Lawyers for the National Football League’s retirement plan told the Fifth U.S. Circuit Court of Appeals that U.S. District Judge Karen Gren Scholer of Dallas was out of bounds when she ordered a near doubling of benefits for a retired running back who is disabled from injuries he sustained as a player.
In June 2022, at the conclusion of a six-day bench trial, Judge Scholer ruled in favor of the ex-player, Michael Cloud, in his suit against the retirement plan. She ordered the plan to increase his annual disability benefits from $135,000 to $265,000, with blistering words for the plan’s administrators over what she regarded, in football parlance, as their illegal procedure and unsportsmanlike conduct. The plan’s appeal to the Fifth Circuit asks that her judgment be reversed.
In her 84-page memorandum opinion and order, Judge Scholer said the board in charge of the retirement plan abused its discretion, acted arbitrarily and capriciously, and relied on “tortuous reasoning” and “cherry-picked information” to justify paying Cloud less than he was entitled to.
Rather than sincerely evaluating Cloud’s claim and examining the documentation in support of it, she said, the board based its finding almost entirely on cursory research by a paralegal from the plan’s longtime outside counsel, the Groom Law Group of Washington, D.C. That practice, she said, violated the federal Employee Retirement Income Security Act, which guarantees participants in employee benefit plans a “full and fair review” of claim applications.
Moreover, she said, the plan’s mistreatment of Cloud — an eight-year NFL veteran who, at 48, is physically and psychologically debilitated, unable to recall things he’s known all his life, or hold even menial jobs — was far from an isolated lapse.
“Behind the curtain,” she wrote, “is the troubling but apparent reality that these abuses by the Board are part of a larger strategy engineered to ensure that former NFL players suffering from the devastating effects of severe head trauma are not awarded… [maximum] benefits.”
In their appellate brief, the retirement plan’s lawyers said Judge Scholer’s “charged rhetoric” notwithstanding, the retirement board “followed all applicable ERISA procedures” and made the right decision in setting Cloud’s disability benefits.
“In its zeal to ‘pull back’ the purported ‘curtain’ on the plan,” the brief said, “the district court flouted basic limitations on judicial review of ERISA benefit decisions at every turn.”
Representing the retirement plan before the Fifth Circuit are Edward Meehan and Michael Junk of the Groom Law Group, who were lead trial counsel before Judge Scholer; Nolan C. Knight of Munsch Hardt in Dallas; and Pratik A. Shah and James E. Tysse of Akin Gump Strauss Hauer & Feld in Washington.
Representing Cloud are Christian S. Dennie of Trophy Club, Texas; and Matthew Nis Leerberg and Kip D. Nelson of Fox Rothschild’s North Carolina offices. Dennie, formerly with Fox Rothschild in Dallas, was Cloud’s lead counsel at trial.
Oral arguments on the plan’s appeal to the Fifth Circuit were heard on Sept. 7 by Judges Don Willett, Andrew Oldham and Kurt D. Engelhardt.
The retirement plan’s lawyers wrote in their appellate brief that Judge Scholer’s opinion was “replete with procedural and substantiative errors,” and that she “applied a freewheeling understanding” of ERISA’s “full and fair review” requirement, while “inventing various procedural rules and misapplying others.” Further, it said, she “relied (selectively) on evidence” favorable to Cloud while minimizing evidence that supported the plan’s position.
Cloud’s lawyers, in urging the appellate court to uphold Judge Scholer’s judgment, wrote that she “correctly recognized that Cloud’s claim for disability benefits was wrongfully and arbitrarily denied in a process that lacked the procedural safeguards both promised by the benefits plan and required by law.”
According to evidence presented at trial, the board denied Cloud’s claim for the maximum disability benefit of just over $265,000 a year during a 10-minute meeting on Nov. 16, 2016, in which it also decided 113 other cases — an average of about one every five seconds.
“Afterwards, board members could not remember anything about Cloud’s application,” Cloud’s appellate brief said.
In his oral argument, Dennie, Cloud’s lead lawyer, said: “The plan tries to argue that ‘we just had a rogue judge that had it out for us.’ That is not the case. This is a history. This is a problem for these players who, frankly in that era, did not know what they were getting into.”
And courts around the country, he said, have ruled that the retirement plan committed the same abuses as those cited by Judge Scholer.
“This is not a rogue judge. This is a judge who did her job,” Dennie told the panel.
In February of this year, The Washington Post published a lengthy article based on a six-month investigation into the retirement plan’s handling of players’ disability claims dating back to 2008.
Relying on documents that have surfaced in lawsuits filed against the plan by ex-players — including Cloud’s suit — The Post concluded that despite public professions by the league and the players’ union over the health and safety of players, “beyond the glare of national television, debilitated former NFL players continue to encounter a benefit plan, jointly managed by the league and union, that fights aggressively to deny claims and repeatedly shirks legal obligations to fairly review cases.”
The result, the newspaper said, has been a string of “tense and protracted legal fights that have revealed repeated instances in which the NFL’s plan seized on technicalities, ignored medical evidence and flouted federal judges to justify denying claims.”
Cloud, an All-American running back at Boston College (where he earned a degree in socioeconomics), was drafted by the Kansas City Chiefs in 1999. He later played for the New York Giants and the New England Patriots, where he was a member of the Super Bowl XXXVIII championship team.
On Oct. 31, 2004, while playing for the Giants, he sustained a concussion as a result of a devastating helmet-to-helmet hit by a defensive back for the Minnesota Vikings. Despite complaining afterward of headaches, dizziness, and vertigo, his lawsuit said, Cloud “was allowed and told to return to play” within 48 hours. (The first version of the NFL’s current concussion protocol, which in theory prevents players who sustain concussions from returning to action until they’re cleared by a medical professional, wasn’t put into place until 2009.)
That was one of at least seven major concussions Cloud sustained in his NFL career, his lawyers said, along with an estimated 20 “dings,” a harmless sounding euphemism for less severe blows to the head. Cloud’s injuries forced him into retirement in March 2006.
An administrative judge from the Social Security Administration ruled in 2014 that Cloud was “totally and permanently disabled” as a result of his on-the-field injuries.
Among Cloud’s neurological and psychological impairments, Dennie said in his closing argument at trial, are migraine headaches, memory loss, vertigo, depression, inattention, insomnia, difficulty making decisions, and unpredictable irritability.
He’s rarely worked since his football career ended, Dennie said. He was cut by his last team, his lawyer said, in part because, despite being a “smart and savvy NFL veteran,” he “could not recall basic plays he learned in high school.”
The NFL’s retirement plan is administered by a board composed of three representatives appointed by the NFL Players Association and three by the NFL Management Council.
The plan provides various categories of disability benefits, the most generous of which, the $265,000 annual payout, is a classification known as “Active Football.” That’s the level of benefits Cloud applied for and was denied in 2016. (Two years earlier, he’d been awarded annual benefits of $135,000 under a lesser category, called “Inactive A”)
On May 15, 2020, Cloud sued the retirement plan in federal court over the denial of his application for top-level benefits. That was the suit that ended up before Judge Scholer.
In her opinion, Judge Scholer wrote: “It is telling that out of the thousands of former players who filed applications for benefits, only 30 players currently receive Active Football benefits.”
The retirement plan’s lawyers countered: ‘The fact that 30 former players have qualified for Active Football benefits reflects not a conspiracy but only the stringent, collectively bargained requirements for attaining such benefits.”
A retired player is entitled to Active Football benefits only if he is totally and permanently disabled as a result of a football-related injury incurred while he was an active player, and only if his disability arose “shortly after” his injury, defined in the plan’s rules as not more than 12 months.
The administrative judge from the Social Security Administration who declared Cloud totally and permanently disabled in 2014 ruled that the onset date of Cloud’s disability was Dec. 31, 2008 — the date after which, according to Cloud, he was no longer able to hold a job. That was more than two years after his retirement from the NFL, and, thus, outside the “shortly after” window, the lawyers for the retirement plan argue in their appeal.
Cloud’s lawyers argued that the disability onset date designated by the Social Security Administration is irrelevant, since what Social Security thinks isn’t binding on the retirement plan or the courts. Moreover, their brief said, one of Cloud’s many concussions occurred during a game in November 2005, near the end of his NFL career, “There was substantial evidence confirming that Cloud was totally and permanently disabled at the conclusion of the 2005 NFL season,” it said. That would put his disability well within the 12-month “shortly after” window.
The retirement plan also said Cloud failed to meet the “changed circumstances” test for having his benefits increased. Once a player is awarded total and permanent disability benefits, as Cloud was in 2014, those benefits continue at the assigned level unless he can demonstrate that because of changed circumstances, for example, the emergence of a new and different impairment, he’s entitled to be moved to a higher-paying category.
Cloud, the plan’s lawyers said, never alleged such changed circumstances; the injury-related health conditions he listed in 2014 were the same as what he submitted two years later, when he sought higher benefits.
Judge Scholer refuted that argument in her order, noting that Cloud’s later application for higher benefits listed among his impairments “significant memory and attention problems” and “affective disorder,” a term that encompasses a variety of psychological afflictions, including depression, anxiety, paranoia, delusion, and bipolar disorder. None of these, she said, were part of his original 2014 application for benefits.
Even without considering the merits of Cloud’s application for increased benefits, the plan’s lawyers told the Fifth Circuit panel the retirement board had the right to reject the application as untimely. They said he missed a 180-day deadline to appeal to the board an initial denial of his application by a committee of the plan to which all benefit claims are first directed for consideration.
Cloud did not appeal to the board until 182 days after receiving a letter informing him that the committee had turned down his claim, the plan’s lawyers said. He was two days late. The clock had run out.
“That should be the end of this case,” Shah, the Akin Gump lawyer, told the panel. “If he missed the appeal deadline … then there is no appeal.”
Dennie noted, however, that the two sides stipulated at trial that Cloud’s position was that he didn’t pick the letter up from his doorstep until two days after it was delivered via Federal Express. Since Cloud didn’t “receive” the letter until retrieving it from his doorstep, the player’s appeal was not two days late. (In football parlance, “Reset the clock to deadline day.”)
Finally, the retirement plan’s lawyers said, even if Judge Scholer had properly found the plan’s decision-making was flawed — and it wasn’t, they added — she had no authority to order an upward adjustment of Cloud’s benefits on her own. At most, the lawyers said, she should have remanded the case to the retirement board for a new review.
In finding for Cloud, Judge Scholer ordered the retirement plan to increase Cloud’s yearly disability payment from its present $135,000, to the “Active Football” maximum of $265,000, retroactive to May 1, 2014. Including pre-judgment interest, she said, Cloud is owed roughly $1.281 million (with the meter still running on post-judgment interest). She also ordered the retirement plan to pay Cloud’s legal bills.
Cloud’s appellate brief said that while a remand is “usually” appropriate in ERISA cases, it is not mandatory.
In this case, it said, “remanding to the board for additional review would be nothing more than an exercise in futility,” since “the board is committed to denying [enhanced] benefits to Cloud no matter what.”