(Editor’s Note: What follows appeared in Sports Medicine and the Law , a periodical produced by Hackney Publications and Montgomery McCracken)
By Joseph E. Samuel, Jr., Esq.
Nearly seven years after reaching a class-wide settlement—then estimated at roughly $1 billion—with thousands of retired players who brought concussion-related lawsuits, the National Football League is now pressing its claims in New York state court to recoup those funds from various insurers. Meanwhile, disputes remain even among the insurers themselves about who is liable.
In a widely publicized 2015 settlement approved by the U.S. District Court for the Eastern District of Pennsylvania, the NFL agreed to set up an open-ended fund to compensate the alleged victims in a class of concussion lawsuits. Individual payouts from the fund were capped at $5 million. Players were required to submit to baseline assessments and other medical examinations to determine their injuries. At the time, experts predicted that the fund would pay out at least $1 billion. As of the Claims Administrator’s latest status report in January 2022, the fund has already paid over $861 million, including over $830 million to members of the class and their lawyers. Since that settlement, the NFL continued to litigate against various insurers in an effort to obtain coverage. Twenty-nine such insurers have resolved the claims against them, including Westport Insurance Corp., but the NFL continues to litigate against four insurers.
In September 2021, insurer American Guarantee and Liability Insurance Company (“AGLIC”)[1] moved for summary judgment on the NFL’s coverage claims against it, arguing that the very nature of concussion-related football injuries means that the NFL is not eligible to recover under AGLIC’s policy.[2] AGLIC argued that the excess policy it issued the NFL only applies when the NFL “at minimum, exhaust[s] the $51 million in coverage provided by the primary, umbrella and lower-level excess insurance policies beneath AGLIC’s coverage.” Because those underlying policies do not have aggregate limits, AGLIC argued, its re-insurance policy can never be triggered, and there is $51 million available for each “occurrence.” AGLIC claimed that “each player’s alleged injuries from head impacts are at least one ‘occurrence,’” and because the class-wide settlement limits any payments to players at $5 million each, AGLIC’s re-insurance policy can never be reached.
The other three insurers in the case strenuously opposed AGLIC’s motion.[3] In a November 2021 filing, TIG Insurance Company, the North River Insurance Company, and the U.S. Fire Insurance Company[4] disputed whether each former player’s impacts to the head during football games constituted an “occurrence,” calling this a “flawed assumption.” Instead, these insurers suggested that “the NFL Parties’ allegedly fraudulent and knowing conduct” weighs on whether there even was an occurrence and, if so, the number of those occurrences. These insurers also argued that summary judgment is premature given that fact discovery, including depositions, is yet to conclude. Notably, the insurers claimed that “the determination of the number of occurrences is a highly fact-intensive inquiry and an issue of first impression in the context of sports-related head trauma claims, not just in New York but throughout the country.”
In its own response,[5] the NFL sided with AGLIC and agreed that with respect to the other three insurers’ policies, that there “is at least one separate ‘occurrence’ and thus at least one separate ‘per occurrence’ limit for each underlying tort claimant.” The NFL also agreed that these policies have no aggregate limits. However, the NFL asked the court to “discontinue” its claims against AGLIC without prejudice, arguing that it was too early to determine “definitively” whether any former NFL players who opted out of the class-wide settlement might have claims that exceed $51 million at some point in the future. Importantly, the NFL noted that AGLIC’s excess policy only covered a single season—the 2001-02 policy period—while the Fairfax insurers “together issued 24 consecutive years of primary coverage from 1978 through 2002 as well as a number of umbrella and excess policies.”
In other words, the dispute pits AGLIC and the NFL on the one hand, with the Fairfax insurers on the other. It will turn on what the Fairfax insurers dubbed “an issue of first impression … throughout the country”—namely, whether the repeated impacts to the head experienced during football by each former player themselves constitute “occurrences,” or whether the NFL’s alleged “concealment and misrepresentations of the alleged risks of football” is itself the “occurrence,” as the Fairfax insurers argue.
Oral argument on AGLIC’s motion is scheduled for April 19, 2022. At that argument, AGLIC and the NFL will rely on New York law that holds “the operative occurrence” to mean “the last link in the causal chain leading to [the insured’s] liability. Appalachian Ins. Co. v. Gen. Elec. Co., 8 N.Y. 3d 162, 170-173 (2007) (citing Arthur A. Johnson Corp. v. Indem. Ins. Co., 7 N.Y. 2d 222 (1959). According to AGLIC and the NFL, this is also referred to as the “unfortunate event” test, differing from a test that other jurisdictions apply that instead looks to the originating cause.[6] Applying this test in light of the temporal and spatial differences between each claimant, AGLIC and the NFL argue, the court must conclude that each claimant’s repeated exposure to head impacts during NFL football constitute the “last link in the causal chain.”
The three Fairfax insurers argue that Appalachian Ins. Co. and other related cases are “factually distinguishable” because they involve incidents of sexual abuse or exposure to toxic substances like asbestos. The insurers claim that the underlying class of former players did not seek to hold the NFL liable for head impacts during football, a risk the insurers called “inherent” and “voluntarily assumed by players who chose professional football as a career.” Instead, the Fairfax insurers claim that the underlying “occurrence” is the NFL’s “misrepresentation or fraudulent concealment of the risks of such head trauma.”
Is Insurance “Killing Football”? An Update
It remains to be seen how the court will rule after the April 2022 oral argument, but the decision could have a major impact on how insurers view and value the risks of football going forward. In a previous article titled Insurance is Not Killing Football, Other Contact Sports—It’s Making Them Safer, we noted how ESPN’s Outside the Lines was reporting that the insurance market for football and other high-contact sports was at risk of drying up. That Outside the Lines report specifically identified asbestos litigation as a potential roadmap of how insurance coverage issues might proceed.
Now, in light of AGLIC’s motion, the comparison seems particularly poignant. AGLIC and the NFL are seeking to hold the Fairfax insurers liable based on caselaw that developed primarily in the context of asbestos and other toxic torts. See Appalachian Ins. Co., 831 N.Y. 3d at 162. Meanwhile, the Fairfax insurers seek to distinguish those cases by highlighting differences between the repeated “occurrences” that take place in the toxic tort context and the allegedly single “occurrence” of the NFL’s “misrepresentation or fraudulent concealment of the risks of such head trauma.”
If AGLIC and the NFL prevail, and repeated instances of head trauma are directly linked to toxic tort cases, the warning from Outside the Lines carries more weight. But if the Fairfax insurers prevail, and the underlying occurrence is viewed merely as the collective action of NFL executives, the comparison to asbestos is no longer as strong. Put simply, insurers might be more willing to offer brain trauma insurance if courts begin to view actions by organizational leaders as the underlying insurable risk, rather than the inherent nature of football and other contact sports. This could have major implications for organizations like Pop Warner, who itself is engaged in concussion litigation and recently won a major victory in the U.S. Court of Appeals for the Ninth Circuit.[7]
Sports Medicine and the Law will continue to follow the NFL’s pursuit of insurance coverage over its concussion litigation settlement and will provide an update after the New York Supreme Court resolves this novel and important legal issue.
[1] AGLIC is a member of the Zurich Insurance Group.
[2] See AGLIC’s Memorandum of Law in Support of Motion for Summary Judgment, Alterra America Ins. Co. v. NFL, Case Index No. 652813/2012, at Doc. No. 648 (N.Y. Sup. Ct. Sept. 30, 2021).
[3] See Alterra, at Doc. No. 674.
[4] These three insurers are each subsidiaries of conglomerate insurer Fairfax Financial Holdings Limited.
[5] Alterra, at Doc. No. 688.
[6] See supra note 5, at 11-12.
[7] See, e.g., Archie v. Pop Warner Little Scholars, Inc., 2019 WL 8230854 (C.D. Cal. Dec. 27, 2019), aff’d, 2021 WL 4130082 (9th Cir. Sept. 10, 2021) (granting summary judgment to Pop Warner because there was “not a sufficient evidentiary basis that Pop Warner’s alleged negligence in connection with Pop Warner Football . . . was a substantial factor in” a class action claimant’s accident and another’s suicide allegedly resulting from chronic traumatic encephalopathy (CTE)).
