SBD/December 11, 2012/Leagues and Governing Bodies

NFL, Insurers Argue Over Payment Obligations; Concussion Lawsuits Could Push Up Premiums

As the NFL “confronts a raft of lawsuits brought by thousands of former players who accuse the league of hiding information about the dangers of concussions, a less visible battle that may have a more widespread effect in the sport is unfolding between the league and 32 of its current and former insurers,” according to Ken Belson of the N.Y. TIMES. The dispute “revolves around how much money, if any, the insurers are obliged to pay for the league’s mounting legal bills and the hundreds of millions of dollars in potential damages that might stem from the cases brought by the retired players.” Regardless of "how it is resolved, the dispute could hurt teams, leagues and schools at all levels if insurers raise premiums to compensate for the increased risk of lawsuits from the families of people who play hockey, lacrosse and other contact sports.” The NFL “may be equipped to handle these legal challenges,” but colleges, high schools and club teams “may be forced to consider severe measures in the face of liability issues, like raising fees to offset higher premiums; capping potential damages; and requiring players to sign away their right to sue coaches and schools.” Some schools and leagues “may even shut down teams because the expense and legal risk are too high.” The question for the NFL is “not whether the insurers are required to help the league, but rather what percent of the league’s expenses each insurer is obliged to cover.” The 32 insurance companies have “varying arguments against the league.” Some wrote policies “for a limited number of years and contend their obligations should also be limited.” Others “contend they wrote policies for the NFL’s marketing arm -- for licensing disputes, for example -- not the league itself” (N.Y. TIMES, 12/11).

LEAGUE TO APPEAL COURT'S STAY: The NFL plans to appeal a California court’s decision to stay the league’s lawsuit against dozens of its insurers. The insurers are seeking exemption from providing coverage in the event the league loses lawsuits filed by former players over the long-term damage playing the game allegedly had on their health. A California Superior Court judge late last month stayed the lawsuit, saying one brought by the insurers against the NFL in N.Y. should take precedence. The NFL last week filed a notice of appeal to the California Supreme Court, seeking expedited review, according to a letter sent by the NFL’s outside counsel to the judge overseeing the N.Y. case. The lawyer, William Phillips of Covington Burling, wrote the letter to affirm that notwithstanding the California decision, the NFL still sought the dismissal of the N.Y. lawsuit brought by the insurers against the league. “If the NFL defendants’ motions to dismiss in New York are granted in whole or in part on jurisdictional and other grounds available under New York law, then the California’s court premise that the New York and California cases are equally comprehensive -- with which we disagree on various grounds -- would become inoperative,” Phillips wrote to Judge Jeffrey Oing of the Supreme Court of the State of New York (Daniel Kaplan, SportsBusiness Journal).
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