Insurer: Lawsuit Could Cost NFL $2.5B

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(from Sports Business Journal, April 29, 2013) The NFL is facing 4,200 retirees in a lawsuit who have signed on to complaints saying they were injured by concussions suffered from the sport. The numbers state the league could pay $2.5 billion if it loses the federal class action lawsuit. Also, according to the NFL’s own lawyer, the league could incur legal costs in the hundreds of millions of dollars, which would make the totals close to three billion dollars.

Among the 4,200 retirees, the math comes down to an average of $450,000 per claim for compensatory damages. Larry Schiffer, attorney for NFL insurer Alterra America said, “and we’re not only talking about compensatory damages here, we’re talking about medical monitoring for the life of these people plus punitive damages for intentional failures and things like that.” The $450,000 per claim totals to $1.89 billion, therefore the remaining $610 million have derived from the punitive damages and medical monitoring costs. The NFL is moving to have the insurers to pay defense costs, which they have, but not at the amount the league is seeking. The league also wants the insurer to cover legal costs, but according to source the insurer doesn’t need to and is only responsible for excess liability. The NFL wanted Alterra’s case dismissed under the theory there is no actual controversy because the insurer at this point faced no such liability, a source said.

“While the numbers are large, they are not particularly surprising to me given the fact that the underlying suits involve multiple players spanning a 45-year period,” said Lynda Bennett, chair of the insurance coverage practice at Lowenstein Sandler, “in light of the $2.5 billion potential liability, coupled with the fact that this dispute is taking place on two coasts right now, the litigation expense will certainly escalate.” The lawsuit has been taking place at a federal court in Pennsylvania, and the NFL is looking to move the insurance lawsuit to a California court where the state’s laws are more amenable to policyholders.