11/17/2004 12:00AM

Questions about Guild cash

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LEXINGTON, KY. - The Jockeys' Guild, the nonprofit organization that paid for catastrophic health insurance coverage for its members before allowing the policy to lapse in 2002, had $4.16 million in cash at the end of 2002, up from $2.12 million at the end of 2001, according to forms filed with the Department of Labor.

The amount of cash held by the Guild in 2002 raises questions about certain statements made by Guild management regarding the group's ability to pay for catastrophic insurance coverage. Disputes over what constitutes adequate insurance and who should pay for it have led to disruptions at Churchill Downs and Hoosier Park, the cancellation of one racing program at Hoosier, and the banning of 14 jockeys at each track after their refusal to ride.

According to a letter sent on March 29, 2002, by Albert Fiss, the Guild's vice president, to Tim Smith, then president of the National Thoroughbred Racing Association, the catastrophic insurance policy cost $443,384 to cover Guild members from April 1, 2001, to April 1, 2002. In the letter, a copy of which was obtained by the Daily Racing Form, Fiss wrote, "The Guild can not afford to pay this premium for the next 12 months." Fiss also wrote, "The Guild is not the appropriate party to be providing occupational accident coverage."

Guild officials did not return phone calls Wednesday requesting comment on the cash balances and the filings with the Department of Labor. They have argued in the past that racetracks should bear the responsibility of paying for accident coverage for jockeys and that the current policies - paid for by tracks - should be raised from a maximum of $100,000 to $1 million worth of coverage, the amount of the previous policy paid for by the Guild.

The Guild's decision to cancel the accident policy in 2002 has upset some riders, who said they first found out about the decision last July, after Gary Birzer, a rider at Mountaineer Race Track in West Virginia, was paralyzed in an accident and was unable to pay for $500,000 in medical bills.

The Guild's increase in cash reserves occurred after the Guild's executive committee made a controversial decision to remove the organization's former national manager, John Giovanni, in June 2001. Giovanni was replaced by Matrix Capital Associates, a company owned by Dr. L. Wayne Gertmenian, the Guild's current president.

More recent figures on the Guild's cash account were unavailable. A Department of Labor spokesperson - who declined to be identified, citing agency rules - said on Wednesday that the Guild's 2003 report was due on March 30 and that department investigators are "taking steps to obtain the report."

The Guild's cash buildup actually began in 2001, according to the filings. At the end of 2000, the last full year in which Giovanni headed the Guild, the cash account stood at $173,647, according to a form signed by Giovanni, a number consistent with previous cash balances. At the end of 2001, after Matrix had been installed, the amount increased to $2,123,038. That filing, signed by Gertmenian, states that the total had been $904,426 at the beginning of 2001. The reason for the discrepancy between Giovanni's end-of-2000 figure and Gertmenian's beginning-of-2001 figure was unclear.

The Guild, which claims 1,250 members, currently receives money from a dues system that charges a rider either $3 or $10 per mount. If a rider pays $10, the rider and his family become eligible for group health insurance that does not cover accidents on the track. The Guild also receives an annual payment from the Thoroughbred Racing Associations, whose member tracks pay approximately $2.2 million a year in exchange for the jockeys waiving their broadcast rights for the purpose of simulcasting, according to TRA officials.

More than 100 jockeys have signed a petition calling for an independent audit of Guild finances, a petition Guild management has rejected.

Filings with the Internal Revenue Service also raise questions about the Disabled Jockeys' Fund, a nonprofit company run by the Guild that raises and distributes money for disabled riders.

According to the filings, the balance of the Disabled Jockeys' Fund grew steadily from $469,323 at the end of 1997 to $1,327,083 at the end of 2001. During those years, payments to disabled jockeys varied from a low of $32,898 in 1997 to a high of $225,411 in 2000. Each year, payments into the fund were higher than payments made to disabled jockeys.

In 2002, however, the fund's payments to disabled jockeys were $835,815, helping to reduce the balance at year's end from $1,327,083 to $440,888, according to the IRS filings. In 2003, the fund paid out $371,160 and ended the year with a balance of $105,071.

Giovanni, reached in Florida, where he now works for Blue Cross-Blue Shield, said Wednesday that during his time at the Guild the fund was used to pay for special needs of disabled jockeys and that the payments could vary substantially year to year. The payments could be used for new wheelchairs, help with house payments, or the installation of ramps or other equipment at riders' homes. The payments were separate from those used to provide weekly disability checks, Giovanni said.

Asked whether the fund had ever distributed in excess of $800,000 in one year while he was at the Guild, Giovanni said, "I can't ever imagine any situation in which we could have possibly distributed $800,000 in one year."

In 2002, the Guild started the Disabled Jockeys' Endowment, a nonprofit company that would be funded entirely by public contributions. According to IRS filings, revenue for the endowment was $108,758 in 2002. In 2003, according to the filings, the endowment received $636,576, raising its balance to $745,334.

Funding for the endowment does not come from the Guild itself, according to a statement accompanying the endowment's IRS filings. The statement said, "Contributions are solicited from the general public for the benefit of jockeys, apprentice jockeys, and former jockeys who have been injured and are permanently or temporarily disabled.

"In particular," the statement read, contributions are from "those interested in racing, or those who have become aware of the devastating effect of permanent injuries . . . ."