(From the November 20, 2004 issue of The Blood-Horse) It is an issue covered nearly daily in the news and business columns of newspapers across America. Kentucky schoolteachers recently threatened a walkout over it; grocery workers in California struck for months because of it. Workers and employers everywhere struggle to make ends meet while having to feed its spiraling costs. Health insurance, along with health care costs, could be the single most important issue facing this nation, and it is one that jockeys and the racing industry have been struggling with for decades. So it is no shock that health insurance, or the lack thereof, raised its ugly head Nov. 7 at Churchill Downs when 14 jockeys said they would not accept mounts later that week, and were subsequently banned for the rest of the meet. (A similar incident occurred one week later at Hoosier Park.) Although few in the industry supported the manner in which the riders went about publicizing the issue, most acknowledge the need for equitable protection for jockeys, considering the dangers of their occupation. There are two distinct types of insurance at play in this struggle. One is the health insurance that covers workers and their families for illnesses that occur away from the workplace. Then there is catastrophic or workers' compensation insurance, which, in the jockeys' case, covers injuries that occur while they're riding. Complicating the issue is the fact that jockeys, in most jurisdictions, are considered independent contractors, so there is no one employer they can look to for coverage. Instead, there is a combination of stakeholders here that include state legislators (who write workers' comp laws), racetracks, regulators, owners, trainers, and the riders themselves. Given this structure, it is hardly surprising there is no consensus on who is responsible for covering riders, and on what level of coverage they should receive. The Jockeys' Guild, which represents approximately 1,200 riders, cites statistics that 90% of its membership earns less than $30,000 a year. However, given that eligibility requirements have been dropped from a minimum of 100 mounts a year to just one, it is possible that many Guild members are primarily exercise riders. Certainly, the "brand-name" jockeys we see on television winning grade I races can earn more than a million dollars per year. Many more, though, ride in obscurity on smaller circuits for much less purse money. The standard take for riders is 10% of the winning share of the purse if they win; 5% of the second- or third-place purse money if they place or show; and a flat mount fee of between $35 and $100 for finishes below that. Racetracks usually pay jockeys directly from the owner's share if they're getting a percentage of the purse. From that money jockeys purchase their equipment, and also pay their agents 20%-30% of their earnings. The valet who takes care of their equipment comes in for 3%-5%. Riders contribute $3-$5 of each mount fee to the Guild, ostensibly for insurance coverage. The most recent job action by riders came at the end of 1994, when a threatened strike was averted with an 11th-hour agreement reached by the Jockeys' Guild and the Thoroughbred Racing Associations (TRA), a consortium of North American racetracks. Racetracks give funds to the Guild, which have historically been used for health insurance. Chris Scherf, the TRA's executive vice president, said racetracks are not responsible for paying health insurance for independent contractors, so it is up to the Guild to decide how to spend the money. Based on a breakdown of racetracks into three classes, tracks pay a per-starter fee plus a flat fee per racing day to the Guild. That amount currently totals approximately $2.2 million annually, and usually has been re-negotiated every two or three years. The TRA also provides $100,000 worth of insurance for jockeys who incur on-track injuries. According to John Giovanni, an ex-jockey who was the Jockeys' Guild's national manager from 1987-2001, the Guild had an additional health insurance plan that kicked in to cover all expenses if that first $100,000 was exceeded. In 2001, however, health insurance costs spiraled upward. After increases of 18% and 12% the previous two years, Cigna Insurance increased the premiums 43% in 2001 following a couple of catastrophic injuries. "We couldn't afford the health insurance anymore," said Giovanni, "so we gave everyone the opportunity to shift to COBRA, a federal program that provides for continuation of health insurance coverage for 18 months. But knowing a lot of them weren't going to shift over, and knowing the Guild was founded to take care of them if they got hurt on-track, we bought a policy through Mather and Co. that covered them for a million dollars over and above the $100,000 paid by the racing associations. That policy, which cost approximately $400,000, was put in place April 1, 2001, and covered every Guild member for $1.1 million." A group of jockeys, upset with the discontinuation of off-track health insurance, blamed Giovanni for not being savvy enough. They ousted him from the Guild in June 2001, and replaced him with Matrix Capital Associates, run by Dr. Wayne Gertmenian, an economics professor at Pepperdine University in Malibu, Calif. On April 1, 2002, when the million-dollar policy came due, the new Guild leadership did not renew it. It wrote letters to the TRA, National Thoroughbred Racing Association, and the racetracks informing them it was not renewing the policy. But according to Giovanni, several Guild board members, and jockeys such as Jerry Bailey, the new Guild leadership failed to notify jockeys in writing that the policy was not being renewed. Many did not realize it until rider Gary Birzer fell from a mount at Mountaineer Park in July 2004, breaking bones in his neck and spinal cord. Birzer remains paralyzed, and his medical bills have far outstripped the $100,000 covered by the track. His wife, Amy, said the Guild told her it would cover her husband's medical bills, and then refused to do so. "I was lied to," she said. Jockeys around the country quickly caught wind of the fact they were no longer covered for catastrophic injuries, prompting the current crisis. Depending on your position in racing, the blame for that lies either with the Guild or with other stakeholders in the industry. Under Gertmenian, the Guild reinstated health insurance for jockeys and their families for illnesses that occurred off the racetrack, but did not put a catastrophic insurance plan in place. "That policy (we did not renew) was written in such a way that no one could ever collect a nickel," Gertmenian told The Blood-Horse. "It did not protect jockeys at all." However, a critic of Gertmenian's in the jockey community, speaking off the record, said Gertmenian was intentionally confusing that policy with another supplemental policy, and added there were no exclusions in the coverage bought by Giovanni. The threatened recent walkout by riders at Churchill and Hoosier appears to be part of a Guild plan to have racetracks pick up the tab for catastrophic injuries suffered on-track. Critics of Gertmenian's claim it was his strategy to create an emergency situation to bring the insurance issue to a head. "You're treating jockeys as a class of citizens as if they are slaves," Gertmenian told The Blood-Horse. "Negotiating this is like a game of five-card monte...you have to go to the TRA; you have to go to individual owners. You can't get a straight answer. There is no national policy, and we won't let the jockeys pay the price for this." The Guild's position, though, is being undermined by charges of accounting irregularities brought against it by several ex-Guild board members such as Eddie King and Robert Colton, who have been either stripped of their positions, or expelled, for questioning Gertmenian's policies and the way in which Matrix is handling the Guild's finances. Colton and the Guild have filed lawsuits against each other, and King is currently considering suing the Guild as well. Gertmenian added he is opposed to workers' compensation being paid for by owners and trainers to help the jockeys. However, that is a formula that appears to be working well in several of the five racing states that do cover jockeys under state workers' compensation guidelines. Those five jurisdictions are New York, New Jersey, Maryland, California, and Idaho. The New York Jockey Insurance Compensation Fund was established in 1992. Owners currently pay $600 a year, with trainers paying the same amount, plus a 50 cents per day per stall fee. In addition, seven-tenths of 1% is taken out of purses for the fund, which currently buys insurance from the state, but bids its business out every year. "In 2004 we paid $2.2 million in premiums, and it will be between that and $2.7 million for next year," said trainer Rick Violette, president of the fund. "We also cover exercise riders, which takes them as a group out of the trainers' personal workers' comp policies, so it ends up being a double savings. For the past seven years we've been able to refund virtually the entire initial payment to owners and trainers, but because our premiums have tripled in the past two years, we're applying most of those savings back into the premiums." In New Jersey, jockeys, exercise riders, and harness drivers have been covered since 1997 by a program that is funded by purse deductions not to exceed 3%. Premiums cost approximately $500,000 per year. In Maryland, the Maryland Insurance Fund serves as the technical employer of jockeys. Owners and trainers are members of the fund, and pay approximately $200-$225 a year to cover what was a $670,000 premium in 2004. "Not only does it work," said Alan Foreman, chief executive officer of the Maryland Thoroughbred Horsemen's Association, "it's relatively inexpensive. It solves the problem that's going on in Kentucky and other states." In California, workers' comp insurance for riders is subsidized by a one-half of one percentage point hike in the pari-mutuel takeout on exotic wagers. The formula was implemented last spring to combat spiraling costs to trainers that were being passed along in the day rates they charged owners. States such as Kentucky, however, must first get state legislators to pass laws concerning coverage of independent contractors under workers' compensation laws. Until such time, racetracks, together with the Jockeys' Guild, will likely have to work together to insure riders for catastrophic injuries. The Blood-Horse staff and correspondents contributed to this article.