Troubled NFL Concussion Deal May Roil NHL Cases

By Steven M. Sellers

The fallout from the National Football League’s troubled $1 billion concussion class settlement will be felt in another professional sport dealing with its own concussion crisis: the National Hockey League.

The NFL settlement, once hailed as a “revolutionary compromise and easily implemented” model for future mass tort cases, has proved thorny in application, with players’ charges of a “rigged” payout system and league countercharges of fraudulent injury claims.

Those and other problems with the rollout of the NFL’s compensation system have triggered a wave of litigation over supposedly “settled” issues.

It remains to be seen how strongly the disputes will affect similar concussion cases brought by retired NHL players but the impact could be significant, lawyers tell Bloomberg Law.

“For better or worse, the NFL settlement set the bar for future mass personal injury settlements in the sports context,” said plaintiffs’ lawyer Paul Anderson, of the Klamann Law Firm in Kansas City, Mo.

Anderson represents players in the NFL settlement and blogs on sports concussion litigation.

Elizabeth Chamblee Burch, a law professor at the University of Georgia Law School, agreed.

“The NFL settlement has to affect the NHL cases in some way,” said Burch, who focuses on mass torts and complex litigation. “It would be silly not to learn from the lessons from the NFL litigation.”

NFL lawyer Brad Karp, however, defended the settlement as “a landmark and innovative resolution of personal injury, MDL class action litigation” that is “supported by more than 99 percent of retired NFL players.”

“Rather than engage in protracted, expensive and risky litigation with their former players, other professional sports leagues may well look to the NFL settlement as a model of how to resolve hundreds, if not thousands, of personal injury claims to ensure that deserving retirees with legitimate diagnoses of cognitive impairment be paid promptly,” said Karp in an email. He is with Paul, Weiss, Rifkin, Wharton & Garrison in New York.

Whether one views the settlement as Karp does, or as plaintiffs’ attorneys critical of the deal do, big differences in the two leagues’ approaches to the litigation, and their varying financial positions, may blunt some of the NFL deal’s influence.

Both sets of litigation are similar in that former athletes claim the leagues failed to warn and protect them from long-term brain injuries from repetitive head truama, according to another plaintiffs’ attorney, Brian Gudmundson, of Zimmerman Reed in Minneapolis.

But it’s a mistake to assume the hockey litigation will follow the path blazed in the NFL cases, Gudmundson said.

Unlike the NFL cases, a trial in the NHL litigation is “likely” because the league’s position is that there is no scientific proof ice hockey participation causes a degenerative brain disease known as chronic traumatic encephalopathy, or CTE, he said.

“The NFL sort of agreed that there was a problem, but the NHL has taken a scorched earth approach, so in that sense, it’s a very different case,” said Gudmundson, who represents both NFL players and NHL players in concussion litigation.

Anderson pointed to finances as another issue in play. “The NHL could point to the NFL settlement as a model, but the question is whether they can and will put up the same amount of money,” he said, estimating the hockey league has already spent at least $1 million defending the case.

Counsel for the NHL didn’t respond to a request for comment.

Saber-Rattling

The saber-rattling doesn’t necessarily mean a settlement, including one modeled on the NFL deal, is off the table, said Matthew Mitten, executive director of the National Sports Institute at Marquette University Law School in Michigan.

“Both sides want to flex their muscles and show they have a strong case or defense,” Mitten said. “But it’s unpredictable once a case goes to a jury, and both sides have exposure.”

The stakes are certainly high in the NHL cases, where Judge Susan Richard Nelson, of the U.S. District Court for the District of Minnesota, is weighing whether the multidistrict litigation will proceed as a class action.

Pursuing the claims as a class, rather than individually, could increase the players’ leverage at trial or in reaching a settlement, the lawyers said.

“Maybe it’s going to require a bellwether case,” Anderson said. “I suspect if the judge grants class certification on discrete issues, we’ll finally see them play out in a federal court.”

But the rancorous rollout of the NFL deal also creates questions about whether the benefits of a class settlement are worth the risks evident in the football litigation.

One of those risks will be aired May 30, when the U.S. District Court for the Eastern District of Pennsylvania will hold a hearing on the NFL’s request for a special investigator to probe potentially fraudulent claims.

The hearing stems from an April 13 court filing in which the NFL alleges “deep and widespread” fraud in claims submitted for compensation.

Those charges came after plaintiffs’ lawyers alleged in March that payments on dementia claims have lagged significantly, and that meritorious brain injury claims had been improperly rejected by the NFL—an accusation vehemently denied by the league.

“The NFL settlement has achieved extraordinary results during its first year, including establishing nationwide networks of over 300 neurologists and neuropsychologists available to examine retired NFL players to assess their neurocognitive and neuromuscular health,” Karp, the NFL’s lawyer, said.

He said those doctors have scheduled “over 3,500 eligible players for free baseline neurological examinations,” and the deal has funded some $300 million in compensation claims.

Third-Party Lenders

But another factor that has complicated the NFL litigation are third-party consumer lenders. These “payday” type lenders, who have advanced money to players at high interest rates based on their expected big payouts, have thrown their own wrench into the settlement payout system.

The “unambiguous language of the settlement agreement” is that any assignment or attempted assignment of a settlement class member’s monetary claims to a third-party funder is “void, invalid and of no force and effect,” Judge Anita B. Brody, who oversees the NFL litigation, said May 22.

Brody’s comments came when she issued a permanent injunction against Thrivest Specialty Funding LLC, a third-party litigation funding company based in Conshohocken, Pa.

Thrivest, one of many lenders helping bankroll cash-strapped players, argued it had the right to arbitrate a dispute over a $500,000 advance payment to class member William White.

Burch, of the University of Georgia, expects similar scenarios will play out for brain-injured NHL players hoping for quick compensation to cope with worsening cognitive impairments.

“The NHL players are certainly going to be targeted by third-party litigation funders,” she said.

Getting Off the Front Page

Professional hockey, by one estimate, brought in nearly two-thirds less in annual revenue in 2015 than the $11.1 billion earned by the NFL.

That could mean that any settlement of the NHL litigation could hinge more on television ratings than law, the lawyers said, pointing once again to the NFL’s experience.

“When people begin to feel players aren’t given some reasonable compensation for injuries, they may be less likely to watch these games,” Mitten, of Marquette University, said.

Paul Haagen, co-director of the Center for Sports Law and Policy at Duke University Law School in Durham, N.C., agreed.

“The NFL settled in an effort to get the cases off the front page, to draw a line under the failure-to-warn cases,” Haagen said.

Some plaintiffs’ lawyers also suggested the NFL’s recent move—a May 23 announcement that teams will be fined if players kneel during the National Anthem—was designed to blunt the impact of an upcoming television program on flaws in the concussion settlement.

The HBO program is scheduled to air May 24 on Real Sports with Bryant Gumbel.

As for the NHL, “if there’s public outcry, then you’ll see a change in the NHL’s position and they will engage in cost minimization,” Haagen said.

That public outcry is justified for brain-injured NHL players whose pain is aggravated by delays in getting fair compensation, the plaintiffs’ lawyers said.

“Trauma, despair, hopelessness, cynicism, anger, you name it,” Gudmundson said. “These players are suffering terribly.”

To contact the reporter on this story: Steven M. Sellers in Washington at ssellers@bloomberglaw.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bloomberglaw.com

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