LOS ANGELES (CN) – The L.A. Dodgers say American Insurance Co. ducked $9.2 million in disability payments the team paid to Jason Schmidt after the pitcher sat out most of the 2007 and 2008 seasons with a torn rotator cuff.
The Dodgers signed Schmidt in 2006, knowing he already had a partially torn rotator cuff in his pitching shoulder. The team says it wasn’t worried because Schmidt had a stellar 2006 season, despite the injury. Schmidt’s contract guaranteed his $47 million salary over 3 years, whether he played or not.
American Insurance agreed to cover Schmidt, even for a shoulder injury, the team says. In exchange for a $2.5 million premium, the insurer promised to pay the Dodgers from $63,000 to $66,000 for each day that Schmidt was injured, the team claims.
Though American allegedly knew about Schmidt’s partial rotator cuff tear when it issued the policy, it agreed to cover rotator cuff injuries on a restricted basis.
Schmidt pitched three games before a shoulder injury kept him out of most of the 2007 and 2008 seasons.
American claimed that a “Special Condition Limitation” restricted its coverage of rotator cuff injuries. It refused to reimburse the team for the first 182 days of Schmidt’s disability. The team says it agreed only to a 90-day exclusion.
The Dodgers want reimbursement with interest. The team is represented by G. Andrew Lundberg with Latham & Watkins.