Ever since loss of value insurance coverage became the norm for first- and second-round draft prospects, we find ourselves asking a series of new questions: Who has loss of value (LOV) coverage? Who was injured? Who is likely to file a claim? Will any of them collect any benefits?
While permanent total disability and loss of value insurance policies can provide millions of dollars in benefits, as they did for Ifo Ekpre-Olomu (pictured above), they often do not pay out at all. When the insurer refuses to pay, can the college or university end up liable for the lost benefits?
If the institution guided the athlete through the policy evaluation, purchase and application process, it might be. That is essentially what Morgan Breslin alleges in his widely reported lawsuit against USC.
It was clearly stated here last October that the NCAA and institutions should make it a priority to educate athletes and their families about the problems many others have faced in trying to collect loss of value insurance benefits.
Is there a way for educational institutions to guide elite student-athletes through the policy evaluation and application process without being sued for their role later? Unfortunately, there is no perfect solution to eliminate exposure to liability, but more institutions are taking protective steps to mitigate their risk.
Some started by creating a formal process to review PTD and LOV insurance policies. Without some sort of procedure or guidelines in place, the athlete will likely overpay for lesser coverage. This reflects poorly on the institution and creates incentive for litigation.
Your plan should include parameters to keep the selection process as objective as possible. Brad Barnes, assistant director of athletic compliance at Texas A&M University, (pictured left)says the school’s philosophy is to help athletes go through the process, but the university makes it clear that it is ultimately the athlete’s decision.
“For now, we gather the information and present it to the player. We don’t make any decisions for them,” Barnes says. “We always tell the athlete, ‘No one should care more about this than you.’ Our goal is to help them mature and make better decisions, especially when there is a large amount of money at stake.”
The best way to increase objectivity and reduce institutional liability is by understanding and explaining the insurance options to the athlete, but not recommending which one to choose.
Permanent total disability and loss of value insurance policies are not one-size-fits-all. There are billion-dollar companies competing domestically and internationally for the athlete’s business, which places him or her at a significant advantage if properly prepared. Barnes has noticed that different brokers often present very different policy proposals, even if they are selling for the same insurance companies.
Elite college athletes need help from their trusted college or university to explain what their insurance options are and how they differ. Athletic departments should be able to answer these three important questions during the initial policy review process:
1. What are the features, advantages and benefits of the policies being offered?
2. What are the restrictions, limitations and common exclusions on the table?
3. Why is the policy definition language so important, and what terms and premiums are negotiable?
If your athletic or compliance department lacks the experience, confidence or resources to analyze these policies thoroughly, seek help. An improper or incomplete explanation about policy specifics may negatively influence an athlete’s policy selection, potentially leaving the institution liable if the athlete was misled. Keeping the offers from different insurers objective may prove difficult if the school also partially or fully funds the policy premium. If the institution makes policy recommendations based on financial involvement, they should be explained to the athlete clearly and succinctly.
It is also imperative to manage the athlete’s expectations. Student athletes should understand how the policy would perform if they suffered a career-ending sickness or injury or a drop in their projected draft slot. According to the lawsuit, Morgan Breslin (pictured below) was allegedly led to believe the policy would protect him and pay if he suffered a career-ending injury while playing for USC.
A successful claim for benefits depends on many factors, such as a properly completed policy application and bulletproofed claim form. Student-athletes should be made aware of potential problems – such as application, delivery and claim mistakes that often result in denied benefits – before they purchase a policy.
The application and claim forms are often as misleading as the policy language itself. For example, many policy applications require athletes to disclose if they have “suffered pain or discomfort” and where they felt it.
All elite college athletes have experienced some kind of pain and discomfort. How can they discern the normal aches and training table pains from the kind of injury, disease, or disorder insurers insist they must know about? The answers to these questions are not always straightforward, making it even more important for athletic departments to understand how subtle mistakes can cost millions on these insurance policies.
The debate of risk versus responsibility ends with one simple mantra: if the proper steps are clearly taken, the athlete likely will not make policy purchase, application or claim mistakes that lead them to sue their school when the insurer denies their claim. Without any help, these fatal mistakes are almost guaranteed. Institutions will better serve their athletes by providing as much guidance as they can, and in turn asking for experienced counsel when they need it.
Frank Darras, Esq., is the founding partner of DarrasLaw, America’s top disability insurance litigation firm. His firm assists premier college and professional athletes in the selecting, applying for and claiming disability insurance benefits. DarrasLaw has recovered nearly $800 million in wrongfully denied insurance benefits for clients across the nation.
If your athletic department has questions about elite athlete insurance policies, contact a top-rated, nationally recognized disability insurance attorney for free policy analysis when you get inquiries for your players, or for free application help to avoid fatal mistakes before delivery of the policy.
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