The NFL is missing insurance policies dating back to the late 1960s, sources familiar with the situation said, a circumstance that could complicate the league’s legal defense against the carriers suing over their liability to the related concussion litigation.
The NFL wants a group of more than 30 insurance companies to pay the league’s legal bills and, potentially, its liability tied to the hundreds of lawsuits now consolidated into a single complaint filed by more than 4,200 retirees. The former players allege the league misled them about the dangers of concussions.
It’s unclear how many policies are missing since 1968, the start date for the insurance coverage, though one source on the carrier side said it is likely more than a dozen. It’s not only the 45 years of polices since 1968 the NFL took out that the league needs, but also the same number for that period on work done through NFL Properties, a source familiar with the situation said.
The NFL, prior to 1968, did not have this type of liability insurance coverage.
The development emerges as the league is set today to argue before a California appeals court that the insurers’ lawsuit should transfer from New York to California. If that were to occur, the missing polices could be moot, experts said. California law allows an insured company to extrapolate from a given policy year claims stretching over a much longer term, said Lynda Bennett, chair of the insurance coverage practice at Lowenstein Sandler LLP. By contrast, New York law, under which the case is currently proceeding, requires the policyholder to pro-rate the liability over each year of the coverage period — so if a policy is missing, that could lead to loss of coverage for that year.
“Winning the forum dispute about California could diminish the importance of the missing policy problem for the NFL,” Bennett said.
The NFL declined to comment.
A lower court in California last fall stayed the NFL’s countersuit against the insurers, ruling the case properly belonged in New York, headquarters to the NFL and many of the insurance carriers. If the NFL were to lose its California appeal and the New York legal case continues (the league’s response to the insurers’ lawsuit is due Friday in the New York court), the NFL would then likely need to commence an expensive investigation to prove the existence of the missing policies.
The state supreme court judge overseeing the case, Jeffrey Oing, already ordered the insurers and the NFL to exchange all policy documents they have, so it’s possible some of the missing polices could emerge that way. But Bennett, who represents policyholders, cautioned that in similar situations like asbestos cases, which required contracts stretching back into the 1950s, she discovered many insurance companies employed procedures then and in following decades to destroy polices after 10 years.
If that were to be the case here, the NFL could still offer evidence that a policy existed; brokerage letters, policies sandwiched around the missing years, and canceled checks are pieces of secondary information that have been used in similar cases previously. But even then, Bennett cautioned, the league would have to prove the terms of the policy, not just the policy’s existence. At that point, she said, the league might utilize an “insurance archeologist,” a professional steeped in the historical terms of insurance contacts that were in effect decades ago.
The insurers are also eager to commence discovery into whether the NFL knew about the risks of concussions. Most standard liability contracts would not pay if the policyholder knew of the underlying risks, but Oing ruled against allowing this type of discovery until discovery begins in the federal concussions case proceeding in federal court in Philadelphia. He reasoned that if discovery began in his case, the insurers could turn up information useful in the retirees’ lawsuit against the policyholder, the NFL — and insurers are not supposed to be hurting their policyholders.
“[T]he insurance carrier now may potentially harm the policyholder in its effort to secure a … judgment saying that there is no duty to indemnify,” Oing said during oral arguments on March 15, when he stayed discovery into what the NFL knew about the risk of concussions.
The next court hearing in the New York case is June 28. There are two separate but related cases against the NFL, one brought by Alterra America Insurance, and another collectively by dozens of insurers led by Discover Property & Casualty.