Jockeys: Coverage Update and a Scandal

January 30th, 2006 by

Back in August the Insider blogged one of the most dangerous professions in America: horse racing. We found that only five states included jockeys in the workers comp system: New York, New Jersey, Maryland, Colorado and California. In the other states, jockeys are either excluded from the comp system or considered to be independent contractors. While states struggle to come up with an equitable and affordable solution, jockeys assumed that they were covered by a disability policy that came with their membership in the Jockey’s Guild. Unfortunately, this turned out to be a bad assumption.
In a scandal that brings to mind the Coingate caper in Ohio, the Jockey’s Guild recently terminated its entire front office staff. An investigation revealed colossal fiscal problems, including non-payment of premiums for a disability policy that protected jockeys in the event of catastophic injuries. Gary Birzer, a young jockey who was totally paralyzed in a 2004 spill, had paid his hefty dues ($64,000 over a six year period) and assumed he had $1 million in disability coverage. The Guild, however, neglected to pay the bills for the insurance, so there was in fact no coverage. Birzer’s medical bills already exceed $600,000. Needless to add, he is suing the Guild — for $10 million.
On his way out the door, the terminated director of the Guild, Dr. L. Wayne Gertmenian, made out checks totalling $217,000 to himself and other employees of his management company. I have a feeling we will be reading more about the good doctor in the coming months (and not in the society pages).
Covering Jockeys
We came across a very comprehensive white paper (PDF) written by two professors at the University of Arizona, Price Fishback and Samuel Allen. They provide an excellent overview of jockeys in the workers comp system, with a state by state anaylsis of the costs. Not surprisingly, Florida and California lead the nation in the cost of insuring jockeys (as much as $43 per hundred of payroll in CA!). Although written in 2002, much of the information still holds true.
In addition to the problem of when and how to include jockeys in the comp system, any reforms need to take into account the other employees at racetracks: trainers, exercise riders and stablemen. (The handicappers, touts and hangers-on will have to fend for themselves.) Racetracks attract a very transient population, moving from state to state, with no certified training and not much in the way of safety equipment. If states do find a way to bring the racing community into the comp system, I expect that most of the risk will end up in a state fund or in the assigned risk pool. The potential for catastrophic injury is always high, the payrolls are erratic, and the hiring practices could best be described as marginal. It’s a colorful world, fun to read about, but when it comes to risk transfer, the prudent underwriter will take a pass.