What Happens if Hockey Becomes Uninsurable?

Hockey Canada continues to face questions about its handling of sexual assault allegations stemming from an incident alleged in a 2022 lawsuit in which a young woman in London, Ontario, stated that members of Hockey Canada’s U20 men’s world junior team sexually assaulted her in 2018 following a Hockey Canada fundraising event.[1] One of the major revelations to come out of the 2022 lawsuit was that Hockey Canada used player registration fees to maintain a fund to settle issues related to claims about sexual assault and sexual abuse. The 2022 case settled, but, following increased scrutiny about the handling of the initial police investigation in 2018, the London police reopened their investigation and, according to police files, have “reasonable grounds to believe five junior hockey players sexually assaulted a 20-year-old woman at the hotel.”[2]  There is continuing chatter that the NHL will suspend up to five players in relation to the alleged incident but, as of now, the NHL has not taken any public action. It is unclear what, if anything, would be appropriate NHL action as no criminal charges have been filed in connection with the case.[3]

It is against this backdrop that Rick Westhead of TSN is reporting that insurance companies are threatening to withhold coverage from Hockey Canada, the Canadian Hockey League (the CHL), and its three constituent major junior leagues in the midst of a separate, ongoing lawsuit alleging that the CHL and its teams and executives “perpetuated a toxic environment which condones violent, discriminatory, racist, sexualized, and homophobic conduct, including physical and sexual assault, on the underage players that they are obliged to protect.”[4]

The class action suit against the CHL and all member teams was brought by in 2020 by former NHL player Daniel Carcillo, who played for the Sarnia Sting and the Mississauga Ice Dogs in the OHL between 2002 and 2005, along with a former WHL player and a former QMJHL player, alleging breach of fiduciary duty, systemic negligence, and vicarious liability stemming from the CHL’s apparent inability to curtail the physical and sexual abuse of players.[5] On February 3, 2023, Justice Perell of the Ontario Superior Court ruled against certification of the class because it was “incorrect and not legally viable” to hold each member team of the WHL, OHL, and QMJHL jointly and severally liable for “each other’s wrongdoings regardless of whether the particular team participated in the wrongdoing,” while suggesting a mechanism by which individuals might pursue their claims against individual teams or leagues.[6] Justice Perell did not express doubt some members of the putative class who were players in the WHL, OHL, or QMJHL were “…. physically and sexually assaulted [themselves]. . . [and] compelled to sexually assault . . . young women invited to team parties.”[7] Both sides were back before the court August 29th as the court grapples with how to move forward in an equitable fashion for current and former players who want to bring claims.[8]

With allegations of abuse going back to the 1970s potentially opening up the CHL and, by extension, Hockey Canada, to enormous liability, Westhead is reporting that Hockey Canada filed suit June 9th in Ontario Superior Court in Milton, Ontario, alleging AIG Insurance Company of Canada and TIG Insurance Company have indicated they may not honor policy obligations in connection with the lawsuit. Hockey Canada filed a similar lawsuit August 11th in a Toronto court against Lloyd’s of London, which includes AIG and Allianz Global Risk US Insurance Company.[9] None of the insurers named have yet responded to the allegations, but the filings by Hockey Canada indicate that insurers have communicated to Hockey Canada that the policies do not cover claims prior to the respective retroactive periods despite there being no language in the policies precluding coverage for claims pertaining  to abuse occurring prior to the retroactive coverage periods.[10] According to court filings by Hockey Canada, between September 2015 and September 2020, Hockey Canada and its leagues, teams and participants were insured under an AIG policy that included an endorsement titled “Sexual Misconduct Liability Endorsement” that provided up to $20 million worth of coverage for claims of sexual misconduct, including both sexual and other physical misconduct.[11] Hockey Canada is pleading that, if the defendant insurance companies fail to comply with their obligations to cover costs and potential damages under the policies, Hockey Canada will attempt to hold them liable for breach of contract.[12]

As Westhead notes, “If the insurance companies successfully argue that they should not have to cover costs and potential damages related to the lawsuit, it’s unclear how the CHL and its teams would come up with the funds.”[13] As Hockey Canada attempts to move forward from the U20 sexual assault scandal with increased emphasis on education and zero tolerance policies, it will be interesting to see what happens if they are forced to pay damages in any of the suits likely to proceed against the CHL and/or member teams. Zero tolerance policies and background screenings are put in place not just to protect players but to demonstrate sound risk management strategies. What happens if Hockey Canada becomes uninsurable? Would insurers hesitate to offer coverage for things like catastrophic injuries going forward?

Of note in relation to coverage for catastrophic injuries, Hockey Canada settled June 8, 2023 in pre-trial discussions with Neil Doef, a former member of Hockey Canada junior teams who suffered a severe spinal cord injury in 2014 while playing in the World Junior A Challenge in Saskatchewan.[14] Doef, who was initially deemed paraplegic, went on to regain function in his right leg and very limited function in his left leg. He attended Princeton University, who honored its acceptance commitment and financial aid commitments despite his obvious inability to play; Ivy League schools do not offer athletic scholarships so denying Doef admission following the injury would have belied otherwise. Hockey Canada had coverage up to $1 million for catastrophic injury through AIG, but, because he eventually received a diagnosis of incomplete paraplegia, AIG denied the claim. Doef sued Hockey Canada for alleged negligence and breach of fiduciary duty in the design and administration of its insurance program, and for allegedly not getting adequate insurance for its members. He sued AIG Insurance for allegedly wrongly denying insurance benefits.[15]

            It will be interesting to watch going forward how Hockey Canada handles insurance coverage. While the public is rightly critical of Hockey Canada’s handling of sexual abuse claims, both by and about players, the majority of claims relate to injury and without relatively robust insurance coverage for participants and participant organizations, it is difficult to see how a national program would function. It is unlikely that insurers would pull injury coverage, but it bears watching.

[1] https://www.cbc.ca/news/canada/police-investigations-junior-hockey-sexual-assault-allegations-1.6741216.

[2] https://www.cbc.ca/news/canada/police-investigations-junior-hockey-sexual-assault-allegations-1.6741216.

[3] https://www.hockeyfeed.com/nhl-news/team-canada-5-players-will-face-nhl-suspensions-for-involvement-in-the-2018-sexual-assault-scandal; https://www.cbc.ca/news/politics/hockey-canada-sexual-assault-crisis-parlimaentary-committee-1.6535248

[4] https://www.tsn.ca/chl/rick-westhead-insurers-refusing-to-provide-coverage-in-chl-abuse-lawsuit-court-documents-say-1.1999863; see Carcillo v. Canadian Hockey League (2023), No. CV-20-00642705-00CP, Reasons for Decision at para. 5 (Can. Ont. Sup. Ct. J.). 

[5] Carcillo v. Canadian Hockey League (2023), No. CV-20-00642705-00CP, Reasons for Decision at para. 5 (Can. Ont. Sup. Ct. J.). 

[6] Id. at para. 9.

[7] Id.

[8] https://www.tsn.ca/chl/rick-westhead-insurers-refusing-to-provide-coverage-in-chl-abuse-lawsuit-court-documents-say-1.1999863.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] https://www.cbc.ca/news/canada/ottawa/neil-doef-hockey-canada-lawsuit-settlement-reached-1.6865300.

[15] Id.

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