Disability Insurance Takes Center Stage As Athletes' Income Grows

As published in The Legal Blitz, by Steve Silver, November 29, 2014.

Wearing Alabama gear to an Auburn house during the Iron Bowl is risky.

Playing a contact sport without disability insurance is just plain dumb. Fortunately, as athletes' salaries and endorsement deals skyrocket, more and more of the top performers are wising up to the value of purchasing disability policies.

Recently, many college football fans watched in horror as Georgia star running back and projected top-10 NFL draft pick, Todd Gurley suffered a season-ending knee injury. Decades ago, Gurley's injury might have spelled financial and life disaster. However, thanks to recent NCAA rule changes, athletes like Gurley can purchase various disability policies either by borrowing against their projected future earnings or through their school directly.

Insurance policies, however, might as well be written in Klingon. So to better explain the ins and outs of insurance, we called in the big guns. Attorney Frank Darras has spent his life fighting insurance companies. He is one of the top disability lawyers in the nation and has won nearly $1 billion for his clients. His firm, DarrasLaw has seen, evaluated, litigated, and resolved more disability and long-term care cases than any firm in the United States.

So yea, he knows a thing or two about disability policies and how they play a huge role in college and professional athletics.

In the cases of Marcus Lattimore and Todd Gurley, the sports media has discussed individual disability and loss of value insurance a lot. What does that mean and what are the differences between disability insurance and a loss of value policy?

For the elite professional athlete, five different types of high-limit disability coverage is available.

(1) Permanent total disability pays an agreed monthly disability benefit after the waiting period is exhausted if an illness or injury prevents the athlete from permanently playing his sport. The illness or injury must occur after the policy is sold and the player must have received the most appropriate care for the condition causing disability. Depending on the player's earnings, their monthly benefit is negotiable and the elimination period can be as short as 90 days or as long as a year with monthly benefits payable for 24, 36, 60 or 84 months.

(2) Loss of endorsement coverage protects the players endorsement income when conduct, statements or questionable activity could negatively impact the fans of the athlete causing the sponsor to terminate the endorsement deal. Tiger Woods, Johnny Manziel and Michael Phelps all would have been lucky to have this coverage to replace sponsors that may have pulled endorsements recently.

(3) Cost of agents and manager coverage should the pro athlete become disabled and hopes to rehab and keep the athlete's progress and good name in front of the public and teams that might be of interest, is also available.

(4) Free agent slot protection is also viable for the pro athlete who will be entering the free agency market and wants to protect their projected salary in the free agent market against disability. This coverage is usually for half of the projected compensation so if a free agent is expected to earn $25 million, the coverage could be as high as $12.5 million.

(5) Career ending disability protection has been in the news of late with Jermichael Finley's $10 million dollar insurance issue. Players can receive a tax-free agreed upon lump sum if they will permanently be prevented from ever playing their professional sport after an agreed upon waiting period.

(6) Finally the NCAA offers potential first to third round projected Division I college athletes going to the NFL, NHL, MLB, NBA and the WNBA career ending coverage up to $5 million dollars. The athletes, if approved, are automatically eligible for a NCAA sanctioned loan with a competitive interest rate and no co-signer. The athlete is obligated to repay the loan in full when he/she signs a professional contract or when disability benefits are payable or when the loan note matures.

(7) Aside from the NCAA's capped $5 million in career ending coverage, the private market place like Lloyd's of London offers college athletes projected first to third round potential draftees additional career ending coverage up to $10 million and permanent total disability coverage up to $5 million.

Most of the policies in the private market also provide as an additional benefit, permanent total disability benefits if the athlete permanently and irrevocably loses their sight in one or both eyes, one hand or one foot or are a paraplegic/quadriplegic.Marcus Lattimore, running back for the San Francisco 49er's recently retired from the NFL after suffering devastating ACL and MCL tears in his knee in 2011 while at University of South Carolina. According to ESPN, Lattimore is alleged to have purchased a $1.7 million tax free permanent total disability policy which should pay if he is unable, because of sickness or injury, to sign any future contract to play football.

Todd Gurley, University of Georgia running back, was serving a four game suspension for allegedly accepting compensation for autographs while a leading candidate for the Heisman Trophy earlier this year. According to reports, Gurley already had a $5 million dollar, career-ending disability coverage and an additional $2.5 million loss of value policy that protected his projected draft slot position at number 8 overall. While serving the suspension, his loss of value policy was increased to $5 million. Unfortunately, in his first game back after the suspension Gurley tore his ACL against Auburn and just like that, his season was over. If Gurley isn't drafted at 8 or higher, and the injury is the cause of his fall in projected slot position, the $5 million loss of value policy would clearly be in play.

In terms of athletes, who should invest in these individual disability policies? Only the top-tier college and pro athletes, or anyone with professional aspirations?

Anyone that has spent time and money furthering their education or technical skills should have private individual disability protection that protects what they have trained so hard to achieve. Today's policies offer non-cancellable guaranteed renewable occupation specific coverage for as short as one year and in some cases to age 67. The non-cancellable guaranteed renewable feature means the premium is fixed or step graduated and as long as the monthly, quarterly, semi-annual or annual premium is paid on time, the carrier can't cancel the contract. "Own occupation coverage protects the insured for the way he/she does the important duties of their occupation. For an orthopedic doctor with "occupation specific" coverage, if they were unable to operate they could collect their full monthly disability benefit even if they could continue to see patients with strains or sprains. For the pro quarterback with a shoulder injury who could no longer throw but was still able to hand off to a running back, they could collect total disability benefits even if they worked full time as a broadcaster.

For the average NFL player whose career lasts 3.5 years, career ending coverage, loss of endorsement and a permanent total disability policy that pays a lump sum after a waiting period or monthly benefits after an elimination period is a crucial part of true financial planning. The National Football League Player Association recently announced it will partner with Petersen International Underwriters out of Valencia, California to sell a Lloyd's of London guaranteed issue career ending, permanent total disability insurance. The beauty of guaranteed issue coverage is that every NFL player qualifies. With the concussion settlement recently resolved, the NFL players will now be able to start with career ending disability coverage and have the additional opportunities to stack on top, free agent projection protection, endorsement deal coverage, and agent/manager disability insurance.

If an athlete ends up collecting on an insurance policy, do they have to pay taxes on it?

An athlete with great financial advisors and a top-rated disability attorney will always make sure the benefits of their permanent total disability coverage, loss of value or endorsement/agent coverage is non-taxable, if possible.

What are some of the biggest obstacles to overcome when an injured athlete wants to collect? Is there a specific proof structure for proving a permanent disability or does it vary by policy?

Disability carriers like to collect expensive premiums and these permanent total disability policies typically cost between $8,000 to $10,000, per million dollars insured.

(a) The easiest denial strategy is for the carrier to argue the insured misrepresented his health, financial or medical information when applying for the policy so the only cost is reimbursing the policyholder for their premiums plus interest but no disability benefits. Making sure the insured takes the time to carefully, accurately, read and understand the multiple questions on a disability application is critical. Mishearing, misunderstanding or misinformation on an application results in lengthy delays and often a rescission of the claim.

(b) If the carrier can't rescind the policy for a fraudulent misrepresentation the next best defense strategy is that the player was treated or should have gotten treatment, consultation, medical care or advice or taken prescription medication during the pre-existing condition period. Most players and their handlers step into this pre-ex trap because all players are seeing a trainer periodically; they often get manipulations or adjustments from a chiropractor; often get massages from the staff physical therapists and have X-Rays and MRI's shot when the first sign of an injury is apparent. These normal every day routine preventative care visits or treatments are then blown out of proportion as medical care, advice and treatment to eliminate any chance to collect disability benefits. A careful and thorough evaluation of all treatment from anyone during the pre-ex period is crucial to collecting the benefits.

(c) Is the insured totally disabled, partially disabled or not disabled at all? Insurance companies test an insured's occupation at the onset of the claim, not on the occupation that was listed on the application. Carriers will look at the one or two years before the disability starts to determine the insured's primary, material, substantial and important duties measured in time spent or money earned. For the MLB third baseman that can pinch hit but not throw across the diamond, carriers would argue partial disability because the player could still hit. We would argue, if he was a starter he would normally get 3-5 at bats per game and a pinch hit appearance here and there would not equate to the time spent regularly hitting if he was in the line-up every day.

(d) Has the insured done any activities inconsistent with their restrictions and limitations that the insurance company can latch onto to deny? If bending, stooping, pushing, pulling and carrying are medical restrictions from the treating doctor why did the insurance company obtain videotape of the player loading laundry detergent or beer at Costco? Every time the insured leaves their house their activities are fair game for insurance company videotaping, so beware.

(e) Has the insured posted on Twitter, Facebook or Instagram vacation, wedding or party photos or information the carrier can suggest is damning to the insured's claim for injury or illness? What you post can and will be used against your claim for benefits, so be very careful.

(f) Has the carrier asked for a personal field visit to better understand your claim? Most policyholders believe the introduction, that a personal visit is really designed to better get to know the insured. That's false. The carrier is hoping the insured's Ferrari is parked out front of their mansion and they show up wearing a Rolex while their phone blows up with calls during the interview. What you have and where you live, the art hanging in your entryway will be painstakingly detailed so no one on your jury will feel sorry for you. Be smart, have the interview at a Denny's or a local restaurant and if the player has cognitive impairments, from the pain meds they're taking, why are they driving to the meeting? Call UBER!

(g) Does the carrier want to send the athlete to a functional capacity exam or independent medical evaluation? Most carriers know exactly who they want to send you to for an insurance company examination. Is the doctor in the right medical specialty to evaluate the sickness or injury? Is the doctor still practicing real medicine with a real staff and surgery schedule or is the exam at another doctor's office they are renting for the exam? Know who the doctor is and what the exam entails before agreeing to any insurance company examinations.

(h) Finally, appreciate that insurance companies have been around for 200 years. They make billions by minimizing, routinizing and normalizing legitimate disability claims. Some, make the process long and hard, expensive and demoralizing. They make the courthouse impossible to find and too expensive to get into. Carriers also know that time is their friend and if they make the process extremely difficult even the strongest disabled insured will bend. Remember, if the player is taking on a billion dollar insurance company with an army of claim people and lawyers along with an unlimited war chest, hire someone who specializes in high stake litigation with a proven national record of success. Make sure the disability lawyer has a reputation for stellar advocacy and that they have the money to finance the litigation because it isn't cheap. Look for a lawyer that has tried and litigated to conclusion cases where not only are the full disability benefits collected but attorneys' fees, emotional distress and punitive damages have also been recovered.

The biggest obstacle to collecting on a loss of value or slot protection is that the player had a lackluster combine or pro-day. Teddy Bridgewater, quarterback for University of Louisville and now the starting quarterback for the Minnesota Vikings had a loss of value policy that some wondered whether he would sue to collect on. According to the media, if Bridgewater wasn't selected as one of the first 11 picks of the draft, and he wasn't, filing a claim was an option. He ultimately was selected as the 32nd pick of the draft but to my knowledge no litigation has been filed. Further, insurance companies may elicit testimony that it was the various clubs' needs that didn't match what the player brought to the draft not a minor injury or sickness.

In terms of Todd Gurley, he now has a torn ACL. I assume he will rehab and try to make it in the NFL.
However, would it be smarter for him to just stop playing football and collect his $10 million policy or is he obligated to try to mitigate his damages and attempt an NFL career?

Todd Gurley is allegedly rehabbing his torn ACL but is he permanently prevented from ever playing or will his draft stock drop putting his loss of value policy at issue? It's too early to tell how the rehab is going to speculate on whether Gurley ever plays again.

The loss of value policy and the extent of his potential fall as a shoe-in first round NFL pick in the 2015 draft is really interesting. As many will remember, Gurley amassed nearly 4,000 yards rushing, caught 55 passes and ran back 11 kickoff returns for touchdowns and was a legitimate Heisman candidate absent the injury and suspension. Some say Gurley's post autograph candor and honesty will help his draft stock. Others say it's a blemish that won't be forgotten on draft day. He will be a steal if his rehab is successful when and if he goes late in round one as some had him as a top-5 overall pick.

Similarly, I saw a story about Pro golfer Anthony Kim allegedly sitting out in hopes of collecting on a disability policy. Can he do this? I assume as long as he has a doctor certifying that he is disabled, then it is legitimate?

The internet is full of speculation as to whether pro golfer Anthony Kim who earned over $12.2 million dollars in tour earnings is attempting to return or cash in on a lucrative career ending permanent disability policy. The policy is allegedly close to $20 million dollars and if it's been set up properly as a tax free benefit, Kim would have to earn $35-38 million to better the policy. Kim was the star of the 2008 Ryder Cup and also Nike's $6 million dollar endorsement man following the '08 season.

It's interesting that his injuries were initially a thumb problem followed by surgery then a devastating Achilles tendon injury that has kept him off the tour since withdrawing from the Wells Fargo Championship in 2012. Since then, there are mixed reports that he is the most competitive guy around, against others who say he isn't injured anymore. These are the kind of cases where what Kim does and has done since his injuries and the care, treatment and rehab will be closely scrutinized. If the injuries legitimately prevent his return to pro golf he surely paid rich premiums for the coverage and he is entitled to the payout.

However, if his insurance company is monitoring social media, documenting what people who are arguably close to him are saying, they may be building a case for denial even before his claim is filed.

What role, if any, does a lawyer play in helping an athlete find the right insurance policy? Is there room for unique drafting of policies or are they standardized?

A top-rated individual disability lawyer with professional athlete contract and litigation experience is vital to finding the right company and policy. Agents and financial planners can put the player's earnings into the pot and coordinate the payment of premiums, but analyzing the contract terms and the insurance company writing the policy should be left to the disability lawyer.

How the language of the policy will be interpreted in the state the policy was delivered are legal questions that need to be answered before the player fills out an application. What prior illnesses, sicknesses or injuries has the player sustained before the policy is applied for will dictate whether the athlete is insurable and for how much and how long the benefits will last. What about routine preventative care, chiropractic adjustments, physical therapy, ice baths, massages? Do any of these daily preventative aids need to be disclosed or if they aren't will the carrier argue the insured misrepresented his health and is a fraud?

Finally, if an injury or sickness results in a legitimate disability triggering the need to file a claim, insurance company claim forms are tricky for both the claimant and the doctors treating him/her. So, a top disability lawyer's help is crucial. This year, we all remember the Alex Rodriguez debacle in New York on whether Alex was eligible for team-funded disability benefits. The Yankees had allegedly purchased a high-limit disability policy to reinsure some of his $25 million a year salary and were contemplating a claim. Mr. Rodriguez was telling the media he was going to return until the suspension eliminating his chances to play in 2014. Some suggest the Yankees were clearly aware of the looming suspension but hoped to have Mr. Rodriguez disabled before the MLB imposed it, opening the door to collecting on the policy they funded.

An interesting side note, and clearly something a defensive-minded insurance company would have raised, was whether the injury was caused by performance enhancing drugs that may have violated the League's substance abuse policy. If the carrier could prove Mr. Rodriguez intentionally took illegal drugs, state or federal law may have prevented any recovery. In the end, the arbitrator reduced a 214 game suspension to 162 and I hope Alex Rodriguez has successfully recovered from his injuries and that he can regain his marquee status.

Additionally, you have battled insurance companies successfully for many years now. What is your secret in overcoming policy denials, processing delays, etc.?

Our secret to successfully defeating billion dollar insurance companies' wrongful delays and denials has been choosing the right clients to represent and never being swayed by the dollars at stake. We don't care whether the policy pays 50 dollars a month or 5 million dollars a month. It's always about representing good honest people. For nearly 30 years we've shown the industry we don't represent liars, cheats or frauds and we won't stand down from any disability carrier, ever. At DarrasLaw, our investigators vet the insured's background, education, criminal and civil records, drug and prior tax issues, if any, along with the quality of treatment the insured received and how hard they tried to get better after the injury or sickness.

We always say, "no case is too small and no venue is too far away for our firm to get involved because we love what we do." We change disabled lives every day and ours is a very privileged way to practice law. With over 2,500 new referrals a month pouring in from all over the country, we really get to see the insurance industry's claim handling in real time. So if a carrier has instituted a new internal claim hurdle or payment denial strategy we see it 100 times before the average disability lawyer has seen just one. Early recognition of an institutional denial strategy allows us to step in and fix the wrong and get the policy benefits to clients which they paid richly for and deserve.

Finally, as founding partner of DarrasLaw I personally review each referral daily so I can make sure we are extending a helping hand to all those who need our expert advice and help.

This year the NCAA allowed its members to purchase loss of value insurance for its athletes and to allow athletes to borrow against future earnings to purchase disability plans? Do you think that was a smart decision?

I thought the recent decision by the NCAA to allow Division I college athletes to borrow against his or her future earnings potential to buy loss of value insurance was terrific. The athletes must borrow from an established, accredited commercial lending institution which will offer very competitive interest rates and no co-signer. In addition, the school can now use money from their "student assistance fund" to help the athlete pay for the coverage like Florida State is doing for Jameis Winston. According to Winston's coach Jimbo Fisher, "they all want to leave for the money. If I know the money is guaranteed I can stay and a get a college degree."

Who can or should a young athlete turn to for advice on insurance policies? I imagine the NCAA might block them from consulting with a lawyer or an agent.

The NCAA's website highlights the general and specific student athlete insurance programs including catastrophic insurance and the Exceptional Student Athlete Disability Insurance Program. The site outlines who is eligible, the application process, how premium financing works for the policies, what's available including permanent total disability, what the elimination periods are before benefits are payable, along with presumptive disability coverage. Maximum coverage limits along with premium rates and definitions of disability for the various policies is also available. Players and their families may also learn about high limit career ending disability insurance along with the loss of value cover in the private marketplace. The benefits in the private market can reach $10 million, while the exceptional student insurance through the NCAA is capped at $5 million. At DarrasLaw, we always offer free advice and insurance policy analysis to anyone who needs help.

How did you end up specializing in disability insurance law and what is your favorite part about it?

I worked my way through college as a paramedic so cutting edge medicine and treatment has always been easy for me. It was understanding how the new disability policy I bought after law school that was difficult. Frankly, I couldn't make heads or tails out of the language in my policy and wondered how could anyone else understand all the nuances if I was a lawyer and had no clue? The agent made all the features, advantages and benefits sound so rich but as I dug deeper I found a policy that was full of legalese and left nothing but ambiguity and I was hooked.

I was very blessed that my very first individual disability case was representing a disabled janitor that had mild traumatic brain damage and was getting beat up, worn down and nearly starved out when I agreed to take on his fight. His billion dollar disability insurance company had worn out his treating doctor with an endless stream of confusing claim forms and when they wrongfully delayed and ultimately denied his disability claim his employer fired him. My insured had no money, no disability benefits and no insurance to get the appropriate treatment he needed for his brain injury. I was honored to have the privilege of representing this hard working, salt of the earth man and his family and when we were able to cripple his disability carrier with riveting and compelling testimony from family, friends and co-workers about how hard he tried to get better our jury listened. With terrific doctor support and a leading local brain expert we recovered all the back and future disability benefits, plenty of emotional distress damages and punishment damages, as a reminder to his insurance company that we all pay rich premiums for insurance and we expect our carrier to timely deliver on the promise of peace of mind and security.

As a result, in my practice, the poor and the disadvantaged always come first because that is where I came from. The doctors in that case all had disability policies they couldn't understand so I offered them free insurance policy and claim assistance for themselves and their patients and the medical community sought my help in droves. From that humble start, we've grown to be the country's largest individual and long term care litigation firm in America. With our national practice, we litigate across fifty states with the very best team of disability experts and a support staff that rivals a billion dollar insurance company. In addition to a stellar staff of disability attorneys we have a full-time nurse that keeps us current on all the current cutting edge medical procedures and medications along with vocational resources to assist with all the physical and cognitive demands of literally any type of occupation.

Our dedication to the disabled has returned nearly $800 million dollars to denied policyholders from every state in America. My favorite part of our practice is being able to level the playing field no matter if our clients are famous athletes, truckers or from the medical, dental or chiropractic community. We have three decades of solid litigation success and our DarrasLaw name has meant real protection for policyholders everywhere. Our firm also enjoys "paying it forward" with free insurance policy analysis and free claim advice to all who need it. It takes decades to earn the respect of a billion dollar insurance industry and our track record of achievements literally puts DarrasLaw into a disability league of our own.

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