[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
THOROUGHBRED HORSE RACING JOCKEYS AND WORKERS: EXAMINING ON-TRACK
INJURY INSURANCE AND OTHER HEALTH AND WELFARE ISSUES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
NOVEMBER 17, 2005
__________
Serial No. 109-62
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
David Cavicke, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
ED WHITFIELD, Kentucky, Chairman
CLIFF STEARNS, Florida BART STUPAK, Michigan
CHARLES W. ``CHIP'' PICKERING, Ranking Member
Mississippi DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon JAY INSLEE, Washington
MIKE FERGUSON, New Jersey TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas HENRY A. WAXMAN, California
MARSHA BLACKBURN, Tennessee JOHN D. DINGELL, Michigan,
JOE BARTON, Texas, (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Amos, Don, Chief Operating Officer, Magna Entertainment,
Inc., accompanied by Andrew Staniusz, Corporate Counsel and
Director of Employee Relations............................. 27
Daney, Bernard J., Chairman, Delaware Thoroughbred Racing
Commission................................................. 87
Finamore, John V., Senior Vice President of Regional
Operations, Penn National Gaming, Inc...................... 10
Fravel, Craig R., Executive Vice President, Del Mar
Thoroughbred Club.......................................... 33
Giovanni, John, former National Manager, The Jockeys' Guild.. 80
Haire, Darrell, Regional Member Representative, Jockeys'
Guild...................................................... 100
Maline, Martin A., Executive Director, Kentucky Horsemen's
Benevolent and Protective Association, Inc................. 69
Metzger, Daniel J., President, Thoroughbred Owners and
Breeders Association....................................... 56
Monahan, Dick, Director and Racing Council Chairman, American
Quarter Horse Association.................................. 96
Riedel, Richard, Executive Director, Kentucky Racing Health
and Welfare Fund........................................... 74
Roark, John O., President and Chairman, National Horsemen's
Benevolent and Protective Association...................... 59
Scherf, Christopher N., Executive Vice President,
Thoroughbred Racing Association............................ 14
Sexton, Steve, Senior Vice President of Kentucky Operations
and President of Churchill Downs........................... 22
Shapiro, Richard B., Commissioner, California Horse Racing
Board...................................................... 90
Van Clief, D.G., Jr., Commissioner and Chief Executive
Officer, National Thoroughbred Racing Associations......... 19
Violette, Richard A., Jr., Chairman, Board of Directors, New
York Jockey Injury Compensation Fund....................... 84
Williams, Rose Mary, Director of Racing, Mountaineer Race
Track and Gaming Resort.................................... 13
(iii)
THOROUGHBRED HORSE RACING JOCKEYS AND WORKERS: EXAMINING ON-TRACK
INJURY INSURANCE AND OTHER HEALTH AND WELFARE ISSUES
----------
THURSDAY, NOVEMBER 17, 2005
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:02 p.m., in
room 2322 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman) presiding.
Members present: Representatives Whitfield, Stupak, Barton
(ex officio), Inslee, and Burgess.
Staff present: Tom Feddo, majority counsel; Mike
Bloomquist, majority counsel; Clayton Matheson, research
assistant; John Halliwell, policy coordinator; Mark Paoletta,
chief counsel; Alan Slobodin, majority counsel; Peter Spencer,
majority professional staff; Terry Lane, deputy press
secretary; Jonathan Pettibon, legislative clerk; David Nelson,
minority counsel; Elizabeth Ertel, research assistant; and
Chris Treanor, staff assistant.
Mr. Whitfield. I would like to call this hearing to order.
I am sorry we are already 2 minutes late but we have a lot or
witnesses today. In fact, a total of 17 and I really do
appreciate all of you taking time from your busy schedules to
be with us as we explore this important issue of thoroughbred
horse racing jockeys and workers, and I might add Quarter
Horses, as well. And examining on-track injury, insurance and
other health and welfare issues.
I would also make the comment that we have already read all
of the testimony, which I thought was very good and quite
thorough on all of the issues. And we are going to go on and
start all of our opening statements and the reason that we are
is because it looks like very soon, we are going to have two
floor votes. One will be a 15-minute vote and one will be a 5-
minute vote and then we are going to come right back and we
will get started because we look forward certainly to the
testimony of everyone on the panel today.
Many of you know that we have already had one hearing that
focused upon the Jockey's Guild and its leadership. And as a
result of that hearing, and not only just that hearing but
other issues as well, as you probably know within the last two
or 3 days the jockeys took matters into their own hands, and
rightfully in my view, eliminated Mr. Gertmenien and his
leadership from the Jockey's Guild. I think that was a right
decision because it was quite obvious that under his
leadership, that the Jockey's Guild, they totally lost their
Disability Fund. All of the funds were depleted from that Fund.
They totally lost their catastrophic coverage because the Guild
allowed the policies to lapse and certainly did not notify them
of that. And under the Gertmenien leadership, such a bad
relationship with the other players in the industry was created
that the Guild lost the over $2.2 million that went to them
each year from the tracks themselves. So we are hopeful that
under new leadership that the Guild can become quite effective
in doing what it was set out to do, and that is to provide
adequate health coverage for the members of the Jockey's Guild.
I would also say, however, that those of us on the
committee do not view this to be the end of the story. Because
we do feel quite strongly that this whole issue of jockey's
health, the lack of a centralized data system on what causes
accidents on the racetrack-some of you testified about the lack
of that data that is available for a centralized place. We have
the Interstate Horse Racing Act itself. I know that there is
mixed feelings about how much should the Federal Government be
involved in racing, should it be involved at all. The Federal
Government is involved in racing because of the Interstate
Horse Racing Act, which provided the framework for
simulcasting. Some people have said don't touch that Act. Other
people say you can use this Act as a vehicle. Some people have
raised the question of why were jockeys left out of that Act?
Why were horseman's groups only included in that Act? What is
the difference in a trainer and a jockey? They both are
independent contractors in one extent. Some trainers are
owners. Some jockeys are owners. But the question was raised,
should jockeys be a part of the Interstate Horse Racing Act?
Should they have a split in some of those simulcasting
revenues?
We have a lot of different organizations involved
nationally in racing. We have got the TRA. We have got the
NTRA, the HPPA, the TOBA and we know that it is a fragmented
industry with a lot of different rules, depending upon which
State you are in. We have great progress made by the leadership
of some tracks like Magna and Churchill Downs, who voluntarily
went to a $1 million policy. We have other tracks that have
$100,000 policies to cover on-track injuries. We have the TRA
that established the first program back with the Jockey's Guild
many years ago, I guess many in the early fifties or late
forties through Cigna. And then we have the Churchill Downs and
Magna, the one through AIG.
There is a question of should there be a Federalized
Workman's Comp system? When Mr. Giovanni was the head of the
Jockey's Guild they established a program in New York, a
Workers' Compensation program there. And Mr. Giovanni and
others came to the Congress and said we would like a
Federalized Workman's Comp program because these jockeys are
traveling all over the country and there should be one unified
system to take care of their situation. And at that time, it
was not decided to pursue that so some arguments will be made
to do that today.
I have already indicated that arguments are being made to
revisit the Interstate Horse Racing Act. And I know that that
interests many people, particular as it relates to off-shore
gambling and the loss of revenues in off-shore gambling and the
conflict with the Wire Act, or perceived conflict with the Wire
Act. Racing medication, race day medications definitely has an
impact on racing and many of you represent groups that have
been advocating a national, uniform system for medications and
it still seems to be a piece meal approach on that.
A jockey's weight continues to be a big issue and it is
important, I think, that there be a standard there because as
jockeys go into different jurisdictions it doesn't make a lot
of sense to have a lot of different weights. Knee crops-I guess
California is the only State that does the knee crops program
for any horse that goes down on a racetrack in California. My
friend, Mr. Stupak, and others on his side wrote a letter to
the NLRB and wanted to know why the NLRB was not more involved
in this issue. And of course we know that historically they
have taken the position that while not unrelated to commerce,
it is presently local in character. Horse racing is presently
local in character and therefore, they have decided not to get
involved in it.
But these are just a few of the issues that are out there
and I think this hearing can be productive for all of us. I
mean, we are all interested and this industry has a tremendous
economic impact. Just last night, a 16-year-old apprentice
jockey was killed in Indiana and we know that it is a dangerous
sport. So I look forward to the testimony of all of you. You
all are the experts and we are trying to come up with some
solutions to some of the many problems facing the industry. And
yet we want to be cautious about how we move forward but we
want to explore every option, look at everything and then move
forward in what we hope will be the most expeditious and
productive way. So with that, I would recognize the ranking
minority member, Mr. Stupak of Michigan for his opening
statement.
[The prepared statement of Hon. Ed Whitfield follows:]
Prepared Statement of Hon. Ed Whitfield, Chairman, Subcommittee on
Oversight and Investigations
Good afternoon and welcome. Today, the Oversight and Investigations
Subcommittee will continue examining a serious health and welfare
matter affecting professional horse racing and interstate commerce. We
will hear testimony on the possibilities of improving the health
insurance situation for jockeys, exercise riders, and backstretch
workers.
The level of urgency for taking action was heightened by our
hearing of October 18th, which featured the tragic story of
professional jockey Gary Birzer, who broke his back in a fall and
became permanently disabled. When he turned to the Jockeys' Guild for
help--for the catastrophic on-track insurance that he believed he had
been provided by the Guild--he discovered that he and other jockeys had
no coverage. To make matters worse, the Guild's Chief Operating
Officer, Albert Fiss, told Mr. Birzer that Mr. Birzer was being used as
a guinea pig, to put pressure on the racetracks to provide the
insurance instead of the Guild.
The Subcommittee at the October 18th hearing examined the Guild's
decision to let the on-track policy lapse--allegedly for a lack of
funds--and its failure to adequately notify its members of that
decision. The Subcommittee also heard from Dr. Wayne Gertmenian, the
President of the Guild. The Subcommittee considered Dr. Gerrtmenian's
leadership of the Guild, the involvement of Dr. Gertmenian's consulting
company, Matrix Capital Associates, and the compensation and fees that
both receive.
We learned that Matrix has no employees, is based out of Dr.
Gertmenian's home, and that Matrix's sole client is the Guild. We found
that in 2004, the Guild paid Matrix $335,000 in consulting fees, but
that Matrix had only about $151,000 in Guild-related expenses, leaving
Dr. Gertmenian's consulting company with nearly $184,000. This was over
and above the salary and fringe benefits provided directly to Dr.
Gertmenian by the Guild. Even more troubling, an analysis of 2003 shows
that the Guild paid Dr. Gertmenian's company $412,000 in consulting
fees, and Matrix had just over $87,000 in Guild-related expenses. Thus,
taking expenses into account, more than $324,000 was still available to
Matrix, and the use of these remaining funds has not been explained.
Dr. Gertmenian did little to explain or justify these payments and
expenditures--which occurred while he oversaw the cut of on-track
insurance coverage--such as the $50,000 in so-called consulting
expenses that benefited Dr. Gertmenian's daughter or her company in
2004. He did little to explain or justify the numbers on Matrix's
corporate tax returns. Furthermore, with all that money spent on so-
called consulting fees for Matrix, Dr. Gertmenian, Albert Fiss, and
Lloyd Ownbey have not been able to describe what they and Matrix have
accomplished for the Guild during the past four years. For that matter,
the Guild's Chairman and Vice Chairman of the Board, David Shepherd and
Tomey-Jean Swan, were unable to answer those questions either.
At the hearing, Dr. Gertmenian also did little to substantiate
certain items on his resume. To date, we have not received the records
requested during the hearing by full Committee Chairman Barton--
notarized letters or statements attesting that Dr. Gertmenian served
with the National Security Council and the Commerce Department, that he
worked for Dr. Kissinger as ``chief detente negotiator,'' and that he
is a distinguished professor at two universities in China.
After these questions were raised about Dr. Gertmenian, Matrix, and
the Guild's current financial situation, the Guild's membership
recently took some actions. Dr. Gertmenian is no longer the Guild's
Chief Executive Officer. This past Tuesday, the Guild's 27 senators
held an emergency senate meeting. At that meeting, they removed the
Guild's board of directors, elected new directors, and fired Dr.
Gertmenian and Matrix. I applaud that decision, and hope that the Guild
can get back on its feet. It is my belief that a strong and financially
healthy Guild is in the best interests of the industry.
Today, the Subcommittee will consider whether and how Congress
might help to ensure that the horse racing industry has adequate on-
track injury insurance or workers' compensation for jockeys, exercise
riders, and workers on the backstretch. As we saw from video shown
during the hearing on October 18th, horse racing is extremely
dangerous, and serious injuries are common--indeed, in just the past
month a professional jockey died after a spill during a race in
Massachusetts, and several other serious spills have occurred on tracks
around the country.
The horse racing industry in the United States generates a total
economic impact of $26 billion annually. Yet for all this money in the
industry, there are many workers without adequate health insurance and
on-track coverage, and apparently much resistance to establishing
workers' compensation for some of the most important workers in the
industry. Very few states--only four--provide workers' compensation
programs for jockeys or exercise riders. As this Subcommittee moves
forward in examining the health and welfare issues of jockeys and other
workers most susceptible to serious injury in this industry, I will be
interested in hearing from all of today's witnesses about whether there
is a role for the federal government: Should there be a national
workers' compensation fund for jockeys, exercise riders, and other
freelance workers in racing? Should every racing state provide a
workers' compensation program for these individuals? Should there be a
national governing body to oversee the professional sport of horse
racing?
Today's witnesses represent many of the various and important
stakeholders in the horse racing industry. We will take testimony from
a number of race tracks, both large and small, from some of the most
prominent trade associations, from health and welfare organizations,
from current and former Guild representatives, from state racing
organizations, and from a horse trainer who has been involved with
establishing New York State's workers' compensation program for jockeys
and exercise riders.
Let me extend my appreciation to all of you for appearing here
today. I look forward to all your testimony and think it will be most
useful. I now turn to the distinguished Ranking Member, Mr. Stupak, for
the purposes of an opening statement.
Mr. Stupak. Well, thank you, Mr. Chairman. Let me begin by
expressing my sympathy to the family of the 16-year-old
apprentice jockey, Josh Radosevich, who was killed yesterday at
Beulah Park near Grove City, Ohio. Josh's death reminded us
that horse racing is a dangerous sport and we must do all we
can to protect those involved in the sport.
This hearing gives us an opportunity to continue to explore
some of the terrible conditions under which jockeys and
exercise riders ply their trade on American's racetracks. The
testimony and questions today will provide us with information
that is needed to craft legislative solutions to deal with the
failure of the employers, tracks, trainers and owners to
provide their workers with the same on the job accident and
disability insurance that many other Americans enjoy.
As you are aware, we wrote Secretary Levitt, asking for a
NIOSH study of safety conditions on racetracks. I have every
reason to believe that that study will be conducted and the
recommendations will then be available as standards that OSHA
can enforce. The Democrats on this committee also wrote to the
NLRB, asking the Board to correct a grave injustice committed
over 30 years ago when the NLRB, by formal rule, declined to
provide protections of the National Labor Relations Act to any
racetrack employees. This loophole in the law allowed one
callous racetrack to ban riders that sought to act collectively
to protect themselves on tracks. And sued them for damages
under the Anti-Trust Laws that have not been abused in this way
since the Wagner Act was passed to stop such intimidation in
the 1930's.
Of course, not all tracks and horseman mistreat the riders
that make their sport and their livelihoods possible. We will
hear from the operator of Del Mar Racetrack in California
regarding the Workers' Compensation Program and off-track
health insurance in that state, as well as the efforts his
track has made to minimize the dangers inherent in horseracing.
California is also pioneering a study of the terrible weight
and nutrition problems faced by jockeys. We will hear from
witnesses that operate in New York and Maryland about the
Workers' Comp Program on those States. And the admirable
efforts of the Magna conglomerate to extend comparable medical
and disability insurance to its tracks in those States that
fail to require that riders be covered by Workers' Comp.
Delaware and Kentucky witnesses will speak of their less
substantial programs to help with healthcare costs. If all
States had programs like California's, we wouldn't be here
today. In fact, the California tracks are losing horses to
tracks in States like West Virginia, that permit the track to
operate without adequate on-the-job insurance. The West
Virginia tracks, Mountaineer and Charlestown, are among the
richest, most profitable horseracing enterprises in the United
States because West Virginia has made them into gambling
palaces through the placement of slot machines.
Like other States that allow slot machines, they are
licensed in commercial numbers on the grounds of racetracks and
part of the slot proceeds must be spent on higher purses for
the horsemen. In fact, as a matter of State law, slot machines
cannot be operated at either Mountaineer or Charlestown unless
a collective bargaining contract is in place for the pari-
mutuel clerks. Of course, an agreement must also be in place
with the horsemen, the trainers and the owners. I am not sure
what the clerks get out of these racetracks but I will bet that
a good on the job and off the job health insurance is among the
benefits. I do know what the horsemen get, purses that have
increased ten-fold, from about $20,000 per race day to $200,000
since the slots went in.
A look at the financial forms of the parent companies tell
you that the tracks themselves are very profitable enterprises.
The jockeys share about 10 percent of the purse and in return,
get a nice, new hot room to sweat the water out of their bodies
before weighing in and a new receptacle to regurgitate in so
they can make weight. What jockeys do not receive is adequate
on-track or off-track insurance. Charlestown takes in about
$1.7 million in revenues each day. It spends about $200,000 per
day in purse money. After its expenses, the pre-tax profit is
about $414,000 per racing day. What do they spend on accident
insurance for the jockeys? Roughly $1,200 per racing day.
West Virginia tracks think that the $100,000 insurance
coverage is generous. They pay no Workers' Compensation, no
health insurance and very little in the way of charity for the
worst victims, like our witnesses from last month's hearing,
Gary Bitzer, who was paralyzed at Mountaineer Racetrack last
year.
The NTRA will testify today that going from $100,000 worth
of coverage to $1 million would cost only 50 to 75 percent more
than the current $1,200 premium. So if Mountaineer Racetrack
would have spent $600 to $900 per race day extra, Gary Burzer
could have had all rehab and other medical costs paid for by
insurance. This small premium amounts to less than one-half of
1 percent of the track's daily purse but it would mean a
lifetime of healthcare security for the jockeys who risk their
lives so track owners can make millions of dollars.
Mr. Chairman, the exploitation of the law by some tracks
comes at great human costs and give those tracks unfair
competitive advantage. Just as a polluter who transfers his
cost to the environment can pay for his products lower than the
competitor who pays the full costs of production by cleaning up
the manufacturing process. So racetracks can force the cost of
on the job accidents onto the backs of its riders, can deprive
the responsible track owner of better horses and of larger
revenues. The competitive imbalance alone is sufficient basis
for this committee, the Energy and Commerce Committee,
responsible for regulating interstate commerce, to act.
For starters, we can condition the simulcasting of races, a
larger source of revenue and profits than the betting on tracks
actually run at most tracks under provision of a decent
Workers' Compensation Benefit for all the individuals involved
in horseracing. Tracks in California, New York and other States
that have 20th century labor laws should not have to compete
with those States that still permit these courageous athletes
to be treated like second class citizens. They should be
treated like any other highly skilled, professional athlete
whose true value is recognized by their sport and their family.
Mr. Chairman, I look forward to working with you on
solutions to the problems that we have laid out today.
Mr. Whitfield. Mr. Stupak, thank you very much. And at this
time I would recognize the chairman of the full Energy and
Commerce Committee, Mr. Barton of Texas.
Chairman Barton. Thank you, Chairman Whitfield. And in case
you didn't introduce to the subcommittee, I would like to
indicate how please I am to see your wife, Connie, in the
audience and have her presence here. It has got to inspire you,
as well as other members up here. Also, I missed part of your
opening statement but in case you didn't mention it, I have
been informed that the Jockey Guild did terminate the contract
of Mr. Gertmenien earlier this week. Did you mention that in
your statement?
Mr. Whitfield. I did, Mr. Chairman, but I would like for
you to repeat it.
Chairman Barton. Okay. I understand that the board meeting
in which that was done, there were several fist fights that
broke out and the police had to be called and I think even the
FBI were called. I am also told that last week or this week,
the disability checks that the Guild provides to disabled
jockeys bounced. And I am also told that the day Mr. Gertmenien
was terminated he had checks written to him for over $217,000
that were drawn on Guild accounts and that those checks didn't
bounce. Which makes you wonder why the checks to the disabled
jockeys bounced but the checks that he wrote or had written to
himself didn't. I am sure that the members of this subcommittee
will assist law enforcement officers at the Federal and State
level to bring Mr. Gertmenien and his associates to justice,
sooner rather than later. And we should commend you and Mr.
Stupak for the investigation that you have both led, which has
resulted in some of the changes that are now being made.
But today we are here to hear from the rest of the industry
and I have to commend you. We have got 18 witnesses so you
pretty well covered the field. If this were the Kentucky Derby
they would have to add another starting post or something to
get all the horses into the gate at the time but it is an
important issue.
I have trouble accepting that in a $26 billion industry,
the riders and other workers at the heart of the horseracing
world, many of them have to go to work each day without
adequate catastrophic injury insurance that they have been
promised. I think we all agree this is intolerable and
something needs to be done about it.
This subcommittee spotlighted the issue in its opening
hearing, which focused on why the Jockey's Guild was no longer
providing on-track injury insurance for its members. We saw the
effects of Amy and Gary Birzer's life-altering encounter with
the perils of competitive riding. We learned how the Jockey
Guild, the organization that they thought they could trust, had
flimflammed them. We heard from current and former jockeys who
explained how important on-track injury insurance is to
themselves and to their families. We also heard Guild
representatives try to explain why they no longer offered on-
track coverage and watched as they tried to lay the blame in
other places.
I have chaired this subcommittee in the past and I have
attended most of the Oversight Investigation Subcommittee
hearings for the last 10 years and we do have people that come
before us and try to obfuscate the truth. But the
representatives of the Jockey Guild, in your hearing on this
issue the first time, would have to take the award for the most
disingenuous if not outright fraudulent testimony. They set a
new standard for least believable. Just for an example, we were
lead to believe by his own resume, that Dr. Gertmenien was a
detente negotiator who had worked directly for Secretary of
State Henry Kissinger. Dr. Kissinger himself called this
subcommittee and said in no uncertain terms that he had never
heard of the man. That is just one example of the testimony
that we heard at the last hearing.
I said at the last hearing that if I were a dues-paying
member of the Guild, I would want new management and as I
pointed out, the majority of the Guild members agreed with that
and they now have new management. We have got several documents
from the new management to that affect. If we have any of the
Jockey Guild members in the room, I want to commend you folks
and say I am proud of you for doing the right thing and we will
keep back you up. That had to be a tough thing to do but you
did it and the committee is proud of you.
In closing, I want to thank all the witnesses at this panel
and the next panel for coming today. We do want to explore the
issue of on-track injury insurance and Workers' Compensation. I
know there are different opinions and we are going to hear
those later today but it is my hope and I know Mr. Stupak and
Mr. Whitfield share it, that following our hearing we can work
together to find a solution. Hopefully, not a legislative
solution and we can do it on a voluntary basis. But I would
think that we would be prepared to offer a legislative
framework if such a framework is necessary.
I look forward to your testimony and I thank ladies and
gentlemen for you being here. Yield back.
[The prepared statement of Hon. Joe Barton follows:]
Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
and Commerce
Thank you, Chairman Whitfield. Thank you for holding this hearing
and for continuing to examine the issue of on-track injury coverage in
the horseracing industry. I have trouble accepting that, in a $26
billion industry, the riders and other workers at the heart of the
horseracing world have to go to work each day without adequate
catastrophic injury insurance that they were promised. This is
intolerable, and I commend the Chairman for spearheading an
investigation of this issue.
Last month, the Subcommittee spotlighted the issue in its opening
hearing, which focused on why the Jockeys' Guild was no longer
providing on-track injury insurance for its members. We saw the effects
of Amy and Gary Birzer's life-altering encounter with the perils of
competitive riding. And we learned how the Guild, one of the few
organizations they thought they could trust, had flim-flammed them. We
heard from current and former jockeys who explained how important on-
track injury coverage is to them and their families. And we heard Guild
representatives try to explain why they no longer offered on-track
coverage and where they thought that responsibility should lie instead.
I must say that people occasionally sit at our witness table and tell
us things that are very hard to believe. That's usually because the
things they are telling us are not completely true. It happens. But of
all the questionable testimony that I've heard, I think the Guild's
sworn testimony last month set a new standard for the least believable.
Today we will expand the scope of our examination and look at how
the rest of the industry views the absence of on-track insurance for
jockeys, exercise riders, and backstretch workers. During the course of
the Subcommittee's investigation, it has become apparent that even
though many in the industry have devoted considerable amounts of time
and effort to this issue, they have been unable to find a solution.
I hope our panels of witnesses here today--which include
representatives from all different segments of the industry--will have
some constructive ideas.
Let me also add that the Jockeys' Guild left many unanswered
questions last month about its management and finances. Even more
importantly, it failed to produce records the Subcommittee had
subpoenaed weeks before. It took a congressional hearing to pry loose
some of the Guild's meeting minutes, and I understand that the Guild
still has not delivered numerous email records and other documents.
Also, Dr. Gertmenian, who claims to be a onetime detente negotiator
working for then-Secretary of State Henry Kissinger, has yet to provide
a lick of evidence to support his resume. I think we all know why.
At last month's hearing, I said that if I were a dues-paying member
of the Guild, I would want new management. The Guild seems to agree.
After that hearing's emotional and disturbing testimony, the Guild's
members this week took back their organization. I am proud of the
members who had the courage to stand up to Dr. Gertmenian, and to
terminate the contracts of Dr. Gertmenian and his organization, and of
Mr. Fiss, and Mr. Ownbey. Absent those actions, it seems plain that the
Guild would have collapsed. I hope that the new board and new managers
will now right what was wrong inside the Guild, and will dig out the
records that we requested and subpoenaed.
In closing, I want to offer my thanks to today's witnesses for
taking the time to help us explore the issue of on-track injury
insurance and workers' compensation. It is my hope that all our
witnesses, and everyone else in the horseracing industry who is
following our hearing, will listen to what is discussed and will be
inspired to work together to find a solution to this and other health
and welfare problems in the industry.
I look forward to the testimony and yield back the remainder of my
time.
Mr. Whitfield. Mr. Chairman, thank you very much and we
appreciate the support you have given as we have looked into
this important issue. And as I said earlier, I want to thank
all of you for taking time from your busy schedules. I
understand even Mr. Amos, that you came back from a vacation,
which is quite impressive to come up. But we are now ready for
this first panel and I am going to introduce the first panel.
And then because this is an Oversight and Investigation
hearing, we do swear witnesses in.
But before I do that, first of all we have with us today
Mr. John Finamore, who is the Senior Vice President of Regional
Operations for Penn National Gaming Company. Thank you for
being here. We have Ms. Rose Mary Williams, who is the Director
of Racing at the Mountaineer Race Track and Gaming Resort in
West Virginia. We have Mr. Christopher Scherf, who is the
Executive Vice-President of the Thoroughbred Racing
Association. Thank you. We have Mr. D.G. Van Clief, who is the
Commissioner and Chief Executive Officer of the National
Thoroughbred Racing Association and it is great to see you
again. We have Mr. Steve Sexton, who is the Senior VP of
Kentucky Operations and President of Churchill Downs and
delighted to have you here. And then of course, Mr. Don Amos,
who is the Chief Operating Officer of Magna Entertainment. I am
glad to have you here. And then we have Mr. Greg Fravel, who is
the Executive Vice President of Del Mar Thoroughbred Club from
Del Mar, California and we thank you for being here.
The gentleman to the far left, I don't see that you are a
witness and I was just wondering if you might tell me--okay. Do
you intend to testify? Okay. Well, in that case would you mind
taking a seat back there and we do appreciate your being here
very much. And at this time I would ask those of you who are
going to be testifying if you would simply stand up. And as I
said, you are aware that the committee is holding investigative
hearing and when doing so, we have the practice of taking
testimony under oath and do any of you have any objection to
testifying under oath today? Okay. The Chair then advised you
that under the rules of the House and rules of the committee,
you are entitled to be advised by a counsel and I understand
that maybe two of you do have counsel with you today. Ms.
Williams, you have counsel. Is that correct? And would you give
us his name again?
Ms. Williams. Mr. Stan Brand.
Mr. Whitfield. Mr. Stan Brand. Okay. And Mr. Amos, did you?
And who is your----
Mr. Amos. Andrew Staniusz, Mr. Amos' counsel.
Mr. Whitfield. Okay. Yes, sir. Okay. But none of those
attorneys intend to testify. They are simply advising you?
Okay.
[Witnesses sworn]
Mr. Whitfield. You are now under oath and you may give a 5-
minute summary of your written statement. As I indicated to
you, we do have 17 witnesses. We value the testimony of each
person here. We have read the testimony but at this time I will
call the first witness and that will be Mr. John Finamore of
Penn National Gaming, recognized for 5 minutes.
TESTIMONY OF JOHN V. FINAMORE, SENIOR VICE PRESIDENT OF
REGIONAL OPERATIONS, PENN NATIONAL GAMING, INC.; ROSE MARY
WILLIAMS, DIRECTOR OF RACING, THE MOUNTAINEER RACE TRACK AND
GAMING RESORT; CHRISTOPHER N. SCHERF, EXECUTIVE VICE PRESIDENT,
THOROUGHBRED RACING ASSOCIATION; D.G. VAN CLIEF, JR.,
COMMISSIONER AND CHIEF EXECUTIVE OFFICER, NATIONAL THOROUGHBRED
RACING ASSOCIATIONS; STEVE SEXTON, SENIOR VICE PRESIDENT OF
KENTUCKY OPERATIONS AND PRESIDENT OF CHURCHILL DOWNS; DON AMOS,
CHIEF OPERATING OFFICER, MAGNA ENTERTAINMENT, INC., ACCOMPANIED
BY ANDREW STANIUSZ, CORPORATE COUNSEL AND DIRECTOR OF EMPLOYEE
RELATIONS; AND CRAIG R. FRAVEL, EXECUTIVE VICE PRESIDENT, DEL
MAR THOROUGHBRED CLUB
Mr. Finamore. Good afternoon, Mr. Chairman, and members of
the subcommittee. My name is John Finamore, and I am the Senior
Vice President of Regional Operations, Penn National Gaming. By
way of background, Penn National is a publicly traded company.
We began in the early 1970's as a small, family owned business
that operated one of Pennsylvania's original thoroughbred
racing licenses at Penn National Race Course outside of
Harrisburg. While today Penn National operates riverboats,
casino resorts and racing facilities in 13 jurisdictions across
the country and in Canada, it has never forgotten, and
continues to buildupon, its horseracing heritage.
My role at Penn National is to oversee four of the
company's racetracks, including Penn National Race Course and
Charlestown Races in West Virginia. I am based at Charlestown,
which provides me a continued perspective of the continued
revitalization of that historic track, which began live
thoroughbred racing in 1933.
Penn National purchased Charlestown Races in 1997, when it
was on the verge of closing its doors. Since then, we have
invested more than $200 million in new capital into the
property. Reflecting our ongoing commitment to live racing, we
have renovated the grandstand and barns, built new jockey's
quarters and a new paddock and began simulcasting the races
around the country. Last year, Charlestown Races completed the
latest phase of renovations and upgrades to the track,
including adding a new surface, installing a new safety rail,
banking the turns, replacing the lighting system and other
significant improvements. Turning to the subject of today's
hearing, at Penn National Gaming we take the issue of safety at
our tracks seriously. We support working together with the
jockeys, the horsemen and the trainers to ensure that in the
event of an accident, there is adequate insurance to address
the injured jockey's needs.
As you know, jockeys are independent contractors who work
not for the racetracks but for the horse owners. Like any other
individual that is self-employed, jockeys are responsible for
addressing their own insurance needs. As a long-time member of
the Thoroughbred Racing Associations, we have in place at our
tracks in West Virginia and Pennsylvania, accident insurance
that provides jockeys with an additional $100,000 maximum
benefit toward medical expenses if they are injured while
riding. In addition, the policy provides $200 per week in
Disability payments, up to 104 weeks, and includes $50,000 in
accidental death and dismemberment coverage. The racetracks pay
100 percent of the premiums, as well as the deductible for
every medical claim.
Furthermore, we have been paying additional money directly
to the Jockey's Guild in the form of mount fees to supplement
their medical insurance coverage and to provide additional
accident insurance. In 2004, this amounted to more than
$160,000 for Penn National Race Course and Charlestown Races.
Looking back to 2002, the last year for which there is industry
data, the collective amount racetracks contributed to the
Jockey's Guild for this purpose was $2.2 million.
It is now clear that these funds were not being used for
either medical insurance or supplemental accident insurance for
the jockeys. As a goodwill gesture, we have been continuing to
donate these funds to the Jockey's Guild, in the hope that they
will be used for the purpose they were intended. Unfortunately,
the Jockey's Guild has greatly failed its membership on this
issue and the jockeys themselves, as independent contractors,
must find a day to address their insurance needs. We believe
that helping to supplement their on-track accident insurance
needs should be a collaborative effort between the tracks, the
horse owners and the trainers.
As for the argument that jockeys should become employees of
the track, this would forever change the nature of horseracing
in this country. The tracks do not and should not exercise any
degree of control over the manner in which a jockey rides or
whether a jockey rides or for whom he or she rides. There is no
permanence in the relationship between the track and a jockey.
The integrity of racing could be called into question if a
track were in a position of control over the jockeys.
In conclusion, while we understand there were five
accidents out of 487,000 mounts last year where the cost of the
injuries rose about the $100,000 level in coverage, we firmly
believe one disabled and destitute jockey is one too many. We
will be working with the TRA to re-examine the levels of our
on-track policies currently in place and we look forward to
continuing to work with the horseman, the trainers and the
jockeys to address this important issue.
I would like to thank you for the opportunity to testify
today and would be happy to answer any of your questions.
[The prepared of John V. Finamore, Sr. follows:]
Prepared Statement of John V. Finamore, Sr. Vice President, Regional
Operations, Penn National Gaming, Inc.
Good afternoon, Mr. Chairman, and members of the Subcommittee. My
name is John Finamore, and I am the Senior Vice President of Regional
Operations for Penn National Gaming.
By way of background, Penn National is a publicly traded company.
We began in the early 1970s as a small, family-owned business that
operated one of Pennsylvania's original thoroughbred racing licenses at
Penn National Racecourse outside of Harrisburg.
While today, Penn National operates riverboats, casino resorts and
racing facilities in 13 jurisdictions across the country and in Canada,
it has never forgotten, and continues to build upon, its horse racing
heritage.
In addition to Penn National Racecourse and its six affiliated off-
track wagering facilities, we also own Charles Town Races & Slots in
Charles Town, West Virginia, and we're the joint owner of Freehold
Raceway in New Jersey. Our most recent racetrack acquisitions include
Bangor Raceway in Bangor, Maine, and Raceway Park in Toledo, Ohio.
My role at Penn National is to oversee these racing and gaming
operations, with the exception of Freehold Raceway. I am based at
Charles Town Races, which provides me a first-hand perspective of the
continued revitalization of that historic track, which began live
thoroughbred racing in 1933.
Penn National purchased Charles Town Races in 1997, when it was on
the verge of closing its doors. Since then, we've invested more than
$200 million in new capital into the property, resulting in a premier
regional entertainment center that has generated more than $435 million
in taxes to West Virginia.
Reflecting our ongoing commitment to live racing, since acquiring
the track we have renovated the Grandstand and barns, built new jockey
quarters and a new paddock and began simulcasting the races around the
country. In addition, we have increased the number of race dates and
the number of races per day. Purses have grown from $20,000 per day to
as high as $200,000 per day, and the number of horse owners and
trainers has grown from 2,400 to 13,000.
Last year, Charles Town Races completed the latest phase of
renovations and upgrades to the track, including adding a new surface,
installing a new safety rail, banking the turns, replacing the lighting
system, and other significant improvements.
Turning to the subject of today's hearing, at Penn National Gaming
we take the issue of safety at our tracks seriously. We support working
together with the jockeys, the horsemen, and the trainers to ensure
that in the event of an accident there is adequate insurance to address
the injured jockey's needs.
As you know, jockeys are independent contractors who work not for
the racetracks, but for the horse owners. The Courts have upheld this
distinction. Like any other individual that is self-employed, jockeys
are responsible for addressing their own insurance needs.
As a longtime member of the Thoroughbred Racing Associations (TRA),
we have in place at our tracks in West Virginia and Pennsylvania--which
are states where jockeys are excluded from workers' comp--insurance
that provides jockeys with an additional $100,000 maximum benefit
toward medical expenses if they are injured while riding. In addition,
the policy provides $200 per week in disability payments up to 104
weeks, and includes $50,000 in accidental death and dismemberment
coverage. This long-established policy was entered into after
discussions with the TRA and with the Jockey's Guild. The racetracks
pay 100% of the premiums, as well as the deductible for every medical
claim.
Furthermore, we have been paying additional money directly to the
Jockey's Guild in the form of ``Mount Fees'' to supplement their
medical insurance coverage and to provide additional accident
insurance. In 2004, this amounted to more than $160,000 for Penn
National Race Course and Charles Town Races. Looking back in 2002, the
last year for which there is industry data, the collective amount
racetracks contributed to the Jockey's Guild for this purpose was $2.2
million.
After the unfortunate accident to Mr. Birzer at Mountaineer, it is
now clear that these funds were not being used for either medical
insurance or supplemental accident insurance for jockeys. As a goodwill
gesture, we have been continuing to donate these funds to the Jockey's
Guild in the hope that they will be used for the purpose they were
intended.
Unfortunately, the Jockey's Guild has greatly failed its membership
on this issue and the jockey's themselves, as independent contractors,
must find a way to address their insurance needs. We believe that
helping to supplement their on-track accident insurance needs should be
a collaborative effort between the tracks, the horse owners and the
trainers.
As for the argument that jockeys should become employees of the
track, this would forever change the nature of horse racing in this
country. The tracks do not, and should not, exercise any degree of
control over the manner in which a jockey rides, or whether a jockey
rides, or for whom he or she rides. Since the earliest days of horse
racing, the track has always acted as the ``neutral'' party, whose role
it is to hold a fair and honest meet where the owners and jockeys come
to compete. There is no permanence in the relationship between the
track and a jockey. The integrity of racing could be called into
question if a track were in a position of control over the jockeys.
In conclusion, we recognize that some of the larger racing
companies have voluntarily increased their on-track accident policies.
And, while we understand there were five accidents out of 487,000
mounts last year where the cost of the injuries rose above the $100,000
level in coverage, we firmly believe one disabled and destitute jockey
is one too many. We will be working with the TRA to reexamine the
levels of our on-track policies currently in place, and we look forward
to continuing to work with the horsemen, the trainers and the jockeys
to address this important issue.
I'd like to thank you for the opportunity to testify today and
would be happy to answer your questions.
Mr. Whitfield. Thank you, Mr. Finamore. You were almost
right on 5 minutes. Great job.
Mr. Finamore. Thank you.
Mr. Whitfield. At this time I will recognize Ms. Rose Mary
Williams of the Mountaineer Race Track. Thank you.
TESTIMONY OF ROSE MARY WILLIAMS
Ms. Williams. Good afternoon. My name is Rose Mary
Williams. I am the Director of Racing at Mountaineer Race Track
in Chester, West Virginia. Thank you for the invitation to
appear before the subcommittee today. I have submitted my
written testimony and will be happy to answer any additional
questions that the subcommittee may have. Thank you.
[The prepared statement of Rose Mary Williams follows:]
Prepared Statement of Rose Mary Williams, Director of Racing,
Mountaineer Racetrack
My name is Rose Mary Williams and I am the Director of Racing at
Mountaineer Racetrack in Chester, West Virginia. I began my career in
racing in 1977 as a mutuel clerk and have worked in racing ever since.
I became director of racing in 1997. Mountaineer Racetrack is a mile-
long thoroughbred track and has operated since 1951. By State statute,
we race a minimum of 210 days per year. By contract with the Horsemen's
Benevolent and Protective Association, we endeavor to race 232 days per
year with ten races per day, or approximately 2,259 races per year. I
am pleased to say that serious accidents are rare.
Gary Birzer's tragic accident happened at my track. But it could
have happened at any racetrack in the country. While there has been no
claim that the track was defective or improperly maintained, or that
track conditions were a factor in causing this accident, it should be
noted that, in horseracing, accidents can and do happen even at state-
of the-art facilities, though perfectly maintained, and under ideal
conditions.
This is so because riding a racehorse is an inherently risky
activity, no different than NASCAR racing, prize fighting, football,
and other sports that entertain, amaze and delight us. During a race,
thoroughbreds reach speeds of up to 40 miles per hour, and jockeys wear
only a safety helmet and two-pound safety vest for protection. Jockeys,
like their counterparts in other sports, accept that risk because they
love what they do, and because they are highly compensated. Many
jockeys earn as much as $500,000 per year.
From those earnings, they choose to pay dues and per mount fees
into their Guild for the obvious reason: they expect that Guild to
provide them protection by, among other things, purchasing and
maintaining on-track injury insurance. I will leave to others the
relationship between the jockeys and their Guild, the allegations that
Dr. Gertmenian failed to inform the jockeys that the Guild had
permitted the catastrophic insurance to lapse, and whether the
insurance carrier should have notified the jockeys of the cancellation.
I simply don't have first-hand knowledge that would be helpful to this
Committee.
Consistent with industry custom, Mountaineer Racetrack maintains an
on-track injury policy covering jockeys for up to $100,000 per
occurrence and exercise riders for up to $25,000 per occurrence. Since
May of 2000, Mountaineer Racetrack's insurer has paid more than
$1,000,000 in claims to some 89 individuals pursuant to on-track injury
policies. Many of those claims were under $1,000 and most were under
$10,000. Mr. Birzer was able to use this policy and in fact received
$100,000 in reimbursements.
Obviously, a $100,000 policy is not sufficient for a catastrophic
accident, but these policies are intended only to supplement the
insurance the jockeys obtain through the Guild. It is expensive
insurance. The premium is $1,230 per race day and $154 per training
day. For 2004, Mountaineer Racetrack paid $252,500 in premiums for on-
track injury insurance. What is more, even at these premium rates there
are few carriers willing to provide the coverage.
Likewise, West Virginia permits employers of trainers and jockeys
engaged in thoroughbred racing to subscribe to and pay premium taxes
into the state's workers' compensation fund (See WV Statutes, Section
23-2-1(b)(6)). Further, West Virginia's unredeemed pari-mutuel ticket
law earmarks for a jockey's trust up to $250,000 annually, specifically
for health and disability benefits for active or disabled jockeys and
their dependents (See WV Statutes, Section 19-23-13(b)(5)(C)). West
Virginia law also provides that 1+% of the total amount distributed for
racing purses be placed into trust to help defray the cost of medical
and other expenses incurred by people whose primary source of income is
derived from the racing, training and care of thoroughbred horses.
As a Director of Racing, I can offer some observations concerning
what racetrack owners can do to make racing as safe as reasonably
possible for jockeys, recognizing that the racetrack owner has no
authority to do anything between the time the horses enter the gate and
the end of the race. This is so because the conduct of racing itself is
controlled by the state racing commission through its on-site
personnel. What then can racetrack owners do before and after a race?
Some examples are:
Properly maintain and periodically resurface the racetrack;
Provide a committee that includes a representative of the jockeys
that has periodic meetings to discuss track conditions;
Install safety rails and place light poles and other objects a safe
distance (industry custom is ten feet) beyond the rails;
Pad indoor paddocks, the chutes leading to the track, and the
starting gates;
Provide a comfortable jockeys' room with such amenities as sauna and
hot tub;
Provide a chaplain who is readily available to minister to the needs
of jockeys and backside workers;
Install appropriate lighting for night racing;
Limit the number of turf races and require shoes that are less likely
to make the surface unsafe;
Provide appropriate ambulance and emergency medical personnel in case
of an accident;
Provide on-track injury insurance in accordance with industry custom,
to the extent such insurance remains available.
It may seem self-evident, but I believe track safety and the
welfare of those who work on-track should be, and in fact are, common
goals of racetrack owners, horsemen, and jockeys and trainers. Taking
these steps helps limit on-track accidents to those that cannot be
prevented. Preventable accidents and the failure of the system to
provide for the needs of injured participants, in addition to being
tragic, are bad for business--all of our businesses.
On a personal note, I know Gary and Amy Birzer. Gary rode
frequently at Mountaineer Racetrack. They are a nice family and my
heart goes out to them.
Mr. Whitfield. Thant was short and sweet. Thank you. At
this time I will recognize Mr. Christopher Scherf, Executive
V.P., Thoroughbred Racing Association.
TESTIMONY OF CHRISTOPHER N. SCHERF
Mr. Scherf. Thank you, Mr. Chairman and members of the
subcommittee. I am gratified to have the opportunity to address
the issues that have prompted this hearing. As the Executive
Vice President of the TRA for the past 17 years, I have
represented its member racetracks, as well as non-members, in
securing a series of national insurance policies. This program
has been in place since the Guild came to the TRA in 1949 to
consolidate insurance from individual track policies into a
national program, assuring coverage for jockeys no matter where
they chose to ride. During the past 30 plus years, the Guild
also has sought and received direct payments from the
racetracks.
In 2001, when the Guild's members health plan became
unaffordable, even with the $2.2 million contributed by the
racetracks, the Guild allocated $440,000 of that amount to
purchase an excess accident policy. I do not believe we would
be here today if Dr. Wayne Gertmenien had not decided to
discontinue the excess accident policy and instead, use the
$2.2 million for other purposes.
What kind of emphasis did the Guild place on accident
insurance? The current policy does not have the Guild as a
policyholder merely because the broker was unable to get the
recent Guild leadership to even sign the policy. In States
where jockeys are covered by Workers' Compensation insurance
purchased by the horsemen, the tracks have purchased a
complimentary injury policy providing lump sum payments to the
catastrophically injured jockeys. The minimum pay-out is
$100,000 but a much higher amount, with a minimum of about
$400,000, is triggered if a jockey elects to provide the track
with a waiver against suit. The Guild, though its then
director, John Giovanni, first proposed this additional benefit
and the waiver provision in the last 1980's and 749 jockeys
took advantage of this offering. Since Dr. Gertmenien took over
the Guild, only one new waiver has been received by the TRA.
Obviously, accident insurance was not a Guild priority.
Another historical benefit was the Jockey Guild's Disabled
Riders Fund, which provided income to permanently disabled
riders. Jockeys recovering from lesser injuries received weekly
Disability payments from the accident policy and the Guild
matched this amount from its dues revenue. When Dr. Gertmenien
took over, the Guild began making the weekly payments to the
temporarily sidelined jockeys from the Disabled Jockey's Fund,
which predictably soon ran out of money. This was the duly
constituted Guild leadership with which the TRA had to deal.
One that would deplete the existing benefits to its members as
a ploy to create crisis.
Regarding basic accident coverage and the relevant
circumstances of working as a jockey in this country, here are
the facts. Jockeys are independent contractors by choice and
enjoy the associated tax benefits, as affirmed by the IRS.
Skilled, touch and fiercely competitive individuals, jockeys
want to be free to negotiate riding assignments on a race by
race basis, choosing those horses that offer the best change of
winning. A generally accepted estimate of jockey's earnings is
7.5 to 8 percent of their mounts' winnings. Therefore, total
jockeys' earnings for the last full year we have, 2004, were
between approximately $88 million and $94 million. There were
991 jockeys who rode at least 100 times last year, an average
of only two horses a week, and they accounted for more than 95
percent of all the horses that raced. The average annual
earnings for those jockeys were around $90,000. Five hundred
ninety-nine jockeys rode at least 300 mounts, which is six a
week and had average earnings of about $138,000. Getting on a
horse is recognized as being inherently risky but horseracing
is the best compensated riding profession.
In 2004, there were 487,000 starters. Latest records
indicate, there were 708 paid claims by the TRA policy. In
recent years, the average claim has been about $7,000. Through
October 31, there have been five injuries from 2004 that have
reached the $100,000 medical maximum. The fact is, the lack of
adequate coverage is a problem on in few specific instances. It
is a problem that is solvable on a long-term comprehensive
basis in a relatively quick fashion.
Jockeys are independent contractors. During the past 2
years jockeys have decided not to ride and have canceled racing
41 times at TRA racetracks.
Regarding safety issues, the TRA has a Safety Committee to
consider jockey safety issues. The TRA and its member
racetracks have been supporters of the Racing Medication and
Testing Consortium, of which I am the Vice-Chairman, to promote
a safe medication policy for horse and jockey. The safer racing
environment is the Holy Grail for the racing industry. Injuries
to horses and jockeys are horrifying to us and our fans.
Turfway Park in Kentucky spent nearly $5 million installing the
new revolutionary Polytrack, which appears to be a safer racing
surface and being anxiously monitored by all tracks.
Unnoticed but nonetheless true, during the past few years,
minimum jockey weight assignments have been raised in
California, Illinois, Kentucky, Maryland, New York and New
Jersey.
Returning to the catalyst for today's hearing, is what has
befallen Gary Birzer acceptable? Absolutely not. As I
previously mentioned, the scope of the problem is far from
insurmountable and a shrewd allocation of existing resources
can provide an enduring, practical solution. The NTRA Jockey
Injury Task Force, which was comprised of racetracks, horsemen
and jockeys last winter, has made adequate insurance coverage
an industry imperative. I am confident that a cooperative
solution will be completed and implemented. This Congressional
subcommittee has been very helpful in placing an increased
focus on the task and situation at hand.
The tracks and horsemen understand the need for a secure
safety net for all jockeys. It is well on its way to being
erected as we speak, and I have every confidence the job will
be completed in the timely fashion it deserves and demands.
Thank you.
[The prepared statement of Christopher N. Scherf follows:]
Prepared Statement of Christopher N. Scherf, Executive Vice President,
Thoroughbred Racing Associations of North America, Inc.
Thank you, Mr. Chairman, and members of the subcommittee. I am
gratified to have the opportunity to address the important and complex
issues that have prompted your inquiry into the tragic circumstances
involving Gary Birzer and his family.
As the Executive Vice President of the Thoroughbred Racing
Associations of North America for the past 17 years, I have represented
its member racetracks, currently numbering 41, in discussions with the
Jockeys' Guild and in securing a series of national insurance policies
providing accident coverage across the broad spectrum of racetracks,
encompassing TRA and non-TRA members, large and small alike. This
program has been in place since the Guild first came to the TRA in 1949
to consolidate insurance from a variety of individual track policies
into a national program assuring coverage the jockeys could count on no
matter where they chose to ride. Jockeys then, as now, would move from
state to state seeking to be retained by various racehorse owners. The
insurance then available did not accommodate perfectly such mobile,
individual sports professionals and insurance companies sometimes would
dispute whether a claim was simply a continuing injury originally
suffered at a different track with a different insurance carrier.
During the past 30-plus years, the Guild also has sought and
received direct payments from the racetracks, using those funds to
subsidize 65 to 75 percent of the cost of the family health plan
offered to members of the Jockeys' Guild. The Guild's health plan
included the unusual provision of covering work-related injuries and
provided reimbursement for medical costs in excess of the $100,000
track accident policy. In 2001 when the health insurance became
unaffordable even with $2.2 million from the racetracks, the Guild's
previous leadership allocated $440,000 of that amount to purchase an
excess accident policy.
I do not believe we would be here today if not for Dr. Wayne
Gertmenian and his leadership of the Guild. In 2002, under Dr.
Gertmenian's leadership, the Guild decided to discontinue the excess
accident policy, which would have cost approximately $490,000, and
instead used the $2.2 million in track contributions for unknown other
purposes. The bottom line is the racetracks were providing base medical
coverage and adequate direct financial support to provide for up to $1
million in accident coverage, but Dr. Gertmenian and his management
group diverted those dollars to other purposes.
The new management of the Guild, under Dr. Gertmenian, never
exhibited concern or even understanding of the accident coverage.
Through the years, the TRA and the Jockeys' Guild were listed as co-
policy holders, along with the track actually purchasing the coverage.
This entitled both organizations to important accident data.
The current policy, however, does not have the Guild as a
policyholder because the broker was unable, despite repeated attempts,
to get the Guild leadership to even sign the document.
In New York, New Jersey, Maryland, and California--where jockeys
are covered by workers' compensation insurance purchased by horsemen--
the tracks have purchased a complementary injury policy that provides
lump sum payments to the jockey ranging from $100,000 to almost $1.5
million in the event of a catastrophic accident, either fatal or
resulting in a total permanent disability, such as some form of plegia.
The minimum payout is provided to any jockey, but the much higher
compensation is triggered if a jockey elects to provide the track with
a waiver against suit. The Guild, through its then director John
Giovanni, first proposed this additional benefit and the waiver
provision in the late 1980s when New York, New Jersey, and Maryland
brought jockeys under some type of workers' compensation fund. Under
Mr. Giovanni and his Guild management's encouragement, 749 jockeys
signed the waiver to assure themselves a benefit ranging from $400,000
to $1.5 million. Since Dr. Gertmenian took over the Guild, this option
apparently has not been recommended by the Guild and only one waiver
has been signed and received by TRA . . . in November of 2001. So much
for current Guild management's abiding concern for member protection.
Another historical benefit was the Jockeys' Guild's Disabled Riders
fund, which was started by John Giovanni to provide supplemental income
to permanently disabled riders. Jockeys recovering from lesser injuries
received weekly disability payments from the TRA-endorsed policy, which
the Guild matched for its members as a form of ``your dues dollars at
work for you.'' When Dr. Gertmenian took over, the Guild began paying
even temporarily sidelined jockeys from the Disabled Jockeys Fund,
thereby diverting those dues dollars revenue to other purposes. This
and a mysterious transfer of dollars out of the Fund is what quickly
depleted the Disabled Riders Fund. On behalf of its member racetracks,
the TRA requested, in 2003 and thereafter, an accounting of the use of
their contributions to the Jockeys' Guild, but never has received a
remotely adequate response from Dr. Gertmenian and his associates.
Regarding basic accident coverage and the relevant circumstances of
working as a jockey in this country, here are the facts:
Jockeys are independent contractors by choice, have been deemed to be
so both legislatively and in some states by judicial ruling,
and enjoy the concomitant tax benefits, as affirmed by the IRS.
As skilled, tough, and fiercely competitive individuals,
jockeys want to be free to take riding assignments on a race-
by-race basis so as to choose those mounts that offer the best
chance of winning.
Jockeys rode in races worth almost $1.2 billion in purses in 2004.
While jockeys are free to negotiate their compensation levels
above state-regulated minimums, a generally accepted estimate
of actual jockeys' earnings is 7.5 to 8.0 percent of his or her
mounts earnings. Therefore, total jockeys earnings were between
approximately $88-$94 million.
There were 1,856 jockeys who rode in at least one race in 2004. There
were 991 jockeys who rode at least 100 times, an average of two
a week. Those jockeys accounted for more than 95% of all rides
and this used to be the minimum requirement for active Jockeys'
Guild membership and benefits. The average annual earnings for
those jockeys was in the $87,000-$93,000 range. The 599 jockeys
who rode at least 300 mounts (six a week and representing more
than 80% of all starters), had average earnings of $134,000-
$142,000.
All equine activity--racing and non-racing, professional and
amateur--is recognized as being inherently risky. People making
a living riding horses usually have a passion for it, as
evidenced by Gary Birzer's return to that activity in a
recreational mode. At the same time, race riding is the best
compensated riding profession available.
In 2004, there were 487,416 starters. Through June 30, 2005, the
latest loss report available, there were 708 paid claims by the
TRA insurance policy. In recent years, the average claim has
been about $7,000. Through October 31, 2005, there have been
five injuries that have reached the $100,000 medical maximum.
We don't know how much above that figure each person's medical
expenses went, except for Gary Birzer.
The salient fact is any lack of insurance coverage is a problem only
in a very few specific instances. It is a problem that is
solvable on both a short-term and long-term, comprehensive
basis in a relatively quick fashion.
The TRA and its member racetracks have a long history of productive
dialogue with the jockeys and the Guild. Jockeys are independent
contractors, but the Jockeys' Guild has been an effective liaison with
track management, representing riders in instances ranging from the
riders deciding not to race for various weather or track surface-
related safety issues on certain days (41 at TRA tracks during the past
two years) to the jockey room environment, which can range from Spartan
to game rooms and, at Monmouth Park, even a swimming pool.
In February of 2004, months before the Gary Birzer accident, the
TRA formed a Safety Committee to constantly monitor and review jockey
safety-related items and agreed to work in consultation with The
Jockeys' Guild to promote the best and latest safety practices.
The TRA and its member racetracks have been supporters of the
Racing Medication and Testing Consortium to promote a uniform and safe
medication policy for horses that will ensure the safety of the horse
and jockey. Horse and rider safety are why state racing commissions
mandate pre-race veterinary inspection of each entrant.
The safer racing environment is the Holy Grail for the racing
industry. Injuries to horses and jockeys are horrifying to our fans.
Turfway Park spent $5 million installing the revolutionary Polytrack
surface and a new rail around it this year and the rest of the industry
is anxiously watching the encouraging early results to make sure the
synthetic material will withstand the various extremes of climate and
weather conditions.
Over the years, gooseneck rails constructed of materials designed
to withstand the impact of a horse have replaced rails that shattered
and had straight uprights as support. Distance-marking poles have been
placed at a safe distance from the inside rail so as not to pose a
danger to horse or jockey. Rider safety vests have been mandated as
essential equipment not to be counted against the impost (weight)
assigned to a horse.
Safety standards are an ever-evolving issue and, consequently, the
TRA and its racetracks always have safety-related items on their
business agenda.
Jockey health issues also are of continuing discussion and
refinement within the industry. Unnoticed, but nonetheless true, a
quick survey by the TRA revealed that during the past few years minimum
jockey weight assignments have been raised in several major racing
jurisdictions (California, Illinois, Kentucky, Maryland, New York, and
New Jersey comprise an incomplete list) and are not the same as 100
years ago or even 10 years ago. It is a complex issue, however, that
must also take into account the optimum safety of the horse.
Attesting to industry desire to have a healthy population of
jockeys, the California racing industry solicited a proposal for a
comprehensive study in August to utilize in developing a wellness
program that will aid jockeys in maintaining a healthy lifestyle while
meeting the rigorous physical demands of their profession. In
September, the TRA and other industry groups met with the collegiate
research team to refine the study so it can be undertaken in the coming
year and become an industry benchmark for future policies.
Returning to the principal reason we're here today:
Is what has befallen Gary Birzer acceptable? Absolutely not.
What assurances can we give you that the racing industry is willing
and able to rectify the situation in near-immediate fashion?
As I previously mentioned, the scope of the problem is far from
insurmountable and the shrewd allocation of existing industry resources
can provide an enduring, practical solution.
The NTRA Jockey Injury Task Force, which was comprised of
racetracks, horsemen, and jockeys last winter, has put everyone on
record as making adequate insurance coverage in the event of a
catastrophic injury an industry imperative. I'm confident there is a
cooperative solution that will be devised and implemented.
This Congressional subcommittee has been helpful in placing an
increased focus on the task at hand. Furthermore, your work may help
restore a long and valuable working relationship between the Jockeys'
Guild, under a responsible new leadership, and other industry groups.
In any event, the tracks and horsemen understand the need for a
secure safety net for all jockeys. It is well on its way to being
erected as we speak and I have every confidence the job will be
completed in the timely fashion it deserves and demands.
Mr. Whitfield. Thank you, Mr. Scherf. Mr. Van Clief, you
are recognized for 5 minutes.
TESTIMONY OF D.G. VAN CLIEF, JR.
Mr. Van Clief. Thank you, Mr. Chairman. As Commissioner of
the National Thoroughbred Racing Association, I thank Chairman
Whitfield and the members of the subcommittee for this
opportunity to address the issues of jockey safety and
insurance.
The NTRA as a member-based trade association comprising
horse owners, breeders, trainers, racetracks and other
horseracing organizations. The corporation represents its
members in marketing and television contracts, public
relations, government affairs, sponsorship sales and product
development programs. It also produces the Breeders Cup World
Thoroughbred Championships, a day of championship level racing
that takes place at a different racetrack each year.
From time to time, the NTRA serves as a convening authority
to address issues of natural importance to our industry. Over
the years, the organization has empanelled industry groups to
address topics such as equine medication and drug testing,
wagering technology and technology security and most recently,
jockey insurance. The NTRA does not contract with jockeys, back
stretch workers or exercise riders. However, we and our members
were shocked and dismayed upon hearing the story of Gary Birzer
and the failure of the Jockey's Guild to provide catastrophic
insurance for its members. It is not our role or intent to
intervene in the Guild's management issues but we have grave
concerns that the organization's apparent disarray has
jeopardized the health and welfare of hundreds of riders. The
Guild was once a trusted partner in vital business-to-business
relationships within out industry, involving millions of
dollars and affecting hundreds of families in the racing
community. It must institute comprehensive reforms to regain
that status. And Mr. Chairman, as you have noticed, it appears
to be well under way in that regard.
The NTRA has and will continue to work cooperatively with
our member associations, with jockeys, with horsemen and with
other industry stakeholders, as well as insurance service
providers and legislative and regulatory agencies to identify
equitable, cost-effective solutions to the problem of lapsed
catastrophic coverage for riders.
In 2004, upon learning that the Guild's catastrophic injury
insurance had been allowed to lapse, the NTRA formed a 33-
member taskforce on jockey accident insurance. The panel
included a cross-section of insurance providers, jockeys,
racetrack representatives and horsemen. They assembled the
relevant facts, such as existing levels of accident coverage,
the mechanisms used by each jurisdiction to find this coverage
and examined Workers' Compensation Programs currently in place
in major racing jurisdictions; California, New York, New Jersey
and Maryland. In its findings, the panel endorsed a minimum
insurance level of a half a million dollars and recommended
furthermore a $1 million optimum level. The panel also
identified a private insurance solution through AIG, which has
since developed a program for North American Thoroughbred
Racetracks. With AIG, most tracks can purchase $1 million of
limits for 50 to 75 percent more than what they were paying to
obtain $100,000 in coverage previously.
NTRA member tracks, excluding those in States where jockeys
are already covered under Workers' Compensation, represented
3,452 race days in 20004. According to AIG, 25 NTRA racetracks,
including those of Magna entertainment and Churchill Downs, our
two largest racetrack operators, have purchased jockey on-track
accident insurance coverage. Most have insured at the $1
million level. These tracks represented 2,316 days in 2004,
thus 67 percent of NTRA member exposure, if you will, is now
ensured under the program. Several other NTRA member tracks are
considering the AIG program and if they do bind that coverage,
more than three-quarters of our member exposure will be insured
at or above the minimum level recommended by our Jockey
Insurance Task Force. Those outside this group remain with the
program negotiated by the Thoroughbred Racing Associations. In
short, despite the Guild's actions or I should say perhaps
their failure to act in allowing coverage to lapse, virtually
all tracks offer an on-track coverage for jockeys ranging from
$100,000 to $1 million.
We believe that our industry, in concert with State
regulatory agencies and a reconstituted, credible jockey's
organization, will ensure that our sport continues to operate
in a manner that will protect both its participants and its
public. Not to do so we think is unacceptable. Thank you, Mr.
Chairman.
[The prepared statement of D.G. Van Clief, Jr. follows:]
Prepared Statement of D.G. Van Clief, Jr., Commissioner, NTRA and
President, Breeders' Cup Limited
Thank you for this opportunity to address the Subcommittee on
Oversight and Investigations regarding the issues of jockey safety and
insurance.
The NTRA is a member-based trade association that represents
owners, breeders, horsemen, racetracks and other horse racing
interests. In addition to managing certain events, including the
Breeders' Cup World Thoroughbred Championships, the association
represents its members in marketing and television contracts, public
relations, government affairs and sponsorship sales and development
programs.
As a trade association, the NTRA serves from time to time as a
``convening authority'' to address national issues. Over the years, the
organization has empanelled industry groups to address equine
medication and drug testing, wagering technology, and, most recently,
jockey insurance.
The NTRA does not contract with jockeys, backstretch workers or
exercise riders. However, like all members of the racing community, we
recognize the important role that these individuals play in our
industry and the risks that they incur each year while discharging
their duties in connection with the care, exercising and riding of some
74,000 race horses participating in 58,000 races and making a combined
total of 487,000 starts.
The recent media reports of alleged misappropriations by the
management of the Jockeys' Guild, reports that its health care plan is
in arrears, as well as the Guild's decision in 2002 to allow its policy
for on-track catastrophic insurance for jockeys to lapse, create grave
concerns that the Guild's actions have jeopardized the health and
welfare of hundreds of riders.
It is not our role or intent to intervene in the Guild's management
issues. However, given the organization's apparent financial and
administrative disarray, the racing industry cannot continue to work
with it until the Guild institutes comprehensive reforms.
At the same time, NTRA has and will continue to work cooperatively
with our member associations, jockeys, horsemen and other industry
stakeholders, as well as insurance service providers and the
appropriate legislative and regulatory agencies to identify cost-
effective and equitable solutions to the problem of lapsed catastrophic
coverage for riders.
In 2004, upon learning that the Guild had allowed its catastrophic
injury insurance for its members to lapse, the NTRA formed a 33-member
Task Force on Jockey Accident Insurance (see attached announcement).
The panel included a cross section of insurance providers, jockeys,
racetrack representatives and horsemen. They assembled the relevant
facts, such as existing levels of accident insurance coverage for
jockeys; the mechanisms used by each jurisdiction to fund this
coverage; and examined workers' compensation programs currently in
place in major racing jurisdictions such as California, New York, New
Jersey and Maryland.
The panel endorsed a minimum insurance level of $500,000 and
recommended a $1 million level (see attached news release). The group
also identified a private insurance solution through AIG, the nation's
largest underwriter of commercial and industrial insurance, which has
since developed a program for Thoroughbred racetracks throughout North
America. In most cases, racetracks can purchase $1 million of limits
for 50% to 75% more than they were paying for $100,000 worth of
coverage with the CIGNA program available through the trade association
known as the Thoroughbred Racing Associations of North America.
NTRA member tracks, excluding those in states where jockeys are
covered under workers' compensation (New York, Maryland, California,
New Jersey and Idaho), represented 3,452 race days in 2004. According
to AIG, 25 NTRA member tracks, including those of Magna Entertainment
and Churchill Downs Incorporated, have purchased the Jockey On-Track
Accident program. These tracks represented 2,316 race days in 2004.
Thus, 67 percent of the NTRA member track ``exposure'' is now insured
under this program. Several other NTRA member tracks have requested and
received an AIG proposal. If they bind, more than three-quarters of our
member exposure will be insured at the level recommended by the Jockey
Insurance Task Force, with the majority at the $1 million level. The
remaining tracks are with the TRA, whose CIGNA program offers $100,000
in coverage.
AIG will also provide an excess policy on top of the $1 million of
coverage for all individual jockeys riding at tracks that purchased the
underlying $1 million worth of coverage. Jockeys would be able to buy
coverage at very competitive rates due to the high deductible carried
by--the participating tracks. AIG has indicated that Guild reform will
be needed before it will be confident enough to use the organization as
a means of channeling this option to jockeys nationwide. We remain
optimistic that these reforms will be carried out shortly and that
jockeys will have access to this added coverage.
In addition to providing on-track catastrophic insurance for
jockeys at levels ranging from $100,000 to $1 million, North American
racetracks work to ensure that the racing environment is safe for both
equine and human athletes as a matter of routine. The safety features
may vary between jurisdictions but generally include:
Pre-race inspection exams by state-licensed veterinarians for all
race-day equine competitors
Post-race equine drug testing under an industry-sponsored program
Track maintenance that includes harrowing, soil conditioning and
watering as needed to produce a safe and consistent surface
Safety rails designed to minimize injuries to horses and riders
should a racing accident occur
Engineered racing surfaces such as Polytrack, which are designed to
reduce the incidence of on-track injuries for horses
An ambulance that follows each racing field from starting gate to
finish
Padded starting gate stalls and professional handlers for each horse
in the starting gate
On track alarms to alert jockeys in the event of an emergency during
a race
Protective helmets and vests for jockeys
Twenty-six industry stakeholder organizations support the Racing
Medication and Testing Consortium that develops model rules for race-
day medication and drug testing. The RMTC also funds university-level
research into equine drugs.
Members of the industry meet regularly to exchange ideas and
information regarding numerous issues, including racetrack safety.
These industry conferences include the University of Arizona's annual
Symposium on Racing, the Asian Conference on Racing; the International
Federation of Racing Authorities; the American Association of Equine
Practitioners' annual convention and conferences conducted by the
Association of Racing Commissioners International and North American
Pari-Mutuel Regulators Association, among others.
Numerous industry organizations provide assistance for jockeys and
other members of the racing community, including the Jockey Club
Foundation, established in 1943 to assist industry workers, including
injured jockeys; the Shoemaker Foundation, formed in 1991 with a
mission to provide financial assistance to any individual in the racing
industry who has suffered a catastrophic illness or accident after
exhausting available workers' compensation and insurance benefits; and
the Don Macbeth Memorial Jockey Fund, providing a wide range of
assistance to riders from purchasing medical equipment to providing
monetary assistance. Numerous benevolent groups exist among horsemen's
associations to assist backstretch workers in need, while organizations
such as the Winners Federation and the Race Track Chaplaincy provide
substance abuse counseling and other social services.
Equine medical research, focusing on equine health and safety, is
funded largely by the industry itself through the Grayson-Jockey Club
Research Foundation, the world's largest private funder of equine
medical research. Additionally, UC-Davis conducts a racehorse necropsy
program funded by the racing industry to determine the nature of
catastrophic injuries to horses and develop injury prevention
strategies. Ongoing scientific research into racetrack injuries is
aimed at identifying causal factors for injuries with the goal of
reducing the incidence and severity of equine injuries and so
indirectly ensuring the safety of jockeys and exercise riders.
In closing, I would like to thank the Committee for its work on the
important issues of jockey insurance and safety. The racing industry is
committed to a shared and speedy resolution to the jockey insurance
issue and believes that with requisite levels of accountability,
transparency and professionalism, the Guild can resume its role as a
facilitator for jockey health and safety programs. The apparent lapse
in Guild management that the Committee's investigation has helped to
expose is, we believe, an aberration in the organization's 65-year
history of service to riders.
We look to our industry, in concert with state regulatory agencies
and a reconstituted, credible jockeys' organization to ensure that our
sport continues to operate in a manner that will protect both its
participants and its public.
Mr. Whitfield. Thank you, Mr. Van Clief. As I told you when
we started this hearing we were going to have two votes and we
have 7 minutes left in the first vote so we are going to
recess. We will be back in, I would say, about 25 minutes and
then we will pick up with you, Mr. Sexton, and Mr. Amos and Mr.
Fravel. So if you all will excuse us, we will recess for 20
minutes and we will be back. Thank you.
[Brief recess.]
Mr. Whitfield. I will call this hearing back to order and
Mr. Stupak is on his way but rather than delay any longer, I
will recognize Mr. Sexton for his 5-minute opening statement.
TESTIMONY OF STEVE SEXTON
Mr. Sexton. Chairman Whitfield, Representative Stupak and
member of the committee, good afternoon. My name is Steve
Sexton and I am the President of Churchill Downs Racetrack,
which for 131 years has been home of America's premiere
horserace, the Kentucky Derby. Churchill Downs parent company,
Churchill Downs, Incorporated or CDI, owns and operates world
renowned horseracing venues throughout the United States. Our
six racetracks in Florida, Illinois, Indiana, Kentucky and
Louisiana, host many of North America's most prestigious races.
Churchill Downs Racetracks have also hosted five Breeders Cup
World Thoroughbred Championships and Churchill Downs is
scheduled to once again host the event in 2006.
Churchill Downs is committed to maintaining a standard of
excellence in all aspects of our operations, including those
concerning the health and welfare of the jockeys and exercise
riders. At present, CDI tracks run approximately 6,000 races
each year and the overwhelming majority of these races are
conducted without incident. CDI and its family of racetracks
stand with the entire horseracing industry in the belief that
there must be an industry-wide effort to ensure the
availability of adequate on-track insurance coverage to jockeys
and to eliminate avoidable racing hazards. CDI has already
taken steps on its own, as well as in conjunction with these
other stakeholders, to rectify the jockey health and welfare
issues currently confronting the horseracing industry today.
For several decades, racetracks in the United States that
are members of the Thoroughbred Racing Association or TRA,
including CDI tracks, have contributed substantial funds each
year to secure on-track catastrophic injury insurance for
jockeys. As you know, jockeys are not employees of the
racetracks but are hired by horse owners or trainers to ride on
a horse by horse basis. These horse owners or trainers
negotiate the terms by which jockeys are compensated. Further,
the individual States establish the racing rules and
regulations governing jockeys and their work-related activities
on a racetrack.
Nonetheless, motivated by a desire to protect the best
interests of jockeys, since the early 1970's CDI and other TRA
Racetracks, have provided jockeys with on-track accident
insurance coverage. CDI and other member tracks have
additionally paid per-race day and per-mount fees to the
Jockey's Guild, with the understanding that the Guild would in
turn use these funds to purchase health insurance and
supplemental catastrophic injury insurance for its member
jockeys. Thus, historically each racetrack provided $100,000 in
on-track injury coverage for each jockey and collectively paid
$2.2 million annually in fees to the Guild. Until Dr. Wayne
Gertmenien took over the Guild in 2001, the Guild used that
money to obtain $1 million in insurance coverage for on-track
catastrophic injuries to supplement the $100.000 first layer of
insurance provided by the racetracks. The next year, the Guild
failed to renew the supplemental catastrophic coverage for
jockeys. Many in the horseracing industry, including jockeys,
only became aware that this on-track policy had lapsed after
the tragic accident at Mountaineer Park in July 2004.
As jockeys, horsemen and racing companies across the
company began asking questions about why Guild management had
terminated that coverage, we wrote the Guild in December 2004
seeking an accounting for the more than $1 million that CDI
tracks have given to the Guild since Dr. Gertmenien had taken
over the organization. At the time we wrote this letter, North
American Racetracks as a group had provided more than $7
million to the Guild during Dr. Gertmenien's tenure, funds that
we understood that would be used by the Guild to pay for the
on-track insurance coverage for jockeys. We never received a
response to our letter.
Accordingly, for the 2005 racing season, we decided on our
own to use the money CDI otherwise would have paid the Guild to
purchase additional on-track insurance coverage for jockeys
racing at CDI tracks. The policy obtained by our company
affords jockeys a catastrophic injury benefit of $1 million, as
well as a disability quotient for both temporary and permanent
disabilities, a significant increase over the $100,000 first
level coverage typically provided by individual racetracks.
We are also working to provide a long-term, comprehensive
and equitable solution to provide adequate insurance coverage
for jockeys and others who work in our industry. CDI is
actively working with all members of the horseracing industry
to support the extensive of State Workers' Compensation
programs not only to the jockeys but also to the apprentice
jockeys and exercise riders who previously were not covered. In
Kentucky, for example, I represented by home tracks, Churchill
Downs and Ellis Park, on the Blue Ribbon Panel created by
Governor Ernie Fletcher in February 2005, to study the issue of
Workers' Compensation for jockeys and others who suffer work-
related injuries while mounting, riding or dismounting a horse.
Throughout the summer of 2005, members of the panel who
represent all constituencies within Kentucky's horseracing
industry, met with representatives of groups within and outside
the horse industry in Kentucky to hear their concerns and
suggestions. Although Kentucky recognizes that certain horse
industry workers, including jockeys, are independent
contractors, the Blue Ribbon Panel voted unanimously to
recommend the Workers' Compensation coverage of jockeys,
apprentice jockeys and exercise riders. The panel also
recommended unanimously that the cost of the Workers'
Compensation Fund be shared by racetracks, horse owners and
jockeys, with a portion of the premium to come from winning
purses. We applaud Kentucky for moving forward on this issue
and believe this is a model that would be implemented in all
stated.
CDI is committed to maintaining the highest standards of
safety at its racetracks. CDI actively participates in a number
of task forces created to study various jockey safety issues
and assists in formulating recommendations to be made to State
regulators. As a member of the TRA Safety Committee created in
January 2004, CDI took the lead in discussions with Jockey's
Guild members concerning a range of such safety issues. Issues
that include the quality of the racetrack surface, the use of
various types of railing on the inner track and the possibility
of mandating the use of safety reins, which are believed to
assist jockeys in maintaining control of the horse should a
rein break.
In our view, what safety standards should be in place are
questions best left to State regulators who have substantial
experience and expertise, in consultation with the jockeys, the
racetracks and the horse owners. This is because in the context
of horseracing, there is no one size fits all solution to
safety. Care must be taken to ensure that a safety feature
intended to avoid one danger will not inadvertently introduce
other dangers.
In our experience, State regulators take their obligation
to regulate track safety extremely seriously. For example, on
any given race day at Churchill Downs there are five to seven
Kentucky regulators onsite monitoring and directing racing
activities. For these reasons, States are uniquely qualified to
assess the desirability of implementing a particular safety
standard for tracks in their jurisdiction.
CDI is committed to continuing to work with all segments of
the racing industry, including jockeys, horse owners, trainers
and the National Thoroughbred Racing Association, to develop a
viable, comprehensive and equitable solution to the jockey
health and welfare issues confronting our sport today. Thank
you.
[The prepared statement of Steve Sexton follows:]
Prepared Statement of Steve Sexton, President, Churchill Downs
Incorporated
I. INTRODUCTION.
Chairman Whitfield, Representative Stupak and Members of the
Committee, Good Afternoon. My name is Steve Sexton and I am the
President of Churchill Downs racetrack, which for 131 years has been
the home of America's premier horse race, the Kentucky Derby. Churchill
Downs' parent company, Churchill Downs Incorporated (``CDI''), owns and
operates world-renowned horse racing venues throughout the United
States. Our six racetracks in Florida, Illinois, Indiana, Kentucky and
Louisiana host many of North America's most prestigious races.
Churchill Downs racetracks have also hosted five Breeders' Cup World
Thoroughbred Championships, and Churchill Downs is scheduled to once
again host the event in 2006.
As a leader in the horse racing industry, Churchill Downs is
committed to maintaining a standard of excellence in all aspects of our
operations, including those concerning the health and welfare of the
jockeys, apprentice jockeys and exercise riders. The Company's efforts
in this regard are evident, in part, in our track safety records. At
present, CDI tracks run approximately 6,000 races each year, and the
overwhelming majority of these races are conducted without incident.
CDI recognizes, however, that horse racing is an inherently
dangerous sport and that the jockeys exposed to these risks play an
integral role in the Company's live racing operations. Accordingly, CDI
and its family of racetracks stand with the entire horse racing
industry in the belief that there must be an industry-wide effort to
ensure the availability of adequate on-track insurance coverage to
jockeys and to eliminate avoidable racing hazards. CDI is pleased to
join other racetracks, owners, trainers, jockeys, state regulators, and
the National Thoroughbred Racing Association, in developing a viable,
comprehensive, and equitable solution to these issues. Indeed, as I
will discuss in more detail shortly, CDI has already taken steps on its
own as well as in conjunction with these other stakeholders to rectify
the jockey health and welfare issues currently confronting the horse
racing industry.
II. EVENTS LEADING TO THE CURRENT JOCKEY ON-TRACK INJURY INSURANCE
COVERAGE CHALLENGES AND CHURCHILL DOWNS' EFFORTS IN RESPONSE.
For several decades, racetracks in the United States that are
members of the Thoroughbred Racing Association (``TRA''), including all
of the tracks owned by CDI, have contributed substantial funds each
year to secure on-track catastrophic injury insurance for jockeys. As
you know, jockeys are not employees of the racetracks, but are hired by
horse owners or trainers to ride on a race-by-race basis. These horse
owners or trainers negotiate the terms by which jockeys are compensated
for riding horses in races. Further, the individual states establish
the racing rules and regulations governing jockeys and their work-
related activities while at a racetrack.
Nonetheless, motivated by a desire to protect the best interests of
jockeys, since the early 1970s CDI and other TRA racetracks have
provided jockeys with on-track accident insurance coverage. CDI and
other member tracks have additionally paid per-race day and per-mount
fees to the Jockeys' Guild, with the understanding that the Guild would
in turn use these funds to purchase health insurance and supplemental
catastrophic injury insurance for its member jockeys. Thus,
historically, each racetrack provided $100,000 in on-track injury
coverage for each jockey, and collectively paid $2.2 million annually
in per-race day and per-mount fees to the Guild.
Up until recently, the Guild fulfilled its primary mission of
providing insurance and support to jockeys. With the $2.2 million in
funds contributed annually by the racetracks, as well as annual dues
and per-mount fees contributed by member jockeys, the Guild obtained $1
million in insurance coverage for on-track catastrophic injuries to
supplement the $100,000 first layer of insurance coverage afforded by
the racetracks. In 2001, the Guild was taken over by Dr. Wayne
Gertmenian. The next year, the Guild failed to renew the insurance
policy that provided supplemental catastrophic coverage for jockeys.
Many in the horse racing industry, including jockeys, only became
aware that this on-track policy had lapsed after the tragic accident at
Mountaineer Park in July 2004. As jockeys, horsemen and racing
companies across the country began asking questions about why Guild
management had terminated that coverage for its members, we wrote the
Guild in December 2004 seeking an accounting for the more than $1
million that CDI tracks had given to the Guild through the per-race day
and per-mount fees since Dr. Gertmenian had taken over the
organization. At the time we wrote this letter, North American
racetracks as a group had provided more than $7 million to the Guild
during Dr. Gertmenian's tenure--funds that we understood would be used
by the Guild to pay for the on-track insurance coverage for the
jockeys.
We have never received a response to our letter.
Accordingly, for the 2005 racing season, we decided on our own to
use the monies CDI otherwise would have paid the Guild to purchase
additional on-track insurance coverage for jockeys racing at CDI
tracks. The policy obtained by our Company affords jockeys a
catastrophic injury benefit of $1 million, as well as a disability
quotient for both temporary and permanent disabilities--a significant
increase over the $100,000 first-level coverage typically provided by
individual racetracks.
We are also working with all members of the horse racing industry
in order to provide a long-term, comprehensive, and equitable solution
to rectify the lack of adequate insurance coverage for jockeys and
certain other independent contractors, such as exercise riders, that
work in our industry.
To that end, CDI actively supports the extension of state workers'
compensation programs not only to the jockeys who previously were
protected by the catastrophic injury policy in place until 2002, but
also to the apprentice jockeys and exercise riders who previously were
not covered. In Kentucky, for example, I represented my home tracks,
Churchill Downs and Ellis Park, on the Blue Ribbon Panel created by
Governor Ernie Fletcher in February 2005 to study the issue of workers'
compensation for jockeys, apprentice jockeys, and exercise riders in
the Commonwealth who suffer work-related injuries while mounting,
riding, or dismounting a horse.
This panel includes representatives of all constituencies within
Kentucky's horse racing industry. Throughout the summer of 2005,
members of the Panel convened numerous times to discuss the spectrum of
issues relating to the group's mission. During these meetings,
representatives of groups within the horse industry in Kentucky and
outside the industry appeared to present concerns, suggestions,
solutions, and various alternatives as to how the state should address
this situation.
Although Kentucky recognizes that certain horse industry workers,
including jockeys, are independent contractors, the Blue Ribbon panel
has recommended that these workers be afforded access to workers'
compensation benefits for work-related injuries. Specifically, on
September 1, 2005, the Panel voted unanimously to recommend coverage of
jockeys, apprentice jockeys, and exercise riders under a workers'
compensation scheme in Kentucky. Further, by unanimous vote, the Panel
recommended that the cost of the workers' compensation fund be shared
by racetracks, horse owners and jockeys, with a portion of the premium
to be gleaned from winning purses.
We applaud Kentucky for moving forward on this issue and believe
this is a model that could be implemented in all states.
III. REGULATION OF THE HORSE RACING INDUSTRY.
CDI is committed to maintaining the highest standards of safety at
its racetracks, and continuously monitors the development of
innovations that might reduce or eliminate risks in the inherently
dangerous sport of horse racing. Among its efforts in this area, CDI
actively participates on a number of task forces created to study
various jockey safety issues and assists in formulating recommendations
to be made to state regulators. Indeed, as a member of the TRA's Safety
Committee, created in January 2004, CDI took the lead in discussions
with Jockeys' Guild members concerning a range of such safety issues.
CDI is thus aware of the concerns raised by Guild members and others
regarding certain safety issues that arise on tracks throughout this
country--issues that include the quality of the track surface, the use
of various types of railing on the inner track, and the possibility of
mandating the use of safety reins which are believed to assist jockeys
in maintaining control of the horse should a rein break.
In our view, what safety standards should be in place are questions
best left to state regulators--who have substantial experience and
expertise--in consultation with the jockeys, the racetracks and the
horse owners. This is because, in the context of horse racing, there is
no one-size-fits all solution to safety issues. Rather, risk assessment
is a highly complex undertaking that requires consideration of a
multitude of variables including the peculiarities of each particular
racetrack according to its geographic region and climate. Further, care
must be taken to ensure that a safety feature intended to avoid one
danger will not inadvertently introduce other dangers. Thus, a track
surface that is ideal in an arid part of California might pose problems
in Louisiana; or a safety rein that might permit a jockey more control
under one set of circumstances might, during a different incident,
entangle a horse's legs and, failing to break, cause the horse to fall
on a fallen jockey. The racing commissions of the individual states
have an extensive history of regulating horse racing and have the
expertise and resources to study all relevant factors and develop
safety standards tailored to the unique needs of the tracks which they
govern. The individual states, including Kentucky, take their
obligation to regulate track safety extremely seriously. For example,
on any given race day at Churchill Downs, there are five to seven
Kentucky regulators on site monitoring and directing racing activities.
For these reasons, states are uniquely qualified to assess the
desirability of implementing a particular safety standard for tracks in
their jurisdiction.
IV. CONCLUSION.
CDI is committed to continuing to work with all segments of the
racing industry, including jockeys, horse owners, trainers, and the
National Thoroughbred Racing Association, to develop a viable,
comprehensive, and equitable solution to the jockey health and welfare
issues confronting our sport today.
Mr. Whitfield. Thank you, Mr. Sexton. At this time we
recognize Mr. Amos for his 5-minute opening statement.
TESTIMONY OF DON AMOS
Mr. Amos. Chairman Whitfield and distinguished members, it
is an honor to appear before this subcommittee to help you
become informed on these matters to the horseracing industry.
My name is Don Amos and I am the Executive Vice President
and Chief Operating Officer of Magna Entertainment Corporation.
I am accompanied by Andrew Staniusz, who is a corporate counsel
with MEC and has worked closely with me in the development of
MEC's jockey accident insurance program. At this time I wish to
speak briefly on some of the points touched upon in my written
testimony.
As of June of this year, all jockeys riding at MEC's six
tracks in non-Workers' Compensation States have been covered
under a $1 million accident/medical insurance program. The
implementation of this coverage is a result of the process that
began with the NTRA, organizing a jockey's medical insurance
panel in November of last year. MEC's participation in this
panel led to it working with Churchill Downs and the AIG firm
in the development of an accident insurance policy that could
be utilized by all tracks in the United States.
As outlined in my written testimony, the program being
implemented by MEC is a co-pay model, with the track paying a
minimum of 70 percent, owners paying a maximum of 20 percent
and the Jockey's Guild paying 10 percent of the premium
required to maintain the $1 million coverage. This translates
to a mount fee of $5 for the owner and $2,50 for the Guild. MEC
is attracted to a co-pay model because of MEC's firm belief
that people have a different attitude to something when they
pay a portion of it, or as opposed to get something for
nothing.
MEC further believes that any program must be designed to
stand the test of time. Medical care costs will increase over
time. Today, $1 million of coverage seems appropriate. In the
future, this is likely to be insufficient. By pre-determining
the contribution of the 70/20/10 percent basis, MEC believes
that this is a sustainable model on a long-term basis or until
such time that an alternate program is developed. It is MEC's
position that an appropriate level of coverage is only a
starting point. The key is to use accident experience data for
frequency and severity to develop comprehensive analyses of
root causes of accidents, which in turn will develop loss
control initiatives based on objective facts.
From the outset, MEC has looked to its insurance carrier,
AIG, to develop a body of loss experience data to begin this
process of loss control. As recently as November 10, 2005, Mr.
Staniusz met with AIG representatives to discuss the status of
the development of loss control initiatives. These discussions,
AIG reviewed with MEC the fact that it has been utilizing
experience data to evaluate safety factors such as starting
gates, rails, lighting, weather, visibility and jockey
equipment. AIG will be commencing loss control inspections of
MEC facilities covered by this insurance program beginning in
the new year. Accordingly, this program is well on the way of
becoming a comprehensive risk management program designed to
enhance the safety of jockeys riding at our facilities.
Mr. Chairman and distinguished members, in conclusion I
firmly believe this industry is moving in the right direction
regarding the specific issue of jockey accident insurance. As
in any process, industry leaders must show the way. MEC
believes that it and Churchill took a responsible approach to
addressing the immediate needs arising from inadequate jockey
insurance. If all stakeholders are willing, adequate medical
insurance is affordable for every racetrack.
MEC encourages all stakeholders to work within the broad
principles of the approach we developed to obtain a viable
solution at the local level. MEC firmly believes that the
stakeholders in this industry will reach an affable solution in
short order.
At this time I wish to restrict my oral remarks to the
issue of jockey accident insurance. As you are aware, my
written testimony touched upon several issues on which I or Mr.
Staniusz would be pleased to field any questions that you may
have. As is clear from my written testimony, I am personally
passionate about this sport. My passion extends to the
magnificent animals, the talented trainers and the courageous
athletes who ride them. This industry has had to face many
challenges in recent years. It is MEC's belief that by having
all stakeholders; owners, trainers, jockeys, breeders and the
tracks working together and balancing their respective
interests, this industry can meet all of its challenges.
Thank you, Chairman Whitfield and distinguished members for
your kind attention.
[The prepared statement of Don Amos follows:]
Prepared Statement of Don Amos, Executive Vice-President and Chief
Operating Officer, Magna Entertainment Corp.
Chairman Whitfield and distinguished members, it is an honor to
appear before this Subcommittee to help you to become informed on these
important matters to the horse racing industry.
My name is Don Amos and I am the Executive Vice-President and Chief
Operating Officer of Magna Entertainment Corp., (``MEC''). As an
executive officer of a public corporation, my responsibility is to act
in the best interests of our shareholders. In MEC's judgment, the best
way to do this is to work with all stakeholders in our industry:
owners, jockeys, trainers and breeders; to achieve the common good of
improving horseracing in a very competitive landscape.
I have been associated with horses since childhood, showing
Shetland Ponies in county fair competitions in rural Ontario, Canada.
This evolved into owning and driving standardbred horses as a young
adult. My association with the thoroughbred industry began in 1977 in
Toronto, Canada. Currently, I am the owner and breeder of 16
thoroughbreds. Throughout my association with, and continuing education
about, horseracing, I have come to admire many individuals. Talented
trainers, who can develop young horses into high performance athletes
will always have my greatest admiration. Further, as someone who at one
time was an aspiring jockey, I must admit to this Subcommittee that I
consider those who ride these animals to be fine tuned athletes,
exhibiting great courage and respect for their competitive colleagues.
In my testimony, I will share with this Subcommittee the approach
that MEC has taken in working with industry stakeholders to deal with
the issues being investigated in these hearings. MEC believes that this
approach is beneficial to the industry, especially to jockeys riding at
MEC's tracks, and will ultimately be beneficial to our shareholders.
This testimony will begin with some background of MEC, its history,
vision and operating principles. This will be followed by a summary of
the steps taken in developing a one million dollar accident insurance
program for jockeys. I will use the term ``program'' because this
testimony will show that an appropriate level of coverage is only the
starting point in promoting jockey safety. Finally, this testimony will
briefly provide MEC's perspective on some of the other issues that have
been raised in these hearings.
BACKGROUND OF MEC
MEC was formed in 1999 as a subsidiary of Magna International Inc.
(``Magna''), currently the fourth largest manufacturer of automotive
systems in the world. The Magna story began in 1957 when its founder,
Frank Stronach, began a tool and die shop out of a garage in Toronto,
Canada. The Company's revenues in the first year were Cdn $13,000.
Today, Magna is a US $20 billion company, employing 81,000 employees
worldwide.
Over the years, Frank Stronach became a major owner and breeder of
thoroughbreds. As a businessman and entrepreneur, he saw an opportunity
to transform thoroughbred racing into a global industry through the
utilization of satellite and internet communication. This vision led to
Magna's purchase of Santa Anita Park in 1998.
MEC became a public company in 2000 with Magna as its controlling
shareholder. In 2003, Magna spun off its interest in MEC.
Today, MEC remains a publicly traded company, with Frank Stronach
as its Chairman. Accordingly, the original vision for MEC continues
today.
MEC'S PRINCIPLES
The fact that MEC began as a subsidiary of a manufacturing company
exposed it to approaches not common to the racing industry. The
foremost of these is a systematic approach to quality control and
continuous improvement. The manufacturing environment, especially in
automotive, is driven by measurables and auditing. Out of this
environment Magna migrated these features into non-production areas
such as employee relations and environmental management through the
introduction of: Employee Opinion Surveys; Health and Safety Audits and
Inspections; and Environmental Audits and Inspections.
All of these vehicles drove the development of action plans for
continuous improvement.
Further, Magna came to a common sense conclusion that success was
based on balancing the interest of the stakeholders in a business:
customers, investors and employees. The only way of achieving this
balance is by respecting each stakeholder through open communications.
Finally, with its employees and managers, Magna emphasized one
fundamental point: ``No government, no company, no union can guarantee
you job security. The best recipe for job security is for employees and
management to work together in harmony, to provide a better product at
a better price for our customers.'' This meant fostering collaboration
and diffusing confrontation. As in the case of any successful
relationship, whether as spouses, friends, parent--child, maintaining
this approach is hard, but satisfying, work.
Mr. Chairman and members of this Subcommittee, this background has
formed part of this testimony to answer one question. We are all
products of the values we are taught and the experiences we have in
life. The same is true in the life of a corporation. Throughout this
testimony, some of you may wish to ask ``Why did MEC decide to do
that?'' The answer I believe is found in knowing our background.
OPERATING IN TODAY'S RACING INDUSTRY
Although MEC is confident in its vision to revitalize horseracing,
the fact remains that this effort costs money.
As a result of the decline of horseracing over the last two
decades, the tracks MEC acquired require significant capital
expenditure. This has caused significant impact to MEC's bottom line.
But these expenditures are necessary to revitalize racing in our
markets.
With respect to the state that horseracing has found itself in as
an industry, there can be much discussion. The bottom line is there is
no one cause; there is no one culprit; there is no value in finger
pointing. We prosper together as an industry, we suffer together as an
industry. All stakeholders have to bear some burden for the state this
industry finds itself in.
The one basic point of the situation the industry finds itself in
is that horseracing will never achieve greater prosperity if its
stakeholders are confrontational. The only chance for this industry to
revitalize itself is if all stakeholders, including ourselves, try to
work together, balancing our respective interests, for the greater good
of the industry.
On this note, the approach MEC has taken with respect to allocating
our resources is in keeping with this philosophy.
Currently, MEC has made significant expenditures to modernize
facilities such as Gulfstream Park to excite the consumer about our
industry. But no Corporation can modernize all of its facilities at
once. Accordingly, in our facilities that are not being overhauled,
MEC's first priority with respect to capital spending is to ensure
compliance with regulatory requirements. In our industry, this
primarily centers on environmental issues, such as, the control of
wastewater from the backstretch.
The next priority with respect to capital expenditure centers
around the safety of both the horse and rider, whether it be by
improvements to track surfaces, starting gates or equipment.
The fact is that as any corporation, MEC must prioritize its
capital expenditures. Accordingly, our efforts must be gradual; with
improvement being implemented on a steady and consistent bases. MEC is
confident that this approach is ultimately viable and beneficial to
customers, employees, jockeys, trainers and the horses at our
facilities.
MEC OPERATIONS
As stated previously in this testimony, MEC has drawn upon its
roots as a subsidiary of a manufacturing company to implement quality
control and auditing programs.
Commencing in 2002, MEC launched a program which included: Employee
Opinion Surveys; Horsemens' Surveys; Periodic Meetings with Employees
and Horsemen; Environmental Audits and Inspections; and Health and
Safety Surveys.
Just as in the case of the Magna experience, these initiatives
resulted in the development of action plans to address deficiencies.
As in the case of any new initiative, there are many challenges to
achieving successful implementation. But by maintaining our focus, MEC
is beginning to see the start of a culture of continuous improvement.
As in all things that achieve lasting effect, these initiatives are
part of a sustained process of gradual change.
With respect to our health and safety audits, these are conducted
by MEC's, workers' compensation carrier, Liberty Mutual, and are
primarily focused on the safety of our employees. However, the
sensitivity to safety being cultivated by this process extends to all
of those at our facilities. As will be discussed in greater detail
later in the testimony, our Jockey Accident Insurance carrier will be
conducting loss control inspections commencing in 2006. MEC has every
expectation that these inspections will have the same effect on
improving jockey safety as have Health and Safety Audits on employee
safety.
JOCKEY ACCIDENT INSURANCE
During 2004, the issue of the adequacy of jockey accident insurance
became one of the key issues of this industry as a result of Gary
Birzer's tragic accident.
MEC was invited to the Jockey Accident Insurance Summit organized
by the National Thoroughbred Racing Association (``NTRA'') which was
held at Turfway Park outside of Cincinnati on November 22, 2004. Andrew
Staniusz, Legal Counsel and Director of Employee Relations Programs for
MEC, attended on the Company's behalf.
During this summit, a consensus emerged that the appropriate level
of coverage at this time would be one million dollars. Further, the key
issue that emerged was not availability of insurance, but how to make
such coverage affordable. Finally, it was decided to engage the AIG
firm, which provided workers' compensation coverage to jockeys in
California, to explore the possibility of developing a program.
The NTRA held a second meeting in Chicago at Arlington Park in
January 5, 2005 with representatives from AIG. What came from this
meeting was an agreement by Churchill Downs Inc. (``CDI'') and MEC to
work together with AIG in trying to develop a program providing one
million dollar coverage.
Over the next weeks, an approach was developed by CDI and MEC that
was communicated to the NTRA group at Turfway Park on February 25,
2005. The approach presented provided for a co-pay structure whereby a
track would pay a minimum of 70% of the total premium of a million
dollar policy, and with horse owners and the Jockeys' Guild combined
contributing a maximum of 30% of the cost.
MEC was attracted to a co-pay model because it is MEC's firm belief
people have a different attitude to something they have to pay a
portion for as opposed to something they get for free. By having to
make a payment each time a horse is raced, the owner is reminded of the
fact that there is a cost for a lack of safety.
The thinking behind having the remainder of the cost paid by the
Guild rather than the Jockey is two-fold. First, there was cognizance
of the fact that a mount fee would be a hardship to jockeys racing at
smaller market tracks. Second, the Jockey Guild was receiving a mount
fee from each track. Historically, these mount fees contributed towards
the accident coverage that had been discontinued by the Guild.
From AIG's perspective, it is fair to say that it did not care how
this policy was funded. It was prepared to provide enhanced coverage to
all tracks in the U.S.
Although this is in no way an endorsement of AIG, there are
distinct advantages in MEC's view of having at this time one major
player in providing this coverage.
It is MEC's position that an appropriate level of coverage is only
a starting point. The key is to use accident experience data, both
frequency and severity, to develop comprehensive analysis of root
causes of accidents which will develop loss control initiatives based
on objective fact, rather than on anecdotal information.
One of the greatest obstacles to appropriate loss control with
respect to jockey accidents historically has been the lack of
appropriate information gathering of loss experience. By having one
major player at this time, a body of loss experience data can be
established to begin the process of loss control. Whether such loss
control measures would be in equipment improvements, track
modifications or new practices, it is only through objective analysis
can this industry create a safer racing environment.
MEC encourages other insurers to enter this field. Afterall,
competition is healthy. For the time being, however, the relationship
with AIG is beneficial to the safety of jockeys.
As stated previously, a joint presentation was given by CDI and MEC
to the NTRA group at Turfway Park on February 25, 2005. During this
presentation the co-pay model was brought forward as a near term
solution. As expected, the approach met resistance from those groups
who were being asked to contribute. The meeting concluded on the basis
that additional coverage was available through AIG and that industry
stakeholders should continue to explore funding approaches.
MEC'S DECISION REGARDING JOCKEY ACCIDENT INSURANCE
After further study, MEC decided to implement a one million dollar
medical coverage policy for jockeys on a co-pay model with the affected
track paying a minimum 70%, owners paying a maximum 20% and the Guild
paying a maximum 10% Our analysis determined that a mount fee of $5.00
for the owner and $2.50 for the Guild would achieve the 20% and 10%
levels. Any surplus would be applied to next year's contributions of
owners and the Guild. If there were insufficient mounts at a track to
realize the appropriate level of co-pay from the owners and the Guild,
the track would make up the short fall. This is what we mean by a
minimum contribution of 70% by the track.
MEC believes that any program must be designed to stand the test of
time. Medical care costs will only increase over time. Today, one
million dollars coverage seems appropriate. In the future it is likely
to be insufficient. By predetermining the contributions on a 70/20/10
basis, MEC believes this is a sustainable model on a long term basis or
until such time an alternate program is developed.
Commencing June 15, 2005, MEC began implementing this policy at
each of its six (6) tracks in non-workers compensation states as each
track commenced its live racing meet. As part of this process, MEC has
sat down with owners and trainers in each affected State to review this
approach. The goal was to achieve consensus beforehand.
Where my other responsibilities did not allow me to meet with these
groups prior to the commencement of the racing meet, MEC decided to
implement the coverage on a temporary basis without requiring a co-
payment. Accordingly, jockeys at MEC facilities have been riding with
one million dollar accident coverage at the following locations as of
the following dates: Great Lakes Downs (MI), June 15, 2005; Thistledown
(OH), June 15, 2005; Lone Star Park (TX), June 15, 2005; Remington Park
(OK), August 5, 2005; and Portland Meadows (OR), October 22, 2005.
The remaining track MEC has in a non-workers' compensation state is
Gulfstream Park in Florida which will begin its live meet in January
2006.
Where state regulations precluded a mount fee approach, MEC has
agreed to look at alternative mechanisms, such as payment from purse
accounts, for an equivalent contribution. At the present time, a co-pay
approach has been established in Michigan and Ohio. Discussions are
ongoing in Texas and Oregon. MEC will be scheduling discussions with
Florida Horsemen shortly and with Oklahoma Horsemen in the new year.
MEC is also currently in discussions with the Jockey's Guild.
FUTURE INITIATIVES
As recently as November 10, 2005, Mr. Staniusz met with AIG
representatives to discuss the status of the development of loss
control initiatives. From these discussions, it was apparent that AIG
has been utilizing its experience data to analyze safety factors such
as starting gates, rails, lighting, weather, visibility and equipment
such as helmets and vests. It is anticipated that AIG will commence
loss control inspections of MEC facilities covered by this program
beginning in the New Year. Accordingly, the programs is now ready to
take the next level.
OTHER ISSUES
1. Exercise Riders
At the time of the NTRA summit, there was discussion of a program
to include exercise riders. The AIG program covers jockeys whether they
are hurt in a race or exercising a horse in the morning. The policy
does not cover pure exercise riders.
At the time this program was being developed, there was simply
insufficient experience data for the insurance industry to determine
appropriate costs. Whenever insurers do not have sufficient
information, they hedge their bets by raising their quotes. Since the
pressing issue at the time was the situation of jockeys, it was
determined to exclude exercise riders.
MEC believes that as insurers become more educated about the risk
factors associated with exercise riding and as more experience data
becomes available, this issue of exercise riders could be addressed.
2. Workers' Compensation
Many believe that workers' compensation is the solution to the
issue of Jockey Accident Coverage. It well may be.
I would caution all participants in these hearings that workers'
compensation is not free. The costs associated with workers'
compensation regimes in the major racing states are expensive, even
after one takes account of subsidies, preferred premiums and other
mechanisms employed to reduce costs.
The approach tabled jointly by CDI and MEC in February was designed
to be affordable at every track in the United States. Experience has
shown that the costs associated with a Workers' Compensation regime,
whether borne by tracks, trainers or other stakeholders, will be far
more onerous and quite likely unaffordable in smaller racing markets.
3. The ``Jockey as Employee'' Issue
The Jockey is licensed by the State Racing Commission. Provided he
or she has not committed any misconduct, a licensed jockey has access
to the track, its backstretch and the jockeys' room.
It is the trainer who retains a jockey to ride a horse. It is the
trainer who pays the mount fee to the jockey. The jockey receives his /
her purse money usually on a customary basis of 10% of the purse for a
win, 7% for place (2nd) and 5% for show (3rd). However, this customary
basis for purse payment is subject to negotiation between the trainer
and the jockey.
If a jockey is not retained to ride by any trainer, would the
jockey be entitled to payment of the minimum wage from the track? If
the jockey is an employee, that would be the case.
But a jockey who cannot get any rides is an underperformer. An
employer is usually able to discharge an underperforming employee. In
the case of jockeys, however, it is the state regulator who determines
qualification.
Further, what happens if this ``jockey as employee'' is fired by
the ``track as employer'' for non-performance but is given a mount by a
trainer the next day? Can the track dictate to a trainer that the
trainer cannot retain this jockey? Can the track avoid terminating this
``jockey as employee'' by forcing trainers to give him rides?
This is simply one hypothetical example that MEC submits should
cause this Subcommittee, and any other body, such as the NLRB,
reviewing this issue, to take pause before going too far down the road
in concluding that ``jockeys as employees'' is the solution to all the
difficulties jockey face.
4. NIOSH
As outlined in this testimony, MEC has demonstrated its commitment
to safety. The issues raised in this Subcommittee's letter to Secretary
Leavitt , however, involve issues of complexity which are of interest
to trainers and horse owners, not just only to jockeys and the tracks.
MEC would encourage NIOSH to seek input from all stakeholders
groups in conducting any evaluation of standards.
CONCLUSION
Mr. Chairman and distinguished members, in conclusion, I firmly
believe that this industry is moving in the right direction regarding
the specific issues of jockey accident insurance. As in any process,
industry leaders must show the way. MEC believes that it and CDI took a
responsible approach to addressing the immediate needs arising from
inadequate jockey accident insurance. Pointing fingers as to how this
situation arose does not help any injured jockey or his or her family.
A federal law providing workers' compensation will in all
likelihood take years; but jockeys will be riding horses tomorrow. What
is available today should meet the needs of all stakeholders in non-
workers compensation jurisdictions.
If all stakeholders are willing, adequate medical insurance is
affordable for every track. MEC encourages all stakeholders to work
with the broad principles of our approach to obtain a viable solution
at the local level. MEC believes that the stakeholders in this industry
will reach an optional solution in short order. To suspend this process
to await federal legislation will not be in the best interests of the
jockeys.
In conclusion and on a personal note, I am sincerely grateful to
have found myself in a position of responsibility where I could
contribute to the safety and security of jockeys and their families.
Mr. Whitfield. Thank you, Mr. Amos. And Mr. Fravel, you are
recognized for 5 minutes.
TESTIMONY OF CRAIG R. FRAVEL
Mr. Fravel. On July 24, 2004, Alex Solis was riding a mare
named Golden KK at Del Mar when an apprentice rider cut him off
along the rail. Golden KK clipped heels with that riders' horse
and fell. Alex rolled under the safety rail and remained there
motionless. Within 30 seconds an ambulance following the race,
with two emergency medical technicians on board, was at Alex's
side. Alex was immobilized and taken to an onsite medical
clinic where he was attended by a physician, who ordered that
Alex be transported to a local hospital. While Alex was being
transported, the race was resumed with a back-up ambulance
following the race.
Under the rules of the California Horseracing Board, Alex
was covered by a policy of Workman's Compensation and his
medical expenses were fully covered with no deductible or co-
payment. He was also entitled to temporary Disability Benefits
and had he been unable to return to work, he would have been
entitled to permanent Disability Benefits and supplemental Job
Displacement Benefits.
Under two programs initiated by horse owners and California
tracks, the cost of Workers' Comp is subsidized through a
variety of funds derived from wagering. In addition, every
California track pays for supplemental catastrophic injury
insurance through a TRA sponsored group program that pays
significant benefits in the event of permanent disability or
death. A program that has been continually funded by the
tracks, despite the fact that the agreement with the Jockey's
Guild, which contemplated the additional coverage, lapsed
several years ago.
California is 1 of 5 States that mandates Workers'
Compensation coverage for jockeys and exercise riders and is
one of two that provides funding to pay for health insurance
for jockeys and their dependents. California racetracks,
horsemen and representatives of the riders have worked together
for years to develop legislative and regulatory standards for
track safety and to contribute significant funding to the
Disabled Jockeys Endowment. Del Mar was the first racetrack in
the United States to install the Fontana safety rail.
We have also worked with the CHRB and Barry Broad, formerly
counsel of the Jockey's Guild, to pass AB 1180. That new law
memorializes a number of safety and health initiatives for the
benefit of California riders. Including a peer reviewed
academic, nutritional and health assessment designed to provide
a scientific basis for future policy decisions concerning the
jockey's scale of weights, as well as nutrition and health
weight management programs. We are in the final stages of
evaluating a proposal from Dr. Dan Benardot of Georgia State
University to conduct the study. And are working with various
industry groups, including the TRA, Thoroughbred Owners of
California, California Thoroughbred Trainers, National HBPA,
THA, Racing Commissioners International and the NTRA to fund
the study on a national basis.
California is the only State in the country to require a
post-mortem examination of every horse that dies on the grounds
of a licensed racetrack or auxiliary training center. That
requirement has enabled us to conduct research into the causes
of catastrophic injuries to horses, conducted by the University
of California at Davis. And to implement programs to reduce the
incidence of injuries amongst racehorses.
In 2005, Del Mar spent in excess of $1.2 million
maintaining the quality and consistency of its dirt and turf
tracks during its 7-week meet. We work with the California
Thoroughbred Trainers to monitor track conditions from the
trainer perspective and to sponsor research into new methods of
evaluating track hardness, surface consistency and base
conditions, which are being developed by Dr. Mick Peterson of
the University of Maine and Dr. Wayne McIllwraith of Colorado
State University. That research has provided us with new
insights into track maintenance techniques and has assisted in
the adaptation of diagnostic tools, such as ground penetrating
radar to evaluate sub-surface conditions. We are also
evaluating the new polymer coated silica sand surface developed
in the United Kingdom and presently being used at Turfway Park
and Keeneland, called Polytrack, which promises to further
reduce injuries to racehorses.
I started this testimony with a story of Alex Solis. It has
a happy ending, as he returned to riding in early 2005. There
is however one aspect of the story that does not have a happy
ending. Had Alex suffered similar injuries off the track, it is
unclear whether his health insurance would have been adequate
to cover his expenses, which would not be covered by Workers'
Comp. That inadequacy would not be the result of any failure of
the California industry to fund health insurance for riders. It
has done that. But from the fact that the health insurance for
California riders is part of a national self-insurance program
managed by the Jockey's Guild, a program whose financial health
is in serious doubt. I encourage this committee to continue to
work with the industry to remedy this situation and to ensure
that racetracks, owners, trainers and regulators have a
responsible party representing the interests of riders. One
that will work with us, rather than against us, in addressing
safety and health constructively. Thank you.
[The prepared statement of Craig R. Fravel follows:]
Prepared Statement of Craig R. Fravel, Executive Vice President, Del
Mar Thoroughbred Club
On July 24, 2004, future Hall of Fame rider Alex Solis was riding a
dark brown four-year old mare named Golden KK in a $32,000 claiming
race at Del Mar, the seaside race track built by Bing Crosby and Pat
O'Brien in 1937. Although Alex's mount was fading from contention in
the race and in seventh position, an apprentice rider likewise out of
contention cut Alex off along the rail. Alex's horse clipped heels with
the apprentice's horse and fell to the ground. While Golden KK got
immediately to her feet and ran off with the field, Alex rolled under
the safety rail near the quarter pole and remained there motionless as
his training and instincts led him to do. In less than 30 seconds, an
ambulance following the race with two emergency medical technicians on
board was at Alex's side. Alex was carefully placed onto a board and
immobilized for transport to an on site medical clinic at Del Mar where
he was immediately attended by a physician who determined that Alex
should be transported to a local emergency room for further evaluation.
While Alex was being transported, the races resumed with a backup
ambulance following each race.
Alex was eventually diagnosed with a fractured vertebra and three
broken ribs and operated on at the University of California, San Diego
Medical Center. He was unable to return to work for six months yet
still managed to rank ninth nationally in total purse earnings in 2004
with $11,554,851. While this is an unfortunate story, the silver lining
in it is the fact that the trainer of the horse Alex was riding was
required by the rules and regulations of the California Horse Racing
Board to maintain a policy of workers compensation insurance. That
policy covered Alex to the same extent as any other worker in
California would be covered in the event of a work-related injury.
Under the terms of that policy and California law, Alex's medical
expenses were covered to the extent required to cure or relieve the
effects of the injury with no deductible or co-payments by Alex as the
injured worker. He was also entitled to temporary disability benefits
to partially replace lost wages and had he been unable to return to his
profession he would have been entitled to permanent disability benefits
and supplemental job displacement benefits. The cost of that workers
compensation insurance was paid by the trainer of Golden KK and in the
case of a rider billed to the owner of the horse. Under two programs
authorized by Sections 19605.73, 19605.75, and 19607.4 of the
California Horse Racing Law the cost of that insurance is subsidized by
racetracks and horsemen through a variety of funds derived from
wagering on California races. In addition, every California track pays
for supplemental Catastrophic Injury Insurance through a TRA sponsored
group program that would pay significant benefits in the event of
permanent disability or death. That program is available only to TRA
tracks in states where workers compensation is available for injured
riders and has been continually funded by those tracks despite the fact
that the agreement with the Jockeys Guild, which contemplated the
additional coverage, lapsed several years ago.
As you will hear in more detail later today from Richard Shapiro of
the California Horse Racing Board, what this story illustrates is the
leadership role California has assumed in the Thoroughbred racing
industry with regard to jockey safety and health issues. It is one of
five states that mandates workers compensation coverage for jockeys and
exercise riders and one of two that provides funding through wagering
dollars to pay for health insurance for jockeys and their dependents.
Racetracks, horsemen and representatives of the riders have worked
together for years to develop legislative and regulatory standards for
track safety and to contribute significant funding to the Disabled
Jockeys Endowment. Del Mar was the first racetrack in the United States
to install the Fontana safety rail on its dirt racetrack, an innovation
that has undoubtedly saved lives and prevented serious injury since its
installation. More recently, we have worked closely with the California
Horse Racing Board and Barry Broad; formerly counsel to the Jockeys
Guild, to pass AB 1180, recently signed into law by Governor
Schwarznegger. That new law memorializes a number of safety and health
initiatives for the benefit of California riders including a peer
reviewed academic nutritional and health assessment designed to provide
a scientific basis for future policy decisions concerning the jockey
scale of weights and nutrition and weight management programs. We are
in the final stages of evaluating a proposal from Dr. Dan Benardot, PhD
of Georgia State University to conduct the study and are working with
various industry groups including the TRA, Thoroughbred Owners of
California, California Thoroughbred Trainers, National HBPA, THA,
Racing Commissioners International and the NTRA to fund the study on a
national basis.
Moreover, California is to my knowledge the only state in the
country to require a postmortem examination of every horse that dies on
the grounds of a licensed racetrack or auxiliary training center. That
requirement has enabled the industry to support and benefit from
research into the causes of catastrophic injuries to horses conducted
by the University of California at Davis School of Veterinary Medicine.
That research most recently lead to the adoption of a regulation
limiting the use of horseshoes with toe grabs on California racing
surfaces based upon findings that there is a significant correlation
between the use of medium and high toe grabs and the incidence of
catastrophic limb failure in horses while racing or training. Similar
research has and will continue to contribute significantly to our
ability to increase safety for horses and riders, as we are more able
to confidently identify the causes of injury and attempt to prevent
them before they occur.
It is undoubtedly true that these programs come at a cost. I would
be remiss if I did not inform you that California operates at a serious
competitive disadvantage to other states where the cost of owning and
training horses is significantly less. Simply put, horses are our
product and the quantity and quality of horses available for racing
translates into higher wagering activity. For a number of years now
California has been losing horses to other states where the cost of
doing business is lower. Nonetheless, I am not aware of any advocate in
California for reducing or eliminating the level of benefits provided
riders at present. I firmly believe that when any rider in California
suffers an injury while riding in a race the industry takes pride in
the fact that they are assured adequate medical care and disability
benefits.
Despite the competitive factors that have affected us in recent
years, California racetracks continue to invest heavily in track
maintenance and safety. When I came to work at Del Mar in 1990 after
spending eight years practicing law, the first thing I did was to spend
a day with Steve Wood, the track superintendent at Del Mar, Santa Anita
and Fairplex. Steve's day begins at around 4:30 am and can extend late
into the evening while tractors; harrows and earthmovers groom and
maintain the dirt surfaces used for training and racing. In 2005, Del
Mar spent in excess of $1.2 million maintaining the quality and
consistency of its dirt and turf tracks to ensure safe riding surfaces
for horses and jockeys during its seven week meet. We have also worked
with the California Thoroughbred Trainers to monitor track conditions
from the trainer perspective and to sponsor research into new methods
of evaluating track hardness, surface consistency and base conditions
being developed by Dr. Mick Peterson, PhD of the University of Maine
working with Dr. Wayne McIlwraith, DVM of Colorado State University
Veterinary School. That research has provided us with new insights into
track maintenance techniques and has assisted in the adaptation of
diagnostic tools such as ground penetrating radar to evaluate
subsurface conditions. We are also evaluating along with Drs. Peterson
and McIlwraith and Dr. Sue Stover of the UC Davis Veterinary School a
new Polymer coated silica sand surface developed in the United Kingdom
and presently being used at Turfway Park and Keeneland in Kentucky
called Polytrack. I firmly believe that this surface will eventually
replace virtually every dirt track in the United States and result in
dramatic improvements in track safety for both horse and rider.
Preliminary results from both Keeneland and Turfway Park indicate that
this prediction can be substantiated both empirically and anecdotally.
I started this testimony with a description of an unfortunate
incident that occurred at Del Mar to my friend Alex Solis. Accidents
seem to go hand in hand with riding horses and some of those incidents,
like the one experienced by Alex, are difficult if not impossible to
prevent. We are, however, working hard to do more to prevent injuries
through scientific research, educational efforts and communication
within the industry and the industry has an obligation to expend the
resources to do that, not just in California but everywhere.
Alex's story has a happy ending as he returned to riding early in
2005 and currently ranks 14th nationally with purse earnings in excess
of $8.8 million for the year. There is, however, one aspect of the
story that does not have a happy ending as of yet. Had Alex Solis
suffered similar injuries in a car crash, it is unclear whether his
health insurance would have been adequate to cover his expenses since
that would not be covered by workers compensation. That inadequacy
would not be a result of any failure of the California industry to
adequately fund health insurance for riders--it has--but from the fact
that health insurance for California riders is part of a national self
insurance program managed by the Jockeys Guild, a program whose
financial health is in serious doubt given the pattern of obfuscation
practiced by the management of the Jockeys Guild in the face of
inquiries by the California Horse Racing Board and the Thoroughbred
Owners of California, indeed in the face of inquiries from its own
members. I would encourage this committee to continue to work with the
industry to remedy this situation and to ensure that racetracks,
owners, trainers and regulators have a responsible partner representing
the interests of riders; one which will work with us rather than
against us in addressing safety and health issues constructively.
Mr. Whitfield. I thank you, Mr. Fravel, and thank all of
you for your testimony. Mr. Fravel, you had mentioned that in
California there is presently a nutrition and health peer-
reviewed study that has been initiated and you are now working
with a professor at Georgia State to conduct that. Is that
correct?
Mr. Fravel. That is correct. We have been through two
drafts of a proposal to finalize the terms of that study and
will be--and have met with a variety of industry participants
that I mentioned in my comments, to finalize the terms of that
and then work on funding for the proposal.
Mr. Whitfield. What funding is available for that? Is there
anyone out in California, any entity or----
Mr. Fravel. Well, no one has been asked formally for any
funding because we haven't had a full budget for the proposal
at this point.
Mr. Whitfield. Right.
Mr. Fravel. But as soon as we have a full budget most of
the industry participants that we have discussed this with have
shown an interest in participating and saw the value in the
project.
Mr. Whitfield. And why is a study like that important?
Mr. Fravel. Well, there has been a lot of discussion of the
jockey's scale of weights, which I suppose you have heard some
of in your discussions. And we worked very closely with Barry
Broad, who is counsel of the Jockey's Guild in California, to
develop a scientific basis for future decisions on matters
relating to the scale of weights. We felt that there was a lot
of anecdotal evidence about things that jockeys engage in to
maintain their weight levels but very little scientific
evidence. And so we began to search for someone who is capable
of doing the kind of in-depth academic research that would
provide a basis for those decisions in the long-term.
Mr. Whitfield. Is there anyone else on the panel today
aware of any similar initiative in the area where you operate?
Mr. Scherf?
Mr. Scherf. Yes. The initiative that Mr. Fravel is talking
about has been presented to national groups. So I mean, that is
moving from a California scope to a national scope.
Mr. Whitfield. Right.
Mr. Scherf. The study now contemplates surveying jockeys in
various jurisdictions and various national groups have been
brought into those meetings for defining a meaningful study.
Mr. Whitfield. Mr. Amos, in his testimony, mentioned the
fact that there was a lack of accident experience data in a
centralized form. And it seems to me when you talk about safety
issues relating to racetracks, it would be helpful to know why
accidents occur. Is it due to a horse failure? Is it due to--
what causes the issue? Is there a centralized data system on
accidents on racetracks that is available to people at this
time?
Mr. Amos. To my knowledge, no. The information we have is
by racetrack and we keep the records by racetrack because we--
--
Mr. Whitfield. So Magna, you keep your own records?
Mr. Amos. Records. It is our initiative.
Mr. Whitfield. And what categories are covered?
Mr. Amos. The most immediate one is that if a horse goes
down where, at what point in the racetrack did that occur?
Because there is things you can't see as far as the base and
other factors, as far as composition of the soil.
Mr. Whitfield. Right.
Mr. Amos. So if you get more than one or two in that
particular area, you have got to take a real close look.
Mr. Whitfield. Right.
Mr. Amos. Scrape down to the base.
Mr. Scherf. Mr. Chairman, there is--the TRA policy does
have loss data and that is what I was referring to when I said
the importance of having the Jockey's Guild as a co-
policyholder that entitled them to that data. I have every
accident that has occurred on that policy. Magna has not been
under that policy. They have been with AIG for several years
because their corporate group has had an AIG policy. But
everybody else has been under this and has the same type of
information, where it occurs. It is evident and when John
Giovanni was in charge of the Guild, he used to get those
reports. And we know where problem areas are, for instance the
start is probably the most dangerous part.
Mr. Whitfield. The start?
Mr. Scherf. The start where horses are in a confined area
and then they are trying to go from zero to 40 in a couple of
seconds. And they take--you know, they may lunge or may take a
bad step. That is generally the most dangerous part of a race.
Solving that is a little more difficult but there is that kind
of records being kept.
Mr. Whitfield. And how many racetracks are insured through
the CIGNA program that you initiated?
Mr. Scherf. Well, up to this year, almost all of the except
the Magna tracks over the course of the years. Because the
jockeys, the reason they came to the TRA was, each track would
have a different carrier. And a jockey may ride 1 day in
Kentucky and get injured and then the Kentucky season would end
and he would go to Florida and injure the same part of the
body. And Florida had a different carrier and then the jockey
was stuck between competing carriers disallowing the claim. One
was saying it was a recurrence of the previous injury and the
other one saying now, you were completely healed. It is the
Florida carrier's fault. So that was the reason for a national
program so that jockeys did not get caught in the switches
between carriers.
Mr. Whitfield. But Ms. Williams and Mr. Finamore, you have
your policies through the CIGNA and TRA?
Mr. Scherf. All racetracks have then through the TRA
policy. It is a TRA/Jockey's Guild endorsed policy that was
sold to the racetracks as a preferred policy.
Mr. Whitfield. Okay.
Mr. Scherf. At times during the years there might be one or
two tracks that would move to a different carrier but generally
all racetracks in the country had the TRA/Jockey's Guild
policy.
Mr. Whitfield. Okay. But Mr. Sexton and Mr. Amos have
talked about the AIG policy. That is different than the CIGNA
policy, correct?
Mr. Sexton. The AIG policy is the one that we stepped
forward and took out in March 2005.
Mr. Whitfield. And how many racetracks are covered by the
AIG policy?
Mr. Sexton. All of our six tracks in five States.
Mr. Whitfield. And all of the Magna tracks?
Mr. Amos. In all non-Workers' Comp States. We are in
Maryland we are also in California but they are Workers' Comp
States. So in every one of those other States, they are
insured.
Mr. Whitfield. Okay. But from your view, Mr. Scherf, is
that because of the national policy that has been in effect
since 1949, that you have all the data you need to determine
safety issues on----
Mr. Scherf. I have from 1990 on.
Mr. Whitfield. And now, California is the only State that
conducts a necropsy if a horse goes down?
Mr. Fravel. As far as I am aware, California is the only
State that----
Mr. Whitfield. Are there any other States that conduct
necropsy exams? DO you view that as important to do or not
important to do or not important to do? Or would you all
respond to that? Ms. Williams?
Ms. Williams. I mean, I think it is something that we will
look at as an industry.
Mr. Whitfield. Now, what would be the reason that you would
not do that? Would it be cost or would it be unproductive? I
mean, what I have read in California for example, these toe
grabs or I don't know what the proper term is. But they have
basically banned certain kinds of shoes because there are
studies at U.C. Davis indicates that many horses go down that
have them above a certain height. So why would you not have a
necropsy policy in effect?
Ms. Williams. Well, those issues are regulated by the West
Virginia Racing Commission. They actually dictate to us what
type of shoes are able to be used.
Mr. Whitfield. But they would have to decide about
necropsy? You would not be able to implement that on your own?
Ms. Williams. Right. We could take it to them but they
would have to decide.
Mr. Whitfield. You cannot implement it on your own?
Ms. Williams. No. In fact, when--we just changed our turf
shoes and we had to have a representative from the West
Virginia Racing Commission in that meeting.
Mr. Whitfield. Okay.
Ms. Williams. And it was agreed to.
Mr. Whitfield. Mr. Finamore?
Mr. Finamore. No, I have nothing to add to that, Mr.
Chairman. That is correct. The Commission would mandate that.
Mr. Whitfield. Mr. Sexton?
Mr. Sexton. We would certainly support a Kentucky Racing
Authority initiative to make that occur in Kentucky because
that would be of interest to us.
Mr. Whitfield. Yes. If a horse goes down on your track
right now, how is it disposed of? I mean, it is incinerated? Do
you take it to a landfill? Does it go for--what happens?
Mr. Finamore. At our racetrack in Charlestown a renderer
removes the horse.
Mr. Whitfield. A renderer? Okay.
Ms. Williams. At our racetrack in Mountaineer, actually the
State vet examines the horse and then it is removed to, I
believe, a landfill.
Mr. Whitfield. Yes, okay. And then----
Mr. Sexton. Similar efforts at Churchill Downs and Ellis
Park. I am not as familiar to our other racetracks.
Mr. Whitfield. Yes. Magna?
Mr. Amos. California is the same as what Craig said.
Mr. Whitfield. Right.
Mr. Amos. And the others, the same procedure.
Mr. Whitfield. Now, you had mentioned this Workman's Comp
Program out in California and one of the ways-I may be wrong in
this. But it is my understanding that one of the ways that is
financed is through uncashed tickets. Is that true or is that
not true?
Mr. Fravel. That is not actually accurate. The history of
the Workman's Comp dates back to the 1950's when there was a
court decision that determined that for Workman's Comp
purposes, jockeys were employees of the trainer, who instructed
them on how to ride the race essentially. And that was the
basis of that decision. And since that time, the Workman's Comp
insurance has always been carried on the trainer's insurance
policy.
Mr. Whitfield. Okay.
Mr. Fravel. The last 3 years, as you have probably read
about in the newspaper reports, there has been a dramatic
increase in the cost levels of Workman's Comp and the State of
California.
Mr. Whitfield. All right.
Mr. Fravel. And in order to try and really stop the outflow
of horses from California because it was becoming prohibitively
expensive to train horses there. We got together with the
horsemen and passed some legislation that set up two different
funds that would help to offset the cost of insurance, one of
which was used to basically form a captive insurance company,
which is then re-insured through AIG. And then a second fund
that is really a direct subsidy and it is kind of complicated
where those come from but they are essentially functions of the
wagering dollars, the different funds that have been created to
subsidize rates.
Mr. Whitfield. Now, the HBPA does not represent the
horsemen in California. Is that correct?
Mr. Fravel. California is a little different than most
places. We now have an organization called the Thoroughbred
Owners of California that is responsible for most of the
negotiating issues with racetracks in California.
Mr. Whitfield. Okay.
Mr. Fravel. And a second organization called the California
Thoroughbred Trainers that represents the trainers' interests.
Mr. Whitfield. Okay. And well, my time is expired and we
will probably have a second round so at this time, I would
recognize Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman. Mr. Scherf, when you
have your testimony here you said that jockeys rode in races
worth $1.2 billion in 2004?
Mr. Scherf. Yes.
Mr. Stupak. How much did the industry take in that year?
Mr. Scherf. The industry?
Mr. Stupak. $26 billion or something?
Mr. Scherf. Well, no. I don't know where that figure came
from. I have heard it here but it--the handle is $15 billion.
That is the transaction figure. Of that take-out, which is what
funds the industry, the horse industry, is about on average 20
percent.
Mr. Stupak. Well, if it is $15 billion, they take in $1
billion so that is about one fifteenth.
Mr. Scherf. They would take in--I would say average, it
would take in about $3 billion and then you pay the States
commissions out of that.
Mr. Stupak. Now, wait a minute now.
Mr. Scherf. You would take a percent of----
Mr. Stupak. What do you mean, average? Jockeys rode in
races worth almost $1.2 billion.
Mr. Scherf. The way the take-out works, you would have $15
billion, you have 20 percent take-out and----
Mr. Stupak. What is 20 percent for?
Mr. Scherf. That is actually, the 80 percent of that figure
is re-circulated among the bettors.
Mr. Stupak. Okay. What--okay. So 20 percent left. So you--
--
Mr. Scherf. There is 20 percent left. That goes to fund the
industry and the States.
Mr. Stupak. And that is about $3 billion?
Mr. Scherf. That would be about $3 billion. This is very
rough math.
Mr. Stupak. Okay.
Mr. Scherf. And then you would figure that the--I am not
sure exactly what the State figures would be but I would guess
probably about $400,000,000. I am not sure really what the
taxes would be. But the horsemen's share of it, which is
generally on a 50/50 split with the racetracks and that is a
very rough thing but it is close enough.
Mr. Stupak. Okay. Well, if I am understanding, you said
total jockey----
Mr. Scherf. At one point----
Mr. Stupak. [continuing] earnings were between $88 and $94
million.
Mr. Scherf. Yes.
Mr. Stupak. So that is about 10 percent?
Mr. Scherf. That is based on 7.5 to 8 percent.
Mr. Stupak. Okay. And then you put down what these jockeys
earn. Now, that is their gross amount, right?
Mr. Scherf. That is their gross amount.
Mr. Stupak. Okay. So do you have to take an agent fee out
of that?
Mr. Scherf. You have to take a 25 percent agent fee out of
that.
Mr. Stupak. Okay. So let us use $90,000. It might be a
little easier for me. So that $90,000, you have got minus 25
percent, right, for the agent?
Mr. Scherf. Right.
Mr. Stupak. And then they have to pay other people?
Mr. Scherf. They pay a valet.
Mr. Stupak. How much? What percentage is that?
Mr. Scherf. I believe it is 10 percent but I--they could
answer that better than I could.
Mr. Stupak. And then they have got to pay their taxes,
right?
Mr. Scherf. Yes. I don't know what their tax--they are
independent contractors so they do have----
Mr. Stupak. They pay taxes themselves. No one pays it for
them. There is no contribution from anyone else?
Mr. Scherf. Oh, correct. Yes.
Mr. Stupak. Okay. And let us see. What else? Don't they
have to pay their Guild something?
Mr. Scherf. If they belong to the Guild, they do.
Mr. Stupak. Okay. So this--use the $90,000 figure. By the
time you get done with 25, 10, taxes probably about 28 percent.
I will be generous. Say 28 percent. They don't have a heck of a
lot. At least over 50, almost 60 percent of that money is
already eaten up before a jockey ever sees it, right?
Mr. Scherf. If that is what you are figuring out. Now, I am
also talking about jockeys--that was based on only 100 mounts a
year, which is two a week.
Mr. Stupak. Okay.
Mr. Scherf. That is most--you know, jockeys who ride----
Mr. Stupak. Sure.
Mr. Scherf. [continuing] 400 mounts account for 80 percent
of the rides.
Mr. Stupak. Well, let me ask you this. What is your salary?
Mr. Scherf. My salary is $205,000.
Mr. Stupak. Do they pay your health insurance?
Mr. Scherf. Yes, they do, partially.
Mr. Stupak. Pay your disability insurance?
Mr. Scherf. Yes.
Mr. Stupak. Pay your Workers' Compensation?
Mr. Scherf. Yes, they do.
Mr. Stupak. Are you part of a union?
Mr. Scherf. No.
Mr. Stupak. Okay. Is your job inherently risky?
Mr. Scherf. I don't think so other than at this moment.
Mr. Stupak. I was going to say, in light of the last
hearing, maybe after this hearing. The point I am trying to
make, and I am not trying to--I am glad you do well. But it
appears from research we have seen, they make at most about
$35,000 a year and they have all the risk and they have all the
danger. And what I said in my opening, if you would only
increase a little bit more money, we could have had a million-
dollar policy, as opposed to a $100,000 policy. It just doesn't
seem fair to us, at least to me, that the jockeys are having
all this difficulty. And I agree, you said that the average
injury was only about $7,000 but you have had what, five in the
last year that have been well over that.
Mr. Scherf. In excess, yes.
Mr. Stupak. What is Gary Birzer's medical, do you know?
Mr. Scherf. I heard him say $800,000, I believe.
Mr. Stupak. Okay. Ms. Williams, I said in my opening that
the profits for Charlestown is 1.7--I am sorry. Not profits.
Revenue is 1.7 million a day and profit is about $414,000? Is
that correct?
Ms. Williams. I would have no idea about Charlestown.
Mr. Stupak. I am sorry. I am sorry. You are?
Ms. Williams. Mountaineer.
Mr. Stupak. Mountaineer, okay. Do you know what is your
gross revenue a day at Mountaineer?
Ms. Williams. On horse racing? I can tell you for the year.
Mr. Stupak. Oh, no. I want slots and everything. That is
all tied in, isn't it?
Ms. Williams. No, I wouldn't--no, I am actually just
Director of Racing, over the racing end of it.
Mr. Stupak. Okay. You are just Director of Racing.
Ms. Williams Yes, sir.
Mr. Stupak. Right. Mr. Finamore is with them. Let me ask
you then, Mr. Finamore, $1.7 million? Is that your gross per
day?
Mr. Finamore. I believe your number.
Mr. Stupak. Pardon?
Mr. Finamore. I am not sure.
Mr. Stupak. Okay. So beyond the $100,000 insurance policy,
how much has your track then contributed to the Birzer family
rehab bills and living expenses since the accident? Do you
know?
Mr. Finamore. Wrong track.
Mr. Stupak. Yes, I know. Sorry. Ms. Williams? Besides the
$100,000 policy, how much has Mountaineer contributed to the
Birzer family?
Ms. Williams. Offhand, I can't tell you because I know we
have done numerous fundraisers with the horsemen and the
jockeys. I do know that when the accident first happened I
talked to his agent, Jimmy Isabelle, and we did make his house
available, you know, with ramps and handicapped accessible.
Mr. Stupak. Okay. And in your position, do you get health
insurance from your employer?
Ms. Williams. Yes, I do.
Mr. Stupak. Do you get Workers' Comp?
Ms. Williams. Yes, I do.
Mr. Stupak. Do you get disability insurance?
Ms. Williams. No, sir.
Mr. Stupak. Not quite equal benefits between the jockeys
and management then?
Ms. Williams. Well, I can't say that because like I said,
they were covered with $100,000 under our policy and it was
assumed that the Guild had the policy in place for the
catastrophic accident.
Mr. Stupak. How much is your disability policy, do you
know?
Ms. Williams. I don't have one, sir.
Mr. Stupak. Okay. You have health insurance, though?
Ms. Williams. Yes, I do.
Mr. Stupak. Okay. Didn't Mountaineer turn down the
insurance policy from AIG, was my understanding from the
testimony earlier?
Ms. Williams. No, sir.
Mr. Stupak. As $100,000 being too expensive?
Ms. Williams. No, sir. We have $100,000.
Mr. Stupak. Okay. But did you--the offer was to go to $1
million and you guys turned that down?
Ms. Williams. We actually went back to our broker and asked
for them to look at that and they would not quote us on that.
Mr. Stupak. Was that AIG?
Ms. Williams. No, it wasn't.
Mr. Stupak. Mr. Scherf, how many--you said you had 40 some
tracks with you, in your umbrella organization?
Mr. Scherf. Yes.
Mr. Stupak. How many tracks are there in the United States?
Mr. Scherf. Roughly 100.
Mr. Stupak. About 40 percent of them then?
Mr. Scherf. Yes, I have most of the major racetracks as
members.
Mr. Stupak. Okay. Mr. Finamore, in your testimony you
stated that like any other individual that is self-employed,
jockeys are responsible for addressing their own insurance
need. Is this what you told Shannon Campbell, the jockey that
became quadriplegic on your track?
Mr. Finamore. I haven't had a conversation with her,
Congressman.
Mr. Stupak. Okay. You provide the jockeys $100,000 maximum
benefit toward medical expenses if they are injured while
riding, right?
Mr. Finamore. Correct.
Mr. Stupak. You state that this is long established policy
that was entered into after discussions with the TRA and the
Jockey's Guild. Exactly whom did you talk to at TRA and the
Guild that you are implying that you have this agreement with?
Mr. Finamore. That would pre-date my time with the company,
Congressman. But in addition to the $100,000, we also continue
to pay the mount fees to the Guild. The money that was
earmarked for the additional insurance.
Mr. Stupak. How much is a mount fee, $8?
Mr. Finamore. It is--from Charlestown races on an annual
basis, it is about $90,000 a year and from Penn National Race
Racecourse it is about $70,000. So it is $160,000 combined
between the two tracks per year and we have continued to pay
that through the current invoice statement, which was
September.
Mr. Stupak. So you paid $160,000?
Mr. Finamore. Per year.
Mr. Stupak. Per year. Right. I think you said in your
testimony you spend $200 million upgrading your facilities,
right?
Mr. Finamore. That is correct. Um-hum.
Mr. Stupak. I have never been there but it sounds like it
must be a pretty nice facility.
Mr. Finamore. It is.
Mr. Stupak. Did you make those improvements because you
needed to make an old track safer, cleaner and more appealing
for your visitors?
Mr. Finamore. Well, a portion--I did mention also, a
portion on that $200 million went into the track directly.
Approximately $8 million most recently, last summer, to put in
a new track surface, new safety rail, new riding system. So the
commitment is there to make the racetrack safe.
Mr. Stupak. But most of the $200 million went into the
gaming operation, right?
Mr. Finamore. Most of it. Um-hum.
Mr. Stupak. Okay. How many race days per year are run at
Charlestown?
Mr. Finamore. This year there will be 245.
Mr. Stupak. Two hundred forty-five?
Mr. Finamore. Um-hum.
Mr. Stupak. Okay. Somewhere I thought I saw in there about
210 to 235, is that about right, what you try to do each year
in races?
Mr. Finamore. It is 245 this year. It will be 220 next
year.
Mr. Stupak. Okay. So if I am doing my math right and I am
not math major. But with a conservative estimate of $357
million per year, that is sort of what I come up with, don't
you think you could afford an additional $189,000? I am taking
210 days times $900 more and I am going with $900. Maybe the
testimony was $600 to $900, to get to that million policy,
$189,000 it would cost you. And don't you think you could
afford that?
Mr. Finamore. Congressman, I think the point is we thought
we had that and we have continued to pay to that level of
insurance. In retrospect, we tried to do the right thing and
that is not to hurt the Guild.
Mr. Stupak. So starting today, you are going to do the
right thing? You are going to pay that extra money?
Mr. Finamore. If you will let me finish, Congressman?
Mr. Stupak. Sure.
Mr. Finamore. We felt we were doing the right thing in that
we continued to make the payments to the Guild. We didn't want
to damage or hurt the Guild in any way. In retrospect, as we
learn about what happened with Dr. G., we question whether we
made the right decision. And apparently some of the other
tracks went in a different direction but the point is, we have
continued to pay that money to get the $1 million policy.
Mr. Stupak. Okay. But the point was, they got Dr. G.,
because they said they could no longer afford insurance and my
impression and maybe the Chairman's too at the last hearing
was, they are disappointed because they had no health insurance
so here comes this guy who offered all kinds of other policies
that didn't work out. You all know that. And we also know that,
like last night, we lost another apprentice jockey but you lost
another jockey. Don't you think with the amount of profit, the
amount of money you make, you invest heavily to get the gaming
in there and I have nothing against gaming. But I would think
for just a little bit more, you could help out these people and
you guys all seem to be taken care of in your jobs with health
insurance and everything. And without the jockeys, you have no
racing and I would think you would be able to do it. So if you
want to do the right thing you could start today by putting in
that extra $189,000 over the next year and take care of this.
Mr. Finamore. According to the Guild, this $1 million
policy costs approximately $450,000 a year.
Mr. Stupak. Don't hide behind the Guild. You are the one
who said you want to do the right thing. We are up here giving
you this opportunity to do the right thing. We would hope you
would take our hint and do the right thing. Would you be
opposed to the jockeys coming together and collectively
bargaining with the tracks to get some benefits?
Mr. Finamore. That is a decision between them and their
employers.
Mr. Stupak. Okay. Well, would you object to the--you claim
they were an independent contractor. If they got together, they
would join in a union or an association or whatever and they
would collectively bargain with you. Would you be in favor of
allowing them to do that?
Mr. Finamore. Congressman, it is a decision between them
and their employers. We really don't have an opinion. We are
not their employers.
Mr. Stupak. Okay. Mr. Chairman, it looks like my time is
over. Thank you for your courtesy.
Mr. Whitfield. At this time I will recognize the gentleman
from Washington, Mr. Inslee, for questions.
Mr. Inslee. Thank you. My name is Jay Inslee. I am from the
State of Washington. I am not an expert in your industry. I
have only been to the track one time where I did not place a
bet on a horse called Praise ``J'' in the Longacre's mile and
it held the record for 30 years in the Longacre's mile. So I am
not an expert in your industry. So I do have some kind of
general questions. To me, looking at this, it just seems
astounding to me that we have Americans who are working in a
very high-risk industry, committing their professional lives to
a situation, who really don't have tremendous bargaining power
and are naked in the face of these tremendous risks. You know,
I think of folks in other industries, choker setters in the
woods, fisherman, people in the hazardous agricultural
industries. They all have coverage. They have protection. It is
just such a fundamental American concept. And yet, this small
group of people are just bare of--it is just amazing to me. So
I wanted to ask for questions of you of why you perceive that
is the case. Now, I understand this archaic common law
considered them ``independent contractors'', which is just--I
don't think of them as contractors like Halliburton or Bechtel,
issuing these big contracts. You know, they just don't have
much bargaining authority and they are scattered about various
tracks. So I guess the first question I have is, there are four
States that have, has I understand it, some meaning Workers'
Comp system. California, Maryland, New York and one other? You
will be familiar with that? New Jersey? The first question, has
the adoption of some system of that mechanism, has that damaged
the sport or the industry in any way in those four States? Has
it disadvantaged them, vis-`-vis West Virginia or other States
at all? That is the first question. Any takers on that one? Can
anybody posit a suggestion why those States have been----
Mr. Fravel. I wouldn't suggest that those States have been
damaged directly. I mean, I think it is a positive for us that
people are covered by Workman's Comp and it puts a lot of
issues aside when somebody gets hurt. You don't have to worry
about a lot of things, like how somebody is going to get taken
care of. It has been, particularly in recent years--I would say
10 years ago it probably wasn't much of an issue because the
cost of Workman's Comp in California was relatively consistent
with costs across the country. And the incremental inclusion of
jockeys in those policies was not that prohibitive. Within the
last 5 years, it became a serious competitive issue and the
industry had to get together and find ways to help pay for it
because the people who were paying the bills directly, were
simply unable to afford it. It was putting them out of
business. And I would say that there are other organizations
sitting at this table who own tracks in California who were
parts of those solutions, as well. So you know, it is both a
disadvantage and an advantage. I think a rider recently came to
California from Kentucky and said that he didn't know why
anybody would ride anywhere else because the benefits to riders
in California were so great. And 3 months later, he left
because he could get more mounts in other States so sometimes
it doesn't make all that much sense but it cuts both ways.
Mr. Inslee. Well, I guess a fair statement is the adoption
of this basic American safety mechanism certainly hasn't
destroyed the industry in any of those four States. That is a
fair statement. Everybody agree with that?
Mr. Fravel. Yes.
Mr. Inslee. I see everybody shaking hands. Second question,
is there anything about the transient nature of the business,
where jockeys are going from State to State, track to track.
Does that argue for a national system in any way or as a State,
if you are going to go to a Workers' Compensation model, can it
be maintained on a State to State basis? Or is there something
intrinsic about the nature of the industry that suggests we
ought to have a national system of one sort or another?
Mr. Van Clief. Congressman, I believe I will take a shot at
that. I don't know that there is anything intrinsic about the
establishment of Workers' Comp Programs on State to State basis
that would be inhibitive in our industry's ability to continue
doing business as it does. Obviously, those programs, as Mr.
Fravel just suggested, are very beneficial where they work. As
they rise in expense to the individual operators, they become
somewhat inhibitive in terms of their ability to compete. But I
would like top point out that what we think we are experiencing
today as an industry is frankly, an aberration. We had a system
with the Jockey's Guild where these riders, as transients, were
covered under the Jockey's Guild's policy up until Mr.
Gertmenien's management and it seems to have fallen apart
during the past 4 years. So as our task force identified, we
think there are ways, both short-term and long-term, to provide
adequate coverage. The AIG solution has been adopted by 67
percent of our tracks representing 67 percent of the days they
run within our membership. That at least is a short-term
solution and I think with a credible Jockey's Guild with which
to work, we can reestablish the sort of framework that protects
these individuals, that was in place previously.
Mr. Inslee. Anyone else like to address that?
Mr. Scherf. I would, Congressman. National Workers'
Compensation, I think one of the problems would be that there
is a huge dichotomy of scale in the horse and racing business.
To get one-size fits all solution would be extremely difficult
and could be damaging in certain States. What we are talking
about here today is we have in essence, major league and minor
league racing and we are trying to take care of everybody
equally. That is the system we had in place previously with the
insurance with working with the Jockey's Guild. That is a
system we can put in place together but to put an enduring
comprehensive plan that will take care of large and small
tracks and get everybody under one umbrella so we can afford
the basic coverage--and we hear what you are saying. And we
agree with you that, you know, we need to take care of injuries
completely and totally. That can be done. But putting it under
a national program, a mandate, I think my fear would be you
would simply use some racetracks and lose thousands of jobs,
including the jobs of some jockeys and I just don't think it is
the best way of going.
Mr. Inslee. Well, just one person talking, I would just
tell you my reaction to this, it is just absolutely incredible
that these people in this high-risk situation don't have a
fundamental statutory protection. I respect all of your efforts
to try to solve this on a voluntary basis but I think this
sorry situation and others leads to the conclusion that it is
just not close enough. And I don't know what the solution is. I
am asking honest questions here. But it appears to me that
these ought to be perhaps the first people in the country to
have some assured statutory protection and right now they
appear to be the last. And maybe they shouldn't be first. Maybe
choker setters and fireman and policeman should be the first.
Maybe they should be fourth. But having this group unprotected
is just incredible to me and I hope that some of you may give
us ideas on how to move forward. Thank you. Thank you, Mr.
Chair, for holding this hearing.
Mr. Whitfield. Thank you, Mr. Inslee. And I think all of us
feel a lot of frustration as it relates to jockeys because in
many senses, jockeys do move around the country a lot. They
really don't have a base of operation, per se and they really
don't have strong advocates. Now, I want to just toss something
out here and I would just like to get your all's reaction to it
because this really is an exploratory hearing. And when the
Interstate Horseracing Act was passed in 1978, it said that a
horsemen's group would negotiate with the tracks for the
simulcasting issue and the horsemen's group had veto power over
that agreement. And I know that this is not a totally accurate
statement but the perception is, among many people, that the
horsemen's group represents owners and trainers. Maybe some
groups represent more owners, some groups represent more
trainers. And as a result of their negotiating under the
Interstate Horseracing Act, they get 1.5 percent or 2 percent
or whatever the figure is of the purse. And that is generally
the HBPA or it is the Thoroughbred Owners and Breeders Group or
it is some other group that represents horsemen in a particular
state. Why would jockeys, the Jockey's Guild as their entity,
why would they not be included in that and why would they not
have a right to negotiate on that, as well? What would be the
arguments against that and sharing that 1.5 or 2 percent fee,
for example? Anybody have any comments on that or thoughts on
it?
Mr. Scherf. Mr. Chairman, it is my understanding when the
Interstate Horseracing Act first was passed, it was to address
a problem that there be fair compensation from the place that
took the bet to the place that produced the race. And it
stemmed from taking bets on the Kentucky Derby without any
compensation to that industry. The investors in that industry
in every instance are the racetracks and the horsemen. The
horsemen ran for about $1.2 billion in purses last year but
they spent probably twice that amount. So the figure you always
hear is 90 percent of all horsemen lose. So that was to ensure
that people were fairly compensated of the two main groups that
had to then put on the show, so to speak. That requires hiring
a lot of people to put that show on, from mutuel clerks to
administrative people, to assistant starters to tractor
drivers, to jockeys to trainers to grooms.
Mr. Whitfield. What I am talking about, I am not talking
about interfering with the tracks' percentage of that. I am
talking about the horsemen's group, that percentage, which is
different for different entities, I--I notice that Mr. Maline
in his testimony said that the fee of the Kentucky HBPA is like
1.5 percent of the purse that they negotiate the simulcasting
rights for. And so my question is, what would be the argument
against allowing jockeys to participate in that 1.5 percent?
Mr. Scherf. Well, they do participate in that. That goes to
fund purses and that is where the jockeys make their money. The
jockeys, you know, right now 87 percent of all handle is coming
through simulcasting.
Mr. Whitfield. Eighty-seven percent?
Mr. Scherf. Right.
Mr. Whitfield. Okay.
Mr. Scherf. That is why purses in--I have the figure--in
1991 before simulcasting really took off was $699 million.
Mr. Whitfield. Six hundred ninety-nine?
Mr. Scherf. Yes. In 2004, it was $1.1 billion.
Mr. Whitfield. Okay.
Mr. Scherf. That is a 56 percent increase in purses in this
country. Jockeys ride for a set percentage of that so they
should have the same increase from that growth and business so
they are cut in for a share of that growth.
Mr. Whitfield. Okay. Anybody else have any comments on it?
Okay. Okay. Let us see here. Do you have anything else, Bart,
of this panel?
Mr. Stupak. Okay. Jockeys may have picked up more in light
of there is a larger purse so they may get a little bit more
but they have expenses that are not picked up by anybody but
themselves, right?
Mr. Scherf. As independent contractors, which is their
choice, as well.
Mr. Stupak. I don't think it is their choice. NRLB made
that decision 30 years ago for them.
Mr. Scherf. No, they are pretty quick to remind you that
they are independent contractors. They don't work for you.
Mr. Stupak. That is not what our hearing showed us last
week, or last month. Excuse me. Ms. Williams or Mr. Finamore,
how much money does the State of West Virginia receive from all
this gaming? Do you know, like in a year?
Mr. Finamore. From the total lottery?
Mr. Stupak. Sure.
Mr. Finamore. Last year it was about $500 million.
Mr. Stupak. That is the total lottery and not just horse?
Mr. Finamore. That is lottery. That is the slot machines.
That is limited lottery. That is the total number.
Mr. Stupak. You don't know how much just from the
horseracing?
Mr. Finamore. I don't know the answer to that. Sorry.
Mr. Stupak. I am just trying to find another pot of money.
It is more money on the table.
Mr. Finamore. Rose Mary may know but I don't know that.
Ms. Williams. Offhand, I do not know. We could get those
figures for you.
Mr. Stupak. Ms. Williams, Mr. Finamore testified before
that they paid the mount fees of like it was $160,000, I think
he said.
Mr. Finamore. Between the two racetracks, Penn National and
Charlestown, right.
Mr. Stupak. Yes. Does your track pay your mount fees?
Ms. Williams. No, they currently do not.
Mr. Stupak. Okay. And your track was the one where Gary
Bitzer got hurt, right?
Ms. Williams. Gary Birzer, yes.
Mr. Stupak. Birzer. How come you don't pay the mount fees
if a competitor track in West Virginia does?
Ms. Williams. From what I understand, legal looked into
that and we do not have a contract covering that.
Mr. Stupak. SO if the Guild would offer you a contract, you
are going to cover it?
Ms. Williams. I am not the legal representative but----
Mr. Stupak. Was your track, if you know, was your track
ever contacted and said hey, would you pay the mount fees? If
you know.
Ms. Williams. I know they have received invoices but there
is no agreement in place to pay those invoices.
Mr. Stupak. So you received the invoice but since there is
no agreement, they didn't pay them?
Ms. Williams. That is correct.
Mr. Stupak. Mr. Finamore, do you got a written contract to
force the mount fees or you guys just do it when you get your
invoice?
Mr. Finamore. Congressman, I don't know of a written
contract that exists. We are invoiced each month at both of our
tracks.
Mr. Stupak. Right.
Mr. Finamore. We have continued to pay those fees. And as I
said earlier, we are current through September and that has
been going on since, as far as I can tell, 1997, if not before.
Mr. Stupak. Can anyone tell me why one track would pay and
another doesn't then, if there is no formal agreement? Trying
to do the right thing?
Mr. Finamore. I was saying earlier that we made the
decision to keep paying. I can't speak for the other tracks.
Mr. Stupak. Mr. Scherf, if you have got 40 some tracks, do
they all pay their mount fees when they come in? When they get
their bill?
Mr. Scherf. I am not sure if they have in the past year or
year and a half.
Mr. Stupak. How about 2 years ago, did they?
Mr. Scherf. Yes, they did. Then the TRA sent a letter to
Dr. Gertmenien----
Mr. Stupak. Right.
Mr. Scherf. [continuing] asking for an accounting when it
was brought to our attention by jockeys and agents who were
concerned about what was happening with the money. We asked
what is being done with this and we never did receive a
response. That was conveyed back to the member racetracks and
then each racetrack then makes its own decision whether they
were pouring money down a sinkhole or not.
Mr. Stupak. If anyone can answer this, do jockeys move
around? Do they try to follow the more lucrative races? The
better jockeys obviously do.
Mr. Scherf. Yes, they do.
Mr. Stupak. So some of the testimony we have had about
getting hurt in one State and then saying well, that was an
injury you received in another state, really sort of begs for
like some kind of national or interstate solution to this thing
then, if jockeys are having these problems. Saying well, that
is an aggravation of a previous injury you did in Florida.
Mr. Scherf. But that hasn't happened since 1949.
Mr. Stupak. Since 1949?
Mr. Scherf. Right, when the TRA then worked with the
Jockey's Guild and formed a national program and got everybody
onto a single insurance program so the jockeys didn't run into
that program. Working together, we have had that problem solved
for more than 50 years.
Mr. Stupak. So you are saying that problem doesn't happen
at all now?
Mr. Scherf. I am not aware of any instances.
Mr. Stupak. Okay. So you don't know or you are just not
aware of any?
Mr. Scherf. Well, I am pretty certain. I would hear.
Mr. Stupak. Okay. Okay. Mr. Fravel, you were talking about
California and the problem with Workers' Comp there. Were you
talking about that or was it Mr. Amos?
Mr. Fravel. I discussed the cost problems in California.
Mr. Stupak. And is that unique just to the jockeys or is it
to other----
Mr. Fravel. No. That is a statewide issue related to
runaway medical costs, essentially. And there were a number of
legislative efforts at the end of the Davis administration,
beginning of the Schwarzenegger administration to address the
problems on a statewide basis. And I think on a statewide basis
it is coming back, slowly but you know, when we were trying to
place insurance for Workers' Comp, including jockeys, as of 2
years ago there was only one carrier that would actually write
insurance in the State in that category. And that is true in a
number of other construction areas, as well but that is a
statewide problem. We just--because of the mobility of the
horse industry, I guess.
Mr. Stupak. Sure.
Mr. Fravel. There are trainers and jockeys and everybody
else. It becomes more pronounced because it is easier to pick
up and go.
Mr. Stupak. Okay. Ms. Williams, just two more questions,
ma'am. Do you think Mountaineer should have a $1 million policy
for jockeys? Do you think they should?
Ms. Williams. As I said before and in my testimony, I have
said that we went to the broker and asked them about the
million dollars and they won't quote us on that.
Mr. Stupak. Why wouldn't they quote you on that?
Ms. Williams. I can't answer that. I don't know.
Mr. Stupak. Okay. As the track manager, could you get back
with us and tell us why? Get us back in writing because we
would like to know that.
Ms. Williams. I will. Absolutely.
Mr. Stupak. Is it because of accidents? Is it because of
cost? What is it?
Ms. Williams. I will ask the broker to send something to us
on that.
Mr. Stupak. You operate, what, 210, 235 days? Something
like that?
Ms. Williams. This year, we will have 232 days of racing.
Mr. Stupak. Is this year a good day in racing, I take it?
You get more days in? Weather-wise or----
Mr. Finamore. It fluctuates, based on different factors. We
are required by the State to race 220 days.
Mr. Stupak. Okay.
Mr. Scherf. Mr. Stupak?
Mr. Stupak. Yes.
Mr. Scherf. If I can help on this issue of the insurance?
Mr. Stupak. Sure.
Mr. Scherf. Because I deal with this a lot. When you are
talking about a million dollar pay-out at one track, an
insurance company tends to look at that and say that is my risk
and, you know, I can lose this and how much premium am I going
to charge when I can lost a million? It is one reason a group
program where you have shared risk among 100 tracks where you
can control that and you share the risk. And the insurer comes
in and knows good experience is going to balance out bad
experience, is what is going to preserve a long-term insurance
program.
Mr. Stupak. But any track can give you a $1 million claim,
right?
Mr. Scherf. Any track but if you have, for instance, you
have 70 tracks or 100 tracks and they are paying a combined
premium of ``X'' million dollars----
Mr. Stupak. Sure. Sure.
Mr. Scherf. [continuing] the insurance industry is much
more interested in that.
Mr. Scherf. Absolutely. That is why we should put you all
together and make you provide health insurance, Workers'
Compensation, off-duty/on-duty insurance. And if you all came
together at 100 tracks and did it, it would be a lot cheaper
for everybody, right?
Mr. Scherf. Well, I would agree with you on the accident
insurance.
Mr. Stupak. Well, health insurance, too. The more people
you have in a health insurance policy usually, right?
Mr. Scherf. That is true. I think we still have the
independent contractor question that we probably differ on.
Mr. Stupak. That is true but you know, even if they are
independent contractors, if you wanted to you could still do
it. You could still provide that as a benefit for riding at the
tracks. California does it, Maryland, some of the other States
we mentioned here today. So I think it could be done if there
was a willingness and I think the independent contractor is
just----
Mr. Scherf. Maryland doesn't provide health benefits.
Mr. Stupak. Right. But they do provide Workers' Comp and
others.
Mr. Scherf. Right, which is accident coverage.
Mr. Stupak. Right. Right. Mr. Van Clief? Is that how you
say it?
Mr. Van Clief. Van Clief. Yes, sir.
Mr. Stupak. Van Clief. You are the one who talked about AIG
insurance, right?
Mr. Van Clief. That is correct, sir.
Mr. Stupak. You know of any reason why they won't insure
Mountaineer?
Mr. Van Clief. I don't know what their reasons would be.
Mr. Stupak. Yes. Is that unusual or----
Mr. Van Clief. Well, as I mentioned, our member tracks----
Mr. Stupak. How many tracks do you have, sir?
Mr. Van Clief. We have about 70 tracks that are members.
Mr. Stupak. Seventy and there is forty. One hundred twenty
tracks.
Mr. Scherf. They are the same. Our 40 are in their 70.
Mr. Stupak. Okay.
Mr. Van Clief. That would probably be a near complete
overlap.
Mr. Stupak. Okay.
Mr. Van Clief. As I mentioned, our member tracks, if you
look at it as race days----
Mr. Stupak. Yes.
Mr. Van Clief. [continuing] are 67 percent covered by the
AIG coverage that came out of our working group study in late
2004.
Mr. Stupak. Sure. So just a curiosity, why would a track be
turned down? Why would a track be turned down and now----
Mr. Van Clief. Why would a track be turned down?
Mr. Stupak. Yes, for this million dollar policy?
Mr. Van Clief. I am not aware of any that are turned down.
Tracks would certainly be rated differently based on their
accident experience.
Mr. Stupak. Accidents and things like that. Sure.
Mr. Van Clief. So obviously, the experience would create
different ratings depending on higher or lower accident rates.
So I am aware that the cost may vary from track to track but I
am not aware of any track that has been excluded from taking
the policy if they could afford it and so desired.
Mr. Stupak. Okay. Thank you.
Mr. Whitfield. Let me follow up on these uncashed tickets.
Of course, in Kentucky they go to the Kentucky Health and
Welfare Fund, uncashed tickets. In California, where does it
go?
Mr. Fravel. You know, Mr. Chairman, there are so many
different recipients of various funds in California from
different parts of the take-out. Uncashed refunds, uncashed
tickets. I can precisely remember where those go.
Mr. Whitfield. Okay.
Mr. Fravel. I mean, every one of them has a home somewhere.
Mr. Whitfield. What about in West Virginia?
Ms. Williams. The uncashed tickets go to the Breeder's
Association. They have a 10/10/10 program, which they are part
of that. And then if there is uncashed tickets, it goes to the
racetracks for capital improvements and it also goes to the
jockeys if there is any funds available. I think $250,000 goes
into that fund, if available Mr. Whitfield. From uncashed
tickets?
Ms. Williams. Uncashed pari-mutual tickets.
Mr. Whitfield. And I guess Kentucky, would it be fair to
say Kentucky would have one of the largest amounts of money
from uncashed tickets? I mean, that is around $2 million or so.
Mr. Sexton. Mr. Chairman, it is between $2- and $2.5
million a year, primarily related around the Kentucky Derby.
Mr. Whitfield. So people just don't cash those Derby
tickets? They just keep them?
Mr. Sexton. They may keep them as souvenirs or they may be
unaware that an inquiry light was posted and the result was
changed.
Mr. Whitfield. Yes.
Mr. Fravel. Mr. Chairman, if I could, Mr. Shapiro has told
me that the uncashed refunds in California are what fund the
health insurance program for riders. A lot of these----
Mr. Whitfield. What, it funds----
Mr. Fravel. I am sorry?
Mr. Whitfield. It funds the health insurance for riders?
Mr. Fravel. It funds the health insurance program.
Mr. Whitfield. Okay.
Mr. Fravel. A lot of these funds like uncashed tickets,
uncashed refunds, were things that used to escheat to the State
of California after a period of time.
Mr. Whitfield. Okay.
Mr. Fravel. And what happened was, when times were better
and there weren't massive State deficits, I think the industry
managed to convince the--along with the Guild, to convince the
State that those uncashed tickets or refunds could be used for
more productive sources within the industry.
Mr. Whitfield. Right.
Mr. Fravel. So we managed to keep those at home but I am
not sure we could do that again.
Mr. Whitfield. Okay. Okay. Well, I want to thank you all
very much for your time today and we look forward to continuing
to talk with you about this issue. I might just say for your
information that Mr. Gertmenien still has not responded to
subpoenas and other efforts of our committee relating to Matrix
and so we may be taking up additional maybe Contempt
proceedings against Matrix and him personally. But that is
something that we haven't decided completely yet. But your
testimony has been quite helpful and thank you very much for
your input. The panel is dismissed.
At this time we will call up the second panel. Mr. Metzger,
who is the President of the Thoroughbred Owners and Breeders
Association. We have Mr. John Roark, who is the President and
Chairman of the National Horsemen's Benevolent and Protective
Association. We have Mr. Marty Maline, who is the Executive
Director of the Kentucky Horsemen's Benevolent and Protective
Association. We have Mr. Richard Riedel, who is the Executive
Director of the Kentucky Racing Health and Welfare Fund. We
have Mr. John Giovanni, who is the former National Manager of
the Jockey's Guild. And we have Mr. Richard Violette, who is
Chairman of the Board of Directors of the New York Jockey
Injury Compensation Fund. We have Mr. Bernard Daney, Chairman
of the Delaware Thoroughbred Racing Commission. Mr. Richard
Shapiro, Commissioner of California Horse Racing Board. Mr.
Dick Monahan, who is the Director and Racing Council Chairman
for the American Quarter Horse Association. And we have Mr.
Darrell Haire, who is the Interim National Manager of the
Jockey's Guild.
So welcome all of you and I would ask you--okay. Okay. We
will give you time to set up here. Okay, great. I guess it is a
little crowded but everybody is in anyway. Is Mr. Roark here?
Mr. Metzger. He is on his way, Mr. Chairman.
Mr. Whitfield. Okay. Thanks. We will wait for Mr. Roark and
then we will just swear everybody in at once.
Mr. Roark. Excuse me, Mr. Chairman.
Mr. Whitfield. That is all right, Mr. Roark. Thank you for
being with us today. Well, all of you are aware that this is an
investigative hearing and when doing so, we have the practice
of taking testimony under oath. Do any of you object to
testifying under oath? Okay. Under the rules of the House and
the rules of the committee, you are entitled to be advised by
legal counsel. Do any of you desire to be apprised by legal
counsel today?
Mr. Violette. I have counsel with me.
Mr. Whitfield. Okay. And what is his name or her name?
Mr. Violette. Robert P. Benson, Jr.
Mr. Whitfield. And will Mr. Benson be testifying?
Mr. Violette. No.
Mr. Whitfield. Okay. All right. In that case--oh, yes, sir.
Mr. Riedel. I have also legal counsel, Mr. Frank Becker. He
will not----
Mr. Whitfield. Frank Becker, okay. Okay. And what is the
name? Okay. But he will not be testifying? Okay.
[Witnesses sworn]
Mr. Whitfield. Okay. You are now under oath and each of you
will be called upon to give your 5-minute summary of your
written statement. And the first opening statement will be
given by Daniel Metzger, President of the Thoroughbred Owners
and Breeders Association and, Mr. Metzger, thank you for being
with us. You are recognized for 5 minutes.
TESTIMONY OF DANIEL J. METZGER, PRESIDENT, THOROUGHBRED OWNERS
AND BREEDERS ASSOCIATION; JOHN O. ROARK, PRESIDENT AND
CHAIRMAN, NATIONAL HORSEMEN'S BENEVOLENT AND PROTECTIVE
ASSOCIATION; MARTIN A. MALINE, EXECUTIVE DIRECTOR, KENTUCKY
HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC.; RICHARD
RIEDEL, EXECUTIVE DIRECTOR, KENTUCKY RACING HEALTH AND WELFARE
FUND; JOHN GIOVANNI, FORMER NATIONAL MANAGER, THE JOCKEYS'
GUILD; RICHARD A. VIOLETTE, JR., CHAIRMAN OF THE BOARD OF
DIRECTORS, NEW YORK JOCKEY INJURY COMPENSATION FUND; BERNARD J.
DANEY, CHAIRMAN, DELAWARE THOROUGHBRED RACING COMMISSION;
RICHARD B. SHAPIRO, COMMISSIONER, CALIFORNIA HORSE RACING
BOARD; DICK MONAHAN, DIRECTOR AND RACING COUNCIL CHAIRMAN,
AMERICAN QUARTER HORSE ASSOCIATION; AND DARRELL HAIRE, REGIONAL
MEMBER REPRESENTATIVE, THE JOCKEYS' GUILD
TESTIMONY OF DANIEL J. METZGER
Mr. Metzger. Thank you, Chairman Whitfield and
distinguished members of the subcommittee. I am honored to have
the opportunity to appear before you and try to address some of
these important issues and challenges facing our sport of
horseracing.
I have been the President of TOBA for the last 6 years.
TOBA is a national trade association that represents owners and
breeders, with a mission to improve the economics, the
integrity and the pleasure of the sport, on behalf of owners
and breeders. TOBA oversees a number of important industry
programs, the most known being the American Graded Stakes
Committee. TOBA has also been a leader in the industry in the
areas of integrity, both at the racetrack and at the public
auctions.
However, TOBA is not a recognized horsemen's association in
any State and has not been directly involved in the independent
contractor accident insurance issue. We do, however, have a
direct interest in the safety and well-being of the jockeys and
other workers. Owners recognize the vital contribution made by
these individuals, as they are part of a team that will
hopefully lead to the Winners Circle.
We would like to preface our remarks by stating a
fundamental belief of our organization. Jockeys are independent
contractors. They are free to choose at what track they will
ride, what day they will ride, what race they will ride and
what horse they will ride. A majority of jockeys retain agents
to line up their business. This is not a status unduly imposed
by others. Jockeys have fought to maintain their independent
contractor status, especially when it comes to advertising.
In the spring of 2004, prior to the Kentucky Derby,
racing's most popular day, jockeys sued the Kentucky Horse
Racing Authority and took the position that they were
independent contractors with the right to exhibit commercial
advertising on their pants during the running of the race.
The industry is here today because of a decision by the
management of the Jockey's Guild to not renew its $1 million
accident insurance policy it carried for its members. The Guild
claimed that it could not afford the annual premium. Yet the
Thoroughbred Racing Association, as you heard earlier, the TRA,
under agreement with the Guild, continued to pay the Guild $2.2
million per year so that it could buy the additional accident
insurance and supplement its medical insurance coverage.
TOBA participated in the Jockey Accident Insurance Summit
organized by the National Thoroughbred Racing Association in
response to the Guild created crisis and the Gary Birzer
tragedy. That 33-person panel, comprised of representatives
from each industry stakeholder group, recommended accident
insurance level of $1 million and endorsed the minimum level of
a half million dollars.
With the additional coverage comes additional cost and all
participants on the panel, with the noted exception of the
Jockey's Guild, agreed to help pay for the increased insurance
coverage. While jockeys are independent contractors, horse
racing has been very supportive of their insurance needs, from
Workers' Compensation programs in five States to the
recommended $1 million accident insurance coverage at many of
our racetracks. Thoroughbred owners, trainers and breeders
should have adequate injury coverage for their full-time
employees and most racing States mandate, and most employees
are provided, with such coverage.
Jockeys are independent contractors and, as mentioned, have
fought to maintain that status. As an independent contractor,
it is up to the individual to provide their accident insurance.
We had a framework in place through the Guild with the
financial assistance of the TRA to provide individuals accident
insurance until the Guild chose not to renew it. Despite its
belief that this issue has been created by the Guild, TOBA will
continue to work with other industry organizations to find an
equitable, long-term and comprehensive solution in the near
future.
TOBA has been at the forefront of the sport in its support
of enhanced drug testing and research and will continue to do
so. The health and safety of our human and equine athletes are
of paramount importance to all owners.
I would like to thank Chairman Whitfield and the entire
subcommittee for its time and efforts on this very important
issue of insurance and safety. All segments of our sport,
including owners, tracks, trainers, jockeys and the State
regulatory agencies will work together to bring a solution to
this issue.
[The prepared statement of Daniel J. Metzger follows:]
Prepared Statement of Daniel J. Metzger, President, Thoroughbred Owners
and Breeders Association
The Thoroughbred Owners and Breeders Association is a trade
organization of owners and breeders and is concerned with common
national business interests and issues of its 3,000 members. TOBA is a
service organization and has no authority to mandate participation in
any insurance program. Because TOBA is not a recognized horsemen's
association in any state, it has not been directly involved in the
independent contractor and backstretch worker accident insurance issue.
We would like to preface our remarks by stating a fundamental
belief of our organization. Jockeys are independent contractors.
Jockeys are free to choose at what track they will ride, what day they
will ride, what race they will ride, and what horse they will ride.
Most jockeys retain agents to line up business for them and will often
break a commitment to an owner at a moments notice if a better mount
becomes available in a race. Independent contractors in Thoroughbred
racing, like in all other industries, are responsible for their own
insurance.
On the other hand, most Thoroughbred racing states require trainers
or owners to carry accident insurance for their full-time employees.
TOBA fully supports enforcement of this requirement to ensure employees
are protected.
The industry is here today because of a unilateral decision by the
management of the Jockeys' Guild to not renew the $1,000,000 accident
insurance policy it carried for its members. The Guild claimed it could
not afford the annual premium of approximately $450,000 per year, yet
the Thoroughbred Racing Association (TRA), under an agreement with the
Guild, was paying the Guild $2.2 million per year so that it could
purchase additional accident insurance and supplement its medical
insurance coverage. Because of the Guild's apparent mismanagement
leaving its members underinsured, other industry stakeholders,
including owners, now have to step in and find a solution to the
problem they created.
In states where jockeys are not covered by workers' compensation
insurance, racetracks carry accident insurance typically with a
$100,000 cap on medical benefits. With the Guild choosing not to renew
its policy for additional coverage, we have the heartbreaking story of
Gary Birzer. To cover this deficiency, 17 tracks over the past year
have voluntarily increased the coverage on medical benefits to
$1,000,000. In the five states where jockeys are covered by workers'
compensation insurance, TRA-member racetracks provide additional
coverage of up to $1.4 million. This coverage costs the member tracks
$1 million per year and this is in addition to the $7 million per year
horsemen pay in workers' compensation premiums.
In the fall of 2004, the National Thoroughbred Racing Association
formed its Jockey Medical Insurance Panel to determine if additional
solutions to this problem exist. As a member of the panel, TOBA
supported the recommendations made, but because of the difference in
the size of the industry from state to state, any solutions will have
to be tailored to the economic structure in each Thoroughbred racing
state.
Thoroughbred owners, trainers, and breeders should have adequate
injury coverage for their full-time employees. Most Thoroughbred racing
states require workers' compensation insurance to cover backstretch
employees of trainers and owners. Jockeys are independent contractors
and have fought to maintain that status. For example, when the
advertising issue arose in the spring of 2004 prior to the Kentucky
Derby, the jockeys took the position that they were independent
contractors with the right to exhibit commercial advertising on their
pants for compensation during the running of the race. A benefit of the
independent contractor status is the ability to maximize one's earnings
and set one's own hours. One perceived drawback to self employment is
the individual is responsible for their own health and accident
insurance. The jockeys, and more specifically the Guild, have abdicated
their responsibility. Despite its belief that this problem has been
created by the Guild and should be solved by the Guild, TOBA will
continue to work with other industry organizations to find an equitable
solution in the near future.
TOBA has been at the forefront of the sport in its support of
enhanced drug testing and research. TOBA is a founding member of the
Racing Medication and Testing Consortium, an industry-wide effort to
promote a safe and uniform medication policy across the United States.
The health and safety of both the horse and jockey are of critical
importance to all owners.
We thank you for your interest in our industry and concern on this
issue.
Mr. Whitfield. Thank you, Mr. Metzger. At this time, Mr.
Roark, you are recognized for your 5-minute opening statement.
TESTIMONY OF JOHN O. ROARK
Mr. Roark. Thank you, Mr. Chairman and members of the
subcommittee. The National Horsemen's Benevolent and Protective
Association appreciates this opportunity to address this
subcommittee on safety insurance and other problems related to
jockeys.
The National HBPA represents about 48,000 licensed
thoroughbred and quarter horse owners and trainers, their
employees and families, by way of 33 affiliated offices in
various States and Canada. The National HBPA horsemen and
horsewomen run over 325,000 horses over 4,500 cumulative racing
days each year. And through our local affiliates, provide
between $5 and $6 million in benevolence programs to those
folks that work on the back side of the racetrack, in the form
of low cost or free medical care, dental coverage, mobile
dental clinics. We have substance abuse programs on the
backside of racetracks. We support the Chaplaincy organizations
and we also do scholarships, housing and funeral assistance and
have backstretch recreational programs around the country. We
also have, in two of our state, we have daycare centers for the
folks and their families and for racetrack employees.
As this committee has heard, jockeys have historically been
treated as independent contractors, a position supported by the
National HBPA. As a member of the NTRA's Task Force on jockey
accident insurance, the HBPA has reviewed a number of different
insurance programs for riders. We also produced our own
Workers' Compensation white paper in 2003. And based upon that
and the research we have done, we believe a self-insured or
captive approach is the most viable and incentive industry
members to control their costs and loss and enforce compliance.
California admitted a partially self-insured program known
as the California Horsemen's Safety Alliance in December 2002,
which as Mr. Fravel commented, covers all the backstretch
workers with some fairly generous benefit levels. Their
approach came after several years of trying to find a solution
to rising Workers' Compensation costs and a similar program is
just being enacted as we speak in Louisiana that is much like
that program. It is going to be a captive. Insurance coverage
should transcend from State to State and track to track to the
benefit of racetracks and horsemen. The National HBPA
therefore, calls for injury protection coverage for all
jockeys, exercise riders, backside workers and we ask all the
industry stakeholders to join us in pursuit of that reform.
The best manner of achieving that reform is not to
nationalize Workers' Compensation, nor to reverse the NLRB's
longstanding policy regarding independent contractors and their
position regarding the racing industry. Congress has long
recognized the primacy of State regulatory authorities over our
industry. The Interstate Horseracing Acts' indirect mode of
regulating interstate commerce with respect to horseracing is
the best methodology of addressing Congress' limited national
interest concerning our industry. The Interstate Horseracing
Act preserves States primacy in the area and encourages
stakeholders to cooperate with each other to reach industry-
wide agreements to resolve vital issues, such as those now
facing jockeys, exercise riders, et cetera.
The Interstate Horseracing Act, for example, would provide
a ready mechanism to encourage States and industry stakeholders
to reach appropriate voluntary efforts to resolve issues of
safety and health hazards within the industry. As well as to
induce stakeholders to address the adequacy of injury insurance
against unavoidable risk, inherent to the sport of horseracing,
for jockeys and exercise riders.
Pursuant to the IHA, owners and trainers by and through
their horsemen's groups, have the authority to negotiate with
racetracks on a periodic basis, to reach agreements addressing
a number of issues between them, including racetrack safety and
backside safety conditions. Many of the national HBPA
affiliates around this country routinely contract with their
racetracks about such conditions, along with a host of other
terms and condition that go into the regular contractual
process between tracks and between horsemen's groups. And these
agreements ultimately contain the grant of horseman statutorily
required consent to interstate off-track wagering. These
racetrack horsemen's groups agreements are customary in the
industry and are required by the IHA and ultimately, are
overseen and approved by State racing commissions, whose
consent to interstate off-track wagering is statutorily
required, as well.
The National HBPA firmly believes that working together
with State regulators, the racing industry is clearly best
suited to develop the best practices needed to make racetrack
facilities as safe as possible for fans and participants.
Through State racing commissions and other local controls, a
ready mechanism already exists for encouraging industry
stakeholders to establish and enforce health and safety
standards.
The National HBPA is involved in numerous programs to
encourage safety and raise the level of professionalism among
horsemen. We are very proud that we were the founder of the
Groom Elite Program, which educates grooms and odd workers on
the backside of race tracks as to horse safety and horse
conditions, as well as other safety benefits. The Groom Elite
Program provides a continuous equine education for backstretch
licensees and also provides training in barn safety, first aid
and life skills.
The National HBPA is also an active participant and Board
member of the North American Racing Academy, which is a
national racing school for jockeys being developed by industry
leaders and led by retired Hall of Fame jockey, Chris McCaren.
Working within the Kentucky Community and Technical College
system, NARA sees its role as providing the racing industry
with a national accredited vocational program designed to
provide students with coursework in various racing industry
fields, in addition to race riding.
We believe that the racing industry is best served by
increased education for its members and voluntary programs
designed to ensure the health and safety of racing
participants.
Thank you for allowing me to address this committee and I
will invite any questions.
[The prepared statement of John O. Roark follows:]
Prepared Statement of John O. Roark, President and Chairman, National
Horsemen's Benevolent and Protective Association, Inc.
Thank you for the opportunity to address the Subcommittee on
Oversight and Investigations of the House Committee on Energy and
Commerce regarding issues of jockey safety, adequate injury insurance
protection for horseracing participants and other current issues facing
the horseracing industry. As a part of, or perhaps a result of this
Subcommittee's investigations and hearings, it has come to the
attention of the National Horsemen's Benevolent and Protective
Association, Inc., (NHBPA) that some members of this Subcommittee have
called upon the National Labor Relations Board (NLRB) to reconsider the
NLRB's policy decision, pursuant to Section 14(c) of the National Labor
Relations Act (NLRA), 29 U.S.C. 164(c)(1), to decline asserting
jurisdiction over labor disputes involving the horseracing and dog
racing industries. See 29 C.F.R. 103.3. The NHBPA wishes to submit
this testimony to Congress pertaining to the issues of jockey safety,
insurance protection, and the potential for federal governmental
involvement in the horseracing industry.
As background, the NHBPA is a service organization founded in 1940
which represents the interests of over 48,000 licensed thoroughbred and
quarter horse owners and trainers, their employees and families via 33
affiliated offices across the U.S. and Canada. Among other things, the
NHBPA assists its affiliated offices and member horsemen by
disseminating and communicating vital information on critical issues;
representing horsemen at industry gatherings and on national boards and
committees; organizing bi-annual conventions to promote an exchange of
ideas and information and to provide national fire and disaster and
owner/trainer liability insurance programs.
NHBPA horsemen and horsewomen run over 324,000 horses over 4,500
cumulative racing days each year and, through their local offices,
provide approximately $4 million--taken from a percentage of their
purses--in benevolence programs which assist over 5,000 licensees with
medical and dental coverage; substance abuse prevention and chaplaincy
programs; scholarship, housing and funeral assistance and backstretch
recreational programs. The NHBPA also provides a national voice for
horsemen on matters of national policy and of national interest and
promotes the preservation and enhancement of live racing in North
America. Thus, the NHBPA submits the following.
Since 1950 and earlier, the NLRB has declined to assert
jurisdiction over labor disputes in the horseracing industry. In re Los
Angeles Turf Club, 90 NLRB 20 (1950). The rationale was that the
operations of the racing industry, ``While not unrelated to commerce,
are essentially local in character.'' Id. at 20. This same rationale
was re-iterated again by the NLRB after Congress enacted Section
14(c)'s specific provisions authorizing the NLRB discretion to decline
jurisdiction over certain classes of employers. See In re Hialeah Race
Course, Inc., 125 NLRB 388, 391 (1959) (``racetrack operations are
essentially local in nature''). The NLRB added another significant
point to its rationale in the Hialeah case, ``[g]iven the character of
racetrack operations, which are permitted to operate by special State
dispensation, and are subject to detailed regulation by the States, we
can assume that the States involved will be quick to assert their
authority to effectuate such regulation as is consonant with their
basic policy.'' Id.
In 1979, the NLRB re-affirmed its longstanding policy, after formal
promulgation of the rule set out in 29 C.F.R. 103.3 (1973) and after
Congress enacted the Interstate Horseracing Act of 1978, 15 U.S.C.
3001 et seq. See In re American Totalisator, Inc., et al, 43 NLRB 314
(1979). The NLRB's majority observed: ``Congress is well aware of the
Board's historic stance of declining to assert jurisdiction over
horseracing'', and if Congress had wished to modify this it could
easily have done so by using less restrictive language in enacting the
``Interstate Horseracing Act of 1978 . . .'' Id. at 314. The NLRB's
minority opinion looked at the legislative history to the Interstate
Horseracing Act and concluded Congress itself considered the
horseracing industry to have significant impact upon interstate
commerce because thousands were employed in the industry and they
could/should be subjected to NLRB jurisdiction. Id. at 315.
The Interstate Horseracing Act (IHA) contains a succinctly stated
and restricted role for the federal government in the horseracing and
off-track betting industries. The majority in American Totalisator
quoted from these congressional findings in the IHA reciting the
confined interests of the federal government with respect to
horseracing as follows:
(1) The States should have the primary responsibility for
determining what forms of gambling may legally take place within their
borders;
(2) The Federal Government should prevent interference by one State
with the gambling policies of another, and should act to protect
identifiable national interests; and
(3) In the limited area of interstate off-track wagering on horse
races, there is a need for Federal action to ensure States will
continue to cooperate with one another in the acceptance of legal
interstate wagers.
243 NLRB at 314, quoting 15 U.S.C. 3001(a)(1)-(3).
The IHA's stated findings and restricted policy role for the
federal government in the horseracing industry was founded upon the
findings of the Commission on the Review of the National Policy on
Gambling, a Commission that rendered its report to Congress in the mid-
1970's. See S. Rept. No. 95-1117, 95th Cong., 2nd Sess. 6, reprinted in
1978 U.S. Code Cong. & Admin. News 4144, 4149. This Commission warned
that passage of legislation at the national level concerning
horseracing and legalized gambling thereon, unless carefully
structured, could amount to ``an unwarranted intrusion by the Federal
Government into an area of regulation better left to the States.'' S.
Rept. No. 95-554, 95th Cong., 1st Sess. 14 (1977), reprinted in 1978
U.S. Code Cong. & Admin. News 4132, 4142 (Views of Mssrs. Cannon &
Stevenson), quoting from the Commission on the Review of the National
Policy on Gambling.
Section 4 of the IHA, 15 U.S.C. 3003, outlaws all forms of
interstate off-track wagering on horseracing without the consent of
each of the following: (1) The ``host racing association'' (which
cannot give its consent without having the consent of its horsemen/
women via an agreement with their representative ``horsemen's group'');
(2) The ``host racing commission;'' and (3) The ``off-track racing
commission.'' 15 U.S.C. 3004(a). Accordingly, the IHA gives a
prominent role to the affected States (i.e., two of the three requisite
consents) in regulating the horseracing industry. Without State
regulatory oversight and consent, there would be absolutely no
interstate simulcasting in this country. The IHA gives civil damage
remedies for the violation of its provisions, and grants those remedies
to, among others, the ``host State.'' 15 U.S.C. 3005. The IHA,
therefore, embodies a significant, indeed, plenary role for the States
over the horseracing industry and preserves their traditional and
significant regulatory authority over the industry.
Pursuant to States' plenary authority over horseracing, the NLRB's
observation in its decision in Hialeah Race Course, Inc., 125 NLRB 388
(1959), is still accurate today: ``[R]acetrack operations . . . are
permitted to operate by special State dispensation, and are subject to
detailed regulation by the States.'' Id. at 391. Unquestionably, the
horseracing industry has significant impact on interstate commerce.
However, the NLRB's policy in 29 C.F.R. 103.3 is informed by more
than just the industry's impact on commerce. The NLRB's policy embodies
Congress' national policy toward gambling, to wit: That the primary
regulators of horseracing should be the States which in fact control
all aspects of the industry including the licensing of all its
personnel such as owners, trainers, jockeys, exercise riders, grooms,
veterinarians, etc., and which possess a significant revenue interest
in the industry's success sufficient to ensure labor stability under
state laws.
By virtue of their plenary authority over horseracing, some States
have taken dead level aim at resolving labor disputes before they ever
erupt into a disruption of commerce. For example, the State of
California passed specific legislation concerning the labor relations
of backstretch workers. See Cal. Bus. & Prof. Code, Div. 8, Ch. 4, Art.
2.5 19455-19455.4. Under the California Code, specific rights and
responsibilities are delineated for workers, employers, and unions.
Section 19455(b) provides the basis for enacting these labor relations
laws: ``The Legislature finds that the National Labor Relations Board
has formally declined to assert jurisdiction over horseracing because
of extensive state control over the industry, the dominant pattern of
sporadic short-term employment which poses problems for effective
enforcement of the National Labor Relations Act, and a unique and
special relationship that has developed between the states and the
industry.'' The Code further sets out the State's interest in such
laws: ``It is the intent of the Legislature to establish an orderly
procedure for backstretch employees. . .to organize a labor union, in
order to reduce the prospect of any strikes, disruptions, or economic
action that would interfere with the operation of horseracing meetings
in California.'' Id. at 19455(c).
State law initiatives such as California's to deal with potential
labor disputes before they arise in the horseracing industry are
authorized under federal law pursuant to Section 14(c)(2) of the NLRA
(29 U.S.C. 164(c)(2)). These state law initiatives, however, will be
completely preempted and rendered nugatory if the NLRB were to reverse
its policy in 29 C.F.R. 103.3. See San Diego Building Trades Council
v. Garmon, 359 U.S. 236 (1959) (the so-called ``Garmon preemption''
doctrine which prohibits states from regulating activities protected by
7 or prohibited by 8 of the NLRA, 29 U.S.C. 157 & 158).
The industry itself is working with State regulators to address the
concerns of jockeys about insurance protection afforded to injured
jockeys and/or exercise riders, etc. The NHBPA is keenly interested in
jockeys (as a group and as a constituency) attaining a level of
proactive involvement in the industry. Furthermore, jockeys should have
and have been accorded the utmost respect of the industry. Jockeys and
their immediate families should have no reason to worry about their
well-being and should not have to concern themselves each time they
ride with an issue of health coverage which might affect their
livelihood and their ability to take care of those families. Presently,
only California, New York, New Jersey, and Maryland have workers'
compensation benefits for jockeys with varying levels of work benefits.
Jockeys are automatically covered in these States and pay no fees as
they are considered employees for workers' compensation purposes. All
jockeys qualify.
In other states, jockeys are considered independent contractors--
not employees--and are covered by an accident and health (A&H) policy
offering, in most cases, $500,000 to $1,000,000 worth of on-track
accident insurance. Our research also indicates that insurers have
approached jockeys' representatives about offering excess coverage,
which could easily be made available to individual jockeys for a very
reasonable premium at racetracks that purchased the full $1,000,000
limit. To date, current jockeys' representation has not shown a
willingness to put in place an excess coverage plan.
Nationally, on-track A&H coverage ranges from $100,000 to
$1,000,000 with the vast majority of tracks in the $500,000-$1,000,000
range. This coverage is first dollar, no deductible applies. All
jockeys qualify.
There are pros and cons to either the workers' compensation or on-
track A&H approaches. Key factors include cost to tracks and horsemen,
compliance, and protection against future increases. The NHBPA, in its
2003 Workers' Compensation White Paper, cites the self-insured or
captive approach as being most sensible in the long-run (pp. 18-19), in
that industry stakeholders, by investing or having a stake in their
coverage program, would be incentivized to control costs and loss and
enforce compliance. California implemented a partially self-insured
program, known as the California Horsemen's' Safety Alliance (CHSA) in
December of 2002 which covers all of its backstretch workers (jockeys
and exercise riders included) at relatively generous benefit levels.
The CHSA approach came after several years of trying to find a solution
to rising workers' compensation costs and a similar program is also
being considered in Louisiana.
By partially self-insuring, industry stakeholders could, in a
sense, ``inoculate'' themselves against future dramatic price hikes as
was evidenced in California. Key to any successful program, however,
will be strict maintenance of valid workers' compensation certificates
of insurance for all racing stables; improved payroll reporting
systems; better training and higher licensing standards of licensees
and the creation of a national on-track accident database modeled after
the national highway patrol system.
It is respectfully submitted, therefore, that the NLRB's
longstanding policy under Section 14(c)(1) of the NLRA, 29 U.S.C.
164(c)(1), embodied in 29 C.F.R. 103.3, is a correct exercise of
discretion with respect to the horseracing industry. If Congress were
nonetheless to direct the NLRB to overrule its policy, what continuing
authority will States play in the regulation of labor disputes
attendant to their plenary regulation of the horseracing industry? Will
States such as California have to completely forfeit their carefully
balanced statutory provisions that regulate labor relations for
backstretch workers, racetracks, unions, and employers (including horse
owners and trainers)? Furthermore, what gaps in regulatory authority
over the industry might be created by virtue of the NLRA's preemption
of States' plenary authority? As this body knows, the NLRA does not
extend to employees ``employed as an agricultural laborer'' (29 U.S.C.
152(3)), nor to ``any individual having the status of an independent
contractor'' (id.).
The legal relationship between racetracks and jockeys is considered
by many authorities not to be that of employer/employee, but rather
independent contractor. See, e.g., Thompson v. Travelers Indemnity Co.,
789 S.W.2d 277 (Tex. 1990); Simmons v. Kansas City Jockey Club, 334 Mo.
99, 66 S.W.2d 119 (1933); Haggard v. Industrial Comm'n, 71 Ariz. 91,
223 P.2d 915 (1950); Munday v. Churchill Downs, Inc., 600 S.W.2d 487
(Ky. Ct. App. 1980). In a number of jurisdictions, however, jockeys
have been found to be employees of the horse owner, e.g., Biger v.
Erwin, 57 NJ. 95, 270 A.2d 12 (1970); Drillon v. Industrial Accident
Comm'n, 17 Cal.2d 346, 110 P.2d 64 (1941), although some jurisdictions
draw a distinction between ``contract jockeys'' and ``freelance
jockeys,'' e.g., Munday v. Churchill Downs, 600 S.W.2d at 487.
If Congress were to direct the NLRB to reverse its policy in 29
C.F.R. 103.3, then the first question that arises is whose
``employees'' are the jockeys? If jockeys are permitted to unionize,
they will gain exempt status under the antitrust laws and can
``strike,'' but against what ``employer'' may they strike? Do they
strike against racetracks (by most accounts not considered their
``employers''), against horse owners or trainers (in some jurisdictions
considered their ``employers,'' but not in all circumstances) or
against their State's regulatory authorities? A major disruption in the
delicate balance that now exists between racetracks, horsemen's groups
and State regulatory authorities will be affected by any reversal in
the NLRB policy.
Furthermore, the NLRA's broad exemption for ``agricultural
laborer[s]'' is likely to leave a large regulatory gap and fail to
benefit many of the individuals whom this Subcommittee may, at first
blush, think would be benefited by a reversal of 29 C.F.R. 103.3.
Congress has long defined ``agricultural laborer'' for purposes of the
NLRA the same as the ``agriculture'' exemption under the Fair Labor
Standards Act, 29 U.S.C. 203(f). See Holly Farms Corp. v. NLRB, 517
U.S. 392, 397 (1996) (since 1946). The Department of Labor has issued
regulatory guidance on the agricultural exemption for the horseracing
industry, at 29 C.F.R. 780.122: ``Employees engaged in the breeding,
raising, and training of horses on farms for racing purposes are
considered agricultural employees.''
While Congress can clearly direct the NLRB to reconsider its policy
toward the horseracing industry, the NLRB will nonetheless be
prohibited from exercising jurisdiction over numerous workers in the
industry as ``agricultural laborers.'' True, some ``employees engaged
in the racing, training, and care of horses and other activities
performed off the farm in connection with commercial racing'' may not
qualify as ``agricultural'' (see 29 C.F.R. 780.122), but thousands of
workers such as grooms, hot walkers, or exercise riders who are
employed on breeding or training farms will remain out of reach of the
NLRB despite performing some of their work at racetracks because they
are employed by racehorse ``farmers.'' Cf. Baldwin v. Iowa Select
Farms, L.P., 6 F. Supp.2d 831 (N.D. Iowa 1998) (employees in the hog
raising business are ``agricultural'' even though some operations do
not occur on a farm); see Holly Farms Corp. v. NLRB, 517 U.S. 392
(1996) (discussing two-part test of what is ``agricultural''
activities, some of which may occur on or off the farm); Farmers
Reservoir & Irrigation Co. v. McComb, 337 U.S. 755 (1949) (establishing
the two-part test for ``agriculture''); see also 29 C.F.R. 780.105(b)
& (c) (same); 29 C.F.R. 780.122 (raising racehorses is
``agriculture'').
On balance, given the significant legal ramifications that would
occur if the NLRB reversed its policy in 29 C.F.R. 103.3, it would be
very disruptive to interstate commerce for the NLRB to start asserting
jurisdiction over the horseracing industry. States that have utilized
their plenary regulatory authority over the industry (usually through
state racing commissions) will have to forfeit significant control in
the regulation of the industry in favor of the NLRB, a federal
bureaucracy, which will have exclusive oversight of labor relations
issues in horseracing. Regulatory gaps will emerge due to the NLRA
exemptions, but such gaps do not currently exist in state regulators'
ability to reach and protect workers in the industry.
The status quo need not be tolerated, however, given the
significant problems that have surfaced with respect to the Jockeys'
Guild's failure to continue carrying adequate insurance for injured
jockeys. Indeed, this Subcommittee may have requested the NLRB to
reconsider its policy with respect to the horseracing industry, in
part, because of frustration with the Jockeys' Guild and its assertions
that it is not legally answerable to member- (or non-member-) jockeys
pursuant to the statutorily derived ``duty of fair representation''
that attaches to ``labor organizations'' authorized pursuant to the
NLRA.
The Jockeys' Guild has defended lawsuits brought against it by
injured jockeys claiming the Guild inappropriately failed to protect
their interests while purporting to exclusively negotiate away their
``publicity'' rights vis-a-vis racetracks on the technical ground that
the Guild is not a labor organization within the meaning of the federal
labor laws (in part due to the policy of 29 C.F.R. 103.3). See Brief
for Defendant-Appellee Jockeys' Guild, Inc. in Sidney Underwood v.
Atlantic City Racing Ass'n, 3rd Cir.Ct. App. No. 96-5578, at pp. 14-15,
found at 1997 WL 33554410 (submitted Sept. 9, 1997). While the Jockeys'
Guild's legal position in the Sidney Underwood case (and similar cases)
is regrettable for the injureds' sake, the answer is not to reverse the
NLRB's longstanding policy in 29 C.F.R. 103.3. The remedy of
extending NLRB oversight into the horseracing industry raises far more
concerns than it solves.
The day-in and day-out working conditions at racetracks at which
jockeys as well as grooms, hot walkers, exercise riders and the like
perform their work, are matters better left to state regulators and the
industry as a whole, and which are currently being addressed in a
concerted effort.
Moreover, with the advent of video lottery machines and other forms
of gaming at racetracks, small-market tracks are able to compete with
large-market tracks in areas of purse distribution and stakes events.
With that dynamic in place, it is now more meaningful than ever that
jockeys be able to participate across state lines and around the
nation. It is in the interest of all industry stakeholders to support
jockeys in this new paradigm. Insurance coverage should transcend from
track-to-track and state-to-state to the benefit of racetracks and
horsemen. The NHBPA, therefore, calls for injury protection coverage
for all jockeys, exercise riders and backside workers. It is vitally
important that the industry support this cause and we ask all the
industry stakeholders to join us in pursuit of this reform.
The best manner of achieving this reform is not to nationalize
workers' compensation, nor to reverse the NLRB's longstanding policy in
29 C.F.R. 103.3. Congress has long recognized the primacy of State
regulatory authorities over the industry. This State primacy is far
preferable to the federal government asserting a direct regulatory
oversight role over the industry, or a federal bureaucratic agency's
assertion of jurisdiction over it. The IHA's indirect mode of
regulating interstate commerce with respect to horseracing is the best
methodology of addressing Congress' limited national interests
concerning the industry. The IHA preserves States' primacy in the area
and encourages stakeholders to cooperate with each other to reach
industry-wide agreements to resolve vital issues such as those now
facing jockeys, exercise riders, etc.
This body certainly has the authority under the Interstate Commerce
Clause to legislate concerning the horseracing industry, but to do so,
would usurp the States' traditional and longstanding plenary role over
the industry. It is respectfully submitted that this body should not,
therefore, encourage the NLRB or any other federal agency to assume the
States' primacy over horseracing, and instead, encourage State
regulators to work with racetracks, horsemen/women, jockeys, and
backside personnel to find acceptable solutions to the issues about
which this Subcommittee is concerned. Encouragement from this
Subcommittee will go a long way toward catalyzing the industry and
their State regulators to promptly reach a resolution to the vital
issue of adequate injury protection insurance for jockeys, exercise
riders, etc.
Safety & Health of Jockeys, Exercise Riders, and Backstretch Workers
The Subcommittee has also called upon the Secretary of Health and
Human Services, and in particular the Occupational Safety and Health
Administration (OSHA) to look into doing a comprehensive inventory of
safety hazards in the horseracing industry, and for the National
Institute of Occupational Safety and Health (NIOSH) to provide a set of
recommended standards under which racetracks should operate. The NHBPA
agrees that a comprehensive study into what steps can be taken to
minimize safety hazards in the horseracing industry is advisable. The
NHBPA would encourage all its affiliates to work with any such
investigation and inventory, and welcome the opportunity to give input
into the development of recommended standards of safety.
Pursuant to the authority of the Secretary under Section 21(d) of
the Occupational Safety and Health Act of 1970, 29 U.S.C. 670(d), the
Secretary is to establish and support ``cooperative agreements with the
States under which employers subject to [the Act] may consult with
State personnel with respect to--(A) The application of occupational
safety and health requirements under [the Act] . . .; and (B) Voluntary
efforts that employers may undertake to establish and maintain safe and
healthful employment and places of employment.'' Id. The Secretary may
furthermore ``condition [] receiving funds under such [cooperative]
agreements, for contributions by States towards meeting the costs of
such agreements.'' Id.
This Subcommittee can and should encourage the Secretary to enter
into ``cooperative agreements'' with state regulators of the
horseracing industry with respect to occupational safety and health
issues, as referred to in Section 21(d) of the Act, 29 U.S.C. 270(d).
Funding for ``voluntary efforts'' as referred to in the Act could be
provided for by the Secretary and the Secretary could condition receipt
of funds upon contributions by the States in meeting the costs of such
agreements. The Interstate Horseracing Act (IHA), 15 U.S.C. 3001 et
seq., would provide a ready mechanism to encourage States and industry
stakeholders to reach appropriate ``voluntary efforts'' to resolve the
issues of safety and health hazards within the industry as well as
induce stakeholders to address the adequacy of injury insurance against
unavoidable risks inherent in the sport of horseracing for jockeys,
exercise riders, etc.
Specific areas of safety and/or potential hazards in the sport may
be of concern to this Subcommittee. Limitations in the structure of the
horseracing industry make safety issues a challenge to address. For
instance, OSHA is directed toward ``employers'' and requires them to
provide a safe work environment. Of course, racetracks do not generally
``employ'' jockeys or exercise riders, etc. Small businesspersons,
i.e., the owners and trainers of the athletes in the sport (the
horses), are frequently considered either the employer or contractor of
workers on the backside of the racetrack. Owners and trainers do not
control the safety hazards of a racetrack or its backside.
Pursuant to the IHA, owners and trainers by and through their
``horsemen's groups'' have the authority to negotiate with racetracks
on a periodic basis to reach agreements addressing a number of issues
between them, including racetrack safety and backside safety
conditions. Many of the NHBPA affiliates around the country routinely
contract with their racetracks about such conditions along with a host
of other ``terms and conditions'' that go into the ``regular
contractual process'' between tracks and horsemen/women, and which
agreements ultimately contain the grant of horsemen's statutorily
required consent to interstate off-track wagering. See 15 U.S.C.
3002(21), (22) & 3004(a)(1). These racetrack-horsemen's group's
agreements are customary in the industry, required by the IHA, and
ultimately overseen and approved by State racing commissions whose
consent to interstate off-track wagering is statutorily required as
well. See 15 U.S.C. 3004(b) & (c).
A ready mechanism already exists for encouraging industry
stakeholders to comply with occupational safety and health standards
that may be appropriately developed by NIOSH. The NHBPA applauds this
Subcommittee's efforts to encourage the Secretary of Health and Human
Services and NIOSH to develop such standards, and suggests that such
might be accomplished pursuant to the Secretary's authority under
Section 21(d) of the Act, 29 U.S.C. 670(d)'s authorization of
``cooperative agreements'' between the States and industry
stakeholders.
As to specific issues of occupational safety and health, an
appropriate investigation and analysis of the industry needs to be
conducted by NIOSH. Many unsupported safety concern allegations abound
and unfounded safety ``fixes'' have been circulated in the industry. A
thorough and scientifically based investigation and analysis of safety
concerns and hazards, looking toward the development of sound
occupational safety and health standards, is indeed warranted. While
other industries akin to horseracing involving similar ``track'' type
hazards (such as drag racing or stock car racing) have not apparently
been extensively regulated heretofore by OSHA, the dearth of safety and
health oversight in these industries does not mean that the
investigation and recommendation of safety standards in this industry
is unwelcome.
As a starting point with regard to some of the specific safety
concerns alleged to exist in the horseracing industry, the NHBPA offers
the following:
Weights and Body Fat of Riders
The issue of maintaining minimum weight levels is primarily
centered on the professional jockeys. Exercise riders are not required
to maintain a minimum weight, although those who ``work'' horses (full
speed maintenance exercise) are generally expected to weigh a more
lenient 125-135 lbs.
During the past two years, the Jockeys' Guild has presented a
proposal to raise the minimum weight--in some cases up to 126 lbs. from
the existing generally accepted average minimum of 112 lbs.--and to put
tighter restrictions on minimum body fat standards for riders. Using
body fat measurements could also be misleading in that an otherwise
healthy jockey could have virtually the same body fat index as an
unhealthy jockey. Most horsemen will agree that, due to better living
conditions and nutrition, today's jockeys are generally bigger than 20
or 30 years ago. It is, of course, in the horsemen's best interests
that the jockeys they hire are in the best possible physical condition.
However, there are equally as many licensed, competent and skillful
jockeys who DO NOT have to engage in extreme weight loss techniques and
have been able to apply the necessary dietary and nutritional practices
they need to perform. Being a professional jockey, like being a
professional racecar driver, is a specialized profession limited to
certain individuals who possess the necessary physical and mental
skills and who readily assume the related risks.
The California horse racing industry (owners, breeders, horsemen
and track operators), led by Del Mar Thoroughbred Club Vice President
Craig Fravel, proposed a well researched alternative to the Jockeys'
Guild plan which was approved by the California Horse Racing Board \1\
In general, the California plan would mandate a minimum weight of 118
(a more reasonable 6-8 lbs. above the current minimum) as compared to
the 126 lb. minimum proposed by the Jockeys' Guild. In our view, a 126
lb. minimum would negatively impact the health and safety of horses at
full (race) speed.
---------------------------------------------------------------------------
\1\ Blood-Horse Magazine; CHRB Rejects Increase in Jockey Weights
by Jack Shinar; April 28, 2005
---------------------------------------------------------------------------
Furthermore, Mr. Fravel has taken the lead, along with other
industry stakeholders including the NHBPA, in considering a proposal
for research titled ``Athletic Performance in Jockeys: A Baseline Study
of Physiological and Nutritional Factors''. If funded, this study would
be led by noted researcher, Dan Benardot, PhD, who heads the Laboratory
for Elite Athlete Performance at Georgia State University.
In order to make more informed long-term decisions with regard to
jockey weights, the NHBPA would encourage a.) That our affiliate
leadership endorse the compromise minimum weight proposal adopted by
the California racing industry and; b.) To support Dr. Benardot's
comprehensive research proposal cited earlier.
Track Conditions
The maintenance of a horse racing surface is very specialized and
can vary greatly from state to state and region to region. While there
may be instances where heavy rains, temperature changes and other
situations have impacted the safety of a racing surface, we feel the
best way of effectively dealing with track safety is through regular
communication.
We endorse the common (and successful) practice used by the vast
majority of racetrack operators (typically through their Director of
Racing and Track Superintendent) and representatives of the local
horsemen and jockeys, which is to a.) Keep in constant communication
with the track superintendent regarding track conditions on a day-to-
day basis and; b.) In the event of severe weather, to meet prior to the
start of a racing card and physically inspect the surface and make a
unified decision of whether to race or not.
The racing industry, during the past 20 years, has invested heavily
in proven safety measures, most notably the Fontana Safety Rail system
which is now in place throughout the large majority of tracks and many
major training centers. This rail system forms a trampoline surface,
which directs a falling rider away from dangerous rail posts toward the
infield. Likewise, the multi-million dollar research and development
into new and improved racing surfaces is on-going and can best be
evidenced with the launch of Polytrack, a revolutionary new synthetic
surface which blends fibers and recycled rubber and wax covered silica
on top of a vertical drainage system and which recently replaced
Northern Kentucky's Turfway Park Racetrack's conventional one-mile dirt
track and received rave reviews.\2\gT1,\3\
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\2\ Blood-Horse Magazine; Early Returns: Polytrack Experience Pays
Off by Tom LaMarra; September 7, 2005
\3\ Blood-Horse Magazine; Turfway Park First to Install Polytrack
on Main Track by Amy Whitfield; April 27, 2005
---------------------------------------------------------------------------
Keeneland Race Course, which co-owns Turfway Park began using
Polytrack on its five-eighths-mile training track in September 2004 as
a test. Keeneland has partnered with Martin Collins International as
the North American distributor of the product.
Safety Equipment
Jockey and exercise riders' helmets and safety vests are required
to be SEI (Safety Equipment Institute) certified and to meet specific
ASTM (American Society for Testing and Materials) standards (F-1163 in
the case of safety equipment).
The development of safety gear for jockeys and exercise riders,
which has only been mandatory since in the early 1950's, mirrors
similar safety advances in professional football--which did not require
solid helmets in the early years of the sport. Thanks to government
urging in the early years, both sports have taken it upon themselves to
aid in the development (through proper testing and research) and then
require the use of ever-improving safety equipment for its athletes.
Despite the relative danger of both sports, industry efforts at
improving safety gear have clearly resulted in countless lives being
saved.
In recent years, a company by the name of Sure Lines, Inc. has been
promoting the mandatory use of a new type of safety rein. The safety
reins are reinforced by a wire and designed to hook on to the horse's
bridle and have a breaking point of 360 pounds over nine minutes (vs.
300 for regular leather or nylon reins).
Ultimately, the added cost of new safety reins would be borne by
horsemen. It has been estimated that Sure Lines reins would cost an
additional $15-$20 more than standard reins.
Standard leather reins are normally $70 and nylon approximately
$20. Refitting an entire racing stable of 30 horses would cost horsemen
an additional $1,200 to $2,700--a substantial financial burden for the
small to midsize market racing operation without clear evidence that
doing so would have the hoped for safety improvement.
No current regulations or model rules have been enacted by industry
regulators such as the Association of Racing Commissioners
International (ARCI) and the North American Pari-Mutuel Regulators
Association (NAPRA). NHBPA agrees with regulators that rein failure (or
failure of other critical equipment such as saddles, stirrups, stirrup
leathers and girths) should be properly researched and, if indicated by
independent data, be upgraded first on racing bridles (used during the
actual running of races) and then phased in over time on training
equipment.
Certainly, riders would be well within their rights to provide
their own reins to the trainer if they so desired. However, in the end,
clear research is needed. For example, what is the ratio of broken
reins to the 350,000 horses that NHBPA horsemen run each year? What are
the failure rates between leather reins and the often used nylon reins?
Is the critical need more for racing conditions versus morning
exercising (which would require trainers to purchase fewer sets of
reins)? This also begs the question: Is the Federal Government going to
also regulate the equipment being used by nearly 2 million horse owners
across the U.S. who own and ride the 3.9 million horses used in
recreational activities across the U.S.?
Conditions of the Horses
The NHBPA supports the industry-wide efforts currently underway at
enhancing current state-by-state medication regulations into uniform
national medication policies being undertaken by the Racing Medication
and Testing Consortium (RMTC) whose mission is to develop, promote and
coordinate, at the national level, policies, research, and educational
programs which seek to ensure the fairness and integrity of racing and
the health and welfare of racehorses and participants, and protect the
interests of the betting public.
The RMTC currently includes representatives of all major
horseracing and breeding organizations--including the NHBPA--from the
Thoroughbred, Quarter Horse and Standardbred industries including:
Track operators, regulatory bodies, horsemen's associations, breeders'
associations, breed registries, jockeys and other key stakeholders.
The NHBPA membership agrees that more effective regulation must
start by ``leveling the playing field'' and arriving at agreeable
national uniform standards that do not penalize responsible use of
therapeutic medication. Testing lab accreditation, specific regulatory
levels and withdrawal time guidelines are just a few of the critical
areas currently being developed through the RMTC, which has recently
circulated a set of proposed model rules to state racing regulators
(many have already adopted the rules into their racing statutes).
Track Work Rules
As previously addressed (pp. 9-12) the NHBPA firmly believes that
working together with state regulators, the racing industry is clearly
best suited to developing ``best practices'' needed to make racetrack
facilities as safe as possible for fans and participants.
For example, the issue of limiting field sizes is regularly
addressed and most racing departments limit field size in turf races
due to the tighter turns involved. Churchill Downs implemented a limit
to 20 horses in the Kentucky Derby due to safety concerns after 23
runners participated in the 1974 Kentucky Derby. Does OSHA limit the
size of the field of racecars in the Indianapolis 500?
The mandatory use of multiple cameras (front stretch head-on;
backstretch head-on and pan angles) at every licensed racetrack is
further evidence that racing is the most regulated sport in the U.S.
Every step of every race is caught on video and available to a board of
stewards one of whom is, typically, a retired jockey.
Adding additional $30,000 video cameras will not solve the problem
of reckless riding. Better education, training and stiffer licensing
standards will. The NHBPA was a founding member of the Groom Elite
Program (GEP) whose mission is to provide horsemen an opportunity for
professional and personal growth, by increasing their understanding of
the horse with which they work and enhancing their professional skills
(www.thehorsemeneliteprogram.com). GEP goes from state to state and
track to track providing continuing equine education for backstretch
licensees while also providing training in barn safety, first aid and
life skills (i.e. substance abuse prevention) in cooperation with
industry support groups such as the Winners' Foundation and the Race
Track Chaplaincy of America.
The NHBPA is also an active participant and Board member of the
North American Racing Academy (NARA) (www.naracingacademy.com)--a
national racing school for jockeys being developed by industry leaders
and led by retired Hall of Fame jockey Chris McCarron. NARA's mission--
``to develop and operate a world-class racing school which will provide
students with the education, training and experience needed to become
expert horsemen skilled in the art of riding racehorses and
knowledgeable in the workings of the racing industry as a whole''--fits
well within our view that better safety begins with better training and
higher standards. NARA would be in the business of preparing better
jockeys and horsemen. Working within the Kentucky Community and
Technical College System, NARA sees its role as providing the racing
industry with a national accredited vocational program designed to
provide students with coursework in various racing industry fields such
as: Regulation and officiating, track management, and life skills (i.e.
substance abuse prevention, nutrition and exercise, etc. . . .) in
addition to race riding.
While some might believe that mandatory drug and alcohol testing
programs might be the answer, we believe that education is the key.
The NHBPA would work with the ARCI and NAPRA in developing uniform
national model rules which would mandate higher licensing
requirements--including training in barn safety, first aid and
substance abuse prevention--for all critical licensees such as jockeys,
exercise riders and grooms. This approach would have the most immediate
effect on track safety and help to reduce accident/workers'
compensation insurance costs.
On-Track Injury Insurance/Workers' Compensation
As indicated in our May 19, 2005 written response to Rep.
Whitfield's request for information (see attached) and as cited
previously (pp. 5-6), the NHBPA has spent a great deal of time
researching the issue of on-track injury / workers' compensation
insurance, forming an industry task force in 2002--2003 designed to
study possible solutions. We encourage the committee to review NHBPA's
attached December, 2003 Report entitled ``Workers' Compensation
Mechanisms for Jockeys'' and our Workers' Compensation White Paper and
Task Force Report which are available on NHBPA's web site:
www.nationalhbpa.com.
The NHBPA Workers' Compensation Task Force outlined the findings of
the three task force groups that were formed to investigate solutions
to the crisis in workers' compensation. The common goal was to ensure
the long-run stability and affordability of insurance in the racing
industry. These groups believe insurance rates can be reduced by (1)
Increasing the use of effective plans to cover athletic participants,
namely jockeys and exercise riders; (2) Forming self-insured or
partially self-insured ``captive'' plans to make the industry more
attractive to insurers; (3) Developing a national database for
reporting on-track accidents and injuries; (4) Enforcing better
compliance and reporting practices and loss controls among horsemen
and; (5) Establishing better education and testing requirements for
licensees on the backstretch to promote a safer, more competent
workplace.
California was able to implement a well-designed partially self-
insured program while Louisiana is looking to follow suit. Other
states, such as New York, New Jersey and Maryland have already
implemented workers' compensation plans and Kentucky, pending
legislative approval, should have a similar plan in place shortly. This
notwithstanding, the large majority of racetracks has $500,000-
$1,000,000 on-track injury coverages in place. The key here is that
state racing industries may have differing needs and therefore might
have differing, yet effective, approaches to the issue of on-track
accident coverage.
We feel that the federal government's most useful role would be in
assisting and encouraging states in getting the local enabling
legislation needed in order to ``lay the groundwork'' on which they can
build an affordable program that is fair to all racing industry
stakeholders.
Mr. Whitfield. Thank you, Mr. Roark. Mr. Maline, you are
recognized for 5 minutes.
TESTIMONY OF MARTIN A. MALINE
Mr. Maline. Thank you, Mr. Chairman and members of the
committee. My name is Martin Maline. I am the Executive
Director of the Kentucky Horsemen's Benevolent and Protective
Association, a position I have held since February 1976. The
KHBPA is a trade association representing the interests of
approximately 6,000 owners and trainers of thoroughbred horse
racing in Kentucky. In addition, we also administer to the
needs of thousands of stable workers.
Susan Bunning is the current President of the KHBPA and
she, along with the ten-member Board of Directors, is elected
by a vote of the entire membership every 3 years. Susan,
incidentally, is the daughter-in-law of Senator Jim Bunning of
Kentucky. The KHBPA is an affiliate of the National HBPA, which
as John mentioned, represents approximately 48,000 horsemen in
the United States and Canada.
The KHBPA negotiates contracts with various racing
associations to assure that an equitable share of wagering
revenue adequately funds purses so that the racing industry
will thrive for horsemen in the State of Kentucky. One and a
half percent of the horsemen's share of wagering revenue is
allocated for the funding of the KHBPA. The organization is
audited on an annual basis by the accounting firm of Deming and
Malone.
In addition, the contracts specifically address myriad
issues that confront workers at racetracks. They include the
basic living needs of workers at the tracks and matters to make
a difficult and strenuous work environment a bit more
tolerable. These are issues of great importance to these
tireless workers and except for the efforts of the HBPA, may be
neglected.
Through our affiliation with the National HBPA, the KHBPA
provides free fire and disaster insurance. This has been
especially important to the horsemen stabled at Ellis Park in
Henderson, Kentucky, where a tornado touched down on November
6. Fortunately, there was no loss of human life at the
racetrack but several horses were killed or severely injured
and horsemen workers living at the track lost everything. As is
the custom of an organization that was built on the adage of
horsemen helping horsemen, we were there to support and offer
secure to the horsemen in need.
The havoc wreaked by the tornado occurred as the KHBPA was
in the midst of helping other horsemen afflicted by hardship.
There was a tragic trailer fire that killed four small children
of stable employees at Churchill. This loss, combined with the
damages at Ellis Park, gave a hastily planned fundraiser a new
sense of urgency. Horsemen struggled to come to terms with
losses that their fellow horsemen were being forced to endure.
The KHBPA provided benevolence to horsemen and stable
workers in need. In addition to medical benefits, housing,
emergency travel and legal advice, the HBPA employs a Hispanic
service coordinator to help our large Spanish-speaking
workforce navigate through barriers that at times can be
somewhat overwhelming. In many ways the backstretch community
is a microcosm of society where work conditions are hard and
living comfortably can be a challenge. As often, where these
types of conditions exist in society, drug and alcohol problems
are perhaps exacerbated. While the KHBPA has championed
recreation and social programs and provides financial support
for full-time Chaplains at each racetrack, there are still
people that struggle with addictive behavior.
For this reason the KHBPA, in conjunction with the Kentucky
Racing Health and Welfare Fund, developed the Thoroughbred
Addiction Counsel of Kentucky in an effort to arrive at a
solution that fits the unique problems of the sometimes nomadic
existence of the racetrack community. TACK has been recognized
by former President George Bush's Thousand Points of Light
program and received the Governor's Aware of Excellence. The
only expenditure of TACK are for the counselors, a bookkeeper
and maintenance of the Concord House, a halfway facility for
recovering racetrack workers. The rest of us volunteer our time
to this worthwhile project.
The KHBPA has actively lobbied for legislation advantageous
to the racing industry. The Backstretch Improvement Commission,
developed by legislation and spearheaded by the KHBPA, assures
that improvements that address living conditions for backside
workers remain a priority. The KHBPA has taken a firm stance on
the horseracing industry's efforts to address the health and
welfare of the sport's jockeys, exercise riders and backstretch
workers, including the issue of on-track injury insurance and
Workers' Compensation and other health and welfare issues faced
by the industry's workers.
The KHBPA supports the requirement that trainers carry
Workers' Compensation on their employees. Unfortunately, many
trainers in compliance with the regulation requiring Workers'
Compensation insurance have been caught in the web of the
Associated Industries of Kentucky insurance collapse. The
dilemma concerns independent contractors working in various
capacities at racetracks and training centers in Kentucky and
throughout the United States. This includes jockeys, freelance
exercise riders, pony people, horse trainers, veterinarians,
blacksmiths, feed suppliers and other workers in various
capacities on no one's particular payroll. Workers'
Compensation coverage applies only to actual employees and not
to the various independent contractors working at the
racetracks.
The KHBPA understands and appreciates the committee's
interest in addressing what is perceived as a tremendous
oversight on the part of the racing industry, allowing jockeys
to ride without adequate insurance. We listened to Gary
Birzer's testimony in front of this committee and we are deeply
saddened by his plight. His story is a tragic one but horse
trainers who are likewise usually self-employed share this
problem. Let me share with you the stories of two horse
trainers, both of whom were severely injured in riding
accidents this past year.
The first individual licensed as a horse trainer was
exercising a horse. The rein broke and the horse veered into
the rail. The trainer lost his arm due to the accident. Another
trainer was injured while astride one of her own horses when
the horse unexpectedly stumbled. She is now confined to a
wheelchair and will never walk again. Trainers are expected to
carry their own insurance. One did have limited coverage but
the other did not.
There are no easy answers but one consideration would be to
have the Racing Authority, the regulatory arm of the racing in
Kentucky, require everyone working as an independent contractor
to show proof of accident and disability insurance prior to
receiving a license. This approach would help to alleviate an
obvious deficiency and would assure that everyone working on
the backstretch of racetracks are receiving adequate coverage.
I have appreciated the opportunity to address you and I
thank you for your interest and concern.
[The prepared statement of Martin A. Maline follows:]
Prepared Statement of Martin A. Maline, Executive Director, Kentucky
Horsemen's Benevolent and Protective Association
My name is Martin Maline. I am the Executive Director of the
Kentucky Horsemen's Benevolent and Protective Association (KHBPA), a
position I have held since February, 1976. The KHBPA is a trade
association representing the interests of approximately 6,000 owners
and trainers of thoroughbred horses racing in Kentucky. In addition, we
also administer to the needs of thousands of stable workers.
Susan Bunning is the current President of the KHBPA and she, along
with the ten-member Board of Directors, is elected by a vote of the
entire membership every three years. Susan, incidentally, is the
daughter-on-law of Senator Jim Bunning from Kentucky.
The KHBPA is an affiliate of the National HBPA, which represents
approximately 40,000 horsemen in the United States and Canada. For a
three year period during the 1980s, in addition to my duties as the
KHBPA Executive Director, I served as the interim Executive Director of
the National HBPA.
The KHBPA negotiates contracts with the various racing associations
to assure that an equitable share of wagering revenue adequately funds
purses so that the racing industry will thrive in the state of
Kentucky. The agreements, which vary from racetrack to racetrack,
include provisions addressing the split of sponsorship revenues,
potential media rights, and revenue generated from the simulcasting of
and wagering on Kentucky's races in other locations outside the state.
One and one half percent of the horsemen's share of wagering revenue is
allocated for the funding of the KHBPA. The organization is audited on
an annual basis by the accounting firm of Deming, Malone, Livesay and
Ostroff.
In addition, the contracts provide for the implementation of funded
horsemen's committees that specifically address myriad issues that
confront workers at racetracks. These committees address the basic
living needs of workers at the track, and matters to make a difficult
and strenuous work environment a bit more tolerable. The committees
address such needs and lifestyle issues as housing, shower and restroom
facilities, cable television, recreation and social programs, and the
overall maintenance of the backstretch community and the racing
surface. These are issues of great importance to the tireless workers,
and except for the efforts of the HBPA, may be neglected.
The main office of the KHBPA is in Louisville, Kentucky in
proximity to Churchill Downs. The KHBPA also maintains satellite
offices at each of the five thoroughbred racetracks in Kentucky and at
the two largest training centers in Lexington and Louisville. This
allows us to have very hands-on and day-to-day contact with our
constituency and the racing workforce.
Through our affiliation with the National HBPA, the KHBPA provides
free fire and disaster insurance. This has been especially important to
the horsemen stabled at Ellis Park in Henderson, Kentucky, where a
large section of the barn area was obliterated by the tornado that hit
on November 6. Fortunately, there was no loss of human life at the
racetrack, but several horses were killed or severely injured and
horsemen and workers living at the track lost everything. As is the
custom of an organization that was built on the adage ``Horsemen
helping Horsemen,'' we were there to offer support and succor to the
horsemen in need. We provided housing to everyone displaced and began
the tedious process of assisting horsemen with the information required
by the insurance company. In addition to the fire and disaster
insurance coverage, as a member of the National HBPA Emergency
Assistance Committee I plan to apply to the committee, on behalf of the
Ellis Park horsemen, for financial help for the unfortunate victims of
this natural disaster.
The havoc wreaked by the tornado occurred as the KHBPA was in the
midst of helping other horsemen afflicted by hardship; we held a
fundraiser on Monday, November 7 that was originally scheduled to
assist the Louisiana horsemen displaced by Hurricane Katrina. While we
were arranging this event there was a tragic trailer fire that killed
four small children of stable employees at Churchill. This loss,
combined with the damage at Ellis Park, gave the fundraiser a new sense
of urgency. Horsemen struggled to come to terms with the losses that
their fellow horsemen were being forced to endure.
The KHBPA provides benevolence to horsemen and stable workers in
need. We work closely with the Kentucky Racing Health and Welfare Fund
(KRH&WF) to assure that assistance is provided when there is need. In
addition to medical benefits, housing, emergency travel and legal
advice, the KHBPA employs a Hispanic Services Coordinator to help our
large Spanish-speaking workforce navigate through barriers that at
times can be somewhat overwhelming. We are proud to say that hundreds
have been assisted in obtaining H-2 work visas and the process
continues daily.
In many ways the backstretch community is a microcosm of society,
where work conditions are hard and living comfortably can be a
challenge. Workers are usually transients, and the place they and their
family must call home often consists of one small room. The restroom
and shower facilities are, in some instances, a long walk from the
living quarters. As often where these types of conditions exist in
society, drug and alcohol problems are perhaps exacerbated. While the
KHBPA has championed recreation and social programs and provides
financial support for full-time chaplains at each racetrack, there are
still people that struggle with addictive behavior. For this reason,
the KHBPA, in conjunction with the KRH&WF, developed the Thoroughbred
Addiction Council of Kentucky (TACK). KRH&WF Chairman Don Ball
challenged me and KRH&WF Executive Director Richard Riedel to explore
various options in an effort to arrive at a solution that fits the
unique problems of the sometimes nomadic existence of the racetrack
community. We accessed the local communities surrounding the various
racetracks to locate counselors familiar with the in-patient treatment
centers in that specific region. As a horseman moves from track to
track, the counselors communicate, informing each other of the special
needs of the individual.
TACK has been recognized by former President George Bush's Thousand
Points of Light program and received the Governor's Award of
Excellence. The majority of funding for TACK is through a generous
contribution from the KRH&WF. TACK is a 501-C3 non-profit program and
is audited annually. The only expenditures of TACK are for the
counselors, a bookkeeper, and maintenance of the Concord House, a
halfway facility for recovering racetrack workers. The rest of us
volunteer our time to this worthwhile project.
The KHBPA has actively lobbied for legislation advantageous to the
racing industry. The Backstretch Improvement Commission, developed by
legislation and spearheaded by the KHBPA, assures that improvements
that address living conditions for backside workers remain a priority.
Stabling and shipping expenses and purse enhancements are also KHBPA
legislative initiatives designed to assist horsemen.
The KHBPA has taken a firm stance on the horse racing industry's
efforts to address the health and welfare of the sport's jockeys,
exercise riders, and backstretch workers, including the issue of on-
track injury insurance and workers' compensation, and other health and
welfare issues faced by the industry's workers. The KHBPA supports the
requirement that trainers carry workers' compensation insurance on
their employees, and we facilitate that process by providing the names
of carriers that specialize in the equine industry.
The dilemma concerns independent contractors working in various
capacities at racetracks and training centers in Kentucky and
throughout the United States. This includes jockeys, free lance
exercise riders, pony people (individuals who exercise horses while
astride another horse), horse trainers, veterinarians, blacksmiths,
feed suppliers, and others working in various capacities on no one's
particular payroll.
The KHBPA understands and appreciates the committee's interest in
addressing what is perceived as a tremendous oversight on the part of
the racing industry: allowing jockeys to ride without adequate
insurance. We listened to Gary Birzer's testimony in front of this
committee and we are deeply saddened by his plight. I had the
opportunity to observe Gary earlier in his career at racetracks in Ohio
and Kentucky, it was obvious that he loved being a jockey. His story is
a tragic one, but horse trainers, who are likewise usually self-
employed, have similar problems. Let me share with you the stories of
two horse trainers, both of whom were severally injured in riding
accidents.
The first individual, licensed as a horse trainer, was exercising a
horse for a friend and fellow horse trainer. The rein broke and the
horse veered into the rail. The trainer lost his arm due to the
accident. Another trainer, an accomplished horsewoman and horse
trainer, was injured while astride one of her own horses when the horse
unexpectedly stumbled. She is now confined to a wheelchair and will
never walk again. The KHBPA is in the process of purchasing a motorized
wheelchair for her, but it has been a tremendous emotional struggle for
her to accept.
Trainers are expected to carry their own insurance. One did have
limited coverage, but the other did not.
There are no easy answers, but one consideration would be to have
the Kentucky Racing Authority, the regulatory arm of racing in
Kentucky, require everyone working as an independent contractor in
Kentucky to show proof of insurance prior to receiving a license.
Currently, trainers are required to have workers' compensation at time
of licensing, but this is not strictly enforced. In addition, workers'
compensation coverage applies only to actual employees, and not to the
various independent contractors working at racetracks.
Mr. Whitfield. Thank you. Mr. Riedel, you are recognized
for 5 minutes.
TESTIMONY OF RICHARD RIEDEL
Mr. Riedel. Thank you, Mr. Chairman. Obviously the focus of
these hearings is on jockey's on-track insurance. As you will
hear from my testimony, the Kentucky Racing Health and Welfare
Fund is specifically excluded by statute from making payment on
those types of claims. However, this hearing is also about
other health and welfare issues faced by the industry's
workers.
I have been asked to testify how the Kentucky Racing Health
and Welfare Fund assists backstretch workers, including
jockeys, working in Kentucky. The payment of revenue from
Kentucky thoroughbred uncashed pari-mutuel tickets for the
Health and Welfare Fund was established by the Kentucky General
Assembly in 1978 to provide health and welfare benefits for
Kentucky's thoroughbred racing industry. We are not a State
agency. However, we do function within the perimeters of
Kentucky Revised Statute 230.374. We have an annual audit,
which is sent to the Kentucky Horse Racing Authority. We
maintain minutes, have open Board meetings and are responsive
to all public and private inquiries.
I am going to paraphrase from the Statute, which will
explain how we are funded and what we can provide and to whom.
One, All net uncashed thoroughbred racing tickets reported to
the Kentucky Horse Racing Authority shall be paid to the
Kentucky Racing Health and Welfare Fund, Inc. Two, the Kentucky
Racing Health and Welfare Fund is a non-profit, charitable
corporation. Three, it is organized for the benefit, aid,
assistance and relief of thoroughbred owners, trainers,
jockeys, valets, exercise riders, grooms, stable attendants,
pari-mutuel clerks and other thoroughbred racing personnel
employed in connection with racing and their spouses and
children.
Four, These individuals must demonstrate their need for
financial assistance connected with death, illness or off-the
job- injury. Five, the assistance that these individuals
receive may not be otherwise covered by union health and
welfare plans, Workers' Compensation, Social Security, public
welfare or any type of health, medical, death or accident
insurance. Six, the Fund shall receive payment on or before
December 31, provided that the Kentucky horse Racing Authority
and the Kentucky State Auditor's office are satisfied that the
Fund is, in all respects, being operated for the charitable and
benevolent purposes set forth in this section. The Fund has
always received the annual payment provided in the Statute.
Under the leadership of our Board of Directors, whose
members generously donate their expertise and time, the Fund
has developed a number of innovative health and welfare
benefits. We do much more than just pay medical bills. Our
staff is made up of dedicated individuals who execute their
duties with respect, dignity and humanity, while attending to
the needs of our clients, medical providers and other agencies.
We have a presence at Kentucky Thoroughbred Race Tracks and at
the major training centers.
Our staff assists in completing the application. They
assist in making appointments with a variety of medical
professionals and are involved in arranging after-care and
prescription medication. Generally, the client is seen by the
medical professional at no charge to them, as the provider
invoices the Fund directly.
Currently our annual maximum benefit is up to $20,000 with
most medical charges under that amount being paid at 100
percent. I have an exhibit that shows every disbursement for a
health related benefit made in 2004. Here you will find the
approved requests of approximately 1,024 individuals who
contacted us over 4,400 times, while submitting approximately
10,000 invoices for payment. Of those 4,400 approved and paid
contacts, approximately 3,700 or 83 percent were stable
employees, the largest working class and those in the greatest
need at any racetrack.
For fiscal year 2004, the Fund received $2.7 million.
During that year, the Fund spent $2.2 million in health-related
benefits, granted $500,000 for the Kentucky Racetrack
Retirement Plan, while spending $534,000 on the Fund's
administration and an additional $17,000 for the retirement
plan administration. In total, the Fund spent $3.6 million,
primarily for health-related and retirement benefits. In
addition, staff was able to negotiate down or redirect and
additional $587,000 in medical charges that would have been
otherwise paid by the Fund and $178,000 that would have been
the responsibility of our clients for payment.
In addition to our popular health and retirement program,
we participate in several other programs. The Fund provides
majority funding for the drug and alcohol counseling program,
the Thoroughbred Addiction Council of Kentucky or TACK. The Old
School Apartments, this was the conversion of a 100-year old
elementary school into 40 apartments for racetrack workers and
others who are low-income, who are at least 55 years of age or
disabled. The facility also contains office space for the Fund,
the TACK office, the Kentucky HBPA and our health service
center.
The Kentucky Racing Health Service Center is a joint
venture with the University of Louisville Schools of Nursing
and Medicine. This is a program that we hope to duplicate at
other Kentucky racing centers in an effort to promote healthier
living and control medical related expenses.
The redirection of a portion of our funding source to
finance a part of the jockey's Workers' Compensation insurance
cost in Kentucky has been discussed lately. I feel that this
would be unwise and very damaging to backside employees, who
are at the bottom of racing's economic scale. Our funding is
already threatened. We already live paycheck to paycheck. For
the Fund to be able to perpetuate our mission of helping the
most economically challenged of Kentucky's thoroughbred
racetrack workers, we must stay focused on soaring medical
costs, diverse demands for our services, modulations in the
workforce on Kentucky's backstretches, changing State and
Federal laws and the tightening budgets of other charities and
public and private agencies.
We monitor with uncertainty the unpredictable revenue
source from which we operate. Fueled by reports of substantial
declines in the pari-mutuel wagering in Kentucky, advancements
in electronic wagering, slots and/or casino gambling in Indiana
and West Virginia and the speculation of alternative forms of
gambling in Kentucky, all of which may further reduce our
source of revenue.
Thank you for this opportunity.
[The prepared statement of Richard Riedel follows:]
Prepared Statement of Richard Riedel, Executive Director, Kentucky
Racing Health and Welfare Fund, Inc.
I am Richard Riedel, Executive Director of the Kentucky Racing
Health and Welfare Fund, Inc. I have been asked to explain how the Fund
receives it funding, how our income is dispensed, to whom, and the
methods by which the Fund is administrated, as well as our relationship
with the Kentucky H.B.P.A. and other racing associations in Kentucky.
I would like to start by explaining our funding mechanism and
advance from there.
The payment of revenue from Kentucky Thoroughbred uncashed pari-
mutuel tickets to the Kentucky Racing Health and Welfare Fund, Inc. was
established by the Kentucky General Assembly in 1978 to provide health
and welfare benefits to Kentucky's Thoroughbred industry. We are not a
state agency; however we do function within the perimeters of Kentucky
Revised Statute 230.374. We are limited by the scope of this statute
and strive on a daily basis to uphold the letter and intent of the law.
I am going to paraphrase from the statute; which will explain how
we are funded and what we can provide and to whom.
1. All net uncashed Thoroughbred racing tickets reported to the
Kentucky Horse Racing Authority shall be paid to the Kentucky Racing
Health and Welfare Fund, Inc.
2. The Kentucky Racing Health and Welfare Fund is a non-profit
charitable corporation.
3. It is organized for the benefit, aid, assistance and relief of
Thoroughbred owners, trainers, jockeys, valets, exercise riders,
grooms, stable attendants, pari-mutuel clerks, and other thoroughbred
racing personnel employed in connection with racing, and their spouses
and children.
4. These individuals must demonstrate their need for financial
assistance connected with death, illness, or off-the-job injury.
5. The assistance that these individuals receive may not be
otherwise covered by union health and welfare plans, worker's
compensation, Social Security, public welfare, or any type of health,
medical, death, or accident insurance.
6. The Fund shall receive payment on or before December 31 provided
that the Kentucky Horse Racing Authority and the Kentucky State
Auditor's office are satisfied that the Fund is in all respects being
operated for the charitable and benevolent purposes set forth in this
section.
The Fund has always received the annual payment provided in the
statute.
As stated earlier, we are a Kentucky non-profit charitable
corporation and under the leadership of our Board of Directors, whose
members generously donate their expertise and time, the Fund has
developed a number of innovative health and welfare benefits and a
compassionate set of guidelines by which they are administered.
Currently the make up of the Board is:
Mr. Don Ball, Chairman. Mr. Ball is the appointee of the Chairman
of the Kentucky Horse Racing Authority. He is a successful Lexington
homebuilder, long time racehorse owner and breeder, and philanthropist.
He has been on the Board 17 years.
Mrs. Susan Bunning, Vice Chairman. Mrs. Bunning serves on the Board
via her position as the President of the Kentucky H.B.P.A. She is a
lawyer for a large regional bank dealing in equine related matters, and
is a third generation horsewoman. She has been on the Board since June
2002.
Mr. Dale Romans, Treasurer. Mr. Romans serves on the Board via his
position as the Vice President of the Kentucky H.B.P.A. He is a second
generation horseman and as of the end of October was the 9th leading
trainer in purses earned in the United States. He also has been on the
Board since June 2002.
Mrs. Carol Hebel, Secretary. Mrs. Hebel is the Governor of
Kentucky's appointment to our Board. She is a prominent Louisville
realtor, 2nd generation owner and breeder, and past president of the
Louisville Orchestra and Kentucky Derby Festival. She has been on the
Board since June 2002.
Dr. Randy Scheen, Member. Dr. Scheen is a prominent Louisville
Dermatologist and long time race horse owner who regularly donates his
time at the health fairs held on the backstretches of Kentucky's
racetracks each year. He joined the Board in 2004.
The organization strives to be transparent while leaving a lengthy
paper trail of its activities. The Board meets at least four times a
year, minutes of each meeting are taken and submitted to Board members
prior to the next meeting. They are then reviewed and voted on at the
next meeting. The minutes are open for public review and are kept in
the top drawer of a file cabinet on the right as you enter my office.
Each year's minutes are bound in black binders.
We are as financially prudent as possible. We have a check signing
policy. Board members are sent copies of monthly bank statements,
monthly activity reports and quarterly activity reports. They are also
sent case summaries every two weeks.
We are audited annually by an independent auditor and submit our
audit to the Kentucky Horse Racing Authority.
We have a policy of sending out an RFP every five years to various
investment firms to determine who will manage our accounts. We meet
regularly with the regional Director of Investments of our portfolios.
We also retain an independent financial advisor to monitor our
investment's performance on an annual basis.
Over the years the Board has developed a guideline manual that
contains all of the standards of eligibility and benefit allowances and
limitations. This manual is referred to on a daily basis by staff to
determine eligibility for requests for assistance.
We do much more than just pay medical bills. Our staff is
compassionate and dedicated, two of whom are bi-lingual. All execute
their duties with respect, dignity and humanity while attending to the
needs of our clients, medical providers, and other agencies. We have
offices located at Kentucky's racetracks, namely: Churchill Downs,
Keeneland, Ellis Park, Turfway Park, and The Thoroughbred Center, a
large training center which is owned by Keeneland.
Our staff assists with the completion of the application process
and authenticates the client's participation in racing by verifying
their Kentucky racing license and compensation. Once satisfied that the
individual is eligible, staff then makes an appointment with the
medical professional that is needed, be it the client's own medical
professional or a Fund referred professional. Our staff is involved in
arranging aftercare and prescription medication for the clients. In
most cases, the patient receives treatment and pays nothing, with the
medical provider invoicing the Fund. We generally pay providers within
two weeks of being invoiced.
The Fund also assists those who have already incurred medical
charges but do not have the resources for payment. We also reimburse
the clients who have used medical services that demanded payment at the
time of service. Any request for assistance that exceeds $4,500 is
reviewed by the Board prior to payment being made. Our policy is to
return all phone calls the same day that they are received and to
respond to written letters within five working days.
I have been a lifelong fan of horseracing, attending the races for
the first time when I was eight years old. I have been the Executive
Director of the Fund for 18 years, following a career of five years as
a full time stable employee, five years as a Thoroughbred race horse
trainer, and five years as an administrative assistant with the
Kentucky H.B.P.A. Along the way I earned an ABA in Business
Administration, have been happily married for 29 years, and raised a
lovely daughter who worked her way through college while working in the
racing industry.
When I was asked to serve as the Executive Director of the Fund in
1987 the maximum benefit available for any one individual on an annual
basis was 50% of the medical charges up to $4,000. At the time we did
not assist in making doctor and dental appointments for the clients.
All prescriptions had to be purchased by the client, who then sought
reimbursement.
Currently our annual maximum benefit is up to $20,000, with up to
an additional $5,000 for continuing medication in chronic cases. Most
incurred medical charges under that amount are paid at 100 percent. It
has been personally fulfilling to witness this organization mature and
bring to fruition the promise for which the Fund was created.
For Fiscal Year 2004 the Fund received $2.7 million in uncashed
tickets. During that year the Fund spent $2.2 million dollars in health
related benefits, granted $500,000 for the Kentucky Race Track
Retirement Trust, while spending $522,000 for the Fund's administration
and an additional $17,000 for the Retirement Plan administration.
In total, the Fund spent $3.6 million, primarily for health related
and retirement benefits. In addition, staff was able to negotiate down
or redirect an additional $587,000 in medical charges that would have
otherwise been paid out by the Fund and $178,000 that would have been
the responsibility of our clients for payment.
I have an exhibit that shows every disbursement for a health
related benefit made in 2004. Here you will find the approved requests
of approximately 1,024 individuals who contacted us over 4,400 times
while submitting approximately10,000 invoices for payment. Of those
4,400 approved and paid contacts, 3,700 or 83 percent were stable
employees, the largest working class and those in the greatest need at
any race track. Staying in compliance with HIPAA requirements, the
names of all individuals and their Social Security numbers have been
blacked out.
In addition to our popular health and retirement programs, we
participate in several other programs:
* The Fund provides majority funding for a drug and alcohol
counseling program, the Thoroughbred Addiction Council of Kentucky or
otherwise known as TACK. It owns its own sober living facility, the
Concord House, located within a two minute walk of Churchill Downs. The
Fund's Board of Directors was the originator of this project and the
Fund has been the main financial supporter of TACK since 1989.
* Six years ago we began a project in which we were the sponsors of
what was to become The Old School Apartments. This was the conversion
of a 100 year old elementary school into forty apartments for racetrack
workers and others who are low income and who are at least 55 years of
age or disabled. The facility also provides office space for the Fund,
the Thoroughbred Addiction Council of Kentucky, the Kentucky H.B.P.A.,
and our Health Service Center. The site is located one block from
Churchill Downs. In 2004 the building earned the Ida B. Willis Award,
Kentucky's most prestigious historical preservation award.
* Six years ago the Kentucky Race Track Retirement Plan was
established by the Kentucky General Assembly. It is a defined
contribution plan which is designed to benefit long term full time
trainers, assistant trainers, and stable employees in Kentucky's
Thoroughbred racing industry. As of December 31, 2004 the plan had 894
active members.
* The Kentucky Racing Health Service Center, which is a joint
venture with the University of Louisville Schools of Nursing and
Medicine and the Kentucky Racing Health and Welfare Fund, Inc. The
Health Service Center is a clinical setting of approximately 3,000
square feet where medical services are provided for free, with a
minimum of paperwork to the client, by medical professionals and
students. This program averaged 8.8 clients per session during it first
6 months of operation. It is open three days a week. This is a program
that we hope to duplicate at other Kentucky racing centers in an effort
to promote healthier living and control medical related spending.
* We have an ongoing outreach program in which we provide bi-
lingual newsletters delivered to all workers in each barn three times a
year. We also publish a bi-lingual guideline summary and resource
manual booklet that is distributed throughout each stable area and we
provide bi-lingual signage of upcoming Fund sponsored events in each
barn. We maintain an up-to-date website.
The Fund is also working, in conjunction with the chaplain at
Keeneland, on a curriculum that would serve as an orientation program
that will be held at the beginning of each race meet in Kentucky to
acquaint new stable employees and horsemen to the various agencies and
departments that are available at each particular track and the
benefits that are available. This will also serve to reacquaint
ourselves to those who have been on the track for a while. To my
knowledge this will be the first such program of its kind in the
country.
We have ongoing relationships with several organizations and
associations in Kentucky racing such as:
* Kentucky Horse Racing Authority--We submit our annual audits to
the Authority, I attend their monthly meetings and have made several
presentations to this body concerning the Fund. We have had Authority
members and representatives attend our meetings, which are always open
to the public. We are in communication with the Authority's staff to
verify current Kentucky license information and once a year they
provide a complete list of the prior year's license information for
trainers, assistant trainers, and stable employees which is vital in
administrating the Kentucky Race Track Retirement Plan.
* Kentucky H.B.P.A.--We have a close working relationship with this
organization whose initials are well known throughout the entire racing
community for their assistance to backstretch personnel and trainers.
When a client reaches his maximum benefit with the Fund or for some
reason is not eligible for benefits with the Fund his or her request is
often referred to the H.B.P.A. They also provide assistance that the
Fund does not provide such as: emergency housing, travel, and food
assistance. We also work with other H.B.P.A. affiliates in our region
to co-ordinate benefits for traveling clients who incur large medical
invoices or have ongoing prescription medication needs when they are
racing outside of Kentucky.
* The Kentucky Race Track Chaplaincy--There are four track
chaplains in Kentucky and between them, the Fund's staff is in
communication with one or more of them on a near daily basis. They walk
the stable area everyday; they know the people and see their problems.
They can often encourage a reluctant or unknowing individual to utilize
our services with a heartfelt referral. In addition to spreading God's
Word, they spread information regarding the Health and Welfare Fund.
* The Kentucky Thoroughbred Association--The KTA is one of two
horsemen's organizations in Kentucky with whom we work closely and also
has an interest in seeing that the Health and Welfare Fund benefits the
backstretch workers for whom it is intended. Representatives of the KTA
attend our Board meetings, display our brochures and newsletters in
their field office, and their Executive Director is the vice-chairman
of the Thoroughbred Addiction Council of Kentucky.
What follows are four abridged vignettes of how these organizations
interfaced within the last four weeks:
* A tornado touched down at Ellis Park at 2:00 a.m. on Sunday,
November 6, it destroyed 10 barns, part of the grandstand, and the
joint office we share with the Kentucky H.B.P.A. I learned of the
disaster about 8:30 a.m. I contacted Mr. Marty Maline, Executive
Director of the Kentucky H.B.P.A., who was already in route to Ellis
Park from his home in Northern Kentucky, about a 4 hour drive away. I
asked him to contact me if there was an immediate need that the Fund
could fulfill. Fortunately, only one stable employee living at the
track was injured. The next day he called me from Ellis Park. He was
standing with a stable employee who had been working at the track. He
was in need of regular prescription medications that the Fund had been
purchasing for him for the past several years. Mr. Maline told me that
the gentleman wanted to come to Louisville and he was arranging
transportation for him. He had enough medication left to last him for a
couple of days. While the Red Cross provided food and water, the
H.B.P.A. provided a hotel room for the gentleman. The next day the
chaplain from Ellis Park drove him to Churchill Downs, about a two hour
drive. He came to our office and we authorized payment for his
prescriptions which were filled at a nearby pharmacy. He has friends in
Louisville that he is staying with and it is my understanding that he
is now at Churchill Downs seeking employment. The Fund's representative
at Ellis Park is now working out of the track kitchen on an as needed
basis to help the displaced horsemen who are now training at Henderson,
Kentucky area training centers.
* On October 25, a fire in a mobile home killed four children in
Louisville. The parents, two separate families, of all four children
were stable employees at Churchill Downs. The chaplain at Churchill
Downs, representatives from the Kentucky H.B.P.A. and the Churchill
Downs Racing Committee, as well as others from the racing community and
the Louisville area, worked with the families, medical personnel, the
coroner's office, and emergency authorities in translating and
providing whatever assistance was needed. The Health and Welfare Fund
staff stayed in communication throughout with the chaplain and the
H.B.P.A. Local horsemen and business owners provided free hotel space
for the families and then a free apartment with donations of furniture,
clothing and food. A local funeral home donated its services, as did a
cemetery for three of the children. The body of the fourth child was
flown to Mexico for burial. The Fund's staff assisted in making
international arrangements and guaranteed payment for the remains to be
flown home and a headstone. We will assist with the funeral charges in
Mexico. The Kentucky H.B.P.A. arranged for roundtrip airfare for the
parents.
* During the last week of October, a former jockey, and now very
experienced exercise rider, was thrown hard from a horse she was
exercising at The Thoroughbred Center. She was galloping the horse on
which she was injured in a ``free lance'' capacity. She was in and of
consciousness for several days. One concerned horseman contacted me and
asked if the Fund could provide assistance. Since it was work related
the Fund could not. One of his concerns was that the trainer of the
horse did not have worker's compensation and that the trainer had
shipped his horses out of Kentucky immediately after the accident. I
told this horseman that I would try to find out if there was insurance.
With the assistance of the Kentucky Horse Racing Authority and
Keeneland's chaplain we were able to verify that the trainer did have
insurance and secured the name of the company. This information was
passed along to family members. The lady is now out of the hospital and
in a Lexington rehabilitation center where she is relearning to walk.
* On October 20, a groom at Keeneland was about to be barred and
ejected from the track for his inappropriate behavior when abusing
alcohol. Working with track security, the chaplain, the TACK counselor
at Keeneland, and the TACK counselor from Louisville, the gentleman
elected to enter the TACK counseling program, a 13 month program of
total abstinence. This arrangement was agreeable with track security
and they sought no further action. The gentleman was allowed to retain
his Kentucky racing license. The TACK counselor from Louisville
transported him from Lexington to Louisville where he entered a
detoxification program for 15 days. He was then enrolled in an
Intensive Outpatient Program and became a resident at the Concord
House, our transitional sober living facility. Two days after entering
the Concord House he secured employment at Churchill Downs while
continuing IOP classes and AA meetings. This was all done at no cost to
the client.
The backstretch of a racetrack is a magical and complex place. It
is a highly dangerous workplace for both the skilled and the unskilled
worker while being an active community which provides living quarters
for many who cannot afford housing or would otherwise be homeless and
unemployed as they cannot afford to travel with their jobs.
The redirection of a portion of our funding source to finance a
part of the jockey's workers compensation insurance costs in Kentucky
has been discussed lately. I feel that this would be unwise and very
damaging to the backside employees, who are at the bottom or racing's
economic scale. Our funding is threatened already.
For the Fund to be able to perpetuate our mission of helping the
most economically challenged of Kentucky's Thoroughbred racetrack
worker with a variety of programs that increase their standard of
living and quality of life, which ultimately provides an established
and healthy workforce, the administration of the Fund must stay focused
on soaring medical costs, diverse demands for our services through
changing medical technology, modulations in the work force on
Kentucky's backstretches, changing state and federal laws, and the
tightening budgets of other charities and public and private agencies.
We monitor with uncertainty the unpredictable revenue source from
which we operate; fueled by reports of substantial declines in the
pari-mutuel wagering in Kentucky, advancements in electronic wagering,
slots and/or casino gambling in Indiana, and West Virginia; and the
speculation of alternative forms of gambling in Kentucky, all of which
may further reduce our source of revenue.
Thank you for this opportunity.
Mr. Whitfield. Thank you. Mr. Giovanni, you are recognized
for 5 minutes and welcome back.
TESTIMONY OF JOHN GIOVANNI
Mr. Giovanni. Thank you, Mr. Chairman. Good afternoon, Mr.
Chairman, distinguished members of the subcommittee. My name is
John Giovanni. I am the former National Manager and Secretary
of the Jockey's Guild and I would like to thank you for
inviting me here again today to testify on these matters of
importance to the racing industry.
For over 40 years, I have dealt with Workers' Compensation
and racetrack accident insurance for jockeys and exercise
riders. I have done so both as a jockey subject to the benefits
of these very programs and also as the administrator of a
national organization charged with negotiating and providing
benefits for its members. I am experienced with these programs
as they relate to the racing industry, not as an expert on
Workers' Compensation. I was, however, substantially involved
with crafting the New York Workers' Compensation for jockeys, a
very successful solution to the problem. And so I shall
endeavor to render my opinion regarding both the programs
presently in place and those proposed.
Four States provide definitive Workers' Compensation plans
to cover jockeys. The other 34 racing States use a patchwork of
different insurance policies based upon an on-track accident
program that was once traditionally negotiated between the
Guild and the Thoroughbred Racing Associations, the TRA. I am
not referring to the $1 million supplemental on-track insurance
that the Guild used to have, but rather the basic on-track
insurance that the racetracks purchased. To the best of my
knowledge, the last of these Guild/TRA contracts was signed in
1999 and expired in 2002. The failure to renew this contract
left what had been at best an antiquated system in total
disarray. I do not believe there presently exists a data base
that can provide a list of tracks that are insured, companies
with which they are insured, eligibility for coverage or
exactly what the benefits are provided. This is truly a system
in need of major repair and overhaul.
The four States, which provide Workers' Compensation
Benefits for jockeys each approached the matter in a different
manner. California's plan is the oldest and most traditional in
that trainers are considered to be the employers of jockeys and
responsible for providing the Workers' Compensation Benefits.
The plan is extremely expensive and if I am not mistaken, in
recent years it began receiving some form of State subsidy.
The Maryland plan was enacted by the State Legislature in
1985 as a program originally designed to cover jockeys while
riding races and exercising horses during training hours. The
plan was capitalized by owners, who made contributions to a
special fund each time they started a horse in a race. Any
owner from any state, even a part owner, must pay a flat fee to
the program in order to race in the state. Through the intense
lobbying efforts of the Maryland Horsemen's Benevolent and
Protective Association, the plan was later amended to exclude
coverage for jockeys during training hours. Hence, jockeys are
covered by owners through their fund while riding in races but
horse trainers are obliged to pay for individual plans to cover
injuries to those same jockeys during training hours. In short,
the plan is inexpensive for horse owners, expensive for horse
trainers and to my knowledge, there is no mechanism in place to
guarantee that every trainer provides the required coverage.
New Jersey has a Workers' Compensation program that
combines features from the Maryland plan and traditional
Workers' Compensation. Basically, both owners and trainers must
contribute to the New Jersey fund. That is, the money in the
fund comes out of purses unless they can show employee coverage
for their employees though another business or Workers'
Compensation plan. The New Jersey plan left open for
interpretation the eligibility of jockeys under certain other
compensation plans that cover employees performing in a
different capacity and they were accepted in lieu of
contributions to the New Jersey Fund. I do not know if this
problem has ever been addressed or rectified.
The Commonwealth of Kentucky is considering a program of
Workers' Compensation in the racing industry. From the news
accounts that I have read and from a jockey's perspective, the
proposal is seriously flawed. Traditionally, employers pay for
the insurance and employees accept the benefits as the
exclusive remedy for an occupational injury. The Kentucky
proposal would have jockeys, horse owners and track operators
share the expense. Track operators would contribute a set
amount, relatively close to what they now pay for an on-track
accident policy. Horse owners would contribute $20 per starter
and jockeys would pay 10 percent of what they earn from a
winning ride.
By assessing only the winning rider, the plan penalizes
excellence and could lead to jockeys considering a move to
other States where they are more fairly compensated for their
work. As an example, the Kentucky Derby carries a $2 million
purse with 60 percent paid to the owner of the winning horse.
Ten percent of that sum is paid to the winning jockey. Under
this proposed scheme, the winning owner would pay $20 to the
insurance fund and the winning jockey would pay $12,000. This
huge disparity plays out through the entire purse structure.
Equally unfair to the jockeys is being force to pay a premium
for their own coverage and then forfeiting the right to
litigation over an injury that may well be the responsibility
of an owner, trainer or racetrack operator. There are several
other problems inherent in this plan and in my humble opinion,
it needs more study.
The New York plan was an effort during my tenure leading
the Jockey's Guild to provide Workers' Compensation coverage to
all licensed jockeys, apprentice jockeys and exercise riders in
the State of New York. The object was to provide benefits at
the lowest cost, close all the loopholes and eliminate
litigation. And this was accomplished by legislation providing
for a fund that for insurance purposes is the employer of all
licensed jockeys, apprentice jockeys and exercise riders, with
all licensed owners and trainers contributing to the fund.
Anyone who rides, no matter who they are actually employed by,
are covered under this plan, even exercise riders who are
freelance and considered independent contractors. In lieu of
the hundreds of individual policies, the fund purchases one
policy at considerable savings and by virtue of the occupations
of those covered under the plan, it isolates the greatest risk.
Certainly, trainers and stable employees receive injuries. It
is inherent in the business. But when an ambulance leaves the
racetrack, far more often than not the occupant is a rider.
The program in New York is called the New York Jockey
Injury Compensation Fund and I am very proud of my work in
initiating the plan. The ultimate goal was to see this plan
become a flagship for the entire industry covering not just
riders but all backstretch employees. Several years after its
adoption in New York, Dan Fick, who are the time was Executive
Director of the American Quarter Horse Association, and I
brought a proposed Federal plan based on the New York model to
Washington. However, we couldn't generate enough interest to
see it through to fruition.
It was and still is my belief that by amending the
Longshoremen and Harbor Workers Act, a national Workers'
Compensation plan can be put in place to best serve the needs
of the racing industry. I know it can be done at a reasonable
expense. Regional offices already exist around the country to
handle claims and the licensing data bases of Racing
Commissioners International and the North American Pari-Mutuel
Regulators Association would provide excellent weapons to deter
fraud and abuse.
In closing, Mr. Chairman, I respectfully recommend that
this subcommittee review the proposed national plan. It may be
of assistance to this committee in finding a viable solution to
the varied and woefully inadequate circumstances that exist
today.
Thank you for your time and your patience. If you have any
questions, I will be more than happy to answer them.
[The prepared statement of John Giovanni follows:]
Prepared Statement of John Giovanni, former National Manager and
Secretary, Jockeys' Guild, Inc.
Good afternoon Mr. Chairman and distinguished members of the
Subcommittee. My name is John Giovanni, I am the former National
Manager and Secretary of the Jockeys' Guild, Inc. And I would like to
thank you for inviting me here again today to testify on these matters
of great importance to the racing industry.
For over 40 years I have dealt with workers' compensation and race
track accident insurance for jockeys and exercise riders. I have done
so both as a jockey subject to the benefits of these varied programs,
and also as the administrator of a national organization charged with
negotiating and providing benefits for its members. I am experienced
with these programs as they relate to the racing industry, not as an
expert on workers' compensation. I was, however, substantially involved
with the crafting of New York's workers' compensation for jockeys--a
very successful solution to the problem--and so, I shall endeavor to
render my opinion regarding both the programs presently in place and
those being proposed.
Four states provide definitive workers' compensation plans to cover
jockeys, and the other thirty-four racing states use a patchwork of
insurance policies based upon an ontrack accident program that was once
traditionally negotiated between the Guild and the Thoroughbred Racing
Associations (TRA). I am not referring to the $1 million supplemental
on-track insurance that the Guild used to have, but rather the basic
on-track insurance that the race tracks purchased. To the best of my
knowledge, the last of these Guild/TRA contracts was signed in 1999 and
expired in 2002. The failure to renew this contract left what had been
at best an antiquated system in total disarray. I do not believe that
presently there exists a database that can provide a list of tracks
that are insured, companies with which they are insured, eligibility
for coverage, or exactly what benefits are provided. This is truly a
system in need of major repair and overhaul.
The four states which provide workers' compensation benefits for
jockeys each approach the matter in a different manner. California's
plan is the oldest and most traditional, in that trainers are
considered to be the employers of jockeys and are responsible for
providing workers' compensation benefits. The plan is extremely
expensive, and my understanding is that in recent years it began
receiving some form of state subsidy.
The Maryland plan was enacted by the state legislature in 1985, as
a program originally designed to cover jockeys while riding races and
exercising horses during training hours. The plan was capitalized by
horse owners who made contributions to a special fund each time they
started a horse in a race. Any owner from any state--even a part
owner--must pay a flat fee to the program in order to race in the
state. Through the intense lobbying efforts of the Maryland Horsemen's
Benevolent and Protective Association the plan was later amended to
exclude coverage for jockeys during training hours. Hence, jockeys are
covered by horse owners through their fund while riding in races, but
horse trainers are obliged to pay for individual plans to cover
injuries to those same jockeys during training hours. In short, the
plan is inexpensive for horse owners, expensive for horse trainers, and
to my knowledge there is no mechanism in place to guarantee that every
trainer provides the required coverage.
New Jersey has a workers' compensation program that combines
features from the Maryland plan and traditional workers' compensation.
Basically, both owners and trainers must contribute to a New Jersey
fund--that is, the money in the fund comes out of purses--unless they
can show employee coverage through another business or workers'
compensation plan. The New Jersey plan left open for interpretation the
eligibility of jockeys under certain other compensation plans that
cover employees performing in a different capacity and that were
accepted in lieu of contributions to the New Jersey Fund. I do not know
if this problem has since been addressed and rectified.
The Commonwealth of Kentucky is considering a program of workers'
compensation in the racing industry. From the news accounts I have
read, from a jockey's perspective the proposal is seriously flawed.
Traditionally, employers pay for the insurance and employees accept the
benefits as the exclusive remedy for an occupational injury. The
Kentucky proposal would have jockeys, horse owners, and track operators
share the expense. Track operators would contribute a set amount
(relatively close to what they now pay for an ontrack accident policy),
horse owners would contribute $20.00 per starter, and jockeys would pay
10% of what they earn from a winning ride.
By assessing only the winning rider, the plan penalizes excellence
and could lead to jockeys considering a move to other states where they
are more fairly compensated for their work. As an example, the Kentucky
Derby carries a $2,000,000 purse with 60% paid to the owner of the
winning horse. Ten per cent of that sum is paid to the winning jockey.
Under the proposed scheme the winning owner would pay $20.00 to the
insurance fund and the winning jockey would pay $12,000.00. This huge
disparity plays out through the entire purse structure. Equally unfair
to the jockeys is being forced to pay a premium for their own coverage
and then forfeiting the right to litigation over an injury that may
well be the responsibility of an owner, trainer, or track operator.
There are several other problems inherent in this plan, and in my
humble opinion it needs more study.
The New York plan was an effort during my tenure leading the
Jockeys' Guild to provide workers' compensation coverage to all
licensed jockeys, apprentice jockeys, and exercise riders in the state
of New York. The object was to provide benefits at the lowest cost,
close all the loopholes, and eliminate litigation. This was
accomplished by legislation providing for a fund that, for insurance
purposes, is the employer of all licensed jockeys, apprentice jockeys,
and exercise riders. All licensed owners and trainers contribute to the
fund and the Fund is deemed, for insurance purposes, the employer of
all licensed jockeys, apprentice jockeys and exercise riders. Anyone
who rides, no matter who they are actually employed by, is covered
under this plan--even exercise riders who are freelance and considered
independent contractors. In lieu of hundreds of individual policies,
the fund purchases one policy at considerable savings, and by virtue of
the occupations of those covered under the plan it isolates the
greatest risk. Certainly, trainers and stable employees receive
injuries--it's inherent in the business; but when an ambulance leaves
the race track, far more often than not, the occupant is a rider.
The program in New York is called ``The New York Jockey Injury
Compensation Fund'' and I am very proud of my work in initiating the
plan. The ultimate goal was to see this plan become a flagship for the
entire industry covering not just riders, but all backstretch
employees. Several years after its adoption in New York, Dan Fick, who
at the time was Executive Director of the American Quarter Horse
Association, and I brought a proposed federal plan based on the New
York model to Washington. However we couldn't generate enough interest
to see it through to fruition.
It was and still is my belief that by amending the Longshoremen and
Harbor Workers Act a national workers' compensation plan can be put in
place to best serve the needs of the racing industry. I know it can be
done at reasonable expense. Regional offices already exist around the
country to handle claims, and the licensing databases of Racing
Commissioners International and the North American Parimutuel
Regulators Association would provide an excellent deterrent to fraud
and abuse.
In closing, Mr. Chairman, I would respectfully recommend that this
Subcommittee review the proposed national plan. It may be of assistance
to this committee in finding a viable solution to the varied and
woefully inadequate circumstances that exist today.
Thank you for your time and your patience. If you have any
questions I will be happy to answer them.
Mr. Whitfield. Thank you, Mr. Giovanni. And at this time I
recognize Mr. Violette for his 5-minute opening statement.
TESTIMONY OF RICHARD A. VIOLETTE, JR.
Mr. Violette. Thank you. Thank you, Mr. Chairman, for
asking me to be here today. I am Richard Violette, Jr. I am
first and foremost a thoroughbred racehorse trainer and have
been training in New York for the last 20 years. I am also
Chairman of the New York Jockey Injury Compensation Fund and
have been so for the last 10 years.
Prior to 1990, the Fund did not exist. A lot of the
situations that have been discussed today, the disputes between
whether riders were independent contractors or employees, the
dispute on who was actually the employee, whether it was an
owner or trainer. Even though New York was already a Workers'
Compensation State for the riders, these disputes continued.
Lots of time and money was wasted at hearings and litigation
and during all this time, riders and their families went
without benefits while the disputes were ongoing.
In 1990, legislation was passed creating the New York
Jockey Worker Compensation Fund. It took a couple of years to
get off the ground. The Fund it a seven-man Board. Six of the
members are appointed by the two horsemen's groups within the
State and the seventh member is elected by the local New York
Jockey's Colony.
For Workers' Compensation purposes only, the Fund is
considered the employer of all the jockeys and apprentice
jockeys and the exercise riders. The Fund yearly bids out the
premium. For the last 8 years we have actually procured the
insurance from the New York State Insurance Fund. They are the
biggest provider for Workers' Compensation and disability
insurance in New York State. We also are governed and have to
supply assessments and regulations to the State Racing and
Waging Board on a yearly basis.
The owners and trainers are assessed on a three-tier
system. The owners have a portion of the purses earned every
race. This year it was .7 percent of the purses earned. The
trainers are assessed on a per-stall fee for stalls allocated
throughout the year and there is an up-front premium and that
is paid, which is $660 and it will be for next year, as well.
The cost of insurance has increased over the last 10 years. The
up-front premium used to be $150 but like everything else,
Workers' Comp certainly has kind of gone through the roof.
Here to report that it has been working, it seems to be a
cost-saving mechanism for both owners and trainers. Owners do
not have to acquire their own Workers' Compensation policy, as
they did before 1990. They are automatically in the Fund. The
Workers' Compensation Board assesses a value to one entity and
bases their Workers' Comp amount on the one entity, which is
the Fund. And I have to say we are pretty proud of the work we
have done. I have been blessed to be surrounded by a number of
Board members that are incredibly talented and kind-hearted an
motivated. Unfortunately, we lost one this week. Gordon Wooten
passed away. He was on-board since day one for the last 12
years. He was a breeder of Silver Charm who won the Kentucky
Derby.
But in a nutshell, the question certainly is out there from
the workers whether jockeys are independent contractors or
employees. But pragmatically and prudently to try to protect a
very valuable group within out industry, we basically stepped
forward and we did the right think, I believe. And I will be
available for any questions. Thank you.
[The prepared statement of Richard A. Violette, Jr.
follows:]
Prepared Statement of Richard A. Violette, Jr., Chairman, New York
Jockey Injury Compensation Fund, Inc.
INTRODUCTION
Thank you Chairman Whitfield and the members of the House
Subcommittee on Oversights and Investigations for your invitation to
appear before you today and to discuss how we in the New York racing
industry address on-track workers' compensation issues for jockeys,
apprentice jockeys and exercise riders.
My name is Richard A. Violette, Jr. I am a professional
thoroughbred race horse trainer and have been one for more than 20
years. I began my career as a trainer in New England at Suffolk Downs
and Rockingham Park. I am currently based at Aqueduct Race Track in
Queens, New York. My current stable consists of approximately 60
horses.
I am Chairman of the Board of Directors of the New York Jockey
Injury Compensation Fund, Inc. I have had the pleasure to serve as the
Fund's Chairman and as a member of the Fund's Board of Directors for
more than 10 years.
In addition to being the Fund's Chairman, I have also been
President of the National Thoroughbred Horsemen's Association since
2000 and have been a member of the Board of Directors of the New York
Thoroughbred Horsemen's Association since 1990. I serve, as do all of
the members of these Boards, on a pro bono basis. I was one of the
founders in 2000 of the New York Groom Education Program, which
educates backstretch workers on horse grooming techniques and English
as a second language.
I am pleased to report to you that the New York Jockey Injury
Compensation Fund has been successful in its mission to obtain workers'
compensation coverage to assure indemnity and medical payments to
injured jockeys, apprentice jockeys and exercise riders in New York and
be cost effective in the process.
BACKGROUND AND PURPOSE OF THE NEW YORK JOCKEY INJURY COMPENSATION FUND,
INC.
Prior to the establishment of the Fund, jockeys, apprentice jockeys
and exercise riders were often challenged in their claims for workers'
compensation benefits as being independent contractors and thus, were
not entitled to benefits.
The fact is that jockeys are a unique type of employee. It is not
unusual for them to be employed by several different employers (owners
or trainers) in the course of a day at the race track and in fact,
within a single hour. When pressed for coverage after an accident, it
would sometimes be argued that the trainer was the jockey's employer.
Such cases were pending before the New York Workers' Compensation Board
prior to the establishment of the Fund. This situation created special
and unusual problems from those encountered by an average employee
regarding identification of coverage and employment.
Similar problems arose with regard to the identification of which
employer is responsible for an injury because of the unusual and
distinctive jockey work environment. It is possible that a jockey may
have an injured back after riding for an hour, and it may be impossible
to determine which ride caused the injury even before getting to the
question whether the owner or trainer was the jockey's employer.
The result of such disputes was that the jockey and his family were
without means of income when there were disputes to determine which
employer was responsible or when the independent contactor defense was
raised. These problems resulted in wasted time and money by the
Workers' Compensation Board in hearing after hearing to evaluate and
determine cases and resulted in delays of benefits intended to be paid
under the New York Workers' Compensation Law.
Chapter 346 of the Laws of 1990 of New York was enacted and, in
addition to establishing the Fund, clarified the status of jockeys,
apprentice jockeys and exercise riders as employees under the Workers'
Compensation Law and established the Fund to procure workers'
compensation coverage for them. Chapter 386 embraced the concept of one
employer (the Fund) created by statute to provide coverage for a
particular group of workers, in this case, the jockeys, apprentice
jockeys and exercise riders who are injured on specified race tracks in
New York State. Employers are also the owners and trainers who pay
their assessed fee to the Fund each year.
By statute, the Fund was created as a not-for-profit corporation.
The Fund purchases coverage at a reduced rate, protecting owners and
trainers and benefiting all jockeys, apprentice jockeys and exercise
riders licensed for thoroughbred and quarterhorse racing on specified
tracks in New York. It permits the Workers' Compensation Board to make
an award against a single entity regardless of which owner or trainer
was responsible and never to have resort to the New York Uninsured
Employers Fund. With the New York Jockey Injury Compensation Fund,
coverage will always be in place. It is not, however, authorized to
obtain workers' compensation coverage for stable employees and other
backstretch workers at the race tracks.
Workers' compensation coverage obtained by the Fund is written by
licensed insurance carriers and is issued on a blanket basis. The Fund
currently obtains its worker's compensation coverage through the New
York State Insurance Fund, the largest workers' compensation and
disability benefits carrier in the state. The Fund does not issue
workers' compensation coverage nor does it assume any risks.
Workers' compensation premiums are paid from annual assessments of
all licensed owners and trainers racing in New York under Section 213
of the New York Racing, Pari-Mutuel Wagering and Breeding Law. Each
year, the Fund determines the total funding necessary to acquire
workers' compensation coverage and advises the New York State Racing
and Wagering Board of the assessment to be made for the ensuing year.
To assure for the equitable distribution of payments from owners
and trainers, the Fund establishes payment schedules that account for
certain factors including, where appropriate and applicable, (i) the
geographic location of a racing association or corporation at which the
owner or trainer participates, (ii) the duration of such participation,
(iii) the amount of purse earnings, (iv) the number of horses involved,
and (v) such other factors as may be determined by the Fund to be fair,
equitable and in the best interest of the racing industry. In addition,
by law, the amount is to be deducted from an owner's share of purses
may not exceed 1% per year.
The New York State Racing and Wagering Board requires any racing
association, including non-profit and quarterhorse racing associations,
to have each trainer utilizing the facilities of the association and
each owner racing a horse there, place on deposit with the horsemen's
bookkeeper of such association the amount to be established and paid in
the manner determined by the Fund.
The Fund is governed by a seven member Board, six of whom are
appointed by horsemen's organizations. The six board members who are
appointed by the horsemen's organizations serve two year staggered
terms. The effect of this structure is that no more than two members
are subject to reappointment in any two year period, assuring a
continuity of experienced representation on the Fund's Board. As a
result of recently enacted New York legislation, the seventh Board
member is elected every two years by a vote of all licensed New York
jockeys and apprentice jockeys. Some Board members have accepted
reappointments to their positions for two year terms on multiple
occasions.
The Board is responsible for the transaction of all Fund business
and the exercise of its powers and functions. The vote of four Board
members is necessary for the transaction of any Fund business. Board
members serve without compensation and are reimbursed for their
expenses incurred in the performance of their official duties.
The Fund is subject to the regulation and examination of the State
Racing and Wagering Board and is required to submit to the State Racing
and Wagering Board annually a financial report and a report of its
activities during the preceding year.
CONCLUSION
Since the Fund began its operations in 1991, it has made great
strides in assuring the availability of workers' compensation coverage,
thereby allowing injured jockeys, apprentice jockeys and exercise
riders to receive indemnity and medical payments without unnecessary
delay.
I am very proud of what we at the New York Jockey Injury
Compensation Fund have accomplished. I have been blessed to serve with
members of our Board that are incredibly intelligent, kind-hearted and
motivated. Without them, none of our accomplishments would have been
possible. On this note, this week Gordon Wooten, a long time Board
member, passed away. His input and insight will be dearly missed and
impossible to be replaced.
The Fund looks forward to continuing its mission working with the
New York racing industry to obtain workers' compensation for jockeys,
apprentice jockeys and exercise riders.
I would be pleased to answer any questions you may have.
Thank you.
Mr. Whitfield. Okay. Thank you, Mr. Violette. Mr. Daney,
you are recognized for 5 minutes.
TESTIMONY OF BERNARD J. DANEY
Mr. Daney. Thank you. My name is Bernard Daney. I am
Chairman of the Delaware Thoroughbred Racing Commission. I am
also Chairman Elect of the Association of Racing Commissioners
International and Board Member of the National Racing Compact.
In 1998, the State of Delaware, in conjunction with the Jockey
Guild, passed a law, which set $175,000 from the purse account
and $175,00 from the Delaware Racing Association, which is the
racetrack, in a fund to be administered by the Jockey Guild.
And the funds were to be deposited annually in a trust fund in
Lexington, Kentucky. The Thoroughbred Racing Commission signed
an agreement with the Guild on October 1, 1998, outlining 16
points of agreement that we would operate with the Guild and
quickly it came to fruition because we had in Delaware an
injured jockey, Julie Snellings, who was paralyzed. She was
drawing $250 a month from the Jockey Guild. We were able to
increase that to about $1,000 a month. About a year later we
increased it to $2,000 a month. But there was a sad story.
Because of her injuries, she passed away at a very young age.
What the program did, we were able to help a young lady when
she was in need.
The good relationship with the Guild continued. The
attorney in New York, Mr. Kennedy, came to Delaware on many
occasions to explain the Fund, the operation of the program
with the Guild and we had no problems operating with Mr.
Kennedy.
Sometime during 2001, the Guild moved their office to
California. The Commission lost all contact with responsible
employees in the Guild office. We made numerous requests for
data concerning coverage, et cetera. We got some replies but
many, many incomplete answers.
Because of the complete frustration with the Guild, the
Delaware jockeys presented a petition to the Commission to
remove the funds from the Guild, ``because they have not
managed the financial affairs of the Guild appropriately.''
That was May 23, 2003.
As a result of that petition, we went to the Legislature
and had them change the law. We took the funds out of the hands
of the Guild and we set up a Jockey Health and Welfare Board.
It consists of one of the Commissioners, a representative from
the Horsemen's Association, a representative from Delaware
Park, two jockeys and myself as an ex-officio member. And
because of doing this, we were able to do a little better with
the operation of the fund. The funds were taken out of the bank
in Kentucky and moved under the control of the Department of
Finance in Delaware.
We had no meetings with the Guild with the jockeys to
explain the program and programs of the Guild. The jockeys just
kind of floundered. A lot of them would come to us asking us
questions. We just had no answers for them because we couldn't
extract it out of the Guild.
At our Commission meeting on October 19, Mr. Fiss informed
us that all health plans would be suspended on October 21, 2005
and they were not going to accept any new jockeys from
Delaware. We had at least 15 jockeys who met our requirements
in 2005 and have not been insured by the Guild under our plan.
We do not know if they have any coverage to this day. It is
very disturbing to us and the people who are putting these
funds up. Mr. Fiss even said at that time, the Guild is kind of
running of money. Delaware is trying to help the Guild get some
extra coverage and help to our jockeys and we get little or no
cooperation from the Guild.
Remember, we have many jockeys who have high earnings. They
can buy their own insurance. They have enough money to do it.
They are in the top one-third. Look at the poor jockeys who are
in the middle income and the lower income. They need help from
us and they need help from the Guild. We believe it is time for
us to help the middle and the low-income jockeys. We hard how
25 percent of the fee goes to the agent, 10 percent of the fee
goes to the valet. They have families to raise and some of them
are not making enough money, not to buy food, let alone health
insurance.
Sorry if I get a little bit excited about helping the
jockeys. I can tell you a true story. About 25 years ago my
wife and I were in Pamlico. We watched a jockey fall and our
horse went down. He laid paralyzed on the ground and he has
been paralyzed to this day. He walks with two crutches and
luckily he is a steward at one of the tracks along the East
Coast so I have a personal responsibility to these young men.
Sorry.
Mr. Whitfield. Mr. Daney, thank you very much. And at this
time, we recognize Mr. Shapiro.
Mr. Daney. I can continue, if you don't mind?
Mr. Whitfield. Oh, okay. You are not through. Okay. Excuse
me.
Mr. Daney. Delaware, California, Maryland and other States
supply funds to help the jockeys. Delaware Park has a million-
dollar policy to cover jockey on-track injuries. All States
should have a supplement, as Delaware does to help support
medical, dental and vision policies of the Guild members. I
believe each track should follow the lead of Delaware Park and
provide the million-dollar policy for on-track.
I believe the industry should supply funds for the welfare
of the jockeys, similar to the millions that they are supplying
to the NTRA. Some of these funds should go for the safety and
welfare of the jockeys.
And last, I believe that the leading jockeys in this
country must stand up and take the leadership of the problems
of the middle and lower income jockeys. They must take the
leadership and take back the Guild. And I guess they have taken
my advice and have taken back the Guild. The Guild should be
run by people with experience and knowledge of the problems of
the jockeys. The leading jockeys must do this. Thank you.
[The prepared statement of Bernard J. Daney follows:]
Prepared Statement of Bernard J. Daney, Chairman, Delaware Thoroughbred
Racing Commission
RELATIONSHIP WITH THE JOCKEYS GUILD
1.) Statute became law June 1998. $175,000 from purse account of
the Delaware Horseman's Association and $175,000 from the Delaware
Racing Association (race track). Fund to be administered by the Jockeys
Guild (the Guild) and funds were deposited annually in trust account in
Lexington, Kentucky bank.
2.) The Delaware Thoroughbred Racing Commission (the Commission)
signed an agreement with the Guild October 1, 1998, outlining 16 points
of agreement.
3.) Good relationship with the Guild and their New York attorney,
Mr. Kennedy. Meeting held with the jockeys to explain the program at
Delaware Park by attorney, etc.
4.) Sometime during 2001 the Guild moved their office to
California. The Commission lost all contact with any responsible
employees in the Guild office. We made numerous requests for data
concerning coverages, etc. We got some replies but many incomplete
replies.
5.) Because of complete frustration with the Guild, Delaware
jockey's presented a petition to our Commission to remove funds from
the Guild ``because they have not managed the financial affairs of the
Guild appropriately.'' (May 23, 2003)
6.) We then went to the Delaware Legislature and requested and
received a new statute setting up a Delaware Jockeys Health and Welfare
Benefit Fund. The Jockeys Health and Welfare Benefit Fund shall be
administered by a Board, known as the Jockeys Health and Welfare
Benefit Board, comprised of 1 member of the Delaware Thoroughbred
Racing Commission, 1 member from the licensed agent under Chapter 101
of Title 3 or Chapter 4 of Title 28, 1 member of the Delaware
Horsemen's Association, and 1 representative from the organization that
represents the majority of the jockeys who are licensed and ride
regularly in Delaware, and 2 jockeys who are licensed and ride
regularly in Delaware. The Chairman of the Commission shall serve as an
ex officio member and vote on matters in the event of a tie vote on any
issue. Members shall be appointed by the Commission and shall serve 2-
year terms. In addition to providing funding for jockey health and
other welfare benefits, the fund may expend reasonable expenses for
administrative purposes. Funds were to be transferred from the contract
of the Guild to Department of Finance in Dover, DE.
7.) No meetings by Guild with jockeys to explain our program or
other programs of the Guild.
8.) At our Commission meeting of October 19, 2005, Mr. Albert Fiss
informed us that all health plans would be suspended on October 21,
2005 and they would not accept any new Delaware jockey's. We had at
least 15 jockeys who met our requirement in 2005 that have not been
insured by the Guild under our plan. We do not know if they have any
coverage. It is very disturbing.
9.) Delaware is trying to help the Guild to get some extra coverage
and help to our jockey's--we get little or no cooperation from the
Guild.10.) Remember, we have many jockeys who have high earnings; they
can buy the best coverage in the world. We also have ``middle income''
jockeys and have ``low income'' jockeys who need help with insurance
costs. I believe it is time for us to help the middle and low income
jockeys.
WHAT TO DO
1.) Delaware, California, Maryland and other states supply funds to
help the jockeys. Delaware Park has a policy of $1,000,000 to cover
each jockey for on-track racing injuries.
2.) All states should have a jockey supplement fund (as Delaware)
to help support the medical, dental, vision policies of the Guild
members.
3.) I believe each track should follow the lead of Delaware Park
and provide the $1,000,000 policy for on-track racing injuries.
4.) I believe the industry should supply funds for the welfare of
the jockeys similar to the millions that they supply to NTRA. Some of
these funds should go for the safety and welfare of the jockeys.
LAST
1.) I believe the leading jockeys in this country must stand up and
take some leadership in the problem of the ``middle income'' and ``low
income'' jockeys. They must take the leadership and take back the
Jockey Guild from outside interest and have the Guild run by people
with experience and knowledge of this problem of the jockey's.
or,
2.) The leading jockeys must form a new jockeys association and
have all jockeys resign and abandon the Guild as it is now constituted.
Mr. Whitfield. Absolutely. And you should have told them to
do it earlier than you did.
Mr. Daney. I am glad they listened to me.
Mr. Whitfield. Mr. Shapiro.
TESTIMONY OF RICHARD B. SHAPIRO
Mr. Shapiro. Mr. Chairman and members of the committee,
thank you in inviting me to testify before you. Fortunately,
this week the members of the Jockey's Guild voted to terminate
Dr. Gertmenien, Albert Fiss and Matrix Corp. For this reason, I
will not delve into the details with the problems the
California Horse Racing Board has had. I do however, sincerely
hope that those people are held accountable for their actions
in every sense of the law.
I would like to assure all of our jockeys that California
stands ready to assist the Guild and its members to return to
sound financial footing and maintain the much needed health
insurance they deserve. I have already spoken to members of the
Guild and offered my assistance and the California assistance
that we can lend to them during this difficult time of
transition. I hope that all tracks and associations will step
up and help the Guild rebuild itself.
California provides approximately $1 million a year for
jockeys health and welfare insurance. These monies are derived
from uncashed refunds of pari-mutuel tickets. This program
began in 1997 and to date, has resulted in over $4.4 million
being given to the Jockey's Guild through 2004. As we speak, we
have approximately $1.5 million available to continue to pay
toward jockey health insurance.
We have also obtained initial quotes for alternative health
insurance from Blue Cross/Blue Shield and we will look forward
to working with the new managers of the Guild to determine the
best possible coverage for our riders.
California backside workers, including the jockeys, are
also covered by Workman's Compensation Insurance. To offset the
high cost of this insurance, the California Horsemen's Safety
Alliance was formed and incorporated into California racing
law. Since 2002, tracks and horsemen have contributed
approximately $22 million toward Workman's Comp insurance.
If Gary Birzer's accident had occurred in California, he
would have been entitled to unlimited medical care, unlimited
disability payments and unlimited rehabilitation. Further, had
he signed a waiver of the liability under the TRA program
funded by California tracks, he would have received additional
catastrophic injury insurance. In my opinion, it is
unacceptable for any track in any State to provide any less
than what California provides to our valued jockey partners.
In addition to the California Health and Welfare Plan and
Workman's Compensation Insurance, California also provides the
following to backside workers and jockeys: Medical and dental
clinics through the California Thoroughbred Horsemen's
Foundation. California Thoroughbred Trainers administer a
pension program for backside workers and trainers with net
assets, with current assets, of $33 million. The Disabled
Jockey Endowment and Don McBeth Jockey Fund receive charitable
race day proceeds from all thoroughbred racing associations.
Ultimately $2 million will be set aside for disabled riders.
Recreational programs and facilities are provided at each track
by the Gregson Foundation and the California Thoroughbred
Trainers. Drug and alcohol counseling is provided by the
Winners Foundation and religious services are provided by the
Racetrack Chaplaincy of America.
The California Horse Racing Board, in conjunction with the
Thoroughbred Owners of California, CTT and all of our
thoroughbred tracks, have initiated a comprehensive health
study to determine optimum health conditions for jockeys. This
comprehensive study is intended to lead us to a better approach
to establish safe riding weights for riders based on scientific
principles, such as body composition, height, gender, age and
other variables that the current approach does not take into
account. We cannot continue to accept the notion that one size
fits all. The industry needs to ensure that weight management
is done safely and in a manner that maximizes athletic
performance. It is critical, however, that all tracks adopt a
uniform scale of weights. It is my hope that the entire racing
community, including the jockeys, will participate with us in
this national study.
Racing throughout the country is facing a transformation.
Many jurisdictions, including California, are facing very
difficult times. With the advent of casino-style gaming at
racetracks in many jurisdictions those without the alternative
gaming are fighting for their economic lives. In California
alone, two of our five major tracks have been sold and are
likely to cease operating as racetracks. The result of this
disadvantage has been that our purses cannot keep pace with
gaming States and consequently, we are losing horses and
horsemen to other States throughout the country. Our existence
is in jeopardy.
Racing needs help to regulate issues that reach farther
beyond one state's borders. With the advent of simulcasting,
advance deposit wagering and the Internet, we face a host of
problems that need to be addressed. Illegal offshore wagering
today is estimated at hundreds of millions of dollars. This
money is not reaching our betting pools and therefore doesn't
benefit the horsemen, the tracks or the States where racing is
being conducted. We need your help to stop this illegal
activity. If we can bring that money back to our racing pools,
there will be more money available to pay for new track
surfaces, better insurance programs and better health and
welfare plans.
I know that some people in horseracing will not like to
hear me advocate any Federal oversight but I look to you to not
constrain us but to help an industry in transition. I ask that
you help preserve the billions of dollars invested by tracks,
horse owners, trainers and all participants in a sport they
love. I ask that you help us save the tens of thousands of jobs
created by this industry. We are at the beginning of a new
century, yet we are a sport of tradition, pageantry and a rich
history. We are a sport made up of wonderful people from all
walks of life. Please help us find a way to insure and employ
all our participants profitably. Help us have an incentive to
not tear down tracks but build tracks. Help us root out those
that try and cheat us and take our product beyond our borders.
Help us establish common limitations and guidelines on
medications to protect our horses.
Racing needs your support to adapt to changing times so it
can be healthy for centuries to come. Again, thank you for all
the work that you are doing.
[The prepared statement of Richard B. Shapiro follows:]
Prepared Statement of Richard B. Shapiro, Commissioner, California
Horse Racing Board
Mr. Chairman and Members of the Committee, thank you for inviting
me to testify before you on ``Thoroughbred Horse Racing Jockeys and
Workers: Examining On-Track Injury Insurance and Other Health and
Welfare Issues.''
My testimony is intended to cover four specific topics. They are;
1. Issues and Challenges with the Jockeys' Guild
2. California's Efforts to Provide Health and Welfare Coverage for
Jockeys and Backstretch Workers
3. Track Safety
4. Competitive Factors and Federal Oversight
JOCKEYS' GUILD
In October 2004 I became a Commissioner on the California Horse
Racing Board. It was about that time that I read of the horrible
situation where Gary Birzer, a jockey I had met one time at Mountaineer
Park had been rendered paralyzed in a racing incident. I recall when I
met Gary I was very impressed with his work ethic--working horses in
the mornings, racing in the evening--always with a smile on his face.
When I heard that unlike California there was no adequate accident
insurance in place to cover his expenses, I was outraged. How could
this possibly be? I placed on our monthly agenda an item for discussion
to insure something like this could never occur in California. I
specifically asked that Dr. Gertmenian appear to address our concerns.
He didn't show up. Mr. Albert Fiss did attend the meeting, but when
asked what steps the Guild was taking to make certain that all of our
jockeys were insured, I was given evasive and non-responsive answers.
Things only got worse from there. You see, California does provide
Workman's Compensation coverage for its backside workers, including the
riders, and further, California provides over a million dollars a year
to the California Health and Welfare Plan, specifically for jockeys
that ride at least 50 races in California and 100 races in a calendar
year (Exh.1). But when I asked Mr. Fiss if the Jockeys in the jockeys'
room had all registered for the coverage, he never answered my question
as he didn't know. This was unacceptable to me. The Jockeys' Guild
should know so.
The Guild receives approximately $1 million each year from
California for insurance coverage for the California riders. The health
plan insuring riders in California is part of a Guild self directed or
self insurance plan, that covers all riders in the country. The money
derived from California is to be used only for the California riders.
We, along with the TOC, have asked repeatedly for the Guild to show
that our money is being used for its intended purpose, and to address
many concerns related to the Guild (Exh. 2). They have failed to do so.
We are not satisfied that our money is being spent for purposes that it
was intended, and we are concerned it is being co-mingled with other
Guild funds and jockey payments for health insurance. We are
unconvinced that we are not subsidizing health insurance for riders in
other states.
We are also very concerned, given the Guilds' apparent financial
straits, that there is insufficient funding to pay for claims,
particularly in the event of a bankruptcy. The Guild has not even
collected almost $1 million of dues from its own members, including
large sums from its current Board members. Given the pattern of
misrepresentation by the Guild, it is questionable that the Symetra
excess policy (Exh. 3) may not be enforceable. We also are alarmed that
within one year of the current Guild management taking over, the Jockey
Disabled fund has been depleted from $1,327,083 in 2001 to $0 in 2003.
We still don't know where that money went, and how disability expenses
increased to over $850,000 in 2002 versus $194,000 in 2001 (Exh. 4).
The Guild is required to provide to us and the Thoroughbred Owners
of California, who are also party to the agreement, audited statements
for each year's actual expenditures. The Guild has failed to timely
comply with this requirement, and only when we insisted that it be
done, did we finally receive audits on September 9, 2005, for the years
ending 2003 and 2004 (Exh. 5). Those reports highlighted varying
concerns of its own auditors, as contained in the Management Letters
from the auditors. Concerns included lack of proper controls,
allocation of funds, and other procedures that should have been
implemented by the Guild (Exh. 6).
Additionally, we note that of the approximate $1 million dollars
contributed by California, approximately 51% of the money provided to
the Guild is used for Administrative expenses (Exh. 7). The Guild
retains a plan administrator, but they also claim approximately 15%, or
$150,000 for Guild administrative expenses. We need to know why nearly
50 cents of every dollar is not going to our jockeys' health benefits.
It is also interesting to note that since 1997 the self directed health
plan of the Guild has increased in cost by 83% as compared to the
CalPERS increase of 67.2% for the same period. (Exh. 8)
In early 2005, we advised the Guild that we wanted to see
alternative health insurance quotes from outside insurance companies.
We asked that they competitively bid the insurance coverage. As we sit
here today, the Guild has not only failed to seek out any competitive
bids, but we have asked for census data so we could obtain alternative
bids, and they have failed to provide that information to us, despite
repeated requests. Just this past week, I called the Guild asking to
speak with Dr. Gertmenian or Albert Fiss, their controller, neither of
them were available. I was told that David Shepard, their Chairman was
there, but he never returned my call. The purpose of my calling was to
simply ask them to authorize the company that administers the health
insurance plan to release census data to an insurance broker who
specializes in racing related health insurance. I do not want to see
this Guild implode and render our jockeys without health insurance.
Notwithstanding their total lack of efforts, I have obtained
preliminary quotes for medical insurance from Blue Cross or Blue Shield
for our California jockeys (Exh. 9). But without the census data we
cannot get firm quotations. I ask you to ask Dr. Gertmenian to sign the
release of information (Exh. 10) I have before me, so that we can
protect our jockeys. If he really cares about these men and women and
their families, I can't imagine he wouldn't immediately sign this
document.
At your hearing on October 18th, Dr. Gertmenian testified that
California had conducted an audit of the Guild and was satisfied. Let
me be very clear with respect to his testimony. His statement was
completely untrue, and he knows it. We have never been satisfied with
the Guild's performance, and the California Horse Racing Board in an
open meeting voted unanimously to proceed with a forensic audit of the
Guild as a result of that dissatisfaction. (Exh. 11)
As a result of our ongoing problems, and the non responsiveness and
untimely performance of the Guild, we have determined that we will have
the State of California Department of Finance undertake a forensic
audit of the Guild, which is commencing as we speak (Exh. 12). Until
such time that we are satisfied that the money provided to the Jockey
Guild is being spent appropriately and for its intended purpose, it
will be my recommendation to the California Horse Racing Board that all
future payments be withheld from this Jockeys' Guild.
All of the California racing industry is dedicated to the welfare
of our valued riders. It is unconscionable what happened to Gary
Birzer. It is unacceptable that this Guild would not provide
replacement wheelchair wheels to a paralyzed rider by the name of Gary
Donahue. It is unacceptable that riders who asked questions were thrown
off their Board of Directors. And it is horrifying to hear that guild
management refers to Gary Birzer as a ``casualty of war''. There is no
war; Gary Birzer is only a casualty of the inept management of this
organization.
If Gary Birzer's accident had occurred in California, he would have
been entitled to unlimited medical care, disability payments and
rehabilitation. Further, had he signed a waiver of liability under the
TRA program funded by California tracks, he would have received
additional catastrophic injury coverage. In my opinion, it is
unacceptable for any track, in any state, to provide any less than what
California provides for our valued Jockey partners.
I am convinced that with real Guild leadership--not a group of
people looking to wage war--all of the racing industry can and will
come together to take care of the riders who put their lives on the
line every time they mount a horse.
CALIFORNIA'S EFFORTS TO PROVIDE HEALTH BENEFITS FOR ITS BACKSTRETCH
WORKERS:
As mentioned previously, California provides approximately $1
million dollars a year for Jockeys Health and Welfare Insurance. These
monies are derived from uncashed refunds of pari-mutuel tickets. This
program began in 1997, and to date has resulted in over $4,411,000
(Exh. 13) being given to the Jockey's Guild through 2004 for Jockey
Health Insurance.
California backside workers, including the jockeys, are covered by
Workman's Compensation insurance (Exh. 14). To offset the high cost of
this insurance, the California Horsemen's Safety Alliance was formed
and incorporated into California Racing Law. Since 2002 and through
2005 approximately $11,250,000 has been contributed by tracks and
horsemen to offset the cost of Workman's Compensation expenses. In
2004, an additional section was added to California Racing Law, which
provided that an additional .5% of the takeout on exotic wagers would
be used to further defray the high cost of Workman's Compensation
Insurance. Since May of 2004 and through October 2005, an additional
$11,300,000 of monies has been collected for costs associated with
Workman's Compensation Insurance for our backstretch workers and
jockeys.
In addition to the California Health and Welfare Plan, and
Workman's Compensation Insurance, California also provides the
following monies and services for jockeys and backside employees:
1. Medical and dental care is provided to all backstretch workers by
the California Thoroughbred Horsemen's Foundation.
2. Backstretch workers and trainers participate in a pension program
administered by the California Thoroughbred Trainers
Association. Current assets under management are $33 million.
3. Disabled Jockey Endowment and the Don McBeth Jockey fund are funded
from charitable race day proceeds from all Thoroughbred racing
associations. Ultimately, $2 million will be set aside for
these disabled riders. Between 2003 and 2005 to date
approximately $425,000 has been donated to these causes.
4. Recreational programs and facilities at each race track are provided
and sponsored by the California Thoroughbred Trainers, the
Gregson Foundation, the Racetrack Chaplaincy, and each of our
racing associations.
5. Drug and alcohol counseling is provided to all backside workers by
the Winners Foundation.
6. Religious services and ministry services are provided by Race Track
Chaplaincy of America.
The California Horse Racing Board in conjunction with the
Thoroughbred Owners of California, California Thoroughbred Trainers and
all of our thoroughbred tracks, have also initiated a comprehensive
health study to determine optimum health conditions for jockeys. This
comprehensive study, a draft of which is attached to my written
testimony, is entitled ``Athletic Performance in Jockeys: A Baseline
Study of Physiological and Nutritional Factors.''(Exh.15) This study is
intended to lead us to a better approach to establishing safe riding
weights for riders based on scientific principles such as body
composition, height, gender, age and other variables that the current
approach does not take into account. We cannot continue to accept the
notion that ``one size fits all''. The industry needs to develop better
nutritional training and monitoring practices to ensure that weight
management is done safely and in a manner that maximizes athletic
performance.
It is my hope that the entire racing community, including jockeys,
will join with us and participate in this study to determine not only
optimum and minimum standards for riders, but also establish a
reasonable scale of riding weights that is implemented throughout the
country.
TRACK SAFETY
All of our race tracks in California are maintained in excellent
condition. Our horsemen's organizations including the California
Thoroughbred Trainers (CTT) and Thoroughbred Owners of California (TOC)
are vigilant in working with our race tracks to insure the safest
possible conditions for both horses and riders.
I believe that the California Horse Racing Board was the first
regulatory agency to adopt track safety regulations and require track
maintenance plans and inspections. Let me just cite a couple of the
racing law and regulations that are in existence in California:
Horse Racing Law:
(Section 19481) required the CHRB to adopt safety standards
governing track base and racing surface, rails, gaps, turf access,
lighting, equipment, drainage, communications, veterinary services,
medical and ambulance services, track inspection procedures, housing
regulations for workers and inspection of housing facilities.
California Horse Racing board Regulations were adopted
specifically:
(Section 1468) governs emergency procedures, communications, and
ambulance services.
(section 1469) governs safety of race course
(section 1471) establishes track safety standards and inspections
requirements
(section 1472) establishes rail construction and track specifications
(section 1473) governs renovation of dirt track
(section 1474) governs maintenance of dirt rack and requires written
track safety maintenance program
Prior to the issuance of any license to conduct any race meeting,
the CHRB conducts inspections and the racing association must satisfy
the CHRB that all procedures are in place before the granting of the
license. It is also customary for track safety to be discussed between
the representative groups, jockeys, and the California Horse Racing
Board to insure that the track surface is safe at all times. When and
if there are concerns, it is the policy of the California Horse Racing
Board, and all of our tracks, to immediately address the problem and if
the track is deemed to be unsafe for any reason, racing will not be
permitted until the problem has been remedied.
California, through UC Davis and a variety of organizations, has
participated in a variety of studies to maintain and develop the safest
possible track surfaces. As evidence of this commitment to track
safety, just recently Hollywood Park determined that its new Turf
Course was not fit for racing, and all turf racing at the meeting that
just commenced was cancelled.
COMPETITIVE FACTORS AND FEDERAL OVERSIGHT
Racing throughout the country is facing a transformation. As part
of this process many jurisdictions, including California are facing
very difficult times. With the advent of casino style gaming at
racetracks in many jurisdictions, those without the alternative gaming
are fighting for their economic lives. In California alone, two of our
five major tracks have been sold and are likely to cease operating as
race tracks. Unfortunately, California only has casino style gaming on
Indian lands. The result of this disadvantage has been that our purses
cannot keep pace with gaming states, and consequently we are losing
horses and horsemen to other states throughout the country. (Exh. 16)
But aside from California, racing needs help to regulate issues
that reach farther beyond one states borders. With the advent of
simulcasting, advance deposit wagering, and the internet, we face a
host of problems that need to be addressed. Illegal off shore wagering
today is estimated at hundreds of millions of dollars. This money is
not reaching our betting pools, and therefore doesn't then benefit the
horsemen, tracks or the states where racing is being conducted. We need
your help to stop this illegal activity. If we can bring that money
back to our racing pools, there will be more money available to pay for
new track surfaces, better insurance programs and better health and
welfare plans.
We need consistent racing laws and rules that apply to all
jurisdictions to insure a safe and level playing field. Uniform
medication rules, uniform scale of weights, uniform minimum standards
for riders and uniform insurance coverage, including Workman's Comp
coverage in all states.
I know that some people in the horse racing industry will not like
to hear me advocate any federal oversight, but I look to you not to
constrain us, but to help an industry in transition. I ask you to help
preserve the billions of dollars invested by tracks, horse owners,
trainers, and all participants in a sport they love. I ask that you
help us save the tens of thousands of jobs created by this industry. We
are at the beginning of a new century, yet we are a sport of tradition,
pageantry, and a solid historical background. We are a sport made up of
wonderful people from all walks of life. Please help us find a way to
insure and employ all of our participants profitably. Help us have an
incentive to not tear down tracks, but build tracks. Help us root out
those that try and cheat us and take our product beyond our borders.
Help us establish common limitations and guidelines on medications to
protect our horses. Racing needs your support to adapt to changing
times, so it can keep the sport healthy for centuries to come
Again, I would like to thank you for taking the time to conduct
this hearing and inviting me to address you.
Appendix
All attachments to Mr. Shapiro's testimony can be viewed online at
the Committee's hearing website: http://energycommerce.house.gov/108/
Hearings/11172005
hearing1709/hearing.htm
Mr. Whitfield. Thank you, Mr. Shapiro. And at this time,
Mr. Monahan, we will recognize you for 5 minutes on behalf of
the Quarter Horse.
TESTIMONY OF DICK MONAHAN
Mr. Monahan. Mr. Chairman, thank you for the opportunity to
appear at this hearing on behalf of the American Quarter Horse
Association. I am currently an AQHA National Director and
Chairman of the AQHA Racing Committee and Racing Council, which
governs quarter horse racing throughout the United States.
I have been involved in American Quarter Horse Racing as an
owner and breeder since 1970 and since 1975 have been involved
in the management of small racetracks in the State of
Washington where I live. I am a trial lawyer in Walla Walla,
Washington to pay for my horse habit.
Issues involving the health and welfare of jockeys and
other workers at racetracks are of utmost important to the AQHA
and AQHA members involved in racing. Just what is an American
Quarter Horse? If you have ever seen a horse in one of rodeo's
timed events, been along for work on a ranch or watched a
Western on a big or small screen, nine times out of ten you
have witnessed an American Quarter Horse.
Located in Amarillo, Texas, AQHA remains the world's
largest equine association, registering more than 4.5 million
American Quarter Horses and serving currently more than 350,000
members. The Association has more than 1.2 million active
owners. According to the recently completed study by the
American Horse Council, the National Economic Impact of the
Horse Industry on the United States, American Quarter Horses
made up approximately 15 percent of the 845,000 horses racing
or breeding for racing in the U.S. And account for about 6
percent of the $10.7 billion direct economic impact of racing
in the United States. About $340 million is wagered each year
on American Quarter Horse racing.
I share these figures so that the committee will understand
where American Quarter Horse racing fits within the horseracing
industry in the U.S. While we are not a large segment of the
racing industry, the leadership role AQHA plays and has played
in the industry is vital. We are committed to the safety of the
jockeys, exercise riders and other backstretch workers and the
horses involved in our product. AQHA has always done its part
to benefit all of the horseracing and those who participate and
the membership stands ready to do that as well, now.
Over the years, AQHA Racing Committee and Council has
discussed track safety and issues to ensure the safety and
fairness of racing. Since 2002 alone, AQHA has invested more
than $600,000 working with other industry associations on
various issues such as a racetrack surface study. We
participated heavily in the Racing Medication and Testing
Consortium and conduct regularly assistant starter workshops to
assist gate workers with properly handling horses behind and in
the gate, to protect horses, jockeys and the wagering public,
to ensure safety and fairness.
Since 1960 and thanks in large part to our generous
members, AQHA and the American Quarter Horse Foundation has
contributed more than $5 million in research grants to colleges
and universities to study various issues and diseases that
affect all breeds of horses, not only racing American Quarter
Horses.
With respect to the jockeys and exercise riders, almost all
of those who ride American Quarter Horses also ride other
breeds. For this reason, they are included in any agreements
reached regarding insurance, be it health insurance or
catastrophic insurance and any jockey can join the Jockey's
Guild who chooses to do so.
AQHA has never been directly involved in the negotiations
that produced agreements regarding insurance in the past.
Rather we have relied on the Jockey's Guild and the
Thoroughbred Racing Association to finalize all of those
agreements. This does not indicate any lack of interest or
concern, only recognition that other organizations were able to
reach acceptable agreements in the past that include American
Quarter Horse racing. We have always participated in and
utilized the final product and appreciated the efforts of all
concerned to protect these individuals.
As did many others, we watched with concern as the
leadership of the Jockey's Guild changed, causing a strain in
the traditional processes and relationships. As the committee
has learned, the path to the current situation in the racing
industry regarding protection of our jockeys has been
unfortunate but we do not believe it is permanent.
Efforts to resolve this issue were started some time ago
and a great deal of work has gone into it. We are confident
that the industry can resolve this issue, as it has done in the
past. The will always has been there but new circumstances have
changed the regular order. We believe that this too will change
and that the previous order will be restored.
The industry makes every effort to make racing as safe as
possible. Racing surfaces are groomed between every race to
keep surfaces in the best shape. Races are canceled when
condition, weather or jockeys raise concerns. New surfaces are
being explored and used all the time.
At AQHA, we believe these issues can be resolved by the
industry by working together. The process has begun and the
industry is working on a resolution. That may involve a new
paradigm but it will happen and AQHA will be involved.
We appreciate your committee's involvement in this
important process. Clearly, it has already spurred some
changes. We expect that such change will continue and the
jockeys and other workers will be protected and insured as
before, if not better. Thank you very much for the opportunity
to participate in these hearings.
[The prepared statement of Dick Monahan follows:]
Prepared Statement of Testimony of Dick Monahan, American Quarter Horse
Association
Good afternoon. Thank you for the opportunity to appear at this
hearing on behalf of the American Quarter Horse Association. I am Dick
Monahan, Chair of the AQHA's Racing Council.
I have been involved in American Quarter Horse Racing as an owner
and breeder since 1970. Since 1975 I have been involved in the
management of small racetracks in eastern Washington.
I am currently an AQHA National Director and Chairman of the AQHA
Racing Committee, a 90-member oversight committee, and the Racing
Council, a 9-member steering committee.
I am a trial lawyer in Walla Walla, Washington to pay for my horse
habit.
Issues involving the health and welfare of jockeys and other
workers at racetracks are of utmost importance to AQHA and AQHA members
involved in racing.
Just what is an American Quarter Horse? If you have ever seen a
horse in one of rodeo's timed events, been along for work on a ranch or
watched a Western on the big or small screen, 9 times out of 10 you
have witnessed an American Quarter Horse.
These heavily muscled, compact horses could and can run a short
distance over a straightaway faster than any other horse,, The fastest
were called Celebrated American Quarter Running Horses by--English
colonists in the 1600s.
The American Quarter Horse established a reputation as the greatest
cattle roundup and trail driving horse in history and were also popular
with early American racing enthusiasts. To ensure the unique qualities
of this breed be preserved, a group of American Quarter Horse
enthusiasts met in Ft. Worth, Texas in 1940 to establish what has to
become the largest equine breed registry in the world, the American
Quarter Horse Association.
Located in Amarillo, Texas, AQHA remains the world's largest equine
Association, registering more than 4.5 million American Quarter Horses
and serving more than 350,000 worldwide members. The Association has
more than 1.2 million active owners.
AQHA functions as the official record keeping and governing body of
the American Quarter Horse industry. AQHA records all American Quarter
Horse ownership, processes, approved show and race results, catalogs
performance and produce data on all American Quarter Horses, maintains
association funds and publicizes the American Quarter Horse industry
through three magazines.
In addition, AQHA maintains current statistics on ownership in each
state and country as well as American Quarter Horse population figures.
With nearly 161,000--new registrations in 2004, AQHA's role in
preserving the integrity of the breed is expanding on a daily basis.
Whether American Quarter Horses are still being used in traditional
ranching operations, for showing, racing or pleasure, AQHA strives to
provide services beneficial to all Association members and ultimately
the American Quarter Horse.
AQHA MISSION STATEMENT
* To record and preserve the pedigrees of the American Quarter
Horse while maintaining the integrity of the breed.
* To provide beneficial services for its members that enhances and
encourages American Quarter Horse ownership and participation.
* To develop diverse educational programs, material and curriculum
that will position AQHA as the leading resource organization in the
equine industry.
* To generate growth of AQHA membership via the marketing,
promotion, advertising and publicity of the American Quarter Horse.
AQHA Racing Mission Statement
* To insure the long-term viability of American Quarter Horse
racing by increasing racing opportunities and developing, as well as
retaining, new owners in state and international venues.
* To record complete race results, records, past performance
information and related racing statistics for the American Quarter
Horse racing industry.
* To recognize the worthwhile achievements of American Quarter
Horses in racing.
AQHA supports and promotes American Quarter Horse racing, which is
authorized in twenty-five states, although a good portion of that is at
state and county fairs with only a few days of racing at each fair.
According to the recently completed study by the American Horse
Council, the National Economic Impact of the Horse Industry on the
United States, American Quarter Horses make up approximately 15% of the
845,000 horses racing or breeding for racing in the U.S. and account
for about 6% of the $10.7 billion dollars direct economic impact of
racing in the U.S. About $340 million is wagered each year on American
Quarter Horse racing.
I share these figures so that the Committee will understand where
American Quarter Horse racing fits within the horse racing industry in
the U.S. While we are not a large segment of the racing industry, the
leadership role AQHA plays in the industry is vital. We are committed
to the safety of the jockeys, exercise riders, other back stretch
workers and the horses involved in our product. AQHA has always done
its part to benefit all of horse racing and those who participate, and
the membership stands ready to do so now.
Over the years the AQHA Racing Committee and Council has discussed
track safety and issues to insure the safety and fairness of racing.
Since 2002 alone, AQHA has invested more than $600,000 working with
other industry associations on various issues such as: 1. Racetrack
Surface Study to determine the effects of various surfaces on horses
legs and how to reduce or eliminate catastrophic injuries, 2. The
Racing Medication and Testing Consortium whose mission is to develop,
promote and coordinate, at the national level, policies, research, and
educational programs which seek to ensure the fairness and integrity of
racing and the health and welfare of racehorses and participants, and
protect the interests of the betting public; and 3. Conducting
assistant starter workshops to assist gate workers with properly
handling horses behind and in the gate to protect horses, jockeys and
the wagering public to insure safety and fairness.
Since 1960, and thanks in large part to its generous members, AQHA
and the American Quarter Horse Foundation has contributed more than
five million dollars in research grants to colleges and universities to
study various issues and diseases that affect all breeds of horses, not
only racing American Quarter Horses.
Today, there are no racetracks that exclusively offer American
Quarter Horse racing. Instead, it is offered in a mixed format with
other breeds, primarily Thoroughbreds, American Paint Horses and
Arabians.
With respect to the jockeys and exercise riders, almost all of
those who ride American Quarter Horses also ride other breeds. For this
reason, they are included in any agreements reached regarding
insurance, be it health insurance or catastrophic insurance and any
jockey can join the Jockeys' Guild who chooses to do so.
AQHA has never been directly involved in the negotiations that
produced agreements regarding insurance in the past. Rather we have
relied on the Jockeys' Guild and the Thoroughbred Racing Association to
finalize such agreements. This does not indicate any lack of interest
or concern, only recognition that other organizations were able to
reach acceptable agreements in the past that include American Quarter
Horse racing. We have always participated in and utilized the final
product and appreciated the efforts of all concerned to protect these
individuals.
As did many others, we watched with concern as the leadership of
the Jockeys' Guild changed, causing a strain in the traditional
processes and relationships. As the Committee has learned, the path to
the current situation in the racing industry regarding the protection
of our jockeys has been very unfortunate. But we do not believe that it
is permanent.
Efforts to resolve this issue were started some time ago and a
great deal of work has gone into it. We are confident that the industry
can resolve this issue as it has done in the past. The will always has
been there, but new circumstances have changed the regular order. We
believe that this too will change and that the previous order will be
restored.
The industry makes every effort to make racing as safe as possible.
Racing surfaces are groomed between every race to keep surfaces in the
best shape. Races are cancelled when conditions, weather or jockeys
raise concerns. New surfaces are being explored and used - all the
time.
At AQHA, we believe these issues can be resolved by the industry by
working together. The process has begun, carriers have been contacted,
and the industry is working on a resolution. That may involve a new
paradigm, but it will happen and AQHA will be involved.
We appreciate your Committee's involvement in this important
process. Clearly it has already spurred some changes. We expect that
such changes will continue and that jockeys and other workers will be
protected and insured as before, if not better.
Thank you very much for the opportunity to participate in these
hearings.
Mr. Whitfield. Thank you, Mr. Monahan. And at this time we
recognize Mr. Haire, who I understand you are the interim head
of the Jockey's Guild. Is that right, Mr. Haire?
Mr. Haire. Yes.
Mr. Whitfield. Glad to have you here. You are recognized
for 5 minutes.
TESTIMONY OF DARRELL HAIRE
Mr. Haire. Thank you. Thank you, Mr. Whitfield. Mr.
Chairman and members of the subcommittee, I am Darrell Haire
and I am the former National Member Representative for the
Jockey's Guild and presently, effective 2 days ago, I am the
organization's temporary national manager. Before going to work
for the Guild, I was an active rider for 15 years.
First of all, I would like to thank the committee for
inviting me to testify and to thank you for conducting these
hearings. Your willingness to take a hard look at our industry,
including uncovering mismanagement at the Guild has been eye
opening to say the least. The letters that you have sent to
Federal agencies asking them to look into establishing health
and safety standards for jockeys have been circulated to every
jockey's room in the country. I can't tell you how much it
means to the jockeys around the country that the U.S. Congress
has shown such an interest in our welfare.
Today, I am here to give you four concrete steps that we
need to help us. A jockey's life is tough and the job is very,
very dangerous. Except for the top jockeys, the pay is not
great. The average jockey makes about $35,000 a year. Why do we
do it? Plain and simple, because we love the sport and we are
professional athletes dedicated to our craft.
Of the thousand or so active riders around the country,
every year some of us will be killed or made quadriplegics. You
met Gary Birzer last month and in just the last 2 weeks,
Michael Lapannese died as a result of an on-track accident at
Suffolk Downs. And yesterday, 16-year-old apprentice jockey
Josh Radosevich was fatally injured as a result of a spill at
Beulah Park in Ohio. And in the last 2 years, Michael Rowland
and Christopher Quinn died as a result of injuries on the
track. In addition to Gary Birzer, jockeys Shannon Campbell and
Remi Gunn sustained injuries so severe that they were left
paralyzed. While we understand and accept the dangers that we
face on the job, what we can't understand is why, in an
industry so wealthy, we do not enjoy the same basic protections
that virtually every other worker in this country, including
almost all professional athletes, have enjoyed for the last 100
years.
Except in four States, California, New York, Maryland and
New Jersey, jockeys are not covered by Workers' Compensation
insurance. If we are injured, we must somehow get by with the
mere $100,000 in medical coverage at many tracks and at some
tracks, $1 million in coverage. One track, Mount Pleasant
Meadows in Michigan, provides no on-track coverage at all and
all the jockeys there are required to waive their rights as a
condition of working. What coverage that exists is not
guaranteed and can be cutoff at any time. Such coverage is
plainly inadequate. Workers' Compensation does provide lifetime
medical coverage for a work-related injury, indemnity benefits
if you are permanently disabled and temporary wage replacement,
while you are recovering from your injuries.
Whatever else you can say, our little union cannot afford
to shoulder the burden of the inevitable on-track injuries, the
cost of healthcare for our families and providing for the
permanently disabled. It is breaking the back of the Jockey's
Guild. It is simply an impossible burden for us to bear.
We need your help desperately. We need you to make the
horseracing industry accept the burden that all other
industries shoulder by amending the Interstate Horse Racing Act
to require that, as a condition of broadcasting a signal,
Workers' Compensation coverage must be in place.
The California Supreme Court recognized jockeys' workers
rights in 1941 and he Commonwealth of Kentucky is considering
requiring such coverage now. However, the horseracing industry
in Kentucky wants the jockeys to help pay for their own
Workers' Compensation coverage. This violates the basic
principle of the Workers' Compensation Law, that workers give
up the right to sue for their injuries in order to receive
coverage in a no-fault, no-cost system. We put up our lives.
They need to put up the premium.
Four States out of 38 racing States require Workman's
Compensation coverage and that must change. Second, we need
Congress to amend the Interstate Horse Racing Act to include
jockeys in the provisions that the racing signal cannot be
broadcast unless the horsemen have in place agreements to
compensate them for their media rights. Jockeys were left
simply out of this requirement when the law was passed and it
is critical that we, as professional athletes, are given the
same rights as all of the other elements of the industry. We
deserve to have a revenue stream that fairly and adequately
compensates us for the value of our image and the talent that
we bring to horseracing.
Third, we need national health and safety standards for
jockeys. This means uniform standards for appropriate jockey
minimum weights, track conditions and emergency response. The
California tracks owners and trainers, as well as the
California Horse Racing Board, are working in cooperation with
us to study jockey health, with an aim of coming up with weight
standards that don't require jockeys to do terrible things to
their bodies to make weight. As you know, every day in this
country, jockeys make themselves vomit, sit in sweatboxes for
hours and take diuretics to lose weight. Just last Saturday,
Chris Herrel, a 31 year old jockey riding at Churchill Downs in
Kentucky died suddenly after a history of engaging in extreme,
but all too common, weight reduction practices. He is not the
only one. Six months ago, 21-year-old jockey Emmanuel Sanchez,
who was riding at Colonial Downs in Virginia, died in similar
circumstances.
One far-thinking State like California cannot do it alone
or it will create an unfair, competitive balance between racing
States. The weight standards in this country need to be
medically sound, not arbitrarily based on the body size of
jockeys in the middle of the 19th century. Every day across the
country, our members get on horses dizzy, sick, hungry and
dehydrated because of what they do to themselves. Surely
together we can come up with a national standard for weight
that is safe for us and won't hurt the horses.
The same thing is true for track conditions and emergency
response. Today there are still places in this country that
lack properly equipped ambulances and trained personnel who can
administer advanced life support to downed jockeys. Precious
minutes are allowed to pass before jockeys receive appropriate
emergency medical treatment. Those moments can be the
difference between life and death.
With regard to track conditions, there is no reason why
there should not be a national minimum standard for track
safety rails, safety reins or safety equipment, established
through the OSHA system.
Fourth, the National Labor Act needs to be amended
explicitly to recognize our collective bargaining rights. The
NLRB's decision to exclude horseracing from its jurisdiction
leaves a gap in labor law enforcement that works to the
detriment of the jockeys. The Guild has been collectively
bargaining on behalf of the jockeys for years but has no
protection against unfair labor. The NLRB must be called into
play.
Mr. Chairman, jockeys, tracks and horsemen needs to be
working together for the betterment of our industry. Our
members love this sport and have dedicated their lives to it.
We believe that if we all put our heads together, we can solve
our mutual problems for the betterment of the sport.
Mr. Chairman, that concludes my opening statement. I am
available to answer any questions you may have.
[The prepared statement of Darrell Haire follows:]
Prepared Statement of Darrell Haire, Interim National Manger, Jockeys'
Guild
Mr. Chairman and Members of the Committee: I'm Darrell Haire, and
I'm the Interim National Manger of the Jockeys' Guild. Before going to
work for the Guild, I was an active rider for 15 years.
First of all, I would like to thank the Committee for inviting me
to testify and to thank you for conducting these hearings. Your
willingness to take a hard look at our industry, including uncovering
mismanagement at the Guild, has been eye opening--to say the least. The
letters that you have sent to federal agencies asking them to look into
establishing health and safety standards for jockeys have been
circulated to every jockeys' room in this country.
I can't tell you how much it means to the jockeys around the
country that the United States Congress has shown such an interest in
our welfare. Today, I am here to give you four concrete steps that we
need to help us.
A jockeys' life is hard and the job is very, very dangerous. Except
for the top jockeys, the pay is not great. The average jockey makes
about $35,000 a year. Why do we do it? Plain and simple, because we
love the sport and we are professional athletes dedicated to our craft.
Of the thousand or so active riders around the country, every year
some of us will be killed or will be made quadriplegics. You met Gary
Birzer last month, but in just the last two weeks, Mike Lapannese died
as a result of an on-track accident at Suffolk Downs. And in the last
two years, jockeys Michael Rowland and Christopher Quinn died as a
result of injuries sustained at the track and, in addition to Gary
Birzer, jockey Shannon Campbell and Remi Gunn sustained injuries so
severe that they were left quadriplegics. Many more jockeys, like Gary
Boulanger, Rick Wilson, Myra Truitt, Jim Burns, Ron Warren, and Tony
D'Amico have suffered severe or career ending injuries in just the last
several years. While we understand and accept the dangers that we face
on the job, what we can't understand is why, in an industry so wealthy,
we do not enjoy the same basic protections that virtually every other
worker in this country--including almost all professional athletes--
have enjoyed for the last 100 years.
Except in four states--California, New York, Maryland and New
Jersey--jockeys are not covered by workers' compensation insurance. If
we are injured, we must somehow get by with a mere $100,000 in medical
coverage at many tracks and, at some tracks, a million dollars in
coverage. One track, Mt. Pleasant Meadows in Michigan, provides no on-
track accident coverage at all and jockeys are required to waive all
rights as a condition of working. What coverage exists is not
guaranteed and can be cut off at any time. Such coverage is plainly
inadequate. Workers' compensation provides lifetime medical coverage
for a work-related injury, indemnity benefits if you are permanently
disabled, and temporary wage replacement while you are recovering from
your injuries.
Whatever else you can say, our little union cannot afford to
shoulder the burden of inevitable on-track injuries, the cost of health
care for our families, and providing for the permanently disabled. It
is breaking the back of the Jockeys' Guild. It is simply an impossible
burden for us to bear.
We need your help desperately. We need you to make the horseracing
industry accept the burden that all other industries shoulder and
require that every state, not just the far thinking states that have
already stepped up to the plate, to provide workers' compensation
coverage for jockeys and exercise riders. This can be accomplished by
amending the Interstate Horseracing Act to require that, as a condition
of broadcasting a signal, workers' compensation coverage must be in
place.
The California Supreme Court granted workers' compensation coverage
to jockeys in 1941 and the Commonwealth of Kentucky is just considering
requiring such coverage now. However, the horseracing industry in
Kentucky wants the jockeys to help pay for their own workers'
compensation coverage. This violates the basic principle of workers'
compensation law: that workers' give up the right to sue for their
injuries in order to receive coverage in a no fault, no cost system. We
put up our lives, they need to put up the cost of the premium. Four
states out of 38 racing states require workers' compensation coverage
and that must change.
Secondly, we need Congress to amend the Interstate Horseracing Act
to include jockeys in the provisions that the racing signal cannot be
broadcast unless the horsemen have in place agreements to compensate
them for their media rights. Jockeys' were simply left out of this
requirement when the law was passed and it is critical that we, as
professional athletes, are given the same rights as all of the other
elements of the industry. We deserve to have a revenue stream that
fairly and adequately compensates us for the value of our image and the
talent that we bring to horseracing.
Third, we need national health and safety standards for jockeys.
This means uniform standards for appropriate jockey minimum weights,
track conditions, and emergency response. The California tracks,
owners, and trainers as well as the California Horse Racing Board are
working with cooperatively with us to study jockey health with an aim
of coming up with weight standards that don't require jockeys to do
terrible things to their bodies to make weight. As you know, every day
in this country jockeys make themselves vomit, sit in sweatboxes for
hours, and take diuretics to lose weight. Just last Saturday, Chris
Herrel, a 31 year old jockey riding at Churchill Downs in Kentucky,
died suddenly after a history of engaging in extreme--but all too
common--weight reduction practices. He is not the only one. Six months
ago, 21 year old jockey Emmanuel Sanchez, who was riding at Colonial
Downs in Virginia, died suddenly in similar circumstances.
One far-thinking state, like California, cannot do it alone or it
will create an unfair competitive balance between racing states. The
weight standards in this country need to be medically sound, not
arbitrarily based on the body size of jockeys in the middle of the 19th
century. Every day across this country, our members get on horses
dizzy, sick, hungry, and dehydrated because of what they do to
themselves. Surely, together we can come up with a national standard
for weight that is safe for us and won't hurt the horses.
The same is true for track conditions and emergency response.
Today, there are still places in this country that lack properly
equipped ambulances and trained personnel who can administer advanced
life support to downed jockeys. Precious minutes are allowed to pass
before jockeys receive appropriate emergency medical treatment. It can
be the difference between life and death.
With regard to track conditions, there is no reason why there
should not be national minimum standards for track safety rails, safety
reins, or other safety equipment established through the OSHA system.
It is ironic that the kitchens and heat plant and parking lot are
covered by uniform OSHA standards, but the race track itself, is not.
Fourth, the National Labor Relations Act needs to be amended to
give us real collective bargaining rights. Not only is horseracing in
general exempted from the NLRA, but as an organization of so-called
``independent contractors'', we have no bargaining rights. We have no
means of collectively negotiating our rights or compensation, while the
rest of the industry collectively negotiates purse agreements and other
agreements that affect us. We cannot even get together lawfully to call
the regulators or protest unsafe track conditions. This isn't right.
Mr. Chairman, jockeys, tracks, and horsemen need to be working
together for the betterment of our industry. Our members love this
sport and have dedicated their lives to it. We believe that, if we all
put our heads together, we can solve or mutual problems for the
betterment of the sport.
Mr. Chairman, that concludes my opening statement. I am available
to answer any questions you might have.
Mr. Whitfield. Thank you, Mr. Haire, and thank all of you
for being so patient and listening to all of this testimony. It
is quite obvious that everything is fragmented and it is
difficult to kind of get your arms around all the different
aspects of this issue.
One comment that Mr. Metzger, you made, you made the
comment that you are not a recognized horsemen's group. Is that
in the context of the Interstate Horse Racing Act or----
Mr. Metzger. That is correct, Mr. Chairman. The recognized
horsemen's groups would be the HBPA, the THA and the TOC.
Mr. Whitfield. And who determines which group is
recognized?
Mr. Metzger. I may defer. I know an overview. I defer to my
colleague right here.
Mr. Roark. Mr. Chairman, the horsemen at a live race meet
have the right to determine who represents them but
contractually by practice it has been TOC in California, THA in
New York, Maryland, New Jersey, Delaware. I believe that is
all. And then we are in the other racing States. Now, HBPA used
to be all racing States but that is no longer the case.
Mr. Whitfield. Well now in Kentucky, Mr. Maline, it is my
understanding that in some tracks you all represent the
horsemen and in other tracks, that David Sweitzer group
represents the horsemen. Is that right or not?
Mr. Maline. Well not exactly, Chairman Whitfield. We
represent the horsemen at every racetrack. We are he majority
horsemen's group in the State of Kentucky. We do have a shared
contract at Keeneland where we each, we share equally in the
funding mechanism. And at Churchill we receive the majority
funding but KTA does receive a small portion of that funding.
Mr. Whitfield. And what does it take to be a member of the
Kentucky HBPA?
Mr. Maline. Well, the bylaws state that if you run a horse
in the State of Kentucky, you are a member unless you choose
otherwise. We also have a provision whereby we do have signed
cards by our members.
Mr. Whitfield. So you don't have to pay dues.
Mr. Maline. No, you do not.
Mr. Whitfield. So if you are a licensed trainer in
Kentucky, then you are considered to be a member, right?
Mr. Maline. That is correct, unless you choose otherwise.
Mr. Whitfield. Now in your testimony, I noticed that you
said 1.5 percent of the horsemen's share of wagering revenue is
allocated for the funding of the KHBPA.
Mr. Maline. Right.
Mr. Whitfield. And approximately how much would that be per
year?
Mr. Maline. Approximately about $900,000 a year.
Mr. Whitfield. Now, I would ask either you or Mr. Roark the
question, would there be any--I had asked this question earlier
and I am not sure what answer I received. But what would you
say to the fact that if the Interstate Horse Racing Act was
amended to include representatives of the jockeys as being an
entity that would also negotiate with the track on the
simulcast issue? How would you all respond to that?
Mr. Maline. Well first of all, Chairman Whitfield, the
Interstate Horse Racing Act in our opinion addresses two
issues. That being the funding that horsemen and the racetracks
receive, approximately 3 to 4 percent when our signal is sent
to a specific area. We receive 3 or 4 percent back, of which we
share equally with the racetrack. Now, as it was mentioned by,
I believe, Mr. Scherf, that from that revenue that is received
for purses, jockeys are--they receive 10 percent, as well as
our trainers receive a same 10 percent of that revenue when
they receive purse money. The second reason that the HBPA is
involved in the Interstate Horse Racing Act is that there was
concern back in 1978 that the racetracks would have a different
priority as far as sending signals to other locations. That
perhaps when they sent to another location that location would
choose to just simulcast racing and not have live racing
anymore.
Now the racetracks, their concern would be the bottom line,
most likely. They are not concerned in another State whether or
not you have live racing. Horsemen are because we are
transient. We do travel to those other locations. So the
Federal Legislature at the time felt horsemen were better
suited to determine if racing in those various locations would
be protected. So for instance in Kentucky, when we decide to
send our signal, it is our concern that there maintains live
racing in that jurisdiction.
Mr. Whitfield. But you all would then--your organizations
would be opposed to any effort to change the Interstate Horse
Racing Act in that respect?
Mr. Maline. Yes, we would. Yes, because we feel they are--
they do receive revenue from that.
Mr. Whitfield. Now Mr. Haire, what do you say to that?
Mr. Haire. Well, I believe that in other sports athletes
get a good piece of the revenue and we are asking just for a
small percentage, where other football or baseball, these
athletes receive 30 to 40 percent of the revenue. I believe we
should get a piece of it.
Mr. Whitfield. Mr. Shapiro, you mentioned in your comments
that--and I made mention to this in my opening statement. That
the Federal Government getting involved in racing creates
immediate problems for a lot of people. We are involved to the
extent that we passed the Interstate Horse Racing Act, which in
the simulcasting is not providing about 85 percent of the purse
money. But you specifically said that you feel like that there
should be more Federal oversight. Would you expand on that
comment?
Mr. Shapiro. Well, I think you can take a look at
California, where we at one point were perhaps the greatest
racing state. We don't have the advantage of slot assisted or
slot revenues to assist our purse pools. Consequently, racing
in California has been disadvantaged tremendously and I believe
that with the advent of simulcasting and Internet wagering and
other wagering that is not taking place on track, that
California has been plunged into a disadvantage across the
board. And despite our efforts to provide the best health
insurance and Workman's Compensation insurance and everything
else that we do, we are losing our tracks and we are losing our
horsemen. I believe that there has to be some Federal oversight
and regulation to try and level the playing field so that
States that don't have gaming can compete and can save their
horses.
You just take a look at what is happening when a track like
Mountaineer Park, which has higher purses than we do in
California. We have people that are raiding our barn areas,
stealing--not stealing but claiming our horses and taking them
to places like West Virginia because our purses don't keep
pace. We are losing our jockeys. And so consequently, it is
critical in my mind that there needs to be some Federal
oversight on a lot of issues, including medication, including a
scale of weights and including some of the wagering issues that
are traveling beyond just California's borders.
Mr. Whitfield. Is there a uniformity of weights around the
country or is each State different?
Mr. Shapiro. No. No. And in fact, as California, we have
one of the higher weight scales and there is--we are
disadvantaged there, too. We recognize that jockey weights have
risen and we have voluntarily raised the scale of weights. But
when trainers and owners look that they can go to Kentucky and
other jurisdictions and race with less weight, there is this
perception that it is going to hurt the horses with more
weight, so we are further disadvantaged.
Mr. Whitfield. Now, Mr. Monahan--oh, did somebody else want
to make comment? Mr. Monahan, the Quarter Horse group, I know
you all race at a lot of different tracks around the country
but I guess there is not exclusive Quarter Horse racing per se.
Is there or is there?
Mr. Monahan. I suppose as close as we have to a straight
Quarter Horse track is Las Alamedas in California.
Mr. Whitfield. Okay.
Mr. Monahan. It is certainly driven by the Quarter Horses.
But for the most part, we race in mixed meets.
Mr. Whitfield. Right. Now, has your organization supported
this effort of the NTRA and other groups for a uniform
medication rule as to what can be given to horses on race day?
Mr. Monahan. Absolutely, Congressman, and I think you will
find that the group that was put together to take care of that
has done it. I mean, virtually every State has not adopted
those rules. Is that correct? I think every State has now
adopted the rules that was put together by the Consortium.
Mr. Whitfield. Twenty-eight? Twenty-eight States. Okay.
Okay.
Mr. Monahan. I am not aware of any that haven't that race
horses.
Mr. Whitfield. Okay. Okay. Mr. Giovanni, in your testimony
you talked about the New York program, which seemed to be a
pretty good program. You all actually came to Congress at some
point in time and it was not adopted but could you just
elaborate on the way that program worked in New York for the
Compensation?
Mr. Giovanni. The legislation provides for a committee,
which is basically the employer--or Fund, rather, which is
basically the employer of all licensed jockeys, exercise riders
and apprentice jockeys. The way it is set up is that an owner
at the beginning of the year makes a contribution and so much
is paid out of purses. There is a small percentage that comes
out of purses. Trainers pay so much per day per stall. That
covers the entire fee. Nobody falls through the cracks. If
somebody is hurt and they are licensed, they are covered and I
can give you a perfect example.
There was a retired jockey who was exercising horses. His
name was Antonio Viscarondo. He was employed by one particular
trainer. Another trainer asked him when you are finished with
your job, would you come by and work my horse out of the
starting gate? I need to get him approved out of the gate. So
he said he would do it and he went over when he finished his
regular job. He was killed working a horse out of the starting
gate, unfortunately. He was clearly not employed by this
person. He was casual labor, independent contractor. However
you want to categorize it. All of his medical expenses were
paid. He left a 9-year-old son, who I believe is collecting
$500 a week until he is 18 or 24 if he goes to college.
And I cite that example because that is what needs to be
done. Everybody who gets on horses, everybody on the backside
needs to have some sort of protection, some sort of coverage.
This plan works.
Mr. Whitfield. Most people on the backside don't have much
of anything.
Mr. Giovanni. Exactly. They have basically nothing.
Somebody needs to step up to the plate and take care of these
people.
Mr. Whitfield. I mean, they may be eligible for Medicaid or
something like that but----
Mr. Giovanni. That is it. That is surely it. Most of them
are.
Mr. Whitfield. Mr. Violette, do you administer the program
that he is talking about?
Mr. Violette. Yes, sir.
Mr. Whitfield. Okay. Do you have any comments on it?
Mr. Violette. I believe that is has worked quite well.
Owners have saved money. Trainers have saved money. The
trainers have been able to extract the group that is at a
higher risk out of their own policy, which they have to provide
for the rest of their backstretch help, for the hot walkers and
grooms. And by extracting that, their entry rate has gone down
so they have saved money on their own policy for the rest of
them. While they have kind of passed along the high risk group
into a larger fund, where we have also been able to save money
because we are a large group.
Mr. Whitfield. But all these people are considered
employees of this entity?
Mr. Violette. Correct.
Mr. Whitfield. Okay. Well, Mr. Stupak, I will recognize you
for questions.
Mr. Stupak. Thank you, Mr. Chairman. First of all, I ask
for unanimous consent that other members may submit their
opening statements. Some of them could not be here.
Mr. Whitfield. Without objection, it is ordered.
Mr. Stupak. And I take it we are going to keep the
committee open to submit some written questions, also?
Mr. Whitfield. Yes, we will keep it open for the normal
time.
Mr. Stupak. Okay. Thank you. Mr. Giovanni or Mr. Violette,
you said that jockey has to be licensed, right, in order to
belong to this Fund?
Mr. Violette. Yes, sir.
Mr. Giovanni. The jockey, the apprentice jockey or the
exercise rider has to be licensed within the state.
Mr. Stupak. What do they have to do to be licensed?
Mr. Violette. Actually, John can answer better, as far as a
jockey.
Mr. Stupak. Right. I want to make sure there is no gap here
where people fall through for a couple years while they are
trying to get licensed.
Mr. Giovanni. No. If somebody needs a license, they just
apply to the New York State Racing and Wagering Board for a
license. They may ask you, have you ridden before or where have
you ridden. If you haven't ridden, you would be licensed as an
exercise rider or in some other capacity. When first applying
for a jockey's license, what they do is give you a temporary
license but still a license. They allow you to ride one or two
races under the scrutiny of the stewards to make sure that you
are qualified and competent enough to hold a professional
license and then they provide you with your license. So nobody
would fall through the cracks.
Mr. Stupak. Mr. Haire, what is the best State to race in if
you are a jockey?
Mr. Haire. The best State would be California, I would say.
Mr. Stupak. You mean, because of their----
Mr. Haire. The Workman's Comp, of course. And they--
California just seems to go out of their way to accommodate the
riders, safety-wise.
Mr. Stupak. And the reason Mr. Shapiro said that they were
actually not doing well in California and losing money because
of simulcast, right? Is that right?
Mr. Shapiro. What I am saying is, that we are struggling to
survive because we are economically disadvantaged because we
don't have slot revenues.
Mr. Stupak. The gaming, right?
Mr. Shapiro. Yes.
Mr. Stupak. Mr. Haire, what is the worst State besides
Michigan to ride in?
Mr. Haire. Well----
Mr. Stupak. You can say Kentucky. The Chairman won't be
mad. No, I am only teasing. Only teasing. What would be a bad
State besides Michigan, because I have taken from your
testimony an example of Mount Pleasant, Michigan.
Mr. Haire. Well, I would say West Virginia, absolutely.
Mr. Stupak. And why is that?
Mr. Haire. West Virginia, for whatever reason unknown to
me, just don't seem to really want to take care of the riders
as far as safety-wise. We have had a difficult time over the
years.
Mr. Stupak. Okay.
Mr. Haire. There are a lot of accidents there.
Mr. Stupak. In the last panel I think one testimony was
about 1,500, almost 1,600 jockeys around the country. Would
that be a fair estimate?
Mr. Haire. There is about 1,800 licensed, yes.
Mr. Stupak. Okay. Do all the States require them to have a
license to race?
Mr. Haire. Yes, sir.
Mr. Stupak. So this New York model could sort of be
duplicated in other States then?
Mr. Haire. Yes, sir.
Mr. Stupak. Okay. Do the jockeys want to be independent
contractors? Or do you think they--I am asking for your
opinion. You were a jockey for what, 15 years, you said. You
are obviously active in the organization. Do they want to be
independent contractors or do you think they would like to come
together, form some kind of collective bargaining agreements or
something with whoever are their owners? What would they rather
be?
Mr. Haire. We would like to be able to have collective
bargaining and be able to, you know, have an agreement with
these racetracks to work with us to do the right thing.
Mr. Stupak. Okay. What is the status of the Jockey Guild as
of this afternoon? I mean, we had some testimony or statements
I guess by us, that new leadership is in place and there has
been some struggles there. But what do you think the future of
the Jockey Guild is?
Mr. Haire. I believe the riders, Mr. Stupak, have taken
control of the organization again and we are--with the help of
the riders and a new Board, we are getting things under
control. It has been--really it has been a real mess but we are
getting our arms around it. We have a lot of support and we
will turn it around and we have very--it is a positive
atmosphere now.
Mr. Stupak. Okay. The last panel, we were asking about
these mount rides and I was getting Charlestown and what was
the other one?
Chairman Barton. Mountaineer.
Mr. Stupak. Mountaineer goofed up but one was paying the
mount fees and the other wasn't paying mount fees and they said
they would just get a bill and they would pay the mount fees.
Is there a formal agreement with the tracks? Anything in
writing saying you get a bill from the Guild and you pay these
mount fees?
Mr. Haire. No, sir.
Mr. Stupak. In your knowledge, has there ever been one?
Mr. Haire. No, sir. They did have an--they signed a TRA
agreement but not all racetracks, sir, are TRA racetracks.
Mr. Stupak. Are covered.
Mr. Haire. So for instance Delaware, we don't receive any
money from Delaware for mount fees and they have slots in
Delaware.
Mr. Stupak. Right. Mr. Violette, in New York how many
claims have been made for like, over 100,000 and how many have
been up to a million?
Mr. Violette. Well, we have an exercise rider who is a
paraplegic, a young lady who was injured about 5 years ago and
right now, her reserve is at $3 million.
Mr. Stupak. Her reserve? So there will be a time when she
will exceed that amount and then?
Mr. Violette. Yes and it is a projection. I mean, she is a
young lady Mr. Stupak. Right.
Mr. Violette. And we could be--you know, the Fund or the
State Insurance Fund could be supporting her for the next 40 or
50 years so those reserves are pretty high.
Mr. Stupak. So once she exceeds $3 million, then----
Mr. Violette. No, she is still for the rest of her life.
There are no limits on the medicals, the rehabilitation or the
weekly stipend.
Mr. Stupak. Okay. Mr. Shapiro, the California Horse Racing
Board provides annual maintenance audits of the tracks. Is that
right?
Mr. Shapiro. Yes. What we so is prior to the--we issue
licenses to racing associations annually. So prior to the
issuance of any license, we have a review where we inspect the
entire backside for the living conditions.' Mr. Stupak. Sure.
Mr. Shapiro. And we inspect the track, as well. And
California has adopted minimum safety standards that are
outlined in my written testimony and every track must adhere to
those. You may note that if there is an unsafe riding surface,
such as just recently at Hollywood Park the all turf racing was
canceled because the Racing Association came forward and said
they had concerns and so all turf racing was canceled.
Mr. Stupak. I am going to ask this question. I don't know
who wants to answer it. Maybe Mr. Shapiro if you know. Can I go
on the Internet and watch a race somewhere else and place a bet
on the Internet?
Mr. Shapiro. Absolutely. Absolutely. You have----
Mr. Stupak. So when I am in California and if I want to bet
on someplace in----
Mr. Shapiro. There are a number of different providers that
you can go to. You can go back to your office, log on the
Internet and you can just go to TVG, You Bet, Express Bet and
you can bet something like 80 different tracks around the
country. You just have to open an account.
Mr. Stupak. And that stream of revenue, how do we tap into
that to take care of some of the concerns that have been raised
here these last couple hearings?
Mr. Shapiro. Well, there are different agreements in place
between the simulcast providers and the tracks and those are
negotiated between the simulcast providers and the individual
racing associations.
Mr. Stupak. I see.
Mr. Shapiro. And so there are fees that are paid to the
host track and also the track that then is importing the races.
Mr. Stupak. But California law would not allow you to
access this Internet gaming, right?
Mr. Shapiro. Well, we do receive revenues from it.
Mr. Stupak. From that?
Mr. Shapiro. But it is reduced revenues.
Mr. Stupak. It is reduced revenue. Right. Sure.
Mr. Shapiro. Right. Because there is--a racetrack in
California makes approximately 17 cents on every dollar that is
wagered at a live racetrack. Now, that 17 cents is then split
between the track, the State and the horsemen.
Mr. Stupak. Right. Right.
Mr. Shapiro. But it is much less for simulcast revenues.
Mr. Whitfield. And there is some offshore gambling that you
wouldn't receive any benefit from.
Mr. Shapiro. Well, that is one of the big problems that is
facing racing today, is there are hundreds of millions of
dollars from signals that are being pirated that are offshore.
And all the tracks in the States are suffering because those
revenues are not coming into our mutual pools. And so
consequently, tracks aren't getting that money and they are not
rebuilding their track surfaces as much as they should and they
need to. And horsemen, including jockeys, aren't getting the
benefit of that revenue, either and of course, the States don't
get that money. So it is a serious and major problem that is
pretty much going unchecked and that is why perhaps looking at
the Interstate Horse Racing Act and ways to modify that would
be very helpful.
Mr. Whitfield. Is there anybody on the panel that
understand the Wire Act? And I have been told that the Wire Act
conflicts with the Interstate Horse Racing Act in some regard
and that there is some question about whether or not--does
anybody know what I am talking about?
Mr. Roark. Kind of.
Mr. Whitfield. Mr. Roark?
Mr. Roark. All I can tell you is, the Wire Act of 1930
something had to do with telephone wagering and there has been
positions taken that based on the Wire Act, simulcast wagering
may or may not be legal. At this point we are doing it and it--
well, it is our position that it is legal. I would like to
comment, if I may, Mr. Chairman, on something Mr. Shapiro said.
Mr. Whitfield. Yes?
Mr. Roark. I don't want this committee to be left with the
impression that all offshore wagering is being done and pirated
from us.
Mr. Whitfield. Right.
Mr. Roark. We have contracts in place with racing
jurisdictions around the world, as well as organizations and
racetracks that provide some revenue to us. There are a lot of
places that aren't doing that. The Interstate Horse Racing Act
could not apply to that because they are foreigners and in
foreign countries. But based on treaties and based on other
things, we are working on solving that problem and we hope to
have something in place in the next year or two to get
something done about that.
Mr. Stupak. As long as the race is run in the United
States, we would have something to say about it, whether bets
are placed off-shore or not.
Mr. Roark. We should have, Congressman.
Mr. Stupak. We will have.
Mr. Roark. We should have. Yes, sir.
Mr. Stupak. We will have.
Mr. Roark. Sir?
Mr. Stupak. We will have.
Mr. Roark. Yes, sir. I agree. I hope so.
Mr. Stupak. Mr. Roark, why don't more States do what New
York does? Why would there be objection to a model like New
York has?
Mr. Roark. To me, it is not a matter of objections,
Congressman. The problem is the funding because as horsemen, we
spend a couple of billion a year on either buying horses or
having training them and all the expense factor of getting
horses ready to race.
Mr. Stupak. Sure.
Mr. Roark. And we are getting revenue back less than $1.5
billion so we are losing--only about 3 percent of thoroughbred
race owners make a profit. So you would say why do you do it?
The love of the sport. The majority of us lose money. I
practice law. As Mr. Monahan said, I am a trial lawyer so I can
afford to have my horses. But the problem is revenue and the
owners are always asked to help fund whatever. Like on the
Racing Medication Task Force, the research is being done and
they are asking us to provide so much a mount all over the
country to fund that research. Second, the----
Mr. Stupak. What is the most lucrative part of horseracing
then? Is it the gaming?
Mr. Roark. The what?
Mr. Stupak. The most lucrative. Where do you make the most
money?
Mr. Roark. Who, me?
Mr. Stupak. Who gets the most money? The tracks? The people
placing bets? Where is the money in horseracing if there is $26
billion----
Mr. Roark. I would say the really good breeders that breed
the best horses, mostly in eastern Kentucky and in other States
of course, as well as the grade one racetracks. They make more
money than anyone else does, in my opinion.
Mr. Stupak. Well, our problem is what I am seeing here is,
you know, you can't have horseracing without the horses. You
can't have horseracing without the jockeys. You can't have
horseracing without the tracks. Everyone is protecting their
own turf. Everyone says it is an inherently dangerous sport.
Everyone says we do it for love of the sport. But when you get
injured, love ain't going to get you very far.
Mr. Roark. Well, we are the engine that drives the train,
Congressman. We are the owners that race the horses. Without
our horses, the tracks would have no reason to be open.
Mr. Stupak. Sure.
Mr. Roark. And our asset is transportable, you know. We can
move from track to track. Our problem is that--and we are glad
that the jockeys are getting almost $94 million of our purses
annually, which is almost 10 percent and that comes out of the
owner's pocket. And then the trainer's share comes out of the
owner's pocket. And the tracks and I don't agree with each
other about where the funding should come from. I made them a
proposition more or less. I said look, as soon as you pay $94
million in insurance premiums around the country, we will split
with you over and above that whatever the cost of insurance is.
Mr. Stupak. Yes, but they have a--you know, as the horse
owners, if you take the example we had in testimony here in the
Kentucky Derby. If I own a horse and my horse wins and that
only happens once a year, obviously, but that is quite a bit of
money and the jockey doesn't get that opportunity to make that
kind of money.
Mr. Roark. The jockey of the winning Derby horse?
Mr. Stupak. Well, okay, you get $600,000. They get what,
$120,000? Ten percent of that?
Mr. Roark. The Derby winner gets $1.2 million. The jockey
gets $220,000 of that.
Mr. Stupak. $120,000, yes. Yes.
Mr. Roark. And that owner probably has spent $10 million
getting the horse to where he could even run in the Derby, or
more.
Mr. Stupak. Yes, but then they have the stud fees and
everything else from that winner, don't they?
Mr. Roark. Maybe. Hopefully, they do. It depends on the
horse's breeding, actually. Some horses will win the Derby,
they will end up commanding a big stud fee compared to others.
Mr. Stupak. Sure. All right. Well, we are looking for a
revenue source because we have got to take care of these folks.
Mr. Whitfield. Mr. Violette, let me just ask a couple other
questions. You are a trainer?
Mr. Violette. Yes, sir.
Mr. Whitfield. And I might just make a comment then. The
horseracing industry, I know there are exceptions to the rule
but it seems like the trainers have more to say about
horseracing than anybody. I mean, a lot of owners that I know
are kind of hands off and the trainers basically seem to be in
control. But you are a trainer and you have other experiences
in this industry. How important do you think this scale of
weight issue is for jockeys and uniformity on that one issue?
Is that a big deal?
Mr. Violette. From a health issue, it is obviously very
important. We don't want ill jockeys riding on horses. We don't
want jockeys starving themselves to death.
Mr. Whitfield. Right.
Mr. Violette. On the flip side, weight is significant as
far as contributing to injuries on horses. We can't have 150-
pound jockeys in the afternoon. And I think everything has to
be done educationally for riders on how to take care of their
bodies, how to eat properly, how not to damage--and maybe we
have to have a minimum fat standard as far as being able to
ride. Suddenly in New York the scale of weights has gone up
about four or five pounds the last year. They have been very
quiet. The actual allowances, once you start with a top weight
going down, they used to have--you know, if you hadn't won a
race in such a such a date, you were allowed nine pounds. Those
allowances have disappeared so the scale has actually gone up.
Mr. Whitfield. Um-hum.
Mr. Violette. But there has to be a line somewhere as to
how heavy you can be in order to be a jockey or how light you
have to be. And I think once you establish a line, there is
always going to be some segment of the community, it might be
me, that if it is 140 pounds, maybe I am going to half-starve
myself to get down to 140 pounds.
Mr. Whitfield. Yes.
Mr. Violette. So I think a good deal of common sense has to
be involved. Our horses are very brittle these days. They don't
seem to take the training or the number of racing starts that
we used to, I don't get out of our racehorses. Do I think there
is a fine line there? There has to be some common sense. There
has to be some responsibility accepted by the riders to try to
eat responsibly and try to limit their weight. And you know, if
you are 6'1'', maybe you should be playing basketball and not
trying to be a jockey.
Mr. Whitfield. Yes. I am just going to go down here real
quickly and then we are going to conclude this hearing. But we
have heard a lot about medication today and I have heard some
major jockeys who have retired have said that one of the
reasons they retired was not knowing what has been given to the
horse. And therefore, not knowing whether or not there may be
an accident or so forth. I would just like to just go down and
ask each one of you individually, do you think that illegal
medications or illicit medications do contribute significantly
to horseracing being a dangerous business? Mr. Metzger?
Mr. Metzger. I don't believe there is enough research to
document this at that time but I do believe the industry has
come together to put the research together through the Racing
Medication and Testing Consortium. Through the new project
announced, the EDRI through Dr. Caitland's lab at UCLA. I think
the industry is going to put the research in there instead of
speculating it.
Mr. Whitfield. Okay.
Mr. Metzger. Our organization has been out, we believe, at
the forefront of the integrity issues to ensure that. But at
this time, I don't think we have the evidence and the research
but we are moving in that direction with the amount of money
that has been committed to the EDRI and the Racing Medication
and Testing Consortium.
Mr. Whitfield. Okay. Mr. Roark?
Mr. Roark. I agree with Mr. Metzger, Mr. Chairman, but also
I would say I don't think it is that significant, as far as
illegal medications are concerned.
Mr. Whitfield. Okay.
Mr. Roark. I think they get a lot of publicity but I don't
think it is that significant around the country.
Mr. Whitfield. Okay.
Mr. Roark. It does exist. We all know that and sometimes on
a daily basis.
Mr. Whitfield. Okay.
Mr. Roark. But I don't think it is that significant,
comparatively speaking.
Mr. Whitfield. Okay. Mr. Maline?
Mr. Maline. Well, I totally agree. I don't think it is that
significant. I think it is important that research be continued
throughout the country. I also feel that therapeutic medication
is important for horses, just as it is for human beings. And we
propose the most stringent testing but at the same time we feel
research is necessary to determine if indeed therapeutic
medication is a help or hindrance.
Mr. Whitfield. Mr. Riedel, do you have a comment?
Mr. Riedel. Well, just to say that I last trained
racehorses 25 years ago and I have been far away from that. But
I do believe racehorses do need therapeutic medication.
Mr. Whitfield. Okay. Mr. Giovanni?
Mr. Giovanni. Mr. Chairman, first of all let me say that I
think Mrs. Whitfield has done a wonderful job in Kentucky with
the Kentucky Medication Committee. They have put together some
standards, threshold levels, trace levels. That is important.
It has always been my belief that injuries to horses equates to
injuries to jockeys. Pain is the early warning system for the
horse. When the horse doesn't feel pain, they extend themselves
and they get hurt and they fall and when that happens, jockeys
get hurt.
So I really appreciate the work that she has done and the
work that the Consortium has done but I still think there is a
lot more work to be done.
Mr. Whitfield. Mr. Violette?
Mr. Violette. I think for a while this was on the back
burner within the industry but the last three or 4 years it has
really been on the front burner with the pilot turned way up.
Between the Racing Consortium and the aggressive nature that
different racing and wagering boards have taken, we are not
really, maybe not ahead of the curve. But the industry is being
very, very aggressive these days and trying to establish very,
very low tolerance levels for anybody trying to cheat the
system and trying to improve the testing to have it all state-
of-the-art.
Mr. Whitfield. Mr. Daney?
Mr. Daney. We are very aggressive in our testing and
continue to be in support.
Mr. Whitfield. Okay. Mr. Shapiro?
Mr. Shapiro. I do believe that there is a place for
therapeutic but I also believe that there are medications that
are being abused throughout the sport. And I believe that all
tracks need to be vigilant and I think uniform testing and no
tolerance penalties should be instituted and it is necessary to
protect the integrity of the game.
Mr. Whitfield. Mr. Monahan?
Mr. Monahan. Congressman, I think the Consortium, I mean,
all of the areas of the industry have come together with that
Consortium and when it is finished, it is going to be taken
care of. It really is. The threshold levels of pain medications
and testing for illegal medications, that is a real, real good
program.
Mr. Whitfield. Mr. Haire?
Mr. Haire. Congressman Whitfield, I am a proud member, a
charter member, of the Consortium and I--you know, we made so
much progress the last few years. I firmly believe that these
horses should have limited medication so these jockeys can feel
what they have underneath them, like they used to years ago
when there was no medication. It is very important when a
jockey warms up his horse or they can feel that animal. They
are athletes, too. They know if there is a problem coming on,
if they warm up out of it or not. So I believe hay, oats and
water. That is all they need in their system and get back to
how racing used to be when it was that way.
Mr. Whitfield. I would ask unanimous consent that we submit
this binder into the record with all the exhibits. And I want
to thank all of you for your patience as you have been here. We
spent a lot of time together today and I don't know if you all
have enjoyed it as much as we have or not. But it is a
complicated issue and we look forward to working with all of
you on an individual basis or collectively to try to address
some of these issues. So thank you very much and I hope you
have a great weekend and hope to see you again soon. Thank you.
And the record will remain open for 30 days for additional
questions and this meeting is adjourned.
[Whereupon, at 5:25 p.m., the subcommittee was adjourned.]