Prepared Statement of The Honorable Ed Whitfield

Thoroughbred Horse Racing Jockeys and Workers: Examining On-Track Injury Insurance and Other Health and Welfare Issues

Subcommittee on Oversight and Investigations
October 18, 2005

Good morning and welcome. Today, the Oversight and Investigations Subcommittee will examine a serious health and welfare matter affecting a national sport and interstate commerce. This issue involves a recent tragic story of a professional athlete in an extremely dangerous sport. On July 20, 2004, during the seventh race at Mountaineer Park racetrack, in West Virginia, jockey Gary Birzer broke his back in a fall and became permanently disabled. When he turned to the organization that he believed was providing his catastrophic insurance coverage, he discovered that he and other jockeys had no coverage. The policy had been allowed to lapse two years earlier. Gary's story dramatically brings to light a very serious problem confronting the horse racing industry - the need for adequate on-track injury insurance for jockeys, exercise riders, and other workers on the backside. Today's hearing will shine a light on this problem and is a first step in determining whether and how the Congress can help provide a solution.

Because of the dangerous nature of horse racing, serious injuries are common among the people who race, ride, or care for these massive and powerful animals. Unfortunately, the various states' workers' compensation programs do not cover many workers in the horse racing industry. Given the nature of these jobs - jockeys and exercise riders, especially - the law has historically considered them to be independent contractors. Only four of 38 racing jurisdictions - Maryland, New York, California, and New Jersey - have attempted to address this problem by creating special workers' compensation funds for jockeys and exercise riders. Some, like New York, have been more successful than others in addressing the problem.

Additionally, there is little real federal oversight or regulation of the horse racing industry. Thus, today horse racing in the United States is a highly fragmented industry generating a total economic impact of $26 billion annually, that supports hundreds of thousands of jobs and sees a racing "handle" of $16 billion each year, but does not provide adequate on-track injury insurance for some of the industry's most important people. Let me be clear - without the jockeys and backside workers, there would be no horse racing. All of those other jobs would not exist.

Let me also make clear: the primary purpose of this hearing is to address the health and welfare issues of jockeys and other workers most susceptible to serious injury in this industry. I am interested in learning whether the federal government can make a difference in the public health issues that these workers face, and whether we need to consider some sort of national governing body to oversee the professional sport of horse racing. In pursuit of these concerns, we are planning a second day of this hearing in early November to take testimony from the Thoroughbred Racing Association, Churchill Downs, Mountaineer Park, and some of the industry's health and welfare organizations. These organizations have already been invited and confirmed their participation. We will have tough and pointed questions for them as well. All of these players in the industry share in the responsibility for taking care of these individuals.

Today we will examine the adequacy of on-track injury insurance and whether a federal solution could be helpful. Such an inquiry entails focusing on the vital role that the Guild has historically played in ensuring that its members had adequate on-track injury insurance. The Guild is an association that has sought to promote the health and welfare of its members since the 1940s. In recent times, the Guild secured on-track insurance coverage through membership dues received from its members - "mount fees" - as well as payments totaling millions of dollars from many racetracks around the country in consideration for the use of Guild members' media rights. The Guild's on-track injury insurance covered jockeys when they weren't riding in the states that had workers' compensation programs. The policy provided $1 million dollars in coverage per accident.

In April 2002, however, when the policy came up for renewal, the Guild chose not to renew it. I have many questions: who made this decision? for what reason? were members adequately notified? Since the Birzer accident, the Guild has frequently told its members, the press, and this Subcommittee that the Guild could not afford the policy, and that the policy did not cover all jockeys. When staff interviewed Dr. Gertmenian, he also stated that the Guild could not afford the policy. But when staff interviewed the Guild's Vice President, Albert Fiss, he admitted that the Guild could have afforded to renew the policy, but that the decision to let the insurance lapse was a "business decision." This past May, in another letter to the Subcommittee, the Guild's general counsel, Mr. Lloyd Ownbey, stated that "the Board and Dr. Gertmenian agreed there was no justification to buy a new policy after it expired when the Guild and its jockeys had more important needs." What could have been more important than maintaining insurance for its members in the event of a catastrophic injury?

The Guild has provided sworn answers in federal litigation stating that the Board made the decision to let the policy lapse. Likewise, in an April 2005 letter to this Subcommittee, Mr. Ownbey stated "the Board of the Guild voted not to renew that insurance policy in April 2002 on the recommendation of Dr. Gertmenian. The decision to let it lapse [was] communicated to Guild members." However, in an article published just last Friday in BusinessWeek Dr. Gertmenian apparently admits there was no formal notification about the policy lapse.

With respect to the Board having made this decision, our work indicates otherwise - that is, the Board was apparently never involved. In fact, three members of that former Board are here today, and I will ask them to testify about this and other issues.

What we do know at this point, is that the policy was allowed to lapse. Many jockeys interviewed by staff have said they were never notified of this decision. Some of these riders risk their lives in competitive races nearly 2000 times a year. And yet, these jockeys have told us they only learned of the lapsed insurance policy after Gary Birzer's tragic accident. We will hear very moving testimony from Gary and his wife, Amy, today on our first panel.

I find the treatment of the Birzers particularly reprehensible. They asked for the Guild's assistance with their medical bills, counting on the insurance for which Gary thought his dues to the Guild had been paying. Not only were they shocked to learn that the Guild no longer had the policy, but that, in the words of Albert Fiss, Gary was being used as a "guinea pig" to make a statement to the industry. The Guild management insists that on-track insurance is the exclusive responsibility of the racetracks.

While I intend to find a solution to this problem, and to hold the racetracks accountable, the immediate issue is here, with the Guild's responsibilities. There is no excuse for this profound breach of trust by the Guild. It had a responsibility to its members - to promote their health and welfare. Instead, the Guild removed an injury insurance policy, without any replacement, and with full knowledge of the risks taken thousands of times each year by jockeys. I am appalled that their leadership would consider the removal of their on-track insurance, without an adequate replacement, to be a simple business decision.

Our second panel of witnesses will provide the opportunity for us to hear, first hand, what several jockeys - including several who are currently members of the Racing Hall of Fame - think of that decision. They will also testify about the dangers of their sport, the safety and health concerns that they have, and their involvement with the Jockeys' Guild - both the current and previous administrations. Their testimony will be invaluable as we examine the public health issues that this professional sport faces.

Finally, today we will hear from the Guild's current management - Dr. Gertmenian and Mr. Fiss - as well as the Guild's general counsel, Mr. Ownbey. Since we began this investigation the Guild has failed to produce records and information in response to a lawful congressional request. In fact, this Subcommittee earlier this month authorized the issuance of subpoenas for records, and it is not altogether clear that the Guild has been fully responsive. We expect some clear answers today, about the failure to produce records in accordance with the subpoenas.

With regard to Dr. Gertmenian, there are several areas of interest that I want to explore today. First, I want to discuss the Guild's treatment of the Birzers after Gary's injury. Second, I would like some answers about the circumstances surrounding the lapse in the on-track insurance policy. Next, I think the public, and especially the jockeys, deserve some answers about your company, Matrix. No one the staff has interviewed, including yourself, has been able to describe what Matrix does for the Guild or has accomplished for the Guild, to earn its $400,000 in annual fees. In a review of those fees, one sees that the Guild pays you $175,000 in salary, $7200 for a car, and $12,000 for life insurance, on top of the $400,000 to Matrix, a company you run out of your home, and that has no employees. Records produced in response to our subpoenas show that your daughter and her marketing firm are frequent recipients of substantial payments from Matrix.

Fourth, we need answers to certain questions about your resume. The jockeys chose to replace Mr. Giovanni, a former jockey, because they thought they were getting an experienced businessman and prominent government leader. I am not so sure that is the case. Fifth, and finally, the Subcommittee expects answers from you about the Disabled Jockeys Fund, and why it has been completely depleted of the $1.3 million it had when you took over the Guild.

Let me extend my appreciation to all of you for appearing here today. I'd like especially to thank Gary and Amy Birzer, and Gary Donahue for their participation. Given your perspective about the needs for adequate coverage and the other pressing health and safety needs in the industry, I think your testimony today will be most useful.

I look forward to all your testimony and now turn to the distinguished Ranking Member, Mr. Stupak, for the purposes of an opening statement.

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