remedy, in or out of the justice system. “That’s something that societally we need to wrestle with—that that kind of sacrifice is what it takes” to win redress, she says. “That’s what sexual-assault survivors are up against when they go to report their abuser.”
Distributing funds from a settlement is at best messy. “I don’t think I’ve ever done a compensation program where there hasn’t been some criticism,” says Kenneth Feinberg, a former adjunct professor at Harvard, Columbia, and NYU law schools. “It comes with the territory.”
Feinberg is the closest thing the world has to a dean of the subject. He was the “special master” on the case that set the template for modern settlements—the Agent Orange litigation in the 1980s, which ended with Dow Chemical, Monsanto, and other companies creating a fund for Vietnam War veterans who had been harmed by the defoliant. Since then, Feinberg has overseen a fund that distributed $7.14 billion to families who lost loved ones in the Sept. 11, 2001, terrorist attacks (a process Fortune documented in a 2002 feature); he’s currently working with survivors of sexual assault in cases involving the Catholic Church with co-administrator Camille S. Biros. “Money is a very poor substitute for damage, for loss, but that’s the American system,” he says. “Offering a family $5 million for the death of their son at the World Trade Center, it’s rather hollow.”
A mediator’s goals, Feinberg notes, include being transparent with survivors about the workings of that system—even when that involves assigning numbers to the immeasurable. The range of settlement sums is usually determined by plaintiff and defense lawyers, but it’s the mediator’s discretion to determine where an individual’s compensation falls. In administering the 9/11 fund, for example, Feinberg set a flat rate of $250,000 for pain and suffering for each victim and an additional $100,000 for each surviving spouse and dependent, avoiding the dilemma of determining whether one suffered more than another. For each victim, he then added factors such as likely lost wages based on Bureau of Labor Statistics data. The result, he says, was 5,300 eligible claims with no two identical amounts. “You have to have a methodology,” he says.
In sex-abuse cases, however, methodology can seem simplistic to the point of cruelty. The Altoona-Johnstown diocese of the Roman Catholic Church has reportedly paid out more than $15 million to survivors of abuse by its clergy and other employees over the decades. In 2016, in a blistering report criticizing the diocese’s handling of the cases, the Pennsylvania state attorney general’s office published a chart that one bishop had used to determine payouts. The chart, which the report blasted as an example of “cold bureaucracy,” featured two columns: “Level of Abuse” and “Range of Payment.” One line reads, “above clothing, genital fondling, $10,000–$25,000.” Another reads, “Sodomy; Intercourse, $50,000–$175,000.”
Denhollander (left, at podium) reads her impact statement at a sentencing hearing for Larry Nassar.
Jeff Kowalsky—AFP/Getty Images
In practice, the harmful effects of sexual abuse spread far beyond the acts themselves, encompassing a spectrum of emotional trauma, disability, and physical pain. Distinctions among kinds of suffering do matter, with huge consequences for survivors. But at some point, experts say, settlement negotiators have to agree on how to translate those distinctions into raw numbers. Actuaries for insurers sometimes devise point systems to determine how to allocate payouts. Those systems are often determined based on “peer” cases, with criteria intended to quantify how a survivor has been affected since the assault, and to project how the assault could continue to affect that person.
The $500 million Michigan State settlement in the Nassar case allocates $425 million to more than 330 claimants who came forward to sue before Dec. 6, 2017; the remaining $75 million is set aside for survivors who came forward after that date. (There are already 160 people in that second wave, sparking concerns about whether the fund is sufficient.) Roughly one-third will pay for fees for attorneys, including for time spent in the settlement process, according to someone familiar with the matter.
The task of distributing the $425 million pool falls to William Bettinelli, a former California judge who was appointed last July by the federal district court overseeing the case. (He is being paid from the overall settlement sum, as well.) In roughly 30 years as a professional mediator, Bettinelli has mediated cases involving catastrophic personal injuries, wrongful death claims, and environmental disasters, according to his firm’s website; his office did not respond to multiple requests for interviews over several months.
According to people familiar with the MSU case, Bettinelli has authorization to approve payouts of up to the low seven figures per person (before taxes and fees). People with knowledge of the process say Bettinelli is following an “allocation protocol” that includes conducting phone interviews with survivors to assess their settlement amount. Among the questions Bettinelli may ask: whether the abuse happened to them as minors, the duration and frequency of the abuse, and the nature of the abusive acts themselves. The mediator can also take into account such factors as the risk a survivor incurred by coming forward or any retaliation she faced for blowing the whistle.
In many cases, a survivor may bring forward evidence that wasn’t used in Nassar’s trials—psychologist evaluations and bills, for example. Several survivors submitted journal entries documenting the toll of abuse. New evidence can be submitted to the mediator as paperwork, be brought up in a meeting, or both.
Grace French is one of several Nassar plaintiffs now doing advocacy work for other abuse survivors.
Photograph by Ali Lapetina for Fortune
One goal of a settlement process is that survivors won’t have to relitigate their case in order to receive their claims. Still, claimants often find themselves recounting horrific details of their experience—especially if that information doesn’t already exist in a trial record. And those conversations, even when a survivor stands on a mountain of evidence, can be awful.
Among the harmful impacts that Mittleman, the lawyer for many of the plaintiffs, says his clients have reported are attempted suicide, bills for stays at psychiatric hospitals, hair loss, gastrointestinal issues, and sleep disturbance. It’s not uncommon for therapy for those coping with the consequences of abuse to cost $150 to $300 per session, with multiple sessions a week or month, often for years. Jobs have been lost, marriages frayed.
The math of a settlement process ideally takes all of this into account. But Mittleman and other advocates say that talks sometimes place excessive emphasis on the number or duration of the assaults. In the context of wide-ranging harm, Mittleman asks, “Is 60 or 100 penetrations really worth more than one time? Because in my opinion, one time is too many.”
One of the aims of a mediator or special master is to be both fair and swift. Meetings to determine a survivor’s payout—the worth of her suffering—can be surprisingly short, and in most cases, the mediator’s decision isn’t open to appeal. The number is final.
Some Nassar survivors I spoke with felt that the amount of money they received was fair and appropriate; others didn’t. And for many, a newly difficult phase began after the settlement—as they realized that money alone couldn’t right what had been made wrong.
Donna Markham’s daughter Chelsey was one of countless girls who bounded into gyms in Michigan in the early 1990s in hopes of making an Olympic team, like the heroes who graced the posters on her bedroom wall. As a child, prosecutors allege, Chelsey was sexually assaulted by Nassar during a doctor appointment. After the abuse, she spiraled into drugs, alcohol, depression, and angry spells that culminated with her taking her own life in 2009. She was 23 years old.
Markham has received her allocation, and she’s one of several survivors who felt perplexed by the math behind the payout and overwhelmed by the paperwork and logistics. Abuse “just eats away at your self-worth, your self-esteem,” Markham says. That fact, so clear to her, was something she felt the process couldn’t account for. “You can’t put a price on a human life,” Markham says. “And how do you make a determination on an award settlement when Chelsey had her entire life ahead of her?” In Markham’s telling, the most important outcome of the process wasn’t monetary: She has forged strong bonds with other women involved in the case and is engaged in advocacy work for those who were harmed. “I didn’t expect to get anything,” Markham says. “I just wanted Chelsey’s story to be told.”
Morgan McCaul, now a student at the University of Michigan, received a payout earlier this year.
Simon Bruty—Sports Illustrated
Some survivors opted not to talk with Bettinelli. Having already testified in legal proceedings or given impact statements, they could let those records speak for them. Morgan McCaul, who was a high school student when she joined the group suing Nassar, is now enrolled at the University of Michigan: “I just felt like [a meeting] would be another thing on my plate that was unnecessary,” she says. McCaul received a payout earlier this year. “My life has not changed” as a result of the money, she says. “But I do know that I had a lot of anxiety in the year and a half leading up to the settlement disbursement, asking myself if it’s ethically sound to be handed a check for something that can never be quantified.” McCaul has channeled that energy into activism, to “leverage this horrible experience into something that can help other people.”
While nothing bars MSU settlement participants from publicly disclosing the sum they received, doing so is not considered a best practice: Talking about the number can make survivors prey to fraud or to criticism that they were fiscally motivated. It can also create conflict with friends or family—and with fellow survivors. Some survivors in the MSU case describe a catch-22 inherent in the process: Those who were resilient and fortunate enough to find help earlier, or to avoid the most severe trauma, sometimes felt that saying so was against their financial self-interest—or, conversely, that a larger check might mean you suffered more than most. That sense of awkward comparison, survivors say, adds to the pain of knowing that the allocation money is, in a sense, evidence of the abuse. As French, the Army of Survivors cofounder, says, “You cash that check, and it feels dirty.”
Olympic gold medalist McKayla Maroney says that she was one of the girls whom Larry Nassar preyed upon. Before his arrest, she received a $1.25 million settlement from the national governing body for the sport, USA Gymnastics—one that included a nondisclosure provision. But after his attacks came to light, the organization faced criticism for effectively covering up Nassar’s behavior by gagging Maroney, and it said that it would not enforce the silence clause.
The cases against Nassar have played a crucial role in intensifying scrutiny of the use of nondisclosure agreements in abuse and harassment cases. Such NDAs have historically been ubiquitous—notably in agreements involving abuse in the Catholic Church. In the private sector, the Vanderbilt Law Review points to data showing over one-third of the American workforce is subject to NDAs. There, critics note, nondisclosure language originally intended to protect trade secrets has been stretched to curb an employee’s right to speak out about workplace issues including sexual harassment.
“So much has been shielded by confidentiality,” says Minna J. Kotkin, a professor at Brooklyn Law School and director of its Employment Law Clinic. “We’re just beginning to know the start.”
The fact that many MSU settlements didn’t require NDAs reflects a broader shift in thinking about abuse, says Kotkin. What were once thought of as private matters that pitted the reputation of vulnerable individuals against those of more powerful authority figures or institutions are coming to be seen as a societal toxin or contagion—the kind of threat about which others should be warned.
It’s difficult to measure how widely this effect is playing out at companies. Some advocates warn that taking silence clauses completely off the table could work against survivors, by encouraging abusers to litigate rather than settle. Still, 12 states, including New York and California, have passed laws to narrow the scope of NDAs in harassment and sexual-assault whistleblowing. Microsoft said in late 2017 that it had removed NDAs involving employees who speak up about sexual harassment; other companies have followed suit, some after scandals within their ranks.
“It’s the trauma you went through, basically, being ranked … I do think a lot of girls are still struggling with that.” – Grace French, Nassar survivor and cofounder of nonprofit Army of Survivors
Feinberg, the mediator, argues that the onus for silence should be reversed. “I think it’s very, very important that the institution agree to confidentiality,” he says. “But if the individual victim wants to [speak out], I think that’s to be encouraged.” That represents a shift in the power balance, from the institution to the survivor.
Painful though it will be, many Nassar survivors will likely be speaking out for a long time. Yet to be resolved is whether MSU will expand its settlement fund if more victims come forward, and how it would pay additional costs. Also looming are lawsuits against USA Gymnastics and the U.S. Olympic Committee (USOC). USA Gymnastics enlisted Nassar as a team doctor for years and now faces 100 lawsuits from roughly 350 plaintiffs. In December it filed for Chapter 11 bankruptcy, a move that put the brakes on both the lawsuits and mediation discussions. (Leslie King, a spokeswoman for USA Gymnastics, says that the organization “has focused on keeping athlete safety and well-being at the forefront of its efforts.”)
Wrangling with these institutions has led Rachael Denhollander to put the settlement process on a long list of issues tied to abuse cases that she believes should change. At worst, she argues, the payments absolve big players of examining their own cultures, giving them in essence a clean slate. “There is a complete refusal to want to discover what went wrong, to admit what went wrong, and to deal with it,” she says.
Denhollander and her fellow survivors plan to speak up to keep pressure on the institutions where Nassar worked. “What lessons do we need to take away from this?” she says. “That sentencing hearing was so many women coming forward publicly. It was the first time the entire world has gotten to see names and faces and [connect them] with the idea of sexual assault. We weren’t just numbers anymore.”