Tuesday, May 7, 2019

USA Gymnastics Sues Insurers for Refusing to Cover Legal Costs

 This Wall Street article talks about the legal battle that the non-profit organization USA Gymnastics is now fighting after its team doctor, Larry Nassar was accused of molesting at least 250 girls over the years. As a result, the USA Olympics is suing "a dozen insurers" because they have refused to pay for the lawsuits that many gymnasts have filed. Therefore, they are asking the judge to "better explain" the limits of their contract. At the same time, the organization filed for bankruptcy last December while at the same time being subject to the investigations that law enforcement might do regarding the lawsuits that even former Olympic Gymnastics have filed accusing the organization of not protecting them from the doctor. As a result, Nassar "pleaded guilty in 2017 to state sexual-abuse charges and federal child-pornography counts" and will be in prison for the rest of his life. According to WSJ, he volunteered for the organization for more than three decades and some girls have made accusations of sexual assault that "date back to the mid-1990s". 

According to the lawsuit, the insurance covers cost related to "state and federal investigations, internal and independent investigations, criminal investigations, crisis management, and the U.S. Olympic Committee’s decertification process". The implications of the lawsuit also affect their participation on the Olympic Games as the  U.S. Olympic Committee has started the process of revoking the organization's status of "sport’s national governing body". Therefore, they need to create a new governing body in order to participate in this year's Olympic Games once this process is completed. 
Also, as a result of the bankruptcy guidelines, the organization will probably invite anyone that might have claims to express them during a certain time frame, including claims not related to Nassar. At the same time, they can use their asset's money and "set deadlines for victims to come forward". All of these under the supervision of a federal judge. 
I think this article was very interesting because of its relevance to Marketing and brand image. This is the perfect example of how the lack of internal control resulted in the total damage of the USA Olympics brand image that is most likely to result in the end of the organization. At the same time, the organization is now receiving a high amount of negative publicity that is impossible to control. Not to mention that they also need to use publicity to invite possible victims to declare their stories. 
On the other hand, this scandal also affects their previous achievements and the status that they were able to build over the years. They are going to lose participation in the Olympic Games, and parents are not going to let their girls be part of the organization. It is important to highlight that this kind of scandals can happen to any organization, even if it is non-profit, and that the recovery of the reputation is extremely difficult because it does not deal with the person that was at fault only but also with their internal control and their trustiness.
Link to article: https://www.wsj.com/articles/usa-gymnastics-sues-insurers-for-refusing-to-cover-legal-costs-11549486473?mod=searchresults&page=1&pos=6
by: Adriana Chacon 

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