By Jeffrey Birren
There’s Gold in Them Courts!
For decades, California has been the workers’ compensation forum of choice for retired professional athletes. It was overwhelmingly attractive to these applicants and their counsel for a variety of reasons. Naturally, California’s laws have been significantly more generous to retired athletes compared to other jurisdictions. In additional, there was virtually no statute of limitations for “cumulative trauma” (CT) claims. Regardless of notice the employer gave the employee, a CT claim does not become ripe until the former player is diagnosed with CT, which may be decades after the player’s retirement. This has even included 70-year-old retired players. (Cal. Labor Code § 5412).
In 1974, the State Supreme Court ruled that the statute of limitations was tolled if the employer failed to give the employee notice of the right to file a workers’ compensation claim (Reynolds v. WCAB, 12 Cal. 3d 726, 729 (1974)). This means that until the applicant visits a doctor who informs the applicant that he or she has CT, the statute is tolled.
The typical CT filing list claims that virtually every body part is injured, a practice often referred to as “skin and contents” pleading. The retired athlete would then go through a long list of injuries when testifying, and claim any and all surgeries and treatments received. The athlete did not seem to know, and this was the critical legal fact, that collectively all of the injuries amounted to CT and that the retired athlete could file a “CT claim.”
In theory, a CT claim should be based on specific employment-based injuries rather than on various micro injuries. For retired athletes, however, all injuries go into the CT claim, as the applicant strives to reach a 70 percent disability rating and its attendant lifetime stream of payments.
Moreover, California always interpreted its laws so as to always find benefits. Judges not only construed the laws, but also the facts, in the way most favorable to the retired players. The employer has the burden of proof to demonstrate that it gave the employeeproper notice to avoid tolling the statute of limitations (Cal. Labor Code § 5409), and it was very easy for the workers’ compensation judge (WCJ) to make a finding that the player did not know of his or her right to file a CT. In fact, the WCJs were quick to apply the so-called Reynolds notice retroactively in claims that preceded the Reynolds decision by decades.
They also made a consistent practice of holding that filing multiple workers’ compensation claims for specific injuries in various states did not equate to knowledge that one could come to California decades later and file a CT claim.
California also had the most liberal jurisdiction laws in the country. Historically, all it took was for an out-of-state player to play a single game in California, and the case could be heard in California and California’s expansive laws and payments would be applied. A leading case, Injured Worker’ Insurance Fund of the State of Maryland v. Workers’ Compensation Appeals Board (WCAB) and Cleveland Crosby made this clear. Crosby was never a resident of California. He never played for a California team. None of his professional contracts were signed in California, yet the WCAB found jurisdiction. Simply playing “a game in California while employed by the Baltimore Colts” was enough for the WCAB to conclude that California had jurisdiction over Maryland for Crosby’s CT injury (66 Cal. Comp Case 923, 925 (2001)). Given the number of California teams, it became inevitable that most professional athletes would eventually play that single game in the Golden State, thus unlocking the vaults.
The WCAB further explained jurisdiction in Roundfield v. Washington Wizards, Atlanta Hawks, Detroit Pistons, Indiana Pacers, and their respective insurance carriers. There must be both personal jurisdiction over the defendant and subject matter jurisdiction over the claim. Personal jurisdiction was established as a result of the employer-teams playing games in California (Cal. Wrk. Comp. P.D. Lexis 26, at 4. See, also Martin v. Detroit Lions, 32 Cal. App. 3d 472 1971)). Roundfield, like Crosby, was not a California resident, during the period of CT, nor did he enter into his employment contracts in California. Regardless, he played games in California while employed by the Wizards, and those games created part of the CT (Roundfield, Cal. Wrk. Comp P.D. 26 at 6).
To further ensure an easy recovery, California has imposed CT liability on the employer during the last 12 months of injurious exposure (Cal. Labor Code § 5412). As a result, the Wizards were forced to pay Roundfield for the CT attributed to his prior ten years of professional basketball. Similarly, in Gregory Foster v. Toronto Raptors, the Raptors were required to compensate Foster for a CT period that included time spent playing in another continent, for another team with no connections to the US (2013 Cal. Wrk. Comp. P.D. LEXIS 253 (2013)).
If there is no jurisdiction over the actual final employer, then liability simply rolls back to the last employer with California jurisdiction (see Cal. Labor Code § 55005, and Reginald Clark v. Green Bay Packers et al., WCAB Case No. ADJ7539200 (2014), wherein the Kansas City Chiefs was Clark’s last employer, however, since he never played in California while employed by the Chiefs, liability rolled back to the previous employer, the Packers). The result was even more striking in Tampa Bay Bucs v. WCAB and Eric Curry (73 Cal. Comp Case 9-44 (2008)). Curry played for the Jacksonville Jaguars for four years after playing for the Bucs, but since there was no jurisdiction over Jacksonville, the Bucs paid for four years of subsequent CT exposure and injuries. One wonders what sort of CT notice the Bucs could have given Curry that would have prevented a tolling of the statute of limitations.
The court in Curry relied on Portland Trailblazers v. WCAB and Ennis Whatley (72 Cal. Comp. Case 154 (2007)). The Trailblazers paid Whatley for his prior CT exposure incurred playing for a CBA team as well as international teams in the Philippines and Israel. Further, Whatley played in Lithuania after leaving Portland, and since there was no jurisdiction over a Lithuanian team, a California court forced the Trailblazers to pay for CT injuries that Whatley sustained in Lithuania. No amount of notice could have started the statute of limitations running against the Trailblazers, as Whatley was still able to play when he left for Lithuania. Presumably a WCJ would expect a Lithuanian club to give Whatley notice of his California CT rights. Otherwise, the statute would be tolled against the Trailblazers.
The WCAB even extended the logic of jurisdiction based on games played to mere practices when it suited them. In Jessie Kenlaw v. Houston Comets (WCAB Case No. ADJ7014186 (2013)), the WCAB used “rollback” to award benefits to Assistant Coach Jessie Kenlaw, based on her participation in pregame practices in California.
Why Care About the Plight of Professional Sports Clubs?
It would be understandable to ask at this point: what is the problem with this? After all, don’t the teams all have workers’ compensation insurance, and why should anyone but the billionaire owners care if the premiums rise?
California employers are required to have workers’ compensation insurance. Moreover, when an insurance company that sells products in California goes out of business, the claims are taken over by the California Insurance Guarantee Association (CIGA). CIGA was created by statute and is funded by surcharges placed on every insurance policy sold in California. Thus, every workers’ compensation policy sold in California has a CIGA surcharge.
As the claims and attendant payouts soared, more and more carriers went into liquidation. Today CIGA has more than 40,000 claims that it is required to administer and pay any resulting awards. Few industries were hit as hard as professional sports, especially since awards to retired athletes are significantly higher than awards to most other employees, often amounting to hundreds of thousands of dollars. Consequently, the system claimed dozens of carriers that had sold professional sports workers’ compensation insurance. Carriers in liquidation that sold such policies include Home, which sold such policies to various teams including the Bears, Cardinals, Chiefs, Eagles, Oilers, Packers, Patriots, and Steelers; Reliance, which sold coverage to the Bills, Eagles, Jaguars, Jets, Vikings, and Washington; Legion, whose clients included the Broncos, Panthers, Vikings, and Washington; Fremont, whose clients included the Cardinals; and Highland, which sold policies to the Packers. This is just a partial list and does not cover the California teams. The majority of their carriers through the 1990s also went into liquidation, as they had also purchased policies from Mission, Fremont and Reliance.
CIGA has estimated that by April 2013, “it has paid over 800 of these claims in recent years, and it has over 1000 claims pending” (California Assembly Committee on Insurance, Bill Analysis, April 24, 2013, at 5). CIGA also stated that the rate of filings had increased, and “while former NFL players used to be the bulk of these claims, players from other sports are now increasingly filing” (Id.). CIGA further stated that as a result “of these insolvencies, many of the claims . . . are not being addressed by the insurer that provided workers’ compensation coverage during the times the player played for the particular team. Rather, these claims are being paid by CIGA, which is financed by a broad-based assessment on all insured California employers” (Id.). Compounding CIGA’s difficulty is that the policies that it inherited were, until fairly recently, nondeductible policies, and thus CIGA, and not the client/club, is required to pay everything.
“As CIGA has been forced to pay tens of millions of dollars to retired professional athletes, it has been forced to assess virtually every California business. CIGA is financed by a broad-based assessment on all insured California employers” (Id. at 4). In plain terms, every single California employer is being assessed by CIGA to pay the claims of thousands of retired professional athletes, as well as CIGA’s defense costs. A California small business, with a handful of employees, all being paid minimum wage, must still pay the CIGA surcharge so that CIGA can pay hundreds of thousands of dollars to retired professional athletes, many of whom made more in a single year than many small business owners will make in a lifetime.
The clubs also felt the pain. Premiums began to skyrocket, and the policies went from having no deductible per claim to at least $1,000,000 deductible per claim. There was no longer an employer maximum retained policy limit. Yet even this was not enough to save the industry. As more carriers went into liquidation, surviving carriers began to stop selling such coverage. Today a single carrier sells workers’ compensation insurance to at least 27 NFL clubs.
California law also imposed another legal burden on clubs. When CIGA took over for Reliance, CIGA alone controlled the litigation. Thus non-California clubs have been put in the uncomfortable position of having a creature of California statute hire counsel, and settle up to deductible limits, without input or approval from those clubs. CIGA’s California counsel could be highly experienced and thoroughly unprofessional, but the arrangement never felt comfortable to clubs in that position. Moreover, the clubs could not stop settlements, and such settlements invariably impacted the size of future premiums.
CT abuse was rife. Athletes could go through the system and collect, only to try it again decades later. Although application was signed under penalty of perjury, when it happened it was deemed sufficient to simply dismiss the fraudulent claim. Three examples demonstrate the CT abuse problem. The first is Don Davey, who played for the Jacksonville Jaguars. At the end of his career, he filed a workers’ compensation claim in California. As the Jaguars’ carrier was in liquidation, CIGA took over the claim and ultimately paid Davey more than $100,000. Disabled Davey then went on to a career in triathlons. (Mike Florio, ProFootballTalk.com, May 3, 2013 entitled “League decries ‘rampant abuse’ of California workers’ compensation system.”)
The second example is Michael Irvin, a Hall of Fame player for the Dallas Cowboys, who received $249,000 for his “disability,” yet his condition did not prevent him from working for the NFL Network. Further (and far more damning), his condition did not prevent him from competing on “Dancing with the Stars” (“Pro Athletes Gaming Work Comp Benefits,” SF Gate, 6-25-13).
Third, Sean Gilbert is currently running for election as executive director of the National Football League Players Association. He is able to do so despite the WCAB determining that Gilbert is 100 percent disabled. Clearly the concept of “disability” has a unique and often bizarre meaning within California’s worker’s compensation system.
The system seemed virtually unable to say “no,” but rather asks “how much.” Yet the burden imposed by the WCJs was unsustainable to all but the applicants and their counsel. Change became inevitable.
Next: Change Initially Comes, From an Unlikely Direction
Birren worked for the LA/Oakland Raiders for 34 seasons and was the general counsel for much of that time. He also taught sports law at Southwestern University School of Law for three years. He can be reached at jebirren@comcast.net
