By Gary Chester, Senior Writer
Michael Cloud was an all-American running back at Boston College. The Kansas City Chiefs picked Cloud in the second round of the 1999 NFL draft. Cloud played for the Chiefs, New England Patriots, and New York Giants in a seven-year career that was undistinguished.
But Cloud’s lawsuit for disability benefits, Cloud v. Bert Bell/Pete Rozelle NFL Player Retirement Plan, 2022 U.S. Dist. LEXIS 109943 (N.D. Tex. June 21, 2022), has made its mark─and may make a difference in the lives of other players who became disabled as a result of the violent nature of the sport.
Background
The NFL and the NFL Players Association (“NFLPA”) put into place an employee benefit plan (the “Retirement Plan”) governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Under the Retirement Plan, players who were injured during their NFL careers may qualify for different levels of benefits if they are totally and permanently disabled.
Cloud sustained numerous injuries, most notably a concussion resulting from a helmet-to-helmet collision in the Giants’ 34-13 victory at Minnesota on October 31, 2004. Cloud was able to walk from the field with assistance, but did not recall doing so, and was sidelined for the rest of the game. He was unable to recall how he returned to his home in New York after the game.
There was no concussion protocol in effect in 2004. However, the NFL conducted a mild traumatic brain injury evaluation immediately following the concussion. Cloud’s symptoms included dizziness, vertigo, and an altered attention span. A follow-up evaluation indicated that a neuropsychiatric examination was to occur “48 hours post-injury,” but there is no evidence the neuropsychiatric exam occurred.
Cloud was cleared to resume playing three days after sustaining the concussion. The parties referred to this concussion as the “triggering event” under the Retirement Plan.
Cloud’s career ended in 2005, after he reportedly had difficulty reading a playbook and remembering plays. He was classified under the Retirement Plan as an “Inactive A” disabled beneficiary. Cloud asserted that he should be reclassified to the highest level of total and permanent disability benefits, known as an “Active Football.”
The Litigation
Cloud filed an action challenging the refusal of the administrator of the Retirement Plan to classify him as Active Football totally and permanently disabled. To prevail, Cloud needed to show that the administrator incorrectly interpreted the Retirement Plan and abused its discretion.
U.S. District Court Judge Karen Scholer held that the administrator abused its discretion in arriving at a determination not supported by substantial evidence. The court also found that the administrator denied Cloud a full and fair review of his appeal and failed to adhere to the requirements of Section 1133 of ERISA. But Judge Scholer’s opinion went beyond the particulars of Cloud’s case.
The process began with Cloud’s application for disability benefits to the Disability Initial Claims Committee (“Committee”) which consists of three members: one person appointed by the NFLPA, another appointed by the NFL Management Council, and the medical director for the Retirement Plan.
Appeals from Committee decisions are handled by the Retirement Board, which is the plan administrator. The Board consists of six voting members, three appointed by the NFLPA and three by the Management Council.
Cloud applied for so-called Line of Duty (“LOD”) disability benefits in 2009, claiming he suffered from vertigo, concussions, and several orthopedic conditions. To qualify, a player must be 25% disabled. Orthopedist Bert Mandelbaum examined Cloud and found a 31% impairment, with an additional 2% for “excess pain.”
The Committee was apparently not pleased with Dr. Mandelbaum’s report because its day-to-day administrator, the Benefits Office, asked him to “review [his] ratings and narrative and submit any changes to the Plan Office…” Dr. Mandelbaum submitted a new report listing Cloud’s “whole person impairment” at 22%, with an additional two percent for “excess pain.” This placed Cloud one percent short of qualifying for LOD benefits.
Cloud filed an appeal and won, in part because of a report by examining neurologist Adam DiDio. Dr. DiDio found that Cloud suffers from several neurological impairments and depression as a result of multiple concussions, including the documented 2004 concussion when he was playing for the Giants.
Cloud’s condition deteriorated over time. He was examined by psychologist Dr. John Patrick Cronin in 2011. Dr. Cronin spoke with Cloud’s wife, Jennifer Cloud, who reported that Cloud’s personality had changed and that he had “issues relating to forgetting where their child was in the home.” Dr. Cronin wrote a report recommending a more thorough work up, based on a history of concussions suffered in college and professional football. The history included Cloud’s inability to read a playbook after the 2004 concussion, which effectively ended his career.
In his report, Cronin criticized an examining neuropsychologist, Dr. Nathan W. Nelson, who concluded that Cloud’s cognitive symptoms were unrelated to the 2004 concussion.
In 2014, Cloud applied for disability benefits with the Social Security Administration. Following an evidentiary hearing, Cloud was issued a favorable decision and an award. The SSA Administrative Law Judge found that Cloud was disabled under the Social Security Act with an onset date of December 31, 2008.
Cloud then applied for total and permanent disability benefits with the Committee. The Committee did not refer Cloud for evaluation by a physician. In July 2014, the Committee awarded Cloud Inactive A benefits, but not Active Football benefits, because the Committee concluded that Cloud did not become totally and permanently disabled during or “shortly after” his career.
Cloud filed an application for reclassification to Active Football with the Committee on February 14, 2016. He claimed to suffer from new disabilities, including “affective disorder.” On March 2, 2016, the Committee denied Cloud’s application for reclassification because it found no additional evidence of changed circumstances since the award of Active A benefits in 2014.
Cloud appealed to Committee’s decision to the Board. The difference in benefits is substantial: In the period 2016 to 2022, Inactive A paid $135,000 per year while Active Football paid $265,008 per year.
The Legal Standard
Under Section 1133 of ERISA, every qualified retirement plan must: (1) provide adequate written notice to beneficiaries whose claims have been denied, including the specific reasons for the denial, and (2) afford a reasonable opportunity to participants whose claims have been denied for a full and fair review.
The U.S Court of Appeals for the Fifth Circuit has set forth a two-step process for determining whether a plan administrator has wrongly denied benefits to a participant. First, the court must consider: “(1) whether the administrator has given the plan a uniform construction, (2) whether the interpretation is consistent with a fair reading of the plan, and (3) any unanticipated costs resulting from different interpretations of the plan.”
Second, if the plan administrator’s interpretation of the plan is legally incorrect, the court next considers whether the administrator abused its discretion. A plan administrator abuses its discretion when it denies benefits “without some concrete evidence in the administrative record that supports the denial of the claim.” [Lifecare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs Inc., 703 F. 3d 835, 841 (5th Cir. 2003).]
The Board Gets Thrown for a Loss
Judge Scholer created no suspense in her lengthy opinion by opening with this salvo: “The curtain has been pulled back as to the inner workings of Defendant The Bert Bell/Pete Rozelle NFL Player Retirement Plan. And what lies behind it is far from pretty with respect to how it handles disability benefit claims sought by former players, such as Michael Cloud.”
The court found that the Board violated ERISA by failing to provide Cloud a full and fair review of his reclassification claim. The Board gave no specific reasons for its decision, did not consider all of the documents submitted, improperly afforded deference to the Committee, and did not consult with an appropriate health care provider.
The court emphasized that no members of the Board saw, discussed, or edited its denial letter before it was sent to Cloud. Judge Scholer characterized the Board’s reasons for denying the claim as “post hoc rationalizations devised by Benefits Office staff and advisors but not discussed among the Board members.” The court also criticized the Board for its general practice of not reading a player’s entire file and for relying on paralegals to do the Board’s work.
Notably, one paralegal wrote that Dr. Cronin’s 2012 report was “submitted with the original request.” In fact, the report was first submitted two years later with Cloud’s 2016 application for reclassification.
The Board also violated ERISA regulations by failing to consult with an appropriate medical professional. Dr. DiDio had stated that neuropsychological testing was “essential” to evaluate Cloud’s traumatic brain injury; he also recommended an MRI. The Board never ordered an MRI or referred Cloud for neuropsychological testing.
After reviewing past decision letters, the court also criticized the Board for never defining “changed circumstances” and for never adhering to a uniform interpretation of that term.
In addition, the Board had disregarded a relevant provision of the Retirement Plan. The Board found that Cloud had not shown that he was totally and permanently disabled “shortly after” the disability first arose, as required by Section 5.3 of the Retirement Plan. However, Section 5.4(b) states that a player is totally and permanently disabled from a psychological/psychiatric disorder that “is caused by or relates to a head injury (or injuries) sustained by a Player arising out of League football activities (e.g., repetitive concussions)…” This section does not contain the “shortly after” requirement.
Since the medical record contains well-documented evidence of Cloud’s psychological and psychiatric disorders relating to repeated concussions, the court held that Cloud qualified for Active Football status. The court noted that the Board’s decision was inconsistent with the Committee’s determination that Cloud was totally and permanently disabled based on the SSA award.
A Damning Conclusion
Judge Scholer made it clear that the Board’s abuse of discretion in this case was not an aberration. In a scathing commentary, she criticized the Board for intending to deny Cloud’s reclassification appeal regardless of the evidence. The opinion continued: “Behind the curtain is the troubling but apparent reality that these abuses by the Board are part of a larger strategy engineered to ensure that former NFL players suffering from the devastating effects of severe head trauma are not awarded Active Football benefits. It is telling that out of the thousands of former players who filed applications for benefits, only 30 players currently receive Active Football benefits.”
The court ordered the Retirement Plan to provide Cloud with Active Football total and permanent benefits, effective retroactively as of May 1, 2014, plus pre- and post-judgment interest. The award is substantial: $1,281,120 in retroactive and prospective benefits.
Adding Injury to Insult
In addition to scolding the Board, Judge Scholer exercised her discretion under Section 1132(g)(1) of ERISA by ordering the Retirement Plan to pay Cloud’s legal fees and costs. Using the lodestar method that considers the difficulty of the legal work, the experience of those performing the work, and the reasonableness of the asserted fees and hours, the court awarded Cloud $1,232,058, which was greater than the amount requested by Cloud’s attorney, Christian Dennie of Fort Worth’s Barlow Garsek & Simon. The court awarded an enhanced amount based on the complexity of the case and the “substantial risk of not prevailing.”
Judge Scholer also took the unusual step of awarding conditional appellate fees to Cloud, based on the anticipated difficulty of litigating the case on appeal. The court set the amount of $250,000 for an appeal to the Fifth Circuit and $350,000 for an appeal to the U.S. Supreme Court.
On July 25, 2022, the Retirement Plan filed a notice of appeal with the Fifth Circuit. It will be interesting to see if the appellate judges share the trial court’s ire over the conduct of the Board and the Council of the Retirement Plan.
