Trend Spotlight CTE – what insurers need to know now

Until recently, most people had probably never heard of chronic traumatic encephalopathy (commonly referred to as CTE). But litigation filed by former players against the (NFL) and National Hockey League (NHL) and the 2015 movie “Concussion” have dramatically increased awareness of this disease. CTE has certainly caught the attention of insurers. Risk and Insurance listed sports-related head injuries as one of the most critical emerging risks, stating “class-action lawsuits stemming from traumatic brain injuries and degenerative brain disease could cause substantial losses for the insurance market and contact sports leagues at all levels.”1 Let’s examine why.

What is CTE? knew repeated concussions could cause A settlement has been reached, and CTE is a progressive degenerative brain CTE and that it misrepresented or concealed preliminarily approved. The NCAA is disease caused by repeated concussions this risk from players. Under a 2016 paying USD 70 m into a medical monitoring and sub-concussive hits, which cause a settlement, representatives of deceased fund which provides for screening of buildup of in the brain leading players diagnosed with CTE prior to current and former athletes for late onset to memory loss, confusion, impaired April 22, 2015 are now eligible to receive diseases resulting from concussions and judgment, impulse control problems, up to USD 4 m. Other compensable subconcussive hits, and it is providing aggression, and progressive dementia. conditions include Alzheimer’s disease, USD 5 m for concussion research. The Symptoms may not begin until years ALS, Parkinson’s disease, and lesser NCAA still faces dozens of suits (some or decades after the last brain trauma. neurological impairments. NFL actuaries naming individual colleges or universities estimate almost 30% of former players will as defendants) by student athletes who CTE was first noticed in boxers in the late develop moderate to severe neurocognitive allege they suffered concussions resulting 1920s. Dr. Bennet Omalu is credited with problems that are covered by the in bodily injuries, and that they have an discovering it in football players in 2002, settlement.2 increased risk of long-term cognitive during an autopsy on former impairment. Steeler . Since then, The NHL, World Wrestling Entertainment CTE has been diagnosed in more than (WWE) and Canadian Football League Pop Warner, the largest youth football 90 former NFL players, and in dozens of (CFL) are also facing similar concussion program in the U.S., has faced two suits other athletes. To date, it has only been litigation, and the issue is not limited to brought by family members of young men diagnosable post-mortem. However, professional athletics. A class action suit who played Pop Warner football and researchers are close to identifying it in live was filed against the National Collegiate were diagnosed with CTE after they died. patients, using new imaging techniques. Athletic Association (NCAA) by student In 2016, Pop Warner settled one suit, an athletes alleging the NCAA’s negligence individual wrongful death action, for an Litigation and fraudulent concealment of information undisclosed amount. The other suit, a class In 2011, former NFL players began filing exposed them to a heightened risk of action, remains pending.3 lawsuits against the league alleging that it neurological diseases (including CTE).

1 “Athletic Head injuries: An Increasing Liability,” Risk and Insurance, April 2015 http://riskandinsurance.com/athletic-head-injuries-an-increasing-liability/ 2 “Brain Trauma to Affect One in Three Players, N.F.L. Agrees,” New York Times, September 12, 2014 https://www.nytimes.com/2014/09/13/sports/ football/actuarial-reports-in-nfl-concussion-deal-are-released.html 3 Kimberly Archie et al. v. Pop Warner Little Scholars, Inc. et al., 2:16-cv-06603 U.S.D.C. Central District of California © 2017 Swiss Re The Pop Warner class action also names Arena Football One, LLC., et al., compensation benefits because CTE is a NOCSAE (National Operating Committee No. 2:15-cv-02258, contains the distinct occupational disease. The plaintiffs on Standards for Athletic Equipment), following language: dropped their suit in December 2016, and seeks an order requiring it to provide but plan to file individual suits on a state- warning labels about the risks of CTE. “This insurance does not apply to by-state basis, according to their attorney. Helmet manufacturer Riddell is facing damages for ‘brain injuries’ sustained similar actions alleging that it: (1) knew by a ‘player’ arising out or in any way D&O the long-term effects of brain trauma but related to participation in any sports Directors and officers (D&O) liability policies failed to disclose them; and (2) falsely or athletic game, contest, event, don’t usually provide coverage for bodily marketed helmets as being able to reduce exhibition or practice. injuries, but plaintiffs may still attempt the risk of concussion by 31%. to seek coverage for CTE-related claims. The term ‘brain injuries’ includes In the 2016 Breland decision referred to Other possible defendants concussions, chronic traumatic previously, Lorenzo Breland, a professional Public and private high schools are also encephalopathy or any other injury arena football player, sought coverage from seeing concussion-related lawsuits. These to the brain and any symptoms, the league and its D&O insurer. The D&O suits typically allege bodily injuries were conditions, disorders or diseases policy contained an exclusion for bodily caused by a single concussion and cite resulting therefrom.” injury. However, Breland argued that the the schools’ negligence. Under state law, policy did not exclude claims for wrongful most schools must advise student athletes Other insurers are establishing sub-limits acts, such as fraudulent misrepresentation. of concussion symptoms, as well as or imposing aggregate limits for The court held that the policy had to be read their short-term risks. But there is no law neurodegenerative claims. Some are as a whole, and while it covered wrongful imposing a duty to warn about CTE. simply refusing to insure any at-risk entities. acts, it excluded claims for bodily injury and breach of contract. Kevin LaCroix, author Nevertheless, some organizations are Workers’ compensation of the D&O Diary,5 questioned the court’s voluntarily providing warnings. The Florida CTE is not only a concern for P&C insurers. decision in a blog post, noting there was a High School Athletic Association has Workers’ compensation carriers have difference between Breland’s claims for amended its Consent and Release from also begun seeing claims alleging typical damages for bodily injuries, and his claims Liability Certificate for concussions to CTE cognitive impairments. The NFL has for damages and other relief based upon include the following language: fought these claims, arguing there is fraud and misrepresentation. The court’s no definitive link between repeated head decision did not analyze or discuss why “Parents and students should be aware trauma and CTE, and that CTE is not the bodily injury exclusion precluded of preliminary evidence that suggests diagnosable in living players. (It remains coverage for the latter claims, he noted. repeat concussions, and even hits to be seen how the NFL’s 2016 admission that do not cause a symptomatic of a link between football and CTE will D&O policies may be found to cover claims concussion, may lead to abnormal impact future claims.4) that do not seek damages for bodily injuries, brain changes which can only be seen but only injunctive relief, such as a change on autopsy (known as Chronic Athletes seeking workers’ compensation in rules or in concussion-handling policies Traumatic Encephalopathy [CTE]).” face many hurdles. Several states and procedures. preclude workers’ compensation coverage Like schools, medical professionals also for professional athletes. Workers’ What might the future hold? have no legal obligation to warn about compensation statutes generally only Right now, it is virtually impossible to CTE. But the American Academy of apply to claims stemming from accidents predict who may develop CTE. However, Neurology contends that physicians or injuries or from occupational diseases, researchers have made significant progress have an ethical obligation to provide and in some states, mental disabilities are in identifying biomarkers of concussion information about the potential short and excluded under the definition of susceptibility and effect. Scientists also long-term risks of single and repetitive occupational disease. Cumulative trauma predict that within the next 5–10 years, head injuries. claims are not recognized as compensable they will be able to identify CTE while a under the laws of most states. Athletes person is alive. These developments may Insurance issues may also face difficulty in linking CTE be game changers. If it is possible to screen Not surprisingly, those named in ongoing symptoms to repetitive brain trauma people for CTE, this could create additional CTE litigation have sought coverage from suffered on the job and not to other duties upon entities to take steps to protect insurers. Insurers have asserted numerous factors. Currently, no workers’ compensation and monitor athletes. The number of defenses, including that the injuries were laws specifically cover CTE. plaintiffs may also increase significantly. expected or intended, do not constitute an occurrence as defined in the policy, or In November 2016, 38 former players Insurers should closely monitor the legal result from fraudulent conduct, which is filed a federal action in Florida against the side of this issue, and medical and scientific not covered. NFL and its 32 teams. The complaint developments. The ability to evaluate alleged scientific verification of CTE in the CTE exposures will continue to evolve at Some insurers are taking steps to avoid living is available. It sought a declaration the same pace as science advances, and CTE claims using specific exclusions. The that the NFL acknowledge advancements as insurers tailor policy language and National Casualty CGL policy issued to in CTE diagnosis, and provide workers’ exclusions to address this risk. Arena Football, at issue in Breland v.

4 “NFL acknowledges, for first time, link between football, brain disease,” espn.com, March 15, 2016 5 “Football Player’s Concussion Claims Test D&O Policy Exclusion,” D&O Diary, November 30, 2016, http://www. dandodiary.com/2016/11/articles/d-o-insurance/football-players-concussion-claims-test-policy-exclusion/ © 2017 Swiss Re