By Richard C. Giller, Esq.
Introduction
On June 10, 2014, Adrian Arrington, the lead plaintiff in a concussion class action lawsuit filed against the National Collegiate Athletic Association, fired his attorney claiming that he never approved a proposed $75 million settlement of the case. Mr. Arrington has reportedly also asked the judge overseeing the litigation to reject the proposed settlement. Arrington, a former strong safety and captain of the Eastern Illinois University football team, claims in his September 2011 lawsuit that he was forced to stop playing football because of health issues including “numerous and repeated concussions” he suffered during his college playing days. Arrington claims that the five concussions set forth in his complaint, as well as other head injuries sustained playing college football, resulted in serious medical issues including memory loss, seizures and headaches, all of which cut short his football career. The plaintiffs in the NCAA concussion case claim that the organization knew about but disregarded information concerning the long-term effects of concussions and other forms of head trauma on athletes, and that the Association ignored studies involving the link between the frequency and severity of concussions and certain types of sports.[1]
Sports concussion lawsuits trigger a number of important cultural, medical and legal issues. However, the focus of this article will be on one of the more pedestrian topics; i.e., whether insurance coverage is available to the NCAA to help offset the tens or hundreds of millions of dollars in defense and indemnity payments arising out of these types of claims. It has been reported that that the NCAA and several of its insurers have reached settlement agreements concerning coverage for concussion lawsuits and that the NCAA is engaged in negotiations with other insurers on a defense cost sharing agreement for the concussion cases.[2] Despite this progress, several insurance companies are contesting coverage based upon a number of issues and this article will analyze the merits of the coverage positions staked out by some insurance carriers.
The NCAA Concussion Litigation and Proposed Settlement
Underlying Concussion Litigation
Arrington’s lawsuit against the NCAA was filed in federal court in Chicago and became the first of a number of concussion lawsuits filed against the Association.[3] In fact, over the last few years there have been over a dozen additional proposed class action concussion cases filed across the country naming the NCAA as a defendant.[4] In December 2013, the actions pending at the time were consolidated into a single multi-district litigation (MDL), which is currently pending in the United States District Court for the Northern District of Illinois.[5]
The NCAA MDL includes claims for negligence, fraudulent concealment, unjust enrichment and medical monitoring, and alleges that the Association breached certain duties purportedly owed to college athletes by not taking steps to prevent head injuries despite purportedly knowing how severe the repercussions might be for an athlete who suffers a concussion.[6] In addition to allegations that the NCAA withheld information from athletes regarding the long-term effects of concussions, the MDL plaintiffs also allege that the NCAA failed to properly train coaches and athletic trainers in how to identify concussion symptoms or to implement proper coaching methods for determining whether an athlete has suffered a concussion or when and for how long a player should refrain from athletic activities after suffering a concussion.
The MDL plaintiffs further allege that the NCAA failed to implement regulations to minimize or reduce activities which were likely to lead to concussions and head trauma, such as failing to implement proper tackling techniques in football, for example, or reducing the number of headers a soccer player is involved with during practice, among other claims. Finally, the concussion MDL alleges that the NCAA failed to implement standard “return-to-play” guidelines in each of the sanctioned sports with respect to athletes who sustained head trauma.
Proposed Settlement in the Underlying Concussion Litigation
In 2014, the parties to the NCAA MDL reached a preliminary $75 million settlement of the medical monitoring portion of the litigation. Pursuant to the proposed settlement, a $70 million common fund would be established for the creation of a medical monitoring program and the NCAA would contribute an additional $5 million over the next ten years to fund research regarding the prevention, treatment, and effects of concussions. The proposed settlement class includes “all persons who played an NCAA-sanctioned sport at an NCAA member institution at any time through the date of Preliminary Approval.” To characterize that class as being “broad” would be an understatement. The settlement class is not limited to any particular sport or any level of competition and is estimated to encompass over four million current and former college athletes. Instead, it apparently includes any athlete who played any sanctioned sport for any length of time at any NCAA member institution.
According to the Association’s website, “The NCAA and its insurance carriers will pay $70M to fund a medical monitoring program that will provide medical evaluations to qualifying class members over a period of 50 years. The medical monitoring program will be overseen by a medical science committee composed of four leading experts in the management and treatment of concussions, including NCAA Chief Medical Officer, Brian Hainline.”[7] The Association’s website also notes that “the medical monitoring program will in some measure be funded through the NCAA’s insurance carriers.” The website explains that under the terms of the proposed settlement, “certain of the NCAA’s insurers have agreed to pay a portion of the Settlement Amount. If those insurers fail to pay that agreed-upon portion … otherwise rescind their agreement and commitment to pay that agreed-upon portion prior to the Effective Date, the NCAA shall have the option to terminate this Agreement … and this Agreement shall become null and void and shall have no further force and effect with respect to any Party in this Litigation.”[8] In short, partial funding by insurance companies of any concussion settlement appears to be a critical pre-requisite to resolving the claims.
The proposed settlement also obligates the NCAA to recommend to the governing bodies of its various competitive divisions, that they implement legislation requiring member schools to certify that they have an approved concussion management plan in place. This plan would require student-athletes to undergo pre-season baseline testing as a pre-requisite to participating in practice or competition. Additionally, under the plan an athlete would be prohibited from returning to play in any game or participating in any practice on the same day a concussion was sustained and the athlete must be cleared to return to practice or competition by a physician before they can resume competition. Finally, the NCAA agreed to require all member institutions properly train medical personnel in how to diagnose, treat and manage head trauma and that such personnel be present at all games and available at all practices in contact sports such as football, ice hockey, lacrosse, soccer, wrestling, field hockey and basketball.
Last July, the parties to the NCAA MDL sought preliminary approval from the court of the proposed medical monitoring settlement. During a hearing held on July 29, 2014, the judge ordered the parties to submit additional briefing to address certain issues of concern identified by the court. Three months later another hearing was held concerning the proposed settlement during which the judge expressed additional concerns over the terms of the settlement, including the following: (1) participants in non-contact sports are included in the settlement even though the MDL does not include a plaintiff representative who played a non-contact sport; and (2) the proposed guidelines would only apply to contact sports even though the scope of the settlement applies to athletes who competed in non-contact sports. The MDL judge took the matter under submission and has not yet issued a ruling. If preliminary approval of the medical monitoring settlement is granted, there will most likely be a 6-month notice period and a final fairness hearing, as well as a deadline for opt-outs and objections. If preliminary approval is rejected, then counsel for the NCAA and the plaintiffs will most likely attempt to re-negotiate the settlement to address the judge’s concerns.
Insurance Coverage Litigation Arising Out of the NCAA MDL
In June 2012, TIG Insurance Company filed a declaratory judgment action against the NCAA in Kansas federal court disputing that it had a duty to either defend or indemnify the Association in the concussion MDL under commercial general liability policies issued to the NCAA by TIG and its related entities.[9] The Kansas coverage litigation was voluntarily dismissed by TIG in August 2013 and is no longer pending, but the allegations contained in that complaint are illuminating.
In the Kansas litigation, TIG denied any defense or indemnity obligations based on five principal arguments:
The injuries did not take place during the coverage period of certain policies and the injuries do not constitute “bodily injury” as that term is defined in the policies;
Coverage is precluded because the injuries may have been “expected or intended” by the NCAA;
Claims of unjust enrichment, fraudulent concealment, and medical monitoring are not covered because they do not seek “damages because of bodily injury;”
Coverage is precluded because some policies contain an “Athletics Participants Exclusion” which, according to TIG’s complaint, “precludes coverage for liability arising out [of] activities or injuries sustained by persons practicing for or participating in an athletic contest”; and
Coverage is precluded under the “Employer’s Liability Exclusion” which bars coverage for “bodily injury” to an “employee” of the insured “arising out of and in the course of employment by the insured.”
Several of these coverage arguments (i.e., whether concussion lawsuits allege an accidental loss or whether coverage for the resulting damages are precluded by the “expected or intended” exclusion or whether medical monitoring costs constitute damages) were analyzed and addressed by this author in a prior article entitled, “Insurers and Insureds could be at Odds over Sports Concussion Lawsuits,” published by the Sports Litigation Alert on June 26, 2015. The discussion of those topics will not be repeated here. Instead, this article will focus on an analysis of the last two points; i.e., the impact application of the Athletics Participants Exclusion or the Employer’s Liability Exclusion might have on the NCAA’s ability to obtain insurance coverage for these claims.
In December 2012, the NCAA filed a declaratory judgment action in the Superior Court in Marion County, Indiana against twenty three insurance companies that had issued primary and excess liability policies to the Association.[10] The Indiana coverage action, like many insurance coverage cases, has spawned a number of complaints, amended complaints, cross-claims, counterclaims and motions. On June 3, 2015, the Indiana court granted the NCAA’s motion to stay the insurance coverage proceedings and very little has transpired in that case since then.
Analysis of Two Exclusions Relied Upon by the Carriers in the NCAA Insurance Coverage Litigation
Athletic Participants Exclusion
According to the dismissed Kansas complaint filed by TIG, two of the policies issued to the NCAA by TIG affiliated companies included an “Athletic Participants Exclusion.”[11] The exclusion in a 1979 to 1980 Ranger Insurance Company excess liability policy bars coverage for “liability arising out of the activities of any player or any person while engaged in any game or contest or practice or in the course of travel to any destination for the purpose of practicing for or participating in any contest whether regularly scheduled, exhibition or post-season game.” A similar exclusion, albeit with slightly different wording, is contained in a primary liability policy issued by International Insurance Company for the 1986 to 1987 coverage period and it precludes coverage “to bodily injury to any person while practicing for or participating in any contest or exhibition of an athletic or sports nature sponsored by the named insured.”[12] The underlined terms and phrases are discussed more fully below.
As a general rule, defined terms in an insurance policy are usually set off by quotation marks or through the use of initial capital letters or using bold font-type, all of which alerts a policyholder to the fact that the highlighted terms have specialized meanings, as defined in the policy. Based upon the allegations in the Kansas complaint, it does not appear that the following terms and phrases as they appear in the Athletic Participants Exclusions constitute defined terms in the respective policies: “activities”; “engaged in”; “bodily injury”; “participating in”; or “sponsored by.” Whether the particular wording of an Athletic Participants Exclusion includes defined terms or undefined terms could have a significant impact on determining whether the particular exclusion bars coverage for concussion lawsuits.
For example, most standard liability policies provide coverage for “bodily injury” claims with the phrase “bodily injury” set off in such a way as to indicate that it is a defined term. Those same policies go on to define “bodily injury” as including “bodily injury, sickness or disease”[13] sustained by a person. It does not appear, however, that the term bodily injury as it appears in the Athletic Participants Exclusion in the 1986-87 International policy discussed above, is a defined term and thus, may not include “sickness or disease” as part of its definition.[14] This omission could have a significant in securing coverage for the concussion claims asserted against the NCAA despite the presence of the exclusion because many of those claims include allegations of long-term sicknesses and illnesses (i.e., a lifetime of migraine headaches, light sensitivity, Alzheimer’s disease, Chronic Traumatic Encephalopathy (CTE), or other progressive degenerative brain diseases), that are distinct, both temporally and practically, from the bodily injury sustained during practice or a game. Further, many of the concussion lawsuits seek recovery of emotional distress damages and loss of support or consortium which also do not appear to constitute bodily injury sustained while “practicing for or participating in” an athletic contest.
Finally, the concussion claims asserted in the NCAA MDL and other concussion cases include claims of negligence in the assessment and treatment of the head injuries. These claims could also fall outside of the Athletic Participants Exclusion and trigger coverage. As several Louisiana cases have concluded, the failure to provide adequate medical care following a sporting accident and claims of negligent emergency treatment on-site do not fall within an Athletic Participants exclusion.[15] As a result, even if a particular insurance policy includes such an exclusion, coverage is not necessarily precluded for all claims. Under the laws of most states, if any of the claims or damages asserted in a particular complaint are covered or potentially covered, a liability insurance carrier is obligated to fund the defense for the entire action, not just that portion which is or is potentially covered.
Employers’ Liability Exclusion
Although not part of the declaratory relief complaint originally filed by TIG in the dismissed Kansas litigation, other insurance carriers have attempted to reject coverage for concussion cases based upon the presence of an Employers’ Liability (“EL”) Exclusion in certain policies. The standard EL Exclusion bars coverage for “bodily injury” to (1) an “employee” of the insured arising out of and in the course of: (a) employment by the insured; or (b) performing duties related to the conduct of the insured’s business; or (2) the spouse, child, parent, brother or sister of that “employee” as a consequence of Paragraph (1) above.”
This exclusion does not appear to have any application to concussion claims filed against the NCAA because student-athletes at individual member institutions clearly do not qualify as “employees” of the Association. And, despite last year’s ruling by the Chicago Regional Director of the National Labor Relations Board that Northwestern University scholarship football players were “employees” of the University for purposes of forming a union, there is no authority for the proposition that student-athletes are employees of the individual member institutions. As a result, the “employer’s liability” exclusion should not bar coverage for the claims filed against the NCAA.
Conclusion
As noted above, sports concussion cases trigger a number of important cultural, medical and legal issues including the personal and societal toll of dealing with a lifetime of migraine headaches, light sensitivity, Alzheimer’s disease, CTE or other progressive degenerative brain diseases. As a result, discussing the financial impact such lawsuits might have on the sports organizations involved may seem trivial. However, those repercussions cannot be ignored. The costs of defending and resolving concussion lawsuits pending or to be filed against the NCAA seems unlikely without contributions from the Association’s insurance carriers.
Resolving the sports concussion lawsuits in such a way that provides for the well-being of the players involved and protects future participants from similar trauma is of paramount importance. The ability of the NCAA to call upon the resources of the various insurance companies that had insured the Association over the years could go a long way towards achieving both of those goals. As this article explained, the primary bases upon which insurers are attempting to avoid paying for the defense of those claims and to resolve the disputes are well-worn and well-litigated. The NCAA appears to have solid grounds upon which to obtain defense and indemnity payments for the underlying litigation and to avoid the coverage defenses being proffered by the carriers.
[1] The complaint salaciously claims that “for over thirty years, the NCAA has failed its student-athletes — choosing instead to sacrifice them on an altar of money and profits.”
[2] “Ultimate Game-Changer?” presented at the Federation of Defense and Corporate Counsel Winter Convention, March 4-8, 2015.
[3] Arrington, et al. v. NCAA, case number 2:11-cv-06356 (N.D. Ill., 11/21/11).
[4] Illinois cases: Arrington, supra; Wolf, et al. v. NCAA, No. 1:13-cv-09116 (N.D. Ill., 2/11/14); Nichols, et al. v. NCAA, No. 1:14-cv-0096 (N.D. Ill., 2/11/14); and Moore, et al. v. NCAA, No. 1:11-cv-06356 (N.D. Ill., 10/29/13). Missouri cases: Washington, et al. v. NCAA, No. 4:13-cv-02434 (E.D. Mo., 12/3/13); and Powell, et al. v. NCAA, No. 4:13-cv-01106-JTM (W.D. Mo., 11/11/13). Tennessee cases: Walton, et al. v. NCAA, No. 2:13-cv-02904-STA-tmp (W.D. Tenn., 11/20/13); and Walker, et al. v. NCAA, No. 1:13-cv-00293 (E.D. Tenn., filed 9/3/13). Other jurisdictions: Jackson, et al. v. NCAA, No. 1:14-cv-03103-DLI-RLM (E.D.N.Y., 4/2/14); Jobe, et al. v. NCAA, et al., No. 3:13-cv-00799-HTW-LRA (S.D. Miss., 12/23/13); Hudson, et al. v. NCAA, No. 5:13-cv-00398-RS-GR (N.D. Fla., 12/3/13); Morgan, et al. v. NCAA, No. 0:13-cv-03174-RHK-JSM (D. Minn., 11/19/13); Doughty, et al. v. NCAA, No. 3:13-cv-02894-JFA (D.S.C., 10/22/13); Caldwell, et al. v. NCAA, No. 1:13-cv-03820-CAP (N.D. Ga., 10/18/13); and DuRocher, et al. v. NCAA, No. 1:13-cv-01570-SEB-DML (S.D. Ind., 10/1/13). There are also at least nine other individual concussion-related injury lawsuits filed and currently pending against the NCAA.
[5] In re: National Collegiate Athletic Association Student-Athlete Concussion Injury Litigation, MDL No. 2492, Case No. 1:13-cv-09116 (N.D. Ill.)
[6] To date, the NCAA has chosen not to litigate what appears to be one of its best substantive defenses; i.e., that the NCAA does not owe a legal duty to the student athletes who play sports at is member schools because it has very little control over how its member schools educate, train and care for student athletes. The NCAA has proffered similar arguments in certain individual cases. For example, in the Onyshko action, the NCAA has asserted, among other things, that it has no legal duty to prevent risks inherent in an activity and that there is no special relationship between the plaintiff student athlete and the NCAA.
[7] http://www.ncaa.org/health-and-safety/ncaa-student-athlete-concussion-injury-litigation-summary-proposed-settlement-agreement.
[8] Id.
[9] TIG Ins. Co., et al. v. NCAA, et al., No. 2:12-cv-02361-JWL-JPO. According to the Kansas complaint, insurance companies related to TIG issued a number of primary policies of insurance to the NCAA between 1985 and 1987 and for the 1992-93 policy year. They also issued excess policies between 1979 to 1980 and again between 1992 and 1993. It was further alleged that the following insurance companies issued primary liability policies to the NCAA for the following time periods: Fireman’s Fund from 1993 to 1997; Swiss Re from 1997 to 1998; USF&G from 1998 to 2003; and Discover Insurance from 2004 to 2006.
[10] NCAA v. TIG Ins. Co., et al., No. 49D13-1212-PL-048782. The insurance company defendants include, Ace Property & Cas. Ins. Co.; Aetna Cas. & Sur. Co.; Allied World Nat’l. Assur. Co.; Axis Ins. Co.; Discover Prop. & Cas. Ins. Co.; Fairmont Spec. Ins. Co.; Fireman’s Fund Ins. Co.; Illinois Nat’l. Ins. Co.; Ins. Co. of North Am.; Lexington Ins. Co.; Maryland Cas. Co.; Nat. Union Fire Ins. Co.; Navigators Ins. Co.; Northwestern Nat’l. Ins. Co.; Philadelphia Indem. Ins. Co.; Ranger Ins. Co.; St. Paul Fire & Marine Ins. Co.; The Travelers Companies; TIG Ins. Co.; Transamerica Ins. Co.; Transport Ins. Co.; USF&G Co.; Westport Ins. Corp.
[11] Ranger Insurance Company (a TIG affiliated company) issued an excess liability policy to the NCAA for the period April 15, 1979 to April 15, 1980. International Insurance Company, another TIG affiliate, issued two primary liability policies to the NCAA covering the period November 9, 1985 through June 23, 1987. Finally, Transamerica Insurance Group, a TIG affiliate, issued a single primary liability policy and a single excess policy to the NCAA both covering the period September 1, 1992 to September 1, 1993.
[12] The term “sponsored” does not appear to be defined in the TIG policies but it could be an important issue because the NCAA may not have sponsored a particular practice, game or sporting event (as opposed to individual member schools being responsible for such sponsorship).
[13] Defining “bodily injury” as including “bodily injury” is just one of several tautologies found in insurance coverage disputes.
[14] At the very least, the failure of the insurance carrier to consistently use “bodily injury” as a defined term in the policy could create an ambiguity which, under established insurance law, is generally construed against the insurance company and in favor of coverage for the policyholder.
[15] Colson v. Louisiana State Racing Commission, 726 So.2d 432 (La.Ct.App. 1999) (injuries sustained while riding a horse during a “schooling race” at the New Orleans Fairgrounds not excluded: “Mr. Colson’s allegations concerning negligent failure to maintain the racetrack and failure to provide adequate medical care following the accident are not clearly excluded because they are ‘independent’ of Mr. Colson’s participation in the race.”); Sam v. Delta Downs, Inc., 564 So. 2d 829 (La.Ct.App. 1990) (wrongful death claim arising out of a horse race not excluded because of claims of negligent on-site emergency treatment: “improper supervision and selection of medical employees, negligent on-site emergency medical treatment, and maintenance of inadequate on-site medical facilities, are claims that are independent of the deceased’s participation in horse racing, and are not excluded from coverage.”).
