Following the Third Circuit Court’s unanimous approval to uphold the NFL concussion settlement, a petition to rehear the appeal en banc has left former NFL players playing the financial waiting game. The impending settlement payouts have lenders circling, preying on vulnerable former NFL players that have debts to pay while suffering from both memory loss and cognitive issues.
Lenders, such as Thrivest, Atlas Legal Fund, and RD Legal Funding, are advertising presettlement loans as financial salvation for retired NFL players, many of which have long spent their NFL salaries. Typically, presettlements loans are paid out for small amounts to pay for immediate bills, such as hospital visits, but loans to NFL players have reached the six-figure range. Loans are paid out at 10 percent of the anticipated payout to the plaintiffs, but the NFL’s release of potential player awards, up to $5 million, has encouraged the lenders to loan at 25 percent or higher, putting millions of dollars in the hands of plaintiffs waiting for the settlement to be finalized.
For players, the loans are attractive, coming with no money down or time limit to pay back, but not without risk. Presettlement loans act as a prepayment of the settlement payout, with the inclusion of up to 40 percent interest at the time the loan is received. As the litigation continues, retired players are faced with ballooning repayment figures while waiting for the NFL payouts to be approved. Even if approved, players may receive less than the millions expected to be paid out. Settlement awards may be reduced by offsets, which include playing in the NFL for less than 5 years or claimants that are older than 45. For retired players that need the money now, they weigh the debilitating interest rates against the length of time until the settlement is finalized.
Although lenders have been accused of offering attractive loans with hidden high interest rates to players without full mental capacity, players are not without protections. Players that receive a loan and do not qualify for the settlement will have the loan forgiven. According to Kelly Gilroy, the Executive Director at the American Legal Finance Association, 25 percent of presettlement loans result in the debt being forgiven due to the settlement not being fulfilled.
After the unanimous decision by the Third Circuit Court, it seems unlikely that the appeal will be heard. If denied, a petition for certiorari to the U.S. Supreme Court would likely follow, forcing more retired players to turn to presettlement loans while waiting for payouts. Meanwhile, lenders will continue to reap the benefits of delayed settlement and retired players will continue to see their awards diminish by high interest rates.