Roy's Reinjury Clause Question

[HartfordWhalers]

Anyone with more insight into exactly how this works.

According to Sham, Roy's contract is not guaranteed if he re-injures a previous physical condition. Since Roy has already had surgery on his knee, is this clause already in force. As in even if the knees are fine from now to June, can Minnesota cite a previous injury and waive an unguaranteed Roy? Or if Roy comes back and is passing a physical next summer, can he be fully guaranteed?

Also, I couldn't think of a player with a similar clause in the past, so anyone have an example?



{Please ignore the minutes played and games active clause for this question. I understand that complicates the question, but wanted to just understand the "reinjury" part. Thanks.}

[DBoys]

In practical terms, what it means is that he's getting paid in full for this year, and then the 2nd year will be erased if he's not playing this season due to his knee.

[HartfordWhalers]

In practical terms, what it means is that he's getting paid in full for this year, and then the 2nd year will be erased if he's not playing this season due to his knee.

Your answer sidestepped the nuance I was inquiring about.

Since he has already had his knee re-operated on, if he returns and plays can Minnesota erase next year based upon an injury that took him out of the lineup in early December? Or would the knee need to be still injured at that time.

[DBoys]

I didn't sidestep the question, you just sidestepped the answer I provided

To say it with more words: If there is a re-injury (the situation you mentioned), then it comes down to whether or not he ends up playing enough this season (as stipulated contractually) to justify what he's being paid. The specific qualifiers (based on playing time and being active) are provided, and if he fails to meet them, the Wolves can void year two. My analysis of what I believe has already occurred is that unless Roy morphs into a major find for the rest of the season, his 2013-14 pay is already inevitably toast.

[HartfordWhalers]

I didn't sidestep the question, you just sidestepped the answer I provided

To say it with more words: If there is a re-injury (the situation you mentioned), then it comes down to whether or not he ends up playing enough this season (as stipulated contractually) to justify what he's being paid. The specific qualifiers (based on playing time and being active) are provided, and if he fails to meet them, the Wolves can void year two. My analysis of what I believe has already occurred is that unless Roy morphs into a major find for the rest of the season, his 2013-14 pay is already inevitably toast.

Your first answer entirely didn't address:

Since Roy has already had surgery on his knee, is this clause already in force. As in even if the knees are fine from now to June, can Minnesota cite a previous injury and waive an unguaranteed Roy?

Instead it just said if he doesn't play this season. Now you appear to be saying that Yes, (so long as he doesn't log enough minutes/games to ensure the clause I'm explicitly not talking about is in force) even if he plays the last 20 games of the season and has a knee that is as clean as it was when he originally signed, the last surgery should enable Minnesota to waive him unguaranteed based upon his knee now (not then). Assuming that is what you are saying, anything to support this interpretation, or a previous precedent?

Or in short, can re-injury already be ruled to have happened. And again, this is not talking about the games on active roster/minutes played clause that would supersede this.

[DBoys]

1 What is written at sham's site is all we have, that I know of.
2 I figure wysiwyg w/ ref to the provisions.
3 To my knowledge, CBA's don't address such limiters on benchmarks for guarantees, so it's a situation where it works as it says.
4 (Per sham) It says a re-injury, without any qualification on the timing of it ...and it stands to reason that, given Roy's medical history, they intended the reference to be as broad as possible.
5 The degree of the non-guaranteeing injury is also defined to a degree, to be one severe enough that it keeps him from meeting either of the guarantee-protective parameters.
6 When you asked "even if the knees are fine from now to June, can Minnesota cite a previous injury and waive an unguaranteed Roy?" the answer was " if he's not playing this season" and I was referencing the playing time qualifiers that can protect the guarantee regardless of injury, which I assumed you had digested before asking.
7 Your scenario "if he plays the last 20 games of the season [I assume you mean, he plays ONLY those games] and has a knee that is as clean as it was when he originally signed, the last surgery should enable Minnesota to waive him unguaranteed ...Yes, that is exactly my understanding of what is allowed. While written a little more clumsily than this in the conditions as cited by sham, my analysis is that in order to guarantee year 2, he has meet any one of the following requirements:
...be injury-free all season on the knee (already failed)
...be active for 65 games (under your scenario, no), or
...play 1400 minutes (under your scenario, no)
8 Given how little he has played to date, I find it pretty much a lock he already won't be able to meet any of those parameters.

[shrink]

Settle a difference of opinion on the Trade Board from a while back:

Hartford Whalers believes that Roy's deal would not be insured this year.

Unless you find something conclusively saying otherwise, I don't believe for a second that an insurance carrier wouldn't use its standard pre-existing conditions (verus one of the limited the contract exclusions they have) on Roy's knees...

Personally, I suspect that the deal is insured. While Roy's likelyhood of injury is high, the fact that the deal is tiny ($5.1 mil in 2012-13), and the contract contains injury protection for next year may mean the carrier wouldn't waste one of their coveted 14 spots on a contract that woould only cost them about $2 mil. I don't know what to think about the pre-existing condition claim, but also suspect that most NBA players have pre-existing conditions of varying severity.

Anyone know the answer on this one, or care to weigh in?

[HartfordWhalers]

Settle a difference of opinion on the Trade Board from a while back:

Hartford Whalers believes that Roy's deal would not be insured this year.

Unless you find something conclusively saying otherwise, I don't believe for a second that an insurance carrier wouldn't use its standard pre-existing conditions (verus one of the limited the contract exclusions they have) on Roy's knees...

Personally, I suspect that the deal is insured. While Roy's likelyhood of injury is high, the fact that the deal is tiny ($5.1 mil in 2012-13), and the contract contains injury protection for next year may mean the carrier wouldn't waste one of their coveted 14 spots on a contract that woould only cost them about $2 mil. I don't know what to think about the pre-existing condition claim, but also suspect that most NBA players have pre-existing conditions of varying severity.

Anyone know the answer on this one, or care to weigh in?

Again, it is not that Roy's deal would have no insurance and be among the 14 exclusions, I'm not sure why you keep bringing those up. Please feel free to read the bold part again. Instead, the insurance company would simply exclude Roy's knees from coverage. This is available as a practice, and I can't imagine any provided wouldn't do so for knees that caused Roy to medically retire before this. If I recall correctly, Amare actually had similar where it wasn;t that his contract was uninsured but rather that it excluded all of his previous injury areas.

After the application and physical examination process is complete, the insurance company has three options: (1) decline coverage, (2) provide insurance coverage but exclude a particular part of the anatomy or charge a higher premium for a preexisting condition, or (3) provide insurance with no exclusions.

(emphasis added)
http://www.law.villanova.edu/sportslaw/ ... NG-172.pdf


Edit: yeah, Amare had similar insurance exclusions:

According to the Knicks, the insurance policy from Stoudemire's contract with the Suns is still in place, but it excludes his surgically repaired left knee.

http://sports.espn.go.com/new-york/olym ... id=5395588

Insurance exclusions shouldn't be surprising where the chance of loss is extremely high.

[DBoys]

HW, the article you cited is a very generic overview of insurance coverage on athletes, so it really doesn't necessarily provide the specifics of the NBA's actual insurance coverage. From what I perused, for purposes of this discussion and the questions being asked here, it didn't seem very helpful.

From what I understand, the idea of "preexisting conditions" being excluded doesn't apply across the board for the NBA and its contracts. The insurer is allow to specify (only) 14 that aren't covered. Otherwise, all are covered without exception.

The apparent rationale is that because of cap and competitive issues, if the preexisting condition was impairing to the extent that the player can't play, he's not getting a contract offered in the first place. Due to the nature of the sport, potential for injury, size of contracts, cap issues, the impact on a franchise when a career-ender occurs, and so on when a player is severely impaired, they want an insurer who will include almost every player no matter what.

Regarding Roy, I suspect that his knees are NOT insured (ie he is one of the 14), but that's only a guess which I'm basing on the contractual info we have.

[HartfordWhalers]

The first article is on professional leagues in general, but certainly doesn't exclude the NBA from that practice, instead including it in the same overview.

In addition to the NBA.com reporting that Amare had specific body part exclusions, Woj did as well:

Insurance won’t cover Stoudemire’s salary if he can’t play because of any additional problems to either of his knees or his right eye.

http://sports.yahoo.com/nba/news?slug=y ... icks070210

Specific body part exclusions -- and not no insurance at all -- are something that does indeed happen in the NBA as well as other sports and gets reported as such.

[HartfordWhalers]

And in case that is not enough for you two to change your opinion, how about a quote from the actual NBA insurance provider detailing this practice?

Marc Blumencranz, the vice president of BWD Group, the brokers that work with the N.B.A. and its insurance company to provide coverage for all 29 teams, also refused to comment on Mourning. Instead he offered generalities about the insurance policies for the athletes and teams his company represents.

''Any time an athlete comes back from a sickness or a disability, there is an underwriter's pre-existing condition exclusion and therefore anything that's taken place for the last 18 months is excluded automatically,'' Blumencranz said.

The N.B.A.'s policy provides insurance for the five players on a team who make the most money. That would apply to Mourning and the Nets. That does not preclude a team from insuring a player for other illnesses excluding the pre-existing condition, he said. ''I'm certain there will be some type of policy in place, it's just a question of what exclusions there will be,'' said Greg Sutton, a director of the international division of William J. Sutton & Co., an underwriter in Toronto.

http://www.nytimes.com/2003/07/15/sport ... -away.html
(Bold emphasis mine)

Clearly the practice exists. And Roy's knees would fall squarely within it.

[DBoys]

HW,
(1) While that article referenced the general kinds of things you'd see in insurance contracts, it doesn't tell us how the NBA's is worded, and it certainly doesn't shed any light on whether Roy is covered, which is the issue under discussion here.
(2) When you tell us that the NBA insurance on contracts has specific exclusions, well duh. Those would be the 14. We already knew that those exclusions exist, and the only question under discussion is whether Roy is or is not one of the 14.
(3) Obviously Amare is one of the 14, but that's an issue which was a no-brainer, of course, given the state of his knees and the size of the contract, and the fact that Amare obviously has his preexisting conditions excluded doesn't shed any light on whether Roy is fully insured or not, which is the issue under discussion here.
(4) I think you'll find the article about Mourning was the way the contracts were insured at one time but not now, as the insurance coverage and system has changed.

[HartfordWhalers]

HW,
(1) While that article referenced the general kinds of things you'd see in insurance contracts, it doesn't tell us how the NBA's is worded, and it certainly doesn't shed any light on whether Roy is covered, which is the issue under discussion here.
(2) When you tell us that the NBA insurance on contracts has specific exclusions, well duh. Those would be the 14. We already knew that those exclusions exist, and the only question under discussion is whether Roy is or is not one of the 14.
(3) Obviously Amare is one of the 14, but that's an issue which was a no-brainer, of course, given the state of his knees and the size of the contract, and the fact that Amare obviously has his preexisting conditions excluded doesn't shed any light on whether Roy is fully insured or not, which is the issue under discussion here.
(4) I think you'll find the article about Mourning was the way the contracts were insured at one time but not now, as the insurance coverage and system has changed.

1) -- The 2003 article citing the broker that sells to the NBA specifically cites that pre-existing conditions are excluded from the players that are covered. Not the 14. Not wholesale non-coverage.
2) Again, specific pre-existing conditions. Not whole contracts.
3) Again, specific pre-existing conditions are automatically excluded before deciding if Amare would even be one of the 14.
4) That was written in 2003. So now this practice that you didn't know existed then has definitely changed in the last 9 years? I'm sorry, thats ridiculous without anything to back that up and with continual references to how body parts are excluded from players. In fact, the details it says are identical now:

The N.B.A.'s policy provides insurance for the five players on a team who make the most money.

I have now shown links from a scholarly journal citing how it works in general in professional leagues, quotes from an nba insurance provider, citations by WOJ, nba.com etc.

If you don't think this happens, I'm really not sure why. And pretty sure that nothing would change your mind.

[DBoys]

Are player contracts insured?

There is a league-wide policy that insures the contracts of around 150 players each season. The five most expensive contracts for each team are included, and teams have the option of submitting additional names for coverage. The carrier has the right to exclude 14 contracts per season, such as when they consider a player with a very large remaining contract to be a medical risk. For example they excluded Luol Deng in 2008-09 because he had $71 million remaining and a history of back injuries. The list of excluded players changes each year, so a player who is not covered one season might be covered the following season.

If an insured player is disabled, then there is a 41 game waiting period, after which the insurance company will pay 80% of the guaranteed portion of the player's base salary. Once a player is covered, the carrier can't exclude the player for the remainder of his current contract.

If the player is traded, his new team receives the benefit -- for example, even though Cuttino Mobley's heart condition was discovered prior to his trade to the Knicks, the Knicks received the insurance payout.

[HartfordWhalers]

Yes. And within that insurance when a team is handing out new contracts and getting the insurance on them:

Any time an athlete comes back from a sickness or a disability, there is an underwriter's pre-existing condition exclusion and therefore anything that's taken place for the last 18 months is excluded automatically

Again, according to the people that actually do this.

[DBoys]

Yes. And within that insurance when a team is handing out new contracts and getting the insurance on them:

Any time an athlete comes back from a sickness or a disability, there is an underwriter's pre-existing condition exclusion and therefore anything that's taken place for the last 18 months is excluded automatically

Again, according to the people that actually do this.

Yep, that's what the ones who used to do it 10 years ago, said they used to do. Do they still handle the NBA insurance, and is it still underwritten and handled the same way now?

[HartfordWhalers]

Yes. Thus the more recent quotes about recent injures being specifically excluded from new insurance contracts.

Insurance is the exact same in the latest CBA. As far as I can tell you didn't think this was ever possible, but it is and has been standard practice.

[DBoys]

HW, the articles you cited didn't say what you thought they did, so they didn't really answer the questions raised.

1 On the one from Villanova Law, the section you quoted was in a context explaining the generalities of how disability contracts in general for a pro athlete get underwritten in the application process.
- - The options they offer are those of any underwriter in responding to any disability insurance application (accept, decline, or modify coverage or cost).
- - It didn't say that preexisting conditions are necessarily excluded, only that the exclusion of preexisting conditions is one way that an underwriter might modify a request for insurance.
- - It wasn't addressing the details of the NBA policy and underwriting, and the article didn't have access to the policies and procedures on the NBA disability policy in writing that article. The reason we know that is because in the article they openly guess at how it might operate, but they don't know.

2 The article on Stoudemire says his knee wasn't insured. That's no revelation. But in and of itself it doesn't define the details of how exactly that came to be.

3 If you'll go back and look at the 2003 article, every player was a separate issue as to how they might be underwritten. So by an underwriter nitpicking every player's health history, you could have the bulk of the league's insured with major exclusions on their policies, leaving the league way too exposed. (If you'll notice in the article, it was a situation where what was excluded was every pre-existing they could find. There were not an additional 14 players who were further excluded.)

But insurance is obtained to reduce the risk of loss, and what good is insurance, if it doesn't cover the very things you're looking to reduce your risk on? It was those somewhat risky conditions that were the very things the teams wanted to have covered.

As I understand it, the process was changed. (Maybe in part it had to do with the Todd MacCulloch mess, I don't know.) After the change, the total number of exclusions for preexisting conditions (body parts, if you will) allowed for the insurance underwriter to exclude league-wide was set at 14. And those 14 are determined and amended from time to time by the insuror as we've discussed here recently in another thread.

4 On that basis, it is my understanding that Stoudemire's preexisting infirmities are 1 of the 14. As far as how Roy would fit into the mix, I would think there would be another 13 besides Stoudemire that present more risk than Roy (due to having bigger contracts), but that's just my guess.

[HartfordWhalers]

HW, the articles you cited didn't say what you thought they did, so they didn't really answer the questions raised.

1 On the one from Villanova Law, the section you quoted was in a context explaining the generalities of how disability contracts in general for a pro athlete get underwritten in the application process.
- - The options they offer are those of any underwriter in responding to any disability insurance application (accept, decline, or modify coverage or cost).
- - It didn't say that preexisting conditions are necessarily excluded, only that the exclusion of preexisting conditions is one way that an underwriter might modify a request for insurance.
- - It wasn't addressing the details of the NBA policy and underwriting, and the article didn't have access to the policies and procedures on the NBA disability policy in writing that article. The reason we know that is because in the article they openly guess at how it might operate, but they don't know.

2 The article on Stoudemire says his knee wasn't insured. That's no revelation. But in and of itself it doesn't define the details of how exactly that came to be.

3 If you'll go back and look at the 2003 article, every player was a separate issue as to how they might be underwritten. So by an underwriter nitpicking every player's health history, you could have the bulk of the league's insured with major exclusions on their policies, leaving the league way too exposed. (If you'll notice in the article, it was a situation where what was excluded was every pre-existing they could find. There were not an additional 14 players who were further excluded.)

But insurance is obtained to reduce the risk of loss, and what good is insurance, if it doesn't cover the very things you're looking to reduce your risk on? It was those somewhat risky conditions that were the very things the teams wanted to have covered.

As I understand it, the process was changed. (Maybe in part it had to do with the Todd MacCulloch mess, I don't know.) After the change, the total number of exclusions for preexisting conditions (body parts, if you will) allowed for the insurance underwriter to exclude league-wide was set at 14. And those 14 are determined and amended from time to time by the insuror as we've discussed here recently in another thread.

4 On that basis, it is my understanding that Stoudemire's preexisting infirmities are 1 of the 14. As far as how Roy would fit into the mix, I would think there would be another 13 besides Stoudemire that present more risk than Roy (due to having bigger contracts), but that's just my guess.

Actually, the articles did say what I said they did.
1) Excluding precluding conditions is a standard option in this type of contract. And unrelated to refusing coverage entirely. Insurers were and still are able to exclude pre-existing conditions. in terms of 3) Every player does need to have a physical and insurance is issued at that time. This isn't something revelatory that was old 9 years ago and doesn't happen now. This is exactly the process how (if I recall correctly) Jeff Green and Chuck Hayes heart conditions were discovered.

The excluding injuries that have caused a player to miss time over the last 18 months doesn't negate the purpose of insurance. Insurance is to protect against unexpected events, and a reoccurring injury of the type being discussed is at the least somewhat expected. EIther the league is exposed to that, or the insurance premiums need to increase dramatically to cover likely injuries. And the league is exposed to that. And 4) Amare at one point having his one knee not even both uninsured is exactlythe sort of thing that follows from this.

I've provided a ton of documentation. If you don't think its true now even though it was true as part of the modern salary cap CBA era and even though its listed as a standard practice in 3 leagues including the NBA, and even though the nba reports that a player is only uninsured for a specific body part... well, okay then. I guess we won't agree, but its not because I didn't provide you with supporting evidence.

[DBoys]

"Excluding precluding conditions is a standard option in this type of contract."

That would be true if (and only if) that was the contractual agreement. But there's nothing that says they can't have a policy (contract) that ignores almost all pre-existing conditions, and my understanding is that the current "standard' contract does just that - ie it is blanket coverage, with everything covered except for 14 selected exceptions.

"Every player does need to have a physical and insurance is issued at that time. This isn't something revelatory that was old 9 years ago and doesn't happen now. This is exactly the process how (if I recall correctly) Jeff Green and Chuck Hayes heart conditions were discovered."

The fact that players have to take a physical doesn't tell us anything helpful. No matter the way the policy is worded, all players would have to take a physical for multiple reasons. The team wants a physical just to be sure they aren't giving a contract to a player who is impaired (such as the Green and Hayes situations you noted). And the insurance company needs to see what exists, to help them determine if this player has one of the 14 preexisting conditions they want to opt to exclude.

The underwriter is like an oddsmaker - he has to assess the amount of risk of a future claim. The preexisting conditions are simply things that make a claim more likely to some degree. But almost all of them will never trigger a claim, so the underwriter has to determine which are the most likely to cause a loss, and let the insurance company avoid insuring those 14 conditions.

" Insurance is to protect against unexpected events"

Kinda. But not exactly. All insurance is about a loss mitigation situation, where an insured is getting help in offsetting future financial risks of one kind or another. But it is not always about "unexpected" (for example, every life insurance policy insures against an event that is CERTAIN to happen at some point, the insured's death). So it's the insurance company's job to price the cost of the risk they are willing to cover.

Because the NBA is a physical sport, one who won't cover any preexisting physical conditions for any of the NBA's players wouldn't seem to be providing enough coverage to be of much use, and that's why, as I understand it, the league changed their disability insurance contract (at a price, no doubt) to limit the preexisting exclusions not being covered to 14 leaguewide.