Michigan State University halts payments from Nassar victims' fund to investigate possible fraud

Posted at 5:57 PM, Jul 26, 2018
and last updated 2018-07-26 23:18:08-04

Michigan State University has halted payments from a $500 million fund that is being used to pay victims of Larry Nassar.

Officials tell 7 Action News that they were notified earlier this week by the firm that manages the Healing Assistance Fund about possible fraudulent claims.

MSU says they haled all further payments so the situation can be investigated. 

The halt comes as MSU announced they were suing their insurance carriers regarding the policies and coverage for sexual assault claims. 

The school issued the following statement about the lawsuit from MSU General Counsel Robert Young:

We are suing our carriers, including our largest carrier United Educators, for failing to honor their policies. It is disappointing and unfortunate we have to go to court on this matter, but we are hopeful this lawsuit will bring us to speedy resolution and that the insurance companies will honor their contractual obligations.

The fund was established in May. At the time attorneys representing the 332 survivors said $425 million would be paid out to current claimants and $75 million would be set aside in a trust fund to protect any future claimants alleging sexual abuse by Nassar.

The settlement was announced after days worth of mediation sessions between lawyers for both the university and the Nassar survivors.

There is no confidentiality agreement or non-disclosure agreements attached to the settlement. It only applies to Michigan State University and MSU individuals who were sued.

According to the lawyers, it doesn't address claims against USA Gymnastics, the U.S. Olympic Committee, and others.