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Tuesday, September 18, 2007

Commissioner Goodell -- Remarks Before The Senate Commerce Committee

Commissioner Goodell -- Remarks Before The Senate Commerce Committee
September 18, 2007

Chairman Dorgan, Chairman Inouye, Vice-Chairman Stevens, and Members of the Committee:
Good morning and thank you for inviting me to appear today and testify on this important subject. I do not believe that this subject is, or should be, immune from Congressional scrutiny. To the contrary, the National Football League has always strived to conduct itself in the public interest, and to do everything in a first-class way. We can only benefit from objective, thoughtful reviews of our policies and programs. And so I welcome the opportunity to be with you today.
I am joined here today by Harold Henderson, our Executive Vice President of Player Programs, and Dennis Curran, our Senior Vice President and labor relations counsel. Both Mr. Henderson and Mr. Curran have been deeply involved for the past two decades in collective bargaining, including on player benefits, and in the administration of these benefit programs by the joint NFL-NFL Players Association Retirement Board.
I recently completed my first year as Commissioner of the NFL. During that year, I have spent a considerable amount of time with retired players and on the concerns raised by a number of them. And while I would candidly acknowledge that we have more work to do, I want to outline both the steps taken thus far, and the framework within which we are approaching this issue going forward.
In that context I should add that I cannot comment on the specifics of any individual case. In my role as Commissioner, I have not read the disability claims files, and I am not qualified to speak to the medical and legal issues raised in any individual case. Although I appoint one half of the Trustees on the Retirement Board, those Trustees act in a fiduciary capacity and I never discuss pending cases with them. Insofar as you may have questions regarding individual cases, I am certain that Mr. Henderson or Mr. Curran, or one of Mr. Upshaw’s colleagues, could respond better than I can today.
In considering the subject of benefits for retired players, I begin from a premise which I think no one seriously disputes – the men who played professional football decades ago deserve our respect and recognition, and their contributions to our game must never be overlooked. I honor them and their achievements and neither I nor the NFL clubs will turn our backs on them.
Second, while it might be tempting to say – as some have – that this is Gene Upshaw’s problem to solve, that is neither fair nor accurate. The responsibility for addressing the needs of retired players belongs to all of us. The retired players, the current players, the clubs, Gene as head of the Union, and I as the Commissioner – all of us have a role to play. We will continue to address this issue in a way that is compassionate, creative, and realistic.
Third, just as it would be wrong to say this is Gene Upshaw’s problem to solve, it would be wrong to say that the NFL can or should solve the problem by itself. While some may not believe this, the fact is that we cannot solve every problem of every type that has been identified, and certainly not in a way that will satisfy everyone. NFL clubs currently spend close to 60 percent of their gross revenues on player benefits and salaries. Our clubs contributed almost $150 million last year to finance medical, disability, and retirement benefits for former players, and during the term of our current collective bargaining agreement, we project that our clubs will spend more than $700 million to fund just this package of player benefits. Owners are responsibly addressing these concerns, but they are simply not in a position to absorb significant incremental costs.
In meetings with Committee and personal staff, our office and the NFLPA have provided you with a comprehensive summary of the benefits provided to retired players. Those benefits have steadily improved over time, and among the benefits available to a player who retires from the NFL today are all of the following:
n A defined benefit pension plan with a benefit that is geared only to years of service, not to the player’s earnings. If a player with ten years of service begins to receive his pension at age 55, he receives $56,000 per year; if he waits until age 65, he receives $147,000 per year. These amounts have grown steadily, and pension benefits have been increased in each new collective bargaining agreement over the past 15 years. For example, a player who retired 25 years ago – in 1982 – and who begins to receive his pension at age 55 has seen his pension benefit credit more than double since he retired as a result of increases agreed to in collective bargaining.
At a time when companies all over America – many of which are considerably larger than the NFL – have terminated their pension plans or turned them over to the federal pension guaranty board, we have both negotiated steady increases in our benefits, and agreed to apply those increases on a retroactive basis. In our most recent agreement in 2006, we agreed to increase pension obligations by more than $200 million. In the last ten years, we have increased those obligations by roughly $400 million – virtually all of which has been for the benefit of retired players. I think everyone would agree that this is a substantial additional commitment by our member clubs to former and current players.
n We also offer a 401(k) plan, in which player contributions are matched on a 2:1 basis by the clubs up to $20,000 per year. Players have access to these funds as early as age 45.
n A player annuity plan, under which eligible players receive an NFL contribution of $65,000 per year to provide transition income to players. They have access to these funds as early as age 35.
n Five years of post-career medical care and a health reimbursement account of up to $300,000 for use later in life.
n A lump sum severance benefit paid upon retirement from the NFL based on the number of seasons played.
We also, as the Committee knows, have a disability plan which offers a range of benefits, including Total & Permanent, Football degenerative, and “Line of Duty” benefits. We recently added another benefit, known as the “88 Plan,” which provides up to $88,000 per year for former players suffering from dementia, without requiring proof that the dementia is football related. For other categories of disability, the benefits range from $18,000 per year to $224,000 per year, depending on the nature and severity of the disability. These benefits are in addition to any state workers’ compensation. In addition, not all disability benefits are based on a complete inability to work.
Benefits available under the disability plan have also grown substantially over the past 15 years. An active player who qualifies for football-related Total & Permanent disability has seen his annual benefit increase from $48,000 in 1993 to $224,000 today. An active player whose Total & Permanent disability is not related to football has seen his annual benefit grow to $134,000. And former players with football-related “degenerative” disabilities have seen their annual benefit grow from $75,000 in 1993 to $110,000 today, without regard to whether they are able to work. These are annual amounts paid to the player as long as he remains disabled.
Our disability plan has a number of features that make it unique and superior to many other plans. I am told that most American workers have no employer-provided disability benefits. A report released last month by the Labor Department showed that barely 3 out of every 10 workers in the private sector have access to long term disability coverage. In certain sectors of the economy that might be perceived as higher risk, the rate of coverage is ever lower.
The NFL Plan covers all players with at least three seasons of experience (four years for players retiring before 1993) and provides for benefits even if the disability is not football-related. With as few as three years of NFL experience, a former player can receive benefits from the NFL disability plan even if his disability results from a car accident, a fall at home, or some other everyday cause. Moreover, eligible players can still apply for football degenerative benefits for up to 15 years after they retire from the NFL.
The NFL Plan provides for payment of disability benefits on a retroactive basis, so players are not prejudiced by delays in the application and administration process. A player who is approved will receive benefits retroactive to his date of application. If the disability precedes the application, the player can receive up to 42 months of benefits on a retroactive basis. And, finally, NFL disability benefits are not offset by medical or workers’ compensation payments, or any other NFL benefits, such as injury protection or severance pay. As the Committee knows, the workers’ compensation system provides lifetime medical and other benefits to players. NFL disability benefits are in addition to any payments received from those systems.
We believe these features, far from being exclusionary, demonstrate our commitment to providing fair and generous benefits to players and their families. And the record bears that out – since 2000, we have paid more than $110 million to players from the 1960s to the present who qualified for disability benefits.
Like you, I have heard concerns expressed about “red tape” and the complexity of the application process. We have taken recent steps to address that problem, and I think there is more we can do. One area of frustration is the Plan’s “Initial Claims Committee.” This arises out of new regulations adopted by the Labor Department in 2002. At the time these regulations were being considered, we filed comments with the Department noting that these regulations would likely have the effect of slowing down decisions on disability claims, and urged that they not be adopted. As we said at the time, because of the sometimes complex nature of disability decisions, including the need to have medical examinations completed by neutral physicians, and the reports analyzed within 45 days, the new rules “will only force faster denials.” The requirements imposed by the Labor Department have had the unintended consequence of making the application process longer and more complex, as our people feared at the time they were proposed.
In the future, we can look more closely at how we decide which cases need to be reconsidered. The statistics show that an overwhelming number of recipients are approved to continue their benefits, which rather strongly suggests that we may not need to review and reconsider cases as often as we have in the past. We have begun that process by reducing the frequency of medical re-evaluations from annually to once every three years for players receiving Total & Permanent disability payments.
When decisions need to be reconsidered at the Board level, we will begin making decisions outside of the Retirement Board’s quarterly meetings. Thus once an application is complete, or additional medical evaluations have been received, the Board can consider and vote on the application by fax or email. This simple change will allow more expedited processing of applications.
Finally, we have tried to ensure that the standards by which disability claims are evaluated are clear and understandable, and therefore more easily applied. As one example, decisions regarding “Line of Duty” disability, which is a partial disability arising from football, are based on standards developed by the American Medical Association. We also recently agreed to expand the standards for determining Total & Permanent disability by incorporating the medical findings of the Social Security Administration. If a player has been determined to be eligible for disability benefits by Social Security, no separate medical assessments will be needed. Instead, the determination of the Social Security Administration will govern the former player’s medical eligibility for NFL disability benefits. Our retirees have my personal commitment to continue the effort to identify and implement any reasonable procedural changes that would allow disability determinations to be made more quickly and reliably. To that end, we have enlisted the assistance of independent counsel and benefit consultants to advise us on best practices with respect to disability plans and to recommend steps we can take to improve the administration of the Plan.
This does not mean that every person who seeks disability benefits will, or should, receive them. That needs to be understood by all parties. Disability benefits are meant to assist people who cannot work, not simply that they can no longer play professional football. No disability plan, whether sponsored by a private insurer, by an employer, or by the Federal government, provides benefits to anyone who applies. And it does not mean that, even if approved, every applicant will receive the amount he requests. But we will continue to strive to do better, and to be seen as doing better.
I now want to address certain allegations about the manner in which decisions are made on disability applications. The administration of the disability plan is governed by federal law and by regulations established by federal agencies. The Plan operates as required under those regulations, including the use of an Initial Claims Committee, neutral physicians, and the associated time limits. The people who make decisions act as fiduciaries, who are obligated to follow the law and the terms of the Plan.
There are those who claim that disability applications are nonetheless denied as a result of some sort of grand labor-management conspiracy. This claim assumes that an extraordinary number of people – myself, my predecessor, Gene Upshaw, the Trustees, the Plan Administrator, the neutral doctors, Plan counsel, and their various staffs – have all agreed to deny benefits without regard to whether an applicant actually qualifies.
Those who adhere to this theory also dismiss that federal courts throughout the country have upheld the Retirement Board’s decisions in 24 of the 25 cases that have been litigated. The critics explain that away by saying that the standard of review is too deferential, ignoring that the standard is set by federal law, not by the NFL, and is consistently applied in reviewing decisions by benefit plan administrators and fiduciaries in all sectors of the American life.
But no matter how deferential the standard of review may be, no court would defer to a decision tainted by collusion or conspiracy. The simple reality is that no such claim has ever been proved and no court has ever made such a finding. These charges are as cynical as they are unfounded, and the Committee should not dignify them here.
There is one other myth about decision-making that should be dispelled – that being that many players are either denied benefits altogether, or forced to endure extraordinary delay, because the Union and management trustees routinely divide 3-3 on applications. There is no basis whatsoever for this suggestion. In fact, since the Initial Claims Committee was put into place in 2002, it has deadlocked on only six claims in a line-of-duty disability and only 32 cases of Total & Permanent Disability. Every other claim filed – almost 600 claims – was decided unanimously, one way or another.
Where claims are appealed to the Retirement Board, the same is true. The Board seldom splits in its votes. And even if there is a split in the Retirement Board, the case is referred to a neutral physician, called the Medical Advisory Physician. That doctor’s report is final and binding. That report decides the case – not the Union trustees or the Management Trustees.
Apart from addressing the workings of the disability plan, we have recently
taken some additional steps to address specific needs of former players.
Earlier this year, we joined with the NFL Players’ Association, the NFL Alumni Association, and the Pro Football Hall of Fame to establish an “Alliance” to bring together the different groups seeking to help retired players. As a first step, we have agreed to create a fund, set initially at $7 million, to fund two specific medical initiatives.
First, to provide full or partial funding of hip, knee or shoulder replacement surgery and related rehabilitation for former players at a network of leading hospitals throughout the country.
Second, to provide an expanded national program of cardiovascular risk screening, and education for former players.
Apart from these two programs, we are also exploring ways of providing support for players in need of assisted living arrangements, and other specific medical needs.
Finally, we are expanding our outreach efforts to better identify former players with special needs, so that our Alliance can provide financial assistance to those proud former players and their families who are sometimes hesitant to ask for assistance.
We recognize that this is not a short-term problem. Some of the leaders addressing this issue – former players like Jerry Kramer or Hall of Famers Willie Lanier and Merlin Olsen – have met with us and continue to do so. I am sure that together we have the resources, creativity and determination to make a real difference in the lives of our former players.
There are today approximately 8000 active and retired NFL Players. Like many groups of 8000 people, their circumstances vary widely. We are proud of the comprehensive and improving package of benefits provided to players, and we will continue working to do as much as possible to help those in need.
Thank you for the opportunity to testify before your Committee today.


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