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Volume 21 No. 1
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Discovery decision may come soon in insurers case

One criticism by observers of the concussion-litigation settlement is that it staved off discovery on the NFL, saving the league from having to open its document vault to reveal what it knew about the dangers of concussions and when.

Discovery might, however, still occur in a different case. The NFL and the league’s insurers are in another action, suing one another over whether the companies have to cover the NFL’s liability from the concussion lawsuit.

“I do not see the judge cutting off the insurers’ inquiries into knowledge of what and when the NFL knew,” said Lynda Bennett, chairwoman of the insurance coverage practice at Lowenstein Sandler, via email. “Those facts will be used by the insurers to develop an ‘expected and intended’ defense. Notwithstanding that the underlying dispute has resolved, the insurers will engage in extensive discovery to try to obtain factual support for that defense.”

An “expected and intended” defense is when the underlying policyholder, in this case the NFL, knew of the problem that sparked the lawsuit. If the policyholder knew, then the insurers will maintain they should not have to cover the settlement payments.

“If the insurers can establish knowledge [by the NFL] that injuries would occur unless precautions were taken (i.e., stiffer penalties, better helmets), they may have success in proving that the injuries were expected, intended, not an accident, and therefore not insured,” Bennett wrote.

At a hearing scheduled for this week, New York state Judge Jeffrey Oing could rule on whether discovery can commence. To date, he has not allowed such discovery in the matter, which began 12 months ago, under the legal theory that the insurers should not dig up information that could damage the policyholder’s case against the retirees.

With the NFL/retirees case now preliminarily settled, it could take away that basis for precluding discovery.

Discovery is typically confidential, but findings and excerpts frequently are used in legal briefs as well as in rulings from the bench.

The insurers’ case could hinge on how Oing interprets the “intended and expected” defense. Some courts have a high standard, Bennett said, ruling that a policyholder like the NFL would have had to expect and intend to cause the injury. That would be difficult for the insurers to prove, she said. Other courts have used something that’s referred to as the “reasonable man” standard: Would a reasonable person have looked at the same information the NFL had and expected the injuries, she said. That is a lower standard and can be easier to prove.

— Daniel Kaplan