The NCAA has filed a lawsuit to force its insurers to pay for parts of current and future settlements that the NCAA has made.
Amidst millions of dollars in payments being made to avoid trials in the past and future amounts that could be negotiated to avoid trials in current litigation, NCAA lawsuit settlements are becoming cumbersome. The NCAA is looking to its insurance providers for relief.
Perhaps the most ironic thing is that according to Steve Berkowitz of USA Today Sports, the costs of litigation and negotiating settlements is part of what the NCAA wants to claim.
Insurance companies and the NCAA are at odds over two issues: whether or not the claims the NCAA has made are covered by the policies it took out and whether or not those claims can be made depending on when the policies were purchased.
The defendants in this case – the NCAA’s insurers – argue that the recent claims are akin to ones the NCAA has already made on antitrust suits that the NCAA settled years ago. The NCAA contends that they are different and thus substantiate new claims under a more recently purchased policy with a larger potential award.
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The timing issue relates to the 2006 antitrust suit brought against the NCAA by former Stanford football player Jason White. The NCAA had purchased one policy a year prior and has also taken out others since. The NCAA is trying to make claims on all of its policies, and the insurance companies are currently refusing to give relief on every policy.
What’s at stake is potentially tens of millions of dollars. If the insurance companies win their argument that the claims the NCAA is making are similar to those already made, they would only be on the hook to provide relief on one policy that has a $30 million maximum and has already been partially drawn from. If the NCAA were to win a potential trial, an additional policy with a max of $45 million could come into play.
While tens of millions of dollars isn’t insignificant, especially to a non-profit organization like the NCAA which distributes revenue to its membership, it’s not enough to cover all of the money the NCAA is paying out for the settlements it is trying to make claims on. There’s the $209 million settlement from a 2015 case that was about the gap between grant-in-aid scholarships and the full cost of attendance. Add on to that the legal fees that the NCAA has incurred, $42.3 million from the Ed O’Bannon case alone, and it’s not hard to understand why every dollar is crucial for the NCAA.
This suit also may never go to trial. Although insurance companies aren’t in the business of writing checks, the cost of litigation on top of the risk of having to provide relief can quickly add up to be more than the NCAA would have settled for out of court. That may be where this is headed for. In the end, a potential settlement of this suit could help the NCAA pay settlements of other suits.
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