Veterans of the National Football League with brain injuries will be relieved to know that payments under the NFL Players’ Concussion Injury Litigation Settlement are exempt assets that players can keep even if they are bankrupt, according to Bankruptcy Judge John K. Olson of Fort Lauderdale, Fla.
Judge Olson evidently was the first to rule on the issue.
The case before Judge Olson involved a chapter 7 petition by a retired 10-year veteran of the NFL. His bankruptcy was becoming a disaster, because the former safety had waived his discharge once the trustee found three unscheduled automobiles parked in his garage and titled in his name.
The former first-round pick in the 1992 NFL draft claimed that payments on account of his neurocognitive impairment are exempt assets. The trustee objected to the claimed exemption.
Fortunately for the former All American, Judge Olson ruled in a June 27 opinion that the payments are exempt assets under Section 522(d)(10), even though Florida has opted out of the federal exemptions.
Generally, Florida does not allow its citizens to take federal exemptions, although state law allows Floridians to claim exemptions under Section 522(d)(10). Subsection (C) allows debtors to exempt the right to receive “a disability benefit, illness, or unemployment benefit.”
In support of her objection, the trustee relied on precedent holding that payments resulting from a tort claim are not exempt in Florida. Judge Olson disagreed. He framed the question as whether the payments were a disability benefit covered by Section 522(d)(10), even though the Litigation Settlement was the result of a lawsuit.
Judge Olson said that the language in the settlement agreement “is undeniably indicative of a disability policy.” He said that neurocognitive impairment “falls within even the narrowest interpretation of the word ‘disability.’”
“Most importantly,” Judge Olson said he focused on the “overall structure of the Settlement Agreement and the medical procedures in place to filter claims.” [Emphasis in original.] Unlike the brain-injury settlement, where the payments are graduated to reflect the extent of a player’s injury verified by a panel of medical experts, someone might win an ordinary tort settlement even if there were no injury, and the payments in a tort case might or might not accurately reflect the extent of an injury.
Judge Olson therefore said that the Settlement Agreement “is vastly different from a traditional class action tort claim settlement, where no matter the size of the class, payouts are fully determined ex-ante. Here, however, the amount of compensation, if any, is only fully determined ex-post, after all of the procedural hurdles have been overcome.”
Noting that the settlement payments were not part of the NFL’s existing disability policy, Judge Olson found “little to suggest that the Settlement Agreement intends to resolve a tort claim; rather, the explicit language of the Settlement Agreement as well as the overall structure suggests that the benefits are pursuant to a separately created policy, which this Court interprets as a disability policy within the meaning of Section 522(d)(10)(C).”