Recently, a federal judge in Texas court ruled in favor of retired NFL player, Michael Cloud, determining that the administrators of The Bert Bell/Pete Rozelle NFL Player Retirement Plan (“Plan”) violated their fiduciary duties under ERISA in denying Cloud a full and fair application review. Cloud’s appeal concerned his eligibility for the highest level of disability benefits under the Plan, which was subsequently denied by the Defendants.
Cloud boasts an impressive NFL career, playing 7 seasons, including for the New England Patriots during their 2004 Super Bowl winning year. Cloud additionally played for the Kansas City Chiefs and the New York Giants between 1999 and his retirement in 2006. During his career, Cloud states that he injured “virtually every aspect of his body” as well as endured numerous cases of head trauma known as “dings” (an instance where a player’s vision goes black due to a hard hit to their head). One of Cloud’s last head injuries sustained in 2004 led to his early retirement, as the frequency and severity of the injuries had caused “cumulative mental disorders.” In 2010, Cloud began receiving benefits under the retirement Plan, and was found to be “totally and permanently” disabled in 2014. Subsequently, in 2016 Cloud applied for reclassification under the Plan but was denied both initially and on appeal.
Cloud brought an action against the Plan in 2020, alleging that his application for reclassification was never fully reviewed by the Defendants. He alleged that the Defendants (including six board members for the Plan) did not adequately review his over 1000-page application. Instead, a paralegal was made to write a summary of the application for the administrators. It has been speculated that the decision on the matter was already drafted before the administrators viewed the summary of the new appeal, as it cited to incorrect documents that belonged to the wrong benefits plan. Further, the denial letter included contradicting information with written minutes taken at the board meeting during their deliberation; the minutes state that the only reason for the denial was the Cloud did not show by clear and convincing evidence the existence of a new injury, while the letter additionally states that the application was made outside of a 180-day deadline among other timing issues. During closing arguments, counsel for Cloud stated that the issue of unfair denial is not new nor exclusive to Cloud, and that the Plan consistently failed to fully review applications by reviewing as many as 50 at a time with no discussion of the specific cases.
The Defendants argued that the payment of benefits was not appropriate, as Cloud did not sustain any new injuries between his first application in 2014 and his application for reclassification in 2016. They further opined that Cloud’s current benefits category was “exactly where he should be” and that he was one of the few beneficiaries to bring an action against the Plan.
The Court did not agree, stating that the denial was incorrect and Cloud’s reclassification application should be granted and he should be placed in the highest benefits category due to the injuries sustaining during his career. Judge Karen Gren Scholer stated that the Plan obviously spent “virtually no time in rubber-stamping the decision.” She further stated that the Plan’s practice of reviewing player’s applications was “wrong and absurd.” Regarding the argument that the low number of cases brought against the Plan is evidence that the decision was correct, Judge Scholer stated that this essentially constituted an “if it ain’t broke, don’t fix it” argument and thus was rejected. She further speculated that it is incredible that under the Plan only 30 former players (all of whom have injuries causing paralysis) are at the highest benefit tier. Thus, she stated that, “The Plan is broke and it’s time to fix it.”
Both Cloud and his family are grateful that the long battle for benefits due to him under the Plan is finally over. Cloud described the Plan’s denial and its effects had “tortured [his] family for years without caring.” This decision is not only a victory for Cloud and his family, but other members of the same or similar retirement plans who have been denied full and fair review of applications by plan administrators. In fact, even outside of the realm of plans relating to former athletes, the decision solidifies the fiduciary duties owed to beneficiaries under ERISA and sets the standard for individualized, thorough, and fair reviews of applications and benefit determinations.