What Athletes and Their Agents Should Know About League, Team Or Owner-Sponsored Group Insurance Plans
By Frank N. Darras*
It’s easy for college athletes to get caught up in the excitement of becoming a professional athlete.
But with all the excitement, the player and his or her agent should consider something a lot less glamorous.
ERISA. It is on insurance documents, insurance cards and prominently displayed on insurance plans. Few people know what it means. But beware, ERISA is not your friend.
If you are a professional athlete or represent one, understand how to protect yourself, your family and your income from the shark named ERISA.
What is ERISA?
The Employee Retirement Income Security Act (ERISA) was passed by Congress in 1974 to protect workers trying to collect their employer sponsored health, life and disability benefits. Today, ERISA has become the insurance industry’s best friend, victimizing players, staff and owners alike. If your teams’ insurance company wrongfully denies your benefits there will be no trial by jury; no punishment damages even if the denial was willful; no emotional distress damages for your worry and suffering and no one will ever testify for you in court because under ERISA there is no real trial. Sound unbelievable? Can’t be true? Here’s the real kicker, under ERISA if you find a prominent lawyer to take your case your lawyer must prove beyond a reasonable doubt the insurance company was wrong. See www.darrasnews.com
In high profile case after case I have seen ERISA leave a sea of denied athletes and employees without a remedy. Whether you are the quarterback, the point guard or the water boy, you have no leverage.
Here are some examples:
• Long-term disability under a company-sponsored plan usually covers the insured for only 24 months in your own occupation. Some plans give a longer period but always check how long you are protected “in your own occupation.”
• After that, the definition of disability shifts to any occupation for which the insured is trained, educated, or suited.
• To collect payment during the “any occupation” period you may have to be Social Security disabled.
• Social Security disabled means you are unable to do any work for pay or profit but age is a significant factor.
If you are not Social Security disabled, your insurance company may say you can monitor video surveillance. Think how difficult that would be to swallow, after playing in the majors.
The ERISA sharks are swimming around your health, life and disability policies. Medical employee insurance claims, your life and disability insurance are equally tasty treats that vanish under ERISA.
If you are a disabled player/employee and your group insurance carrier denies your legitimate claim and your home is foreclosed on, your equity extinguished and your credit destroyed…..not one of those damages is collectible under ERISA.
Life insurance claims that fall under ERISA are treated the same way as group medical and disability. There are few consumer remedies, mandatory administrative appeals and a standard that few lawyers can consistently reach to win.
The Solution
Since you are young and are insuring your most important asset, you’re earning potential, buy your own disability insurance. Remember, purchasing disability insurance can be tricky. Policy features, advantages and benefits vary greatly. Some policies are iron-clad and pay benefits on time, when you need them. Other policies are full of holes and the carrier can’t be counted on to pay legitimate claims.
Here are some hard fast rules to follow:
• Always buy as much individual coverage as you can afford. While athletes think (like everyone else) that they will never become disabled, the reality is that one third of all Americans between the ages of 35 and 65 will become disabled for more than 90 days. Prepare now.
• Buy as much as you can, as coverage is the cheapest when you are young and healthy. Remember to upgrade and add to your coverage when you sign a new contract so you keep pace with your earnings.
• Even if your league, team or owner offers a group policy, be sure you buy your individual coverage first. Pay the premiums for the policy yourself so any benefits will flow tax-free. With individual coverage you also have outstanding consumer rights and remedies in the event your claim is wrongfully denied.
• Only purchase “non-cancelable” and “guaranteed renewable” coverage. These features mean the insurance company cannot cancel your policy, increase your premiums or change the contract language as long as you pay your premiums on time – even if the insurer is “taking a bath” on the claim side or decides to stop writing new business in your state.
• Obtain the longest benefit period possible – lifetime if available, but at least until you reach age 65. Always buy “own occupation” coverage.
• Remember, when it comes to insurance, “the big print giveth … the small print taketh away,” so be careful and read the fine print.
• Once your coverage is in force don’t miss a premium payment.
Finally, professional athletes often make fatal mistakes early in the claim process. Be sure to seek out disability counsel with a national practice and a proven track record in high stakes litigation before you file your claim.
About Frank N. Darras
Frank N. Darras is managing partner of Shernoff, Bidart, Darras & Echeverria, LLP, in Ontario, California. He heads the firm’s national disability and long-term care insurance department and is singled out as one of America’s leading plaintiffs’ lawyers. Darras’ client list literally reads like the who’s who of sports figures, business professionals, doctors, lawyers, film stars and television personalities. Annually honored as one of the Top 500 Lawyers in America, Darras can be reached at 800-458-4577 or darrasnews@darrasnews.com.
