Sox John Henry At Risk?

[Crash Course]

http://www.miami.com/mld/miamiherald/8355634.htm

Now Lloyd's plans to ask former Marlins owner John Henry, part owner of the Boston Red Sox, what he knows about the white-out in an upcoming deposition -- before the case goes to mediation in August. A trial is set for November.


If it's found that Henry had a hand in this, WWBD? Vincent banned Stein for life for Spira. Should it be the same? More? Less?

[Makofan]

Much ado about nothing. Lloyd's is notorious about not paying claims, so they'll go the litigating route for a while (EDIT - my opinion only as an observer - I am not a lawyer)

[Joseph]

Much ado about nothing. Lloyd's is notorious about not paying claims, so they'll go the litigating route for a while (EDIT - my opinion only as an observer - I am not a lawyer)

This seems a little more serious than a squibble over paying claims, the Marlins are accused of insuring Fernandez with two different firms (Lloyds, and Hartford Life) without informing either of the other's policy, and for attempting to collect on both policys after Fernandez was hurt.

[Jim Rice]

Where to begin? Let's start with this - I have worked in the insurance industry for 14 years and spent about ten of those years as a medical malpractice underwriter. I now work for a subsidiary of GE that provides reinsurance to companies that self-insure their health insurance for their employees. Hopefully that establishes my credentials. Please take my word for this - this suit by Lloyd's is a big fat nothing. It is nothing but Lloyd's method of not paying a claim, something they are so notorious for that they once caused a crisis in the entire industry when several Lloyd's syndicates underfunded their claim reserve funds (an act which saw a few people in England go broke and few more go to prison).

The holes in Lloyd's suit are too numerous to detail, but let's eliminate a couple of them out of hand. John Henry bears no liability whatsoever for a claim Lloyd's refused to pay. It clearly stems from an original injury that took place before Henry even owned the team and was paid without question by Lloyd's to the tune of over $5 million. Any decent plaintiff's attorney could easily link the re-injury in September of 1999 to the original injury in October 1997, and since Lloyd's was still covering the Marlins in 1999, they are on the hook for that payment, which they apparently refused to make.

Claiming that the Marlins' failed to disclose personnel and payroll changes after 1997 is a pitiful attempt at subterfuge. It the two things were related at all, Lloyd's could have used it as grounds not to pay the 1998 claim. Since they paid that claim without question, they tacitly acknowledged that the payroll decrease and Fernandez's injury had nothing to do with each other. Besides, they would have to show that the personnel changes forced a misuse of Fernandez that caused the injury to recur, and that is demonstrably not the case - he didn't pitch at all in 1998 and pitched less than 6 innings per start in 1999, so he clearly was not misused. That's meaningless anyway, since Lloyd's agreed to provide the coverage for injuries sustained while Fernandez pitched and that's the exact type of injury he suffered. Unless there was an exlusion added to the policy that removed their responsibility to pay for a recurrence of the same injury, they are liable to pay it. If that was the case they would simply cite that clause and move on, but they are saying the exact opposite - that Fernandez's claim was a new one. In either case, they're liable to pay it.

And even if all of this could somehow be skewed against the Marlins anyway, there is NO WAY that the owner of the team was responsible for filling out an insurance application for one of the team's pitchers. So even if the white-out in question truly was some attempt to hide an injury, that would be the responsibility of the team's risk manager, or whoever else filled out that insurance application. How the white-out matters at all is pretty difficult to see anyway, since Lloyd's was clearly familiar with Fernandez's injury history, having paid out a $5 million claim on him. It would have been impossible to hide Fernandez's history - Lloyd's already had his medical records in hand, and should have been closely monitoring his health for the rest of the life of the policy given the fact that they took an enormous loss by paying out that $5 million claim. ANY attempt by the Marlins that smelled fishy would have instantly been met with an early policy termination from Lloyd's for material misrepresentation, followed immediately by a lawsuit. That didn't happen. Lloyd's never terminated the policy, early or otherwse, until after Fernandez's career was over. They're stuck. They have to pay the claim, and anything they are saying now to avoid that is nothing but an attempt to delay that or negotiate a lower settlement.

It looks like the Marlins screwed up in placing the second policy with Hartford, for which they have already had to repay the $2 million that Hartford paid out, but that doesn't eliminate Lloyd's liability to pay for the injury since that policy was in place long before the Hartford policy was purchased. The ONLY way Lloyd's is off the hook is if they can prove the Marlins didn't disclose the Hartford policy AND they have a contract clause that voids the policy in the event a second policy is purchased. That type of clause is rarely worded in such a way that it allows the insurance company to completely avoid paying the claim. Regardless, the speculation that team owner John Henry would be personally involved in the placement of the team's disability insurance coverage is laughable.

[KCBOOMER]

Nicely written, JR.

[Crash Course]

How bad does baseball need Lloyd's? If the answer is "a lot" since who else would insure these contracts, would Bud step in and force Henry/the Marlins/whoever to make this go a way to make Lloyd's happy?

You know, cut off the foot to save the body kind of thing?

[Jim Rice]

How bad does baseball need Lloyd's? If the answer is "a lot" since who else would insure these contracts, would Bud step in and force Henry/the Marlins/whoever to make this go a way to make Lloyd's happy?

You know, cut off the foot to save the body kind of thing?

The answers are "not at all" and "absolutely not"

First, baseball doesn't need Lloyd's or any other insurance company. All these companies did was provide insurance to contracts that clubs knew they couldn't pay in the event of injury. Since insurers were in a price war with each other for most ofthe 1990s, coverage was easily available - note that Hartford agreed to write the Marlins policy on Fernandez EVEN THOUGH HE HAD ALREADY MISSED A YEAR WITH A ROTATOR CUFF TEAR. This was easily the dumbest time period in the history of the insurance industry in America, since these wars to lower premiums coincided with a boom in jury awards. Dumb, dumber, dumbest.

But now insurance companies have finally realized that they are in business to make money, not provide charity, and these kinds of policies can't be found from Lloyd's or anyone else. This THRILLS Bud Selig and all other club owners, because it gives them a handy excuse to offer lower contracts. "Sorry Mr. Boras, I can't pay your client that much without insurance to cover us if he gets hurt, and, unfortunately, no insurance companies will take on the risk." The insurance industry finally getting wise plays very neatly into the hands of the owners, so interfering in this case in favor of Lloyd's would pretty much be the last thing on Bud's mind. This case is basically serving as a hallmark for why large guaranteed contracts are a bad thing, so somewhere Bud is smiling.

[Crash Course]

good point