11/21/2005 12:00AM

Birzer files $10M suit against guild

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REUTERS/Kevin Lamarque
Gary Birzer and his wife, Amy, preparing to testify before a congressional subcommittee investigating the Jockeys' Guild.

LEXINGTON, Ky. - Gary Birzer, the jockey who was paralyzed last year and whose unpaid medical bills became a catalyst for sweeping management changes at the Jockeys' Guild, has sued the guild and its former chief executive officer, L. Wayne Gertmenian, for $10 million.

The lawsuit, filed in U.S. District Court in Los Angeles on Friday, claims that Birzer was never informed that the guild had allowed a catastrophic insurance policy covering its members for $1 million in medical bills to lapse in 2002. The lawsuit also accuses Gertmenian, who was ousted last week by the guild's board of directors, of fraud and breach of fiduciary duty.

Birzer, who was injured as the result of an accident at Mountaineer Park in July 2004, "was left high and dry by the guild," said Paul Koczkur, Birzer's attorney, who is based in Detroit, on Monday. "He was led to believe that the catastrophic ontrack insurance policy that was provided by the guild was still in full force and effect. As he only found out after his accident, that was not the case."

The lawsuit also names Albert Fiss, the guild's former chief operating officer, as a defendant. Fiss was fired by the guild's board last week.

Barry Broad, an attorney representing the guild, said on Monday that the guild had received the lawsuit but would reserve comment on it. Broad pointed out that the suit accuses the guild of mismanagement prior to its staff being replaced last week.

"We're still trying to get a handle on it," Broad said.

Gertmenian did not return a phone message left at his home on Monday. Fiss also did not return a phone call.

Birzer's injury and his unpaid medical bills became a rallying cry for critics of the guild and Gertmenian. Last month, Birzer and his wife, Amy, were highly critical of the guild and Gertmenian during testimony before a congressional subcommittee investigating the guild and its practices.

Amy Birzer said during her testimony that her husband had paid $64,000 in dues and fees to the Guild in the six years prior to his accident in the belief that the catastrophic injury policy was in place, and that no one at the guild had informed the couple about the policy being cancelled. She also testified that her husband's unpaid medical bills exceeded $500,000.

Several other jockeys who were members of the guild also told congressional investigators that the guild never informed its members that the policy had been allowed to lapse.

The guild's financial situation is currently in disarray, according to Broad and other guild officials. Koczkur said that the money being sought by the lawsuit would be paid by the guild's insurance if Gertmenian had purchased a policy covering its officers and directors against lawsuits, a standard corporate practice.

"Gary is a big supporter of the guild," Koczkur said. "He's very loyal to the guild. The lawsuit is not taking a shot at the guild per se, but rather the guild as managed by Gertmenian and Fiss."

Last week, the guild's board of directors fired Gertmenian and terminated its relationship with his consulting company, Matrix Capital Associates. On the day that the board voted, Gertmenian, who was paid an annual salary of $151,000, made out checks totalling $217,000 to himself and other Matrix employees, according to Broad. Matrix was being paid $335,000 a year by the guild.

The guild handed over information about the checks to the police in Monrovia, Calif., where the guild's office is located, and is currently attempting to recover portions of the money.

"We're working with the banks to try to recover the money," Broad said. "That in of itself is an issue, as far as what you can or can't recover. As you know, it's one of many things we have on a very full plate."