NFL Agrees To Sign A Blank Check To Settle Concussion Class Action
There has been a breakthrough in the settlement of the concussion class action lawsuit against the NFL. Under the original proposed settlement announced in August 2013, the total pool of money available to retired players suffering from qualifying conditions was capped at $675 million. In January 2014, Federal Judge Anita Brody rejected that settlement because of her concern that “not all Retired NFL Football Players who ultimately receive a Qualifying Diagnosis or their related claimants will be paid.” Specifically, Judge Brody stated that she feared that "the $675 million compensation fund would be depleted before twenty years by the large payments mandated for the various Qualifying Diagnosis."
Today, the NFL announced that the $675 million aggregate cap on damages has been removed from the settlement agreement. The NFL has essentially signed a blank check. Under the revised settlement, any retired player (as of the date the settlement agreement is approved) who develops a Qualifying Condition during the next twenty years will be paid the full amount set forth in the settlement agreement, with no limit on the total amount. The settlement sets forth a schedule of payments that a player (or his family) would receive that depends upon the Qualifying Diagnosis that the player received over the next twenty years. For example, a player diagnosed with Parkinson’s Disease would receive up to $3.5 million and those diagnosed with ALS (Lou Gehrig’s Disease) would receive up to $5 million.
The other provisions of the settlement agreement remain unchanged. The NFL will pay $75 million to conduct "baseline" neurological examinations of all retired players. The NFL will also pay $10 million to establish a separate research and eduction fund. The NFL will also be required to pay plaintiffs' attorneys, up to $110 million.
Unlimited Risk For The NFL
This settlement places the full financial risk for brain trauma injuries on the NFL. If the NFL's actuarial projections are correct, the total cost of the injury compensation fund will be, at most, $675 million. If those projections were too optimistic, the NFL could be liable for billions of dollars of damages over the next twenty years. Unless the NFL was able to purchase insurance to cover this risk, there is the possibility that this settlement would eventually bankrupt a team, or even the entire league.
When the NFL settlement was announced in August 2013, the conventional wisdom was that the NFL had obtained an advantageous agreement. It had apparently traded a contingent liability that might measure in the billions for a fixed liability costing less than $900 million. Now that Judge Brody has removed the cap on the NFL's liability, it will take twenty years to learn whether the NFL struck a good deal, or signed its own death warrant.