Starting in July 2011 the National Football League (NFL) and helmet manufacturer Riddell Inc. began facing a number of lawsuits from thousands of former NFL players alleging that concussions and other injuries sustained during their NFL careers resulted in brain and other neurological damage. These concussion-related suits — eventually brought by more than 4,500 retired football players — were consolidated in the Eastern District of Pennsylvania. In re NFL Players’ Concussion Injury Litigation, E.D. Pa., No. 2:12-md-02323 (filed 1/31/12). On August 29, 2013, after nearly two months of intensive negotiations, former United States District Judge Layn Phillips, the court-appointed mediator in the consolidated suits, announced that the parties had reached a settlement agreement. Under the agreement, the NFL and NFL Properties, LLC will pay US$765 million to provide medical benefits and injury compensation for retired NFL football players, fund medical and safety research, and cover litigation expenses. Attorneys’ fees, to be approved by the district court, will be paid in addition to the settlement amount. The settlement agreement must be approved by United States District Judge Anita B. Brody, who is presiding over these cases.

The settlement includes all players who have retired as of the date on which the court grants preliminary approval to the settlement agreement, their authorized representatives, or family members. Riddell and a number of related entities are not a part of the settlement agreement and therefore claims against them for design and manufacturing defects, as well as failure to warn, remain in litigation. If the settlement receives final approval, Riddell and related entities will be the only remaining targets, a potentially risky position since any damaging discovery might be harmful in current and future lawsuits brought by athletes in college, high school, and other types of contact sports (mixed martial arts, soccer, etc.).

Pending Insurance Coverage Cases Arising from the Concussion-Related Litigation

The NFL and Riddell tendered these concussion-related lawsuits to their insurers, resulting in an ongoing battle in various pending coverage suits between the NFL and its liability insurers to determine what, if any, coverage and indemnity will be provided to the NFL. On April 12, 2012, Riddell filed a declaratory judgment action against 13 of its insurers in Los Angeles Superior Court, putting at issue 37 primary and excess policies issued from 1959 through 2011. Riddell v. Ace American Ins. Co., Cal. Sup. Ct. LA, No. BC482698 (filed 4/12/12)

On August 13, 2012, Alterra American Insurance Company, a high level excess insurer, filed an action against the NFL in New York Supreme Court seeking a declaration that it does not have a duty to defend or indemnify the NFL under their primary, umbrella, and excess insurance policies in approximately 93 underlying concussion-related suits. Alterra America Ins. Co. v. NFL, Sup. Ct. NY Cty, No. 652813 (filed 8/13/12). In response to the Alterra action, on August 15, 2012, the NFL filed a lawsuit in Los Angeles Superior Court against 32 general liability insurers that issued 187 primary and excess insurance policies over a period of 44 years, alleging that the insurers wrongfully denied coverage and seeking a declaration of the insurers’ duty to defend the NFL and indemnify it for any damages owed in at least 143 concussion related suits. NFL v. Fireman’s Fund Ins., Cal. Sup. Ct. LA, No. BC490432 (filed 8/15/12). The NFL alleges that its insurers issued “occurrence policies” that provide both primary and excess coverage to cover all sums the NFL may be legally obligated to pay as damages because of third-party bodily or personal injury caused by an occurrence. According to the NFL, the duty to defend — the key issue in dispute — is triggered when the occurrence leading to the liability resulted in injury during the policy’s period. The NFL also sued “Doe” insurers that issued policies to Riddell, claiming additional insured status. On August 21, 2012, Discovery Property & Casualty Company and five affiliated companies (collectively, Travelers) filed its own declaratory judgment action against the NFL in New York Supreme Court, naming two dozen other insurers from the California action, claiming it owed them no contribution for the underlying brain-injury lawsuits. Discovery Prop. & Cas. Co. v. NFL, Sup. Ct. NY Cty, No. 652933 (filed 8/21/12). The Travelers suit seeks a declaration that it is not obligated to defend or indemnify the NFL for any of the concussion-related suits because Travelers does not insure the NFL; it only insures NFL Properties, Inc., the NFL’s marketing company, which is not a party to the coverage litigation (although it is a party to the NFL concussion litigation settlement).

On August 22, 2012, Alterra amended its New York complaint to sue the NFL’s other insurers—the 29 insurers that were parties to the California NFL coverage action. On September 19, 2012, the two New York actions—Travelers and Alterra—were consolidated. On September 25, 2012, the NFL and Riddell declaratory judgment actions in California were deemed “related” and assigned to the judge presiding over the Riddell action. All of the insurers (but one) moved to stay or dismiss the NFL coverage action in California on forum non conveniens grounds, arguing that New York was a more appropriate forum. On November 28, 2012, the court stayed the California coverage action pending the outcome of the parallel New York actions, finding that New York was the proper forum and that the NFL was “selective and tactical” in choosing California. The NFL appealed, and on May 28, 2013, the Court of Appeals affirmed the judge’s stay order. In Alterra, the NFL filed a motion to stay or dismiss with prejudice, based on the prior filed more comprehensive NFL coverage action in California, but that motion was denied on March 15, 2013. As for the New York action filed by Travelers, the NFL filed a similar motion to dismiss, but that motion was denied. No coverage decisions have yet been made in these cases.

Future Insurance Coverage Cases and Potential Impact on Insurers

Although these insurance coverage actions are currently limited to former professional football players, there may be future insurance coverage cases involving college football, high school football, or other contact sports. For example, on September 3, 2013, three former college football players filed a lawsuit against the National Collegiate Athletic Association (NCAA) in the Eastern District of Tennessee on behalf of a class of plaintiffs defined as “All former NCAA football players residing in the United States, who did not go on to play professional football in the National Football League.” Walker v. NCAA, E.D. Tenn., No. 1:13-cv-00293 (filed 9/3/13). The plaintiffs allege that the NCAA failed to educate football players of the long-term, life-altering risks of head impacts, and did not establish known protocols to prevent, mitigate, monitor, diagnose, and treat brain injuries. Plaintiffs seek medical monitoring and their costs and attorney fees for the lawsuit. There is currently another class action against the NCAA pending in the Northern District of Illinois. Arrington v. NCAA, N.D. Ill., No. 1:11-cv-06356 (filed 9/12/11).

However, whether the insured is the NFL, the NCAA or the Ultimate Fighting Championship (UFC), the courts and the parties will face complex coverage issues due to the number of insurers involved and the nature of the alleged brain injury-related claims. One significant issue is that, similar to tobacco or asbestos litigation, the alleged injuries took years to develop and manifest; adverse health effects may only manifest themselves several years after the player retires. So, the definition of an occurrence will likely feature in the litigation. For example, should each game in which the player participated be an occurrence or each season? Depending on the answer, policy limits on several policies could be triggered, and complex allocation issues lay ahead. The larger issue for the courts is whether the primary insurers will have to carry more of the burden than the insurers who wrote the excess policies. Further, because insurance laws vary from state to state (New York law, for example, is thought to be more favorable to insurers than California law), the degree of impact on insurers may depend on where the cases are tried.