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By DAN REYNOLDS, senior editor of Risk & Insurance®

Professional sports teams in Florida may have won this round, but there is still plenty to do to close a workers' compensation adjudication loophole that has employers gnashing their teeth and paying out mad money.

The bill seeks to close a loophole in the cumulative trauma statutes in the state of California, which allow former pro players to file claims for cumulative trauma on the West Coast even if all they ever did was practice there or play an away game there once. The loophole has led in recent years to the filing of hundreds of millions of dollars in cumulative trauma claims in California from former NFL players from all over the country.

Bob Murphy, the Philadelphia-based head of the sports practice for broker Marsh, estimates that there are 500 claims being filed annually in the state of California by NFL players from across the country. At between $150,000 to $200,000 per claim, NFL teams are facing a workers' comp bill that could eventually top $1 billion if something isn't done about this loophole.

What's frightening, according to Murphy, is the speed at which these cases have built up. Since 2008, there have been 1,600 cumulative trauma cases filed in California by former NFL players.

FLORIDA'S SOLUTION ONLY?

Florida's bill, if it survives the legal challenges that are sure to come, would establish reciprocity with a section of the California labor code that says that California will remand workers' comp cases to the home states of teams only if that home state has a reciprocal statute.

So, the Florida bill, which Gov. Rick Scott said he will sign into law shortly, does good things for Florida pro teams and any transportation, construction firm or other company that might have transient workers who set foot in California for even a couple of days.

The bad news, according to Alex Fairly, an Amarillo, Texas-based senior vice president with Willis, is that not many other states are likely to follow Florida's lead.

"We believe that politics are just very difficult, and there are plenty of interest-related issues and conflicts in the other states. We think that the process will be just as difficult and all the questions will still have to be answered. We think there are states that will absolutely not do this," Fairly said.

But the battle to close the California loophole is being fought on several fronts.

Attorneys for the sports teams are also litigating over sections of players' contracts that would appear to limit their workers' compensation filing options to the state of their primary employment.

In once recent case, the Chicago Bears and the National Football League Management Council vs. players Michael Haynes, Joe Odom, Cameron Worrell and the National Football League Players Association, an arbiter ruled that the players were bound by the section of their employment contract that precluded the players from filing workers' comp claims outside of Illinois.

Tim Peterson, an attorney with Ladera Ranch, Calif.-based Peterson, Colantoni, Collins & Davis, who works in a defense capacity on workers' compensation for many professional sports teams, also hasn't given up hope that other states may follow Florida's lead.

"I think this is the type of legislation that, whether you are conservative or liberal, I think each state is really interested in protecting their own, and I think this is what this statute does, it protects their own employers, and it keeps their employers in a litigation forum where they can truly manage their risk. And that is the goal," Peterson said.

June 7, 2011

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