08/25/2017 12:40PM

Absolute-insurer rule sits on a fault line

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It began more than two years ago with the finding of a trace amount of a regulated, therapeutic medication in a horse trained by one of the most respected horsemen in the sport.

It sits now on the precipice of undermining one of the linchpins of racing regulation, threatening the supremacy of a rule that regulators consider the most powerful deterrent to the illegal use of drugs in racing.

An appeal in a Kentucky court by the trainer Graham Motion of a relatively minor penalty for the positive has landed the racing industry at a crossroad. Last week, a state judge in Kentucky ruled entirely in favor of Motion in the trainer’s appeal of the Kentucky Horse Racing Commission’s decision to pursue a penalty against him, and in so doing, the judge stated that the commission’s absolute-insurer rule violated the state constitution.

The ruling was the first to challenge the constitutionality of the absolute-insurer rule in nearly five decades. The rule, which holds a trainer strictly liable for any substance found in a horse, is considered a foundational regulation for racing regulators, allowing racing commissions to consider a positive finding as prima facie evidence that a trainer can be penalized, regardless of a trainer’s protestations of innocence.

Though the rule has been upheld in state courts over and over again since 1969, it is a frequent target of complaints from horsemen, who believe that the rule creates an unfair burden of proof when they have to defend themselves against medication violations. While courts have acknowledged that the rule seems “un-American” in its shifting of the burden of proof to the accused, the rulings have also universally stated that there is no better way to protect the sport from unscrupulous actors.

“Horse racing, at its best, is difficult to control, and would be practically impossible to regulate if every governing rule and regulation were made dependent for validity upon the knowledge or motive of the person charged with a violation,” wrote the district court judges in a 2002 appeal in Florida centering on the rule. “The trainer is singularly the best individual to hold accountable for the condition of a horse.”

It is unclear whether the Motion ruling will ultimately weaken the rule. First off, the KHRC is expected to appeal the decision (though it has not yet determined which course of action it will take in response to the ruling). Secondly, and perhaps more importantly, attorneys who specialize in racing matters do not expect racing commissions in other states to reformulate their own absolute-insurer rules, even if the ruling is upheld.

The reason is simple: The precedents supporting the rule presents a high hurdle for other challenges.

“There’s case law in nearly every state, going back decades,” said Alan Foreman, the chairman and chief executive for the Thoroughbred Horsemen’s Associations and an expert on racing law. “You’d have to litigate in each one of those jurisdictions. You’d have to re-litigate the question each time.”

There is also an open question whether the Motion ruling, which was written by Franklin Circuit Court Judge Thomas Wingate, represents a general challenge to the absolute-insurer rule or whether the specific aspects of the case led Wingate to conclude that Motion’s due-process rights had been violated.

The ruling has several conclusions. The first was that the threshold level set for the drug, the muscle-relaxant methocarbamol, was “arbitrary and capricious.” The second conclusion, related to the first, was that the KHRC overstepped its authority to impose a penalty because the threshold level was based on faulty reasoning. “Without scientific evidence providing more than the wildest speculative reasoning for imposing a penalty, the KHRC would have unfettered power to regulate all substances with which a horse could come into contact,” Wingate wrote.

It was not until Wingate reached these two conclusions that he then challenged the absolute-insurer rule. Relying on his opinion that Motion’s attorneys were not permitted “to present a meaningful challenge” during an appeals hearing, based on the attorneys’ argument that the positive was the result of accidental contamination and that the threshold was not scientifically valid, Wingate stated that “an absolute liability rule violates the trainer’s substantive due-process rights because a strict liability rule, based upon an irrebuttable presumption, damages a trainer’s reputation” and his ability to earn a living.

So, if the KHRC had simply allowed Motion’s attorneys to present that challenge during the appeals process, and had still arrived at a penalty for the violation, would Wingate have ruled that the absolute-insurer rule violated Motion’s due-process rights?

“I think that is a great question,” said Peter Sacopolus, an Indiana attorney who has written about the rule. “What if initially the administrative law judge or the person hearing the case said, ‘I’m going to let it in, and I’ll give it a proper weighting at the time that I am ready to make a decision?’ The due-process argument may have gone differently. Excluding that at that point, and keeping it out of the record, that really opened it up to the due-process argument.”

The Racing Medication and Testing Consortium, an industry-funded group that recommends threshold levels, was severely undermined by the decision, with Wingate writing that the organization recommended the threshold level “without thorough scientific information supporting that decision.” That has been a familiar complaint about the RMTC’s work, even though the organization has stressed that it relies on scientific evidence to set the thresholds while also seeking to balance the needs of horsemen with the demand to protect the integrity of the sport.

In a statement, the RMTC was harshly critical of the decision and the criticism from Wingate, stating that the threshold was based on “sound science” and that the ruling on the absolute-insurer rule “has moved Kentucky backward in its regulation of horse racing,” citing the prevalence of the rule in racing jurisdictions across the U.S.

“The court’s mystifying ruling undermining Kentucky’s reliance upon the absolute-insurer rule … puts Kentucky out of step with other major racing jurisdictions and undermines its efforts toward national uniformity of regulations,” the RMTC statement read.

Foreman, who is a member of the RMTC’s board, pointed out that Wingate reached his decision in the context of the industry’s struggle to provide guidelines on the use of therapeutic medications while also cracking down on violators who persistently toe the line with therapeutics or who use substances that have no business being in a horse. For the most part, the thresholds sit on a trace-level demarcation line that often trips up even the most responsible horsemen.

Wingate “could have just made the decision based on his finding that the threshold level was arbitrary and capricious, but he went much further,” Foreman said, noting that 95 percent of positives in the sport are for therapeutic medications. “So maybe he was just trying to stimulate a conversation on whether the absolute-insurer rule is fair or not in this environment of very sensitive testing. I don’t think that’s necessarily a bad thing.”