    [House Hearing, 109 Congress]
    [From the U.S. Government Publishing Office]

       THOROUGHBRED HORSE RACING JOCKEYS AND WORKERS: EXAMINING ON-TRACK
              INJURY INSURANCE AND OTHER HEALTH AND WELFARE ISSUES

    =======================================================================

                                    HEARING

                                   before the

                                SUBCOMMITTEE ON
                          OVERSIGHT AND INVESTIGATIONS

                                     of the

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 18, 2005

                                   __________

                               Serial No. 109-34

                                   __________

           Printed for the use of the Committee on Energy and Commerce

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     house

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                        COMMITTEE ON ENERGY AND COMMERCE

                          JOE BARTON, Texas, Chairman

    RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
    MICHAEL BILIRAKIS, Florida             Ranking Member
      Vice Chairman                      HENRY A. WAXMAN, California
    FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
    CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
    PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
    NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
    ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
    CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
    BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
    HEATHER WILSON, New Mexico           BART STUPAK, Michigan
    JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
    CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
    Mississippi, Vice Chairman           GENE GREEN, Texas
    VITO FOSSELLA, New York              TED STRICKLAND, Ohio
    ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
    STEVE BUYER, Indiana                 LOIS CAPPS, California
    GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
    CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
    JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
    MARY BONO, California                JAN SCHAKOWSKY, Illinois
    GREG WALDEN, Oregon                  HILDA L. SOLIS, California
    LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
    MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
    MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
    C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
    SUE MYRICK, North Carolina
    JOHN SULLIVAN, Oklahoma
    TIM MURPHY, Pennsylvania
    MICHAEL C. BURGESS, Texas
    MARSHA BLACKBURN, Tennessee

                          Bud Albright, Staff Director

            David Cavicke, Deputy Staff Director and General Counsel

          Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                     ______

                  Subcommittee on Oversight and Investigations

                        ED WHITFIELD, Kentucky, Chairman

    CLIFF STEARNS, Florida               BART STUPAK, Michigan
    CHARLES W. ``CHIP'' PICKERING,         Ranking Member
    Mississippi                          DIANA DeGETTE, Colorado
    CHARLES F. BASS, New Hampshire       JAN SCHAKOWSKY, Illinois
    GREG WALDEN, Oregon                  JAY INSLEE, Washington
    MIKE FERGUSON, New Jersey            TAMMY BALDWIN, Wisconsin
    MICHAEL C. BURGESS, Texas            HENRY A. WAXMAN, California
    MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
    JOE BARTON, Texas,                     (Ex Officio)
      (Ex Officio)

                                      (ii)
    ?

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
        Bailey, Jerry, Professional Jockey, Member, Racing Hall of
          Fame, former President, Jockeys' Guild.....................    45
        Birzer, Gary, former professional jockey, accompanied by Amy
          Birzer, Paul Koczkur, Attorney, and Dane Lupo, Attorney....    12
        Colton, Robert, professional exercise rider, former
          professional jockey, former Member, Board of Directors,
          Jockeys' Guild.............................................    87
        Day, Pat, former professional jockey, Member, Racing Hall of
          Fame, former President, Jockeys' Guild.....................    55
        Donahue, Gary, former professional jockey....................    63
        Fiss, Albert, Vice President and Chief Operating Officer,
          Jockeys' Guild.............................................   175
        Gertmenian, L. Wayne, President and Chief Executive Officer,
          Jockeys' Guild.............................................   173
        Giovanni, John, former professional jockey, former National
          Manager, Jockeys' Guild....................................    50
        King, Edwin L., professional jockey, former Treasurer,
          Jockeys' Guild.............................................    56
        McCarron, Chris, former professional jockey, Member, Racing
          Hall of Fame, former Member, Board of Directors, Jockeys'
          Guild......................................................   139
        Ownbey, Lloyd, General Counsel, Jockeys' Guild...............   187
        Shepherd, David, professional jockey, Chairman, Board of
          Directors, Jockeys' Guild..................................    67
        Swan, Tomey-Jean, professional jockey, Co-Vice Chairman,
          Board of Directors, Jockeys' Guild.........................    65

                                     (iii)

       THOROUGHBRED HORSE RACING JOCKEYS AND WORKERS: EXAMINING ON-TRACK
              INJURY INSURANCE AND OTHER HEALTH AND WELFARE ISSUES

                                  ----------

                           TUESDAY, OCTOBER 18, 2005

                      House of Representatives,
                      Committee on Energy and Commerce,
                  Subcommittee on Oversight and Investigations,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 11:05 a.m., in
    room 2123, Rayburn House Office Building, Hon. Ed Whitfield
    (chairman) presiding.
        Members present: Representatives Whitfield, Stearns, Bass,
    Walden, Burgess, Blackburn, Barton (ex officio), Stupak,
    Schakowsky, Inslee, and Baldwin.
        Staff present: Mark Paoletta, chief counsel; Tony Cooke,
    majority counsel; Tom Feddo, majority counsel; Kelli Andrews,
    majority counsel; Alan Slobodin, majority counsel; Peter
    Spencer, professional staff member; Clayton Matheson, research
    analyst; Terry Lane, deputy communications director; Jonathan
    Pettibon, clerk; Michael Abraham, clerk; David Nelson, minority
    counsel; and Elizabeth Ertel, research assistant.
        Mr. Whitfield. This hearing will come to order. I'm sorry,
    we're a few minutes late, but we had some last minute issues
    that came up and--but I do want to welcome you to this hearing
    on ``Horse Racing Jockeys and Workers: Examining On-track
    Injury Insurance and Other Health and Welfare Issues.'' We're
    going to have three panels of witnesses today. The first panel,
    we have Mr. Gary Birzer, who's a professional jockey, and his
    wife Amy Birzer, and so we look forward to their testimony.
        And before we get to their testimony, of course we will
    have our opening statements. And I might add that as is the
    custom of the Oversight and Investigations Subcommittee, we
    take all of our testimony under oath. And every witness is
    entitled to have an attorney represent them as they give their
    testimony and before we get to every witness, we'll certainly
    be swearing them in and walking them through the process. But
    at this time, I do want to welcome all of you once again for
    being with us today. I know many of you came from long
    distances and we appreciate very much your taking the time to
    be here on what we consider to be a particularly important
    issue.
        This issue came about and came to my attention and the
    attention of most people that follow the industry as a result
    of a July 20, 2004 accident during the seventh race at
    Mountaineer Park Race Track in West Virginia when jockey Gary
    Birzer broke his back in a fall and became permanently
    disabled. When he turned to the organization that he believed
    was providing the catastrophic insurance coverage, he
    discovered that he and other jockeys had no coverage, even
    though they had paid the fees, they paid their dues to that
    organization. The policy had actually been allowed to lapse 2
    years earlier.
        Gary's story dramatically brings to light a very serious
    problem confronting the entire horse racing industry, and that
    is the need for adequate on-track insurance coverage for
    jockeys, for exercise riders, and other workers on the
    backside. In today's hearing, we'll shine a light on this
    problem, and as a first step in determining whether and how the
    Congress can help provide a solution.
        I might also say that there is little real Federal
    oversight or regulation of the horse racing industry. And
    today's horse racing in the United States is a highly
    fragmented industry with a lot of different jurisdictions. It
    does have a total economic impact of $26 billion annually and
    that supports hundreds of thousands of jobs, and there is a
    racing handle of over $16 billion each year. But it still does
    not provide adequate on-track injury insurance for some of the
    industry's most important people and that is the jockeys.
        Now today's hearing has been made by some of the witnesses,
    particularly relating to the Jockeys Guild, they tried to make
    this a rather controversial hearing, and there is no reason for
    this to be a controversial hearing, but there are some serious
    issues that we're going to be looking into.
        No. 1, we're going to look into the lapse of the policy and
    we're going to try to find out did the Board of the Guild or
    the appropriate body of the Guild make a rational and valid and
    legal decision on allowing it to lapse? No. 2, did the Guild
    give adequate and legal notice to jockeys who paid dues with
    the full expectation that they would be covered with insurance
    for catastrophic coverage? Did the Guild give them adequate
    notice so that they did know? No. 3, there's a fund called the
    Disabled Jockeys Fund, and I think Mr. John Giovanni started
    that fund when he was the head of the Jockeys Guild, and at one
    point, there's $1.3, $1.4 million in that fund. And from that
    fund, the Jockeys Guild made payments to permanently disabled
    jockeys from time to time as the need occurred.
        And under the current leadership of Dr. Gertmenian and
    others at the Guild, we know that the Disabled Jockeys Fund is
    being depleted and there has been testimony that we've heard
    and we've read in the testimony that over a million dollars was
    taken out of that fund, was asked to be moved because ``we''
    want to leave the impression that this fund does not have
    adequate resources so that we can get more money. So those
    allegations have been made.
        And then we know that when Mr. Giovanni was in charge of
    the Disabled Jockeys Fund and his leadership, that payments to
    the jockeys were made from the Fund. Checks were made from that
    fund to the jockeys. But under Dr. Gertmenian, it appears that
    the Disabled Jockeys Fund is making payments to the Guild and
    then the Guild is writing checks. And of course, we've asked
    for and subpoenaed those documents to get a better
    understanding of the way that's been working and at this time,
    we've not received complete information.
        Another issue relates to Dr. Gertmenian himself. There's
    some testimony, and this is not a court of law, but it is a
    fact-finding body, that Dr. Gertmenian has a tendency to
    exaggerate, to embellish and sometimes that contributes to an
    overall perception problem. For example, in his resume he talks
    about being a chief detente negotiator in Moscow for the
    National Security Council, and yet we've talked to people who
    have been at the National Security Council during the period
    that Dr. Gertmenian refers to in his Pepperdine University
    resume of 1974, 1975 and 1976.
        We've talked to many people who have been there during that
    period, in fact, from 1972 through 1984, and they never heard
    of Dr. Gertmenian. So those are some issues that we look
    forward to looking at as well.
        And then finally, what is the solution to this, how do we
    come up with a solution? We know that this committee has
    jurisdiction over professional sports. It was this committee
    that passed the first Interstate Horseracing Act that set up
    the infrastructure or the structure for simulcasting. So do we
    need a Federal solution? Is this something that is so difficult
    because of the fragmented industry and the different
    jurisdictions and something so important as health care for a
    sport that is so dangerous? Do we need to take some additional
    steps?
        So that's another purpose of this hearing. And with that, I
    will at this time recognize the gentleman from Michigan for his
    opening statement.
        [The prepared statement of Hon. Ed Whitfield follows:]

      Prepared Statement of Hon. Ed Whitfield, Chairman, Subcommittee on
                          Oversight and Investigations

        Good morning and welcome. Today, the Oversight and Investigations
    Subcommittee will examine a serious health and welfare matter affecting
    a national sport and interstate commerce. This issue involves a recent
    tragic story of a professional athlete in an extremely dangerous sport.
    On July 20, 2004, during the seventh race at Mountaineer Park
    racetrack, in West Virginia, jockey Gary Birzer broke his back in a
    fall and became permanently disabled. When he turned to the
    organization that he believed was providing his catastrophic insurance
    coverage, he discovered that he and other jockeys had no coverage. The
    policy had been allowed to lapse two years earlier. Gary's story
    dramatically brings to light a very serious problem confronting the
    horse racing industry--the need for adequate on-track injury insurance
    for jockeys, exercise riders, and other workers on the backside.
    Today's hearing will shine a light on this problem and is a first step
    in determining whether and how the Congress can help provide a
    solution.
        Because of the dangerous nature of horse racing, serious injuries
    are common among the people who race, ride, or care for these massive
    and powerful animals. Unfortunately, the various states' workers'
    compensation programs do not cover many workers in the horse racing
    industry. Given the nature of these jobs--jockeys and exercise riders,
    especially--the law has historically considered them to be independent
    contractors. Only four of 38 racing jurisdictions--Maryland, New York,
    California, and New Jersey--have attempted to address this problem by
    creating special workers' compensation funds for jockeys and exercise
    riders. Some, like New York, have been more successful than others in
    addressing the problem.
        Additionally, there is little real federal oversight or regulation
    of the horse racing industry. Thus, today horse racing in the United
    States is a highly fragmented industry generating a total economic
    impact of $26 billion annually, that supports hundreds of thousands of
    jobs and sees a racing ``handle'' of $16 billion each year, but does
    not provide adequate on-track injury insurance for some of the
    industry's most important people. Let me be clear--without the jockeys
    and backside workers, there would be no horse racing. All of those
    other jobs would not exist.
        Let me also make clear: the primary purpose of this hearing is to
    address the health and welfare issues of jockeys and other workers most
    susceptible to serious injury in this industry. I am interested in
    learning whether the federal government can make a difference in the
    public health issues that these workers face, and whether we need to
    consider some sort of national governing body to oversee the
    professional sport of horse racing. In pursuit of these concerns, we
    are planning a second day of this hearing in early November to take
    testimony from the Thoroughbred Racing Association, Churchill Downs,
    Mountaineer Park, and some of the industry's health and welfare
    organizations. These organizations have already been invited and
    confirmed their participation. We will have tough and pointed questions
    for them as well. All of these players in the industry share in the
    responsibility for taking care of these individuals.
        Today we will examine the adequacy of on-track injury insurance and
    whether a federal solution could be helpful. Such an inquiry entails
    focusing on the vital role that the Guild has historically played in
    ensuring that its members had adequate on-track injury insurance. The
    Guild is an association that has sought to promote the health and
    welfare of its members since the 1940s. In recent times, the Guild
    secured on-track insurance coverage through membership dues received
    from its members--``mount fees''--as well as payments totaling millions
    of dollars from many racetracks around the country in consideration for
    the use of Guild members' media rights. The Guild's on-track injury
    insurance covered jockeys when they weren't riding in the states that
    had workers' compensation programs. The policy provided $1 million
    dollars in coverage per accident.
        In April 2002, however, when the policy came up for renewal, the
    Guild chose not to renew it. I have many questions: who made this
    decision? for what reason? were members adequately notified? Since the
    Birzer accident, the Guild has frequently told its members, the press,
    and this Subcommittee that the Guild could not afford the policy, and
    that the policy did not cover all jockeys. When staff interviewed Dr.
    Gertmenian, he also stated that the Guild could not afford the policy.
    But when staff interviewed the Guild's Vice President, Albert Fiss, he
    admitted that the Guild could have afforded to renew the policy, but
    that the decision to let the insurance lapse was a ``business
    decision.'' This past May, in another letter to the Subcommittee, the
    Guild's general counsel, Mr. Lloyd Ownbey, stated that ``the Board and
    Dr. Gertmenian agreed there was no justification to buy a new policy
    after it expired when the Guild and its jockeys had more important
    needs.'' What could have been more important than maintaining insurance
    for its members in the event of a catastrophic injury?
        The Guild has provided sworn answers in federal litigation stating
    that the Board made the decision to let the policy lapse. Likewise, in
    an April 2005 letter to this Subcommittee, Mr. Ownbey stated ``the
    Board of the Guild voted not to renew that insurance policy in April
    2002 on the recommendation of Dr. Gertmenian. The decision to let it
    lapse [was] communicated to Guild members.'' However, in an article
    published just last Friday in BusinessWeek Dr. Gertmenian apparently
    admits there was no formal notification about the policy lapse.
        With respect to the Board having made this decision, our work
    indicates otherwise--that is, the Board was apparently never involved.
    In fact, three members of that former Board are here today, and I will
    ask them to testify about this and other issues.
        What we do know at this point, is that the policy was allowed to
    lapse. Many jockeys interviewed by staff have said they were never
    notified of this decision. Some of these riders risk their lives in
    competitive races nearly 2000 times a year. And yet, these jockeys have
    told us they only learned of the lapsed insurance policy after Gary
    Birzer's tragic accident. We will hear very moving testimony from Gary
    and his wife, Amy, today on our first panel.
        I find the treatment of the Birzers particularly reprehensible.
    They asked for the Guild's assistance with their medical bills,
    counting on the insurance for which Gary thought his dues to the Guild
    had been paying. Not only were they shocked to learn that the Guild no
    longer had the policy, but that, in the words of Albert Fiss, Gary was
    being used as a ``guinea pig'' to make a statement to the industry. The
    Guild management insists that on-track insurance is the exclusive
    responsibility of the racetracks.
        While I intend to find a solution to this problem, and to hold the
    racetracks accountable, the immediate issue is here, with the Guild's
    responsibilities. There is no excuse for this profound breach of trust
    by the Guild. It had a responsibility to its members--to promote their
    health and welfare. Instead, the Guild removed an injury insurance
    policy, without any replacement, and with full knowledge of the risks
    taken thousands of times each year by jockeys. I am appalled that their
    leadership would consider the removal of their on-track insurance,
    without an adequate replacement, to be a simple business decision.
        Our second panel of witnesses will provide the opportunity for us
    to hear, first hand, what several jockeys--including several who are
    currently members of the Racing Hall of Fame--think of that decision.
    They will also testify about the dangers of their sport, the safety and
    health concerns that they have, and their involvement with the Jockeys'
    Guild--both the current and previous administrations. Their testimony
    will be invaluable as we examine the public health issues that this
    professional sport faces.
        Finally, today we will hear from the Guild's current management--
    Dr. Gertmenian and Mr. Fiss--as well as the Guild's general counsel,
    Mr. Ownbey. Since we began this investigation the Guild has failed to
    produce records and information in response to a lawful congressional
    request. In fact, this Subcommittee earlier this month authorized the
    issuance of subpoenas for records, and it is not altogether clear that
    the Guild has been fully responsive. We expect some clear answers
    today, about the failure to produce records in accordance with the
    subpoenas.
        With regard to Dr. Gertmenian, there are several areas of interest
    that I want to explore today. First, I want to discuss the Guild's
    treatment of the Birzers after Gary's injury. Second, I would like some
    answers about the circumstances surrounding the lapse in the on-track
    insurance policy. Next, I think the public, and especially the jockeys,
    deserve some answers about your company, Matrix. No one the staff has
    interviewed, including yourself, has been able to describe what Matrix
    does for the Guild or has accomplished for the Guild, to earn its
    $400,000 in annual fees. In a review of those fees, one sees that the
    Guild pays you $175,000 in salary, $7200 for a car, and $12,000 for
    life insurance, on top of the $400,000 to Matrix, a company you run out
    of your home, and that has no employees. Records produced in response
    to our subpoenas show that your daughter and her marketing firm are
    frequent recipients of substantial payments from Matrix.
        Fourth, we need answers to certain questions about your resume. The
    jockeys chose to replace Mr. Giovanni, a former jockey, because they
    thought they were getting an experienced businessman and prominent
    government leader. I am not so sure that is the case. Fifth, and
    finally, the Subcommittee expects answers from you about the Disabled
    Jockeys Fund, and why it has been completely depleted of the $1.3
    million it had when you took over the Guild.
        Let me extend my appreciation to all of you for appearing here
    today. I'd like especially to thank Gary and Amy Birzer, and Gary
    Donahue for their participation. Given your perspective about the needs
    for adequate coverage and the other pressing health and safety needs in
    the industry, I think your testimony today will be most useful.
        I look forward to all your testimony and now turn to the
    distinguished Ranking Member, Mr. Stupak, for the purposes of an
    opening statement.

        Mr. Stupak. Thank you, Mr. Chairman, and thank you for
    convening this hearing. Today, we're going to hear a story of
    neglect, failure and betrayal. I'm, for one, outraged that the
    jockeys, exercise riders and grooms that make thoroughbred
    racing the sport that it is could face conditions in the 21st
    century that most American workers have not experienced within
    their working lives, or their parents' working lives for that
    matter. The most disturbing aspect of what we will hear today
    concerns the failure of the Government, State and Federal, to
    provide fundamental legal protections to these workers which
    are enjoyed by their fellow citizens. Of the 38 States that
    permit thoroughbred racing, only four, New York, California,
    New Jersey and Maryland, require that the owners and operators
    of race tracks provide workers compensation insurance for
    jockeys and freelance exercise riders.
        Some States do not even require that riders, grooms or
    other workers that are the exclusive employees of a single
    stable be covered by workers comp. Workers compensation
    insurance has been a fundamental condition of employment for
    almost all Americans, including those that perform their tasks
    under very dangerous conditions for almost a century. Yet,
    under the rules that the jockeys are independent contractors,
    most States allow the riders to bear the risk and costs that
    are borne by virtually all other employers in this country.
        This is compounded by a rarely issued rule by the National
    Labor Relations Board stating that racetrack employees will not
    be afforded the right to organize or bargain collectively,
    under Federal law, to improve their working conditions. OSHA
    has not issued any rules that race tracks must follow to be in
    compliance where there are minimal safety conditions. Today, we
    will also focus on the apparent betrayal of the jockeys by the
    current leadership to provide themselves with some of the
    protections that lawful unions and other responsible employers
    supply. That organization is the Jockeys Guild.
        Anyone that has seen the movie ``SeaBiscuit'' knows the
    Guild was formed around 1940 to provide some support to
    disabled jockeys. The working conditions, and hence the need
    for the Guild to perform that support function, have not
    changed much in the intervening half century. Up until 2001 the
    Guild did a fairly good job of providing insurance for healthy
    jockeys and some support for both temporary and permanently
    disabled jockeys. On June 15, 2001 the Guild came under the
    effective control of Wayne Gertmenian professor of economics at
    Pepperdine University.
        The witnesses today will tell the story of the takeover and
    the subsequent revocation of the traditional on-track insurance
    protection that was previously supplied by the Guild. They'll
    tell us that the usurpation of the Disabled Jockeys Fund and
    the bringing of the organization itself to the apparent brink
    of bankruptcy today. What I find very interesting is the fact
    the Gertmenian takeover was timed in response to a survey taken
    by the previous administration on whether the Guild should
    explore affiliation with the AFL-CIO Union in order to
    reacquire reasonably priced off-track health insurance.
        Essentially, what happened was the Gertmenian
    administration took over to keep out a real union. Dr.
    Gertmenian will get his chance to account for his stewardship
    of the Guild today. It's up to the jockeys to decide his
    institutional fate.
        Mr. Chairman, while the betrayal of the Guild management is
    a serious failing, it's the failings of the Government that are
    truly unacceptable. I expect that the jockeys appearing today
    will confirm what we've already learned from the staff
    interviews, that a number of meaningful steps can be taken to
    improve the safety of human participants working at race
    tracks. Much of what needs to be done in the way of mandating
    proactive safety precautions requires changes in law. I look
    forward to working with you as we move forward with this
    investigation and remedial legislation.
        One thing we can do now is to bring the evidence from the
    witnesses to the attention of the Secretary of Health and Human
    Services. I request that he immediately instruct the National
    Institute of Occupational Safety and Health and OSHA to
    undertake a study of racetracks and related sites nationwide
    and to establish guidelines OSHA can use to hold tracks
    responsible for correcting the most egregious working
    conditions that jockeys and exercise riders must endure to
    practice their trade. The legal system must compel the tracks
    to treat their workers as Americans expect employers to behave.
    If we permit anything less, the Congress will have to add its
    name to the list of institutions that treats riders as second-
    class citizens.
        Mr. Chairman, I know this issue is very important to you
    and I have a couple of other issues I wanted to bring up on
    other hearings I hope we could have in the near future, but I
    do not want to distract from the seriousness of the hearing
    today, so I'd like to submit my full statement for the record.
        Mr. Whitfield. Thank you, Mr. Stupak, and it will certainly
    be admitted into the record.
        The Chair recognizes the gentleman from Oregon, Mr. Walden.
        Mr. Walden. Mr. Chairman, I'm going to waive an opening
    statement in exchange for more time for questions.
        Mr. Whitfield. The Chair recognizes the gentlelady, Ms.
    Baldwin.
        Ms. Baldwin. Thank you, Mr. Chairman. It appears that
    thoroughbred horse-racing jockeys occupy a rather unique and
    unenviable status in professional sports. The NLRB has ruled
    that they can't form a union because they are not anyone's
    employees and the racetrack owners say jockeys are independent
    contractors and the horse owners say don't look at us. I think
    it's very important that this subcommittee is undertaking an
    investigation into the set of circumstances that has left
    America's jockeys without on-track catastrophic injury
    insurance. And I expect that this hearing and this
    investigation will shed light on this topic. And I hope that we
    can hold those responsible accountable.
        That said, I share the Chairman's sentiments that I hope
    this investigation and this subcommittee can produce a greater
    good. Let's not only hold wrongdoers accountable, let's find a
    solution to the problem of uninsured jockeys, particularly as
    it applies to on-track catastrophic coverage. And on this point
    we could explore a number of different options. We can remove
    the obstacles that prevent jockeys from being treated like
    other professional athletes who can form players unions. We
    could put the focus on track owners and operators to abandon
    their insistence that jockeys are independent contractors or,
    alternatively, at the very least, increase the ridiculously
    low, particularly $100,000 per incident on-track liability
    coverage that most of them now maintain. We could put the focus
    on horse owners to take greater responsibility in providing
    comprehensive health care coverage, or we could, as I say over
    and over again on this committee, enact universal comprehensive
    quality affordable health care for everyone in America.
        Based upon what I've learned during the course of this
    investigation thus far, I feel that a great wrong has been
    committed against America's professional jockeys, and I want
    justice for those who have been wronged. But I've also learned
    in the course of my life that a wrong is being committed
    against 46 million Americans, that because of the label that
    they bear, independent contractor, self-employed, small
    business owner, student, homemaker, mom, pop, poor, they find
    themselves among the uninsured. 46 million uninsured in
    America. And I hope that this hearing and investigation will
    lead to more than making our professional jockeys whole again,
    although I mightily want that to happen. I hope that we'll also
    lead to real suggestions and real solutions about the health
    care crisis that our Nation faces and the phase in our health
    care safety net. Thank you, Mr. Chairman.
        Mr. Whitfield. Ms. Baldwin, thank you very much. I might
    add that you'd mentioned thoroughbred racing and that was sort
    of the title of the hearing, but we do recognize certainly that
    there's a big quarterhorse racing industry, lot of jockeys who
    ride quarterhorses, and as I said in my opening statements,
    we're not focused just on jockeys here, but the backside
    people, the exercise riders and others. And so, we have a lot
    of options to look at. At this time, I recognize the gentlelady
    from Tennessee, Mrs. Blackburn.
        Mrs. Blackburn. Thank you, Mr. Chairman. I will just
    welcome the Birzers and thank them for their time and waive
    statement, reserve the time for questions.
        Mr. Whitfield. Thank you. At this time I recognize Ms.
    Schakowsky.
        Ms. Schakowsky. Thank you, Mr. Chairman, for holding this
    important hearing. I want, first, to associate myself with the
    statement of my colleague, Ms. Baldwin from Wisconsin, in
    regard to the need for more comprehensive approach to health
    care and the need, in my view, and obviously hers, for national
    health care program to cover all Americans. Jockeys, exercise
    riders and other backside workers have long been forced to
    endure some of the most dangerous and undercompensated working
    conditions of any group of workers in this country.
        Today, we will focus on the dreadful conditions that these
    courageous citizens must face every working day. We will also
    focus on the failures of the current management of the Jockeys
    Guild to fulfill even the most basic of its purposes, providing
    for the health and welfare of disabled jockeys. This is a
    necessary part of the subcommittee's investigation. However,
    there is another part that can't go ignored. The employers are
    not with us today. The racetracks apparently believe that they
    have no obligations to injured riders, save for a $100,000
    insurance policy that does not begin to address the real cost
    of permanent disability.
        They fight any and all attempts to extend the basic right
    to workers compensation that the rest of us enjoy and that the
    State mandates for all other employers. I understand that you
    will hold a hearing, at least one more hearing, Mr. Chairman,
    for the owners and managers of tracks, including Mountaineer
    Track, where Gary Birzer suffered his tragic accident last year
    will be called to account for the treatment of the workers that
    make this $26 billion per year business successful. I hope this
    subcommittee finishes this--I hope before this subcommittee
    finishes this important work, we will be able to put together
    bipartisan recommendations to finally address the injustices
    that have been the historic characteristic of the business as
    opposed to the sport of horse racing. Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you, Ms. Schakowsky. As I stated
    earlier, we're going to be open and we're going to explore
    every avenue to try to address this significant issue. At this
    time, I recognize Dr. Burgess from Texas.
        Mr. Burgess. Thank you, Mr. Chairman, for the recognition.
    Thank you for holding this hearing. This morning we're going to
    be focusing on the health and welfare of a specific class of
    individuals, and I strongly believe it is the role and
    responsibility of this committee to address the imminent health
    care needs of our entire Nation. Mr. Chairman, thank you for
    bringing yet another specific health-related issue not only to
    the committee's attention, but also to the public's attention.
    Additionally, I would like to thank you and extend--I would
    like to thank and extend my sympathies in advance to those
    individuals and their families who are with us today, those
    individuals who have been injured and have graciously agreed to
    share their stories with us today.
        Horse racing is inherently dangerous. I'm sure no one will
    argue with that statement, but there are also many things in
    life that are dangerous, and hence the reason that we try to
    protect ourselves and our families from the unthinkable. Yet it
    is truly unthinkable that the safety net we have created to
    protect ourselves will be taken away from us without us even
    knowing it.
        Like we do with all insurance, these jockeys relied on the
    Guild to protect them. They participated in the dangerous
    profession for the good of the sport, believing that if
    something happened to them, they would be protected. For the
    Guild to rend that safety net and expose these jockeys to this
    trouble is not only unthinkable, but in my opinion, it is
    criminal. While I do not claim to be an expert in this industry
    or an expert in the law, before coming to Congress, I was just
    a simple country doctor, but I do know an unhealthy situation
    when I see one. This predicament cannot easily be cured and the
    remedies for the families will be difficult, but I do hope this
    hearing will not only expose the various ailments, but begin
    the slow road to recovery for this entire profession.
        To do this, tough questions must be asked and answered by
    both the Jockeys Guild and the consulting firm Matrix Capital
    Associates. I look forward to what will likely prove to be a
    very lively discussion this morning. Again, Mr. Chairman, thank
    you for bringing this hearing to us so we can address some of
    these important concerns with regards to the health and welfare
    of this industry. I yield back the balance of my time.
        Mr. Whitfield. Thank you, Dr. Burgess. At this time, I
    recognize the gentleman from Florida, Mr. Stearns.
        Mr. Stearns. Thank you, Mr. Chairman, thank you again for
    holding this hearing on catastrophic injury insurance for
    professional jockeys and others in the horse racing industry
    that you mentioned, not just the jockeys. I think the members
    should realize that as well as people in audience. I am from
    Ocala, Florida. We have about 469 horse farms down there. It's
    a majestic sport that we want to preserve and we've had some
    winners from Ocala. In fact, back in 1955, the 1955 Champion 2-
    year old colt Needles won the 1956 Kentucky Derby and Belmont
    Stakes, so I'm making a plug for my home town. And of course
    Fleet Alex is a Florida-bred horse down in Palm Beach County.
    So we're well aware of the jockeys. We in Ocala are very
    concerned and so we appreciate this hearing. These hard working
    agile jockeys put their life on the line, and who's looking
    after their health, we find out really no one is.
        This is a very vigorous sport. It's a very dangerous sport
    with a high rate of accidents, and my staff and I were talking,
    we were reminded we have a boxing bill dealing with setting up
    a commission to establish standards for health for these
    boxers, and so I'm very glad, Mr. Chairman, that we're looking
    at this particular case for jockeys. Mr. And Mrs. Birzer, I'm
    sorry that you're here, I'm sorry, Mr. Birzer, for your injury.
    You're very wise to come forward to talk about it so we in
    Congress can empathize and try to do something about it. Mr.
    Donahue seems to be sort of a whistleblower for his colleagues,
    I think, for questioning the accounting of the Disabled Jockeys
    Fund and being fired for troubles.
        So I appreciate your courage in sharing your painful
    experiences and memory with this subcommittee. It's only
    through hearings I've found that we've learned what is right
    and working in our vast system of commerce, and we also need to
    say because of this hearing, we need to improve and we need to
    have legislation to do that.
        Mr. Colton, in looking at your testimony, I believe you
    submit that, ``I believe this hearing could some day lead
    toward creating a Nationwide program that would include
    insurance for all backside workers, as the Chairman mentioned,
    as well as national uniform national safety standards that
    would help reduce injuries.''
        Well, on a profession wide insurance plan, this House has
    debated and passed the associated health plans repeatedly in
    recent years. This could be an option for all of yours.
    Meanwhile, on uniform safety and standards, my subcommittee,
    the Consumer Protection and Trade, has examined similar issues
    like jockeys in a dangerous sport. As I mentioned, boxing is
    one case. So I'm looking forward to discussing the protections
    for jockeys and also for the backside workers. And again, thank
    you, Mr. Chairman for having this hearing.
        Mr. Whitfield. Thank you, Mr. Stearns. If there are no
    further opening statements, then we will begin with the first
    panel.
        [Additional statement submitted for the record follows:]

     Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
                                  and Commerce

        Thank you Chairman Whitfield. Let me also thank you for launching
    this investigation into the heath of jockeys and other horse-racing
    industry workers. This billion-dollar sport could not exist without the
    daily risks these people take, sometimes for minimal pay, and often
    without the insurance they thought they had.
        The people who race horses for a living are not a large or
    particularly influential group. They engage eagerly in a dangerous
    sport in which a mistake or a fluke can maim them. It doesn't happen
    every day, but it happens. And when it does, jockeys rely on their
    insurance to see them through. We'll hear today what happens when a
    jockey who was the victim of a terrible accident discovers he was the
    victim of a terrible betrayal, too.
        Our witnesses today are professional jockeys who are well known in
    the world of thoroughbred horse racing. They will explain the risks
    they face, and how they banded together and entrusted the Jockey's
    Guild with funds to buy insurance to protect them and their families
    from the catastrophic financial losses that can accompany injuries.
        We'll also hear about a classic story of betrayal, in which
    management of the Jockey's Guild let them down. And we'll hear the
    disturbing story of Gary Birzer, who learned too late that the
    insurance coverage he was promised did not exist. This was not a clever
    sting. It was a crude deception performed by an official in whom trust
    as well as money had been invested.
        Today, we will examine a set of specific actions taken by people in
    charge of one particular industry organization, and will see how those
    actions made a tragic injury so much worse. I look forward to learning
    more about the particulars of this case, as well as to examining in
    this and other hearings the broader problems exposed by this alarming
    episode.
        Mr. Chairman, this is an important if under-appreciated issue, and
    the bright light you will shine on it in coming months should bring
    attention to this problem in this sport.
        As you conduct the Subcommittee's oversight, I hope the horse
    racing industry will pay close attention and deal with these problems.
    We'll be watching, too, and there should be no question that any
    failure to take action will draw additional scrutiny by Congress. If we
    must, I promise you that we will exercise our jurisdiction over
    professional sports and public health to ensure the welfare of these
    athletes is protected.
        This Committee will continue to do its own work to gather the facts
    necessary for the full story on these problems. We've already
    subpoenaed records and will do so again, if necessary, to collect the
    factual information required for the Committee's oversight work to
    proceed.
        Let me offer my warm thanks to the witnesses' and especially Mr.
    and Mrs. Birzer on the first panel--for taking the time to help us
    explore this issue today. I am hopeful your sincere efforts will help
    restore some trust in the system you have long relied upon for
    assistance when injured--and will help the movement towards improving
    the health insurance situation for the sport overall.
        I look forward to the testimony and yield back the remainder of my
    time.

        Mr. Whitfield. I'm going to introduce the first panel,
    again, even though I did so in the opening statement, then
    before we do all the swearing in, we want to show a video that
    I think gives a very clear example of just how dangerous this
    sport is, and particularly for the jockeys who are riding in
    these races.
        But the witness on the first panel is Mr. Gary Birzer and
    his wife Amy, and as I mentioned earlier, he was involved in an
    accident in Mountaineer Park in 2004 and is permanently
    disabled, and we appreciate your being here. Before we swear
    you in and any attorneys that you might have with you, I would,
    at this time, ask that we show this video. Put out some of the
    lights if you would.
        [Video played.]
        Mr. Whitfield. I think you would agree with me that that
    short video does show quite clearly the challenges in this
    profession, and I think all of us would be irresponsible if we
    did not look into this in some depth and try to come up with
    some solutions to maybe have some national standards on safety
    and to make sure that people participating in this sport that
    creates an economic benefit of $26 billion annually across the
    country, that there be adequate coverage for anyone
    participating in this sport.
        I've introduced Mr. Birzer and his wife Amy, and once
    again, we genuinely appreciate your being here. As I stated in
    the opening statement, this is an Oversight and Investigations
    hearing, and when the committee does that, we have the practice
    of taking testimony under oath. And so I would ask you, Mr.
    Birzer, and your wife Amy, do you have any objection to
    testifying under oath this morning?
        Mr. Gary Birzer. No, sir.
        Mr. Whitfield. I would also advise you under the rules of
    the House and the rules of the committee you are entitled to be
    advised by legal counsel. Do you desire to be advised by legal
    counsel during your testimony today?
        Mr. Gary Birzer. Yes.
        Mrs. Birzer. Yes.
        Mr. Whitfield. So both of you desire to do so. In that
    case, would you please identify your counsel for the record,
    please.
        Mr. Koczkur. Walt Koczkur on behalf of Gary Birzer.
        Mr. Whitfield. I'm sorry, what?
        Mr. Koczkur. Paul Koczkur.
        Mr. Whitfield. For Gary Birzer.
        Mr. Lupo. Dane Lupo on behalf of the Birzers.
        Mr. Whitfield. Okay. All right. Let me ask this, will the
    two legal counsels, will you be giving testimony today. All
    right. Then at this time I'm going to stand and I would ask Mr.
    Birzer you to raise your right hand and Amy if you would stand
    and raise your right hand and I'll swear you in.
        [Witnesses sworn.]
        Mr. Whitfield. Okay. Each of you are now under oath and we
    have a number of witnesses today and we value the testimony of
    each witness, and I want you to know in advance that your
    entire testimony that you have already submitted to us will be
    placed into the record and we're going to ask that you try to--
    I won't hold you totally to this, but try to complete your
    testimony in 5 or 6 minutes, if you can possibly do that. So at
    this time, Mr. Birzer, you're recognized for your opening
    statement, and before you give your testimony, be sure that the
    microphone is on by pushing that button so that it shows.

         TESTIMONY OF GARY BIRZER, FORMER PROFESSIONAL JOCKEY,
      ACCOMPANIED BY AMY BIRZER, PAUL KOCZKUR, ATTORNEY, AND DANE
                             LUPO, ATTORNEY

        Mr. Gary Birzer. It's on now. My name is Gary Birzer, I'm a
    second generation jockey. My father rode and trained race
    horses. I started riding in February 1997 in Grand Island,
    Nebraska. I rode on many racetracks such as Lincoln Park, River
    Downs, Hoosier Park, Turfway Park, Beulah Park, Suffolk Downs,
    Canterbury Park and Mountaineer Park. My wife and I were
    engaged in July 1998. After talking to two Guild members, they
    suggested that I join the Guild, pay the hundred dollars yearly
    fee and $2 per mount member fee. I agreed. In 6 months before I
    married--Amy and I were to be married, I became a full member,
    feeling secure that the fact that me and my family would have
    appropriate insurance.
        When I joined the Guild, Gary Stevens was president, and
    when I received my handbook, it read we take care of our own,
    and that included insurance for on-track injuries. When the
    Guild was in financial trouble in 2001, I was one of the few
    that stayed a full $10 per mount member plus $100 annual fee,
    thinking that if anything would happen to me, that they would
    take care of those who remain loyal.
        When Dr. Gertmenian and his management company, Matrix
    Capital took over, I remained a loyal member, still putting in
    the maximum $10 per ride. I attended all Guild meetings when
    they came to the racetrack. Not once during any of these
    meetings was anything said of the catastrophic insurance being
    canceled. No other riders said anything about it either. If any
    of the other even 20 riders in the meeting had heard it, the
    news would have spread around like wildfire.
        I believe that the Guild would have covered me. I would
    have never ridden without insurance and put my family in this
    jeopardy. On July 20, 2004 my life changed forever. I remember
    bits and pieces right after my accident. I was being heavily
    medicated to lessen the pain for my injuries and treated
    infections. I don't remember exactly when I found out the Guild
    was not going to help me. However, my wife was dealing with it
    well before I became aware of this situation. I was in denial,
    depression for the longest time. The first time I talked to the
    Guild, I was in Squirrel Hill, one of the best rehab centers
    for spinal cord injuries in the country. Amy was crying and
    near a nervous breakdown.
        I called Albert Fiss. I left a message on his answering
    machine to call me. He finally called me back and asked me what
    he could do for me. I said Squirrel Hill is going to give me 4
    weeks as charity but I need another 4 weeks, can the Guild pay?
    He answered back yes. I told him he needed to talk to Joyce
    Watson in the admissions.
        Later, Ms. Watson came back to my room and said that Mr.
    Fiss agreed to pay for 4 more weeks then take care of anything
    else I needed, when I had a meeting a few days later at
    Squirrel Hill that involved Squirrel Hill's management, Guild
    representatives, Mr. Fiss, Darrell Hare, Larry Samuel, jockeys
    Bobby Walker, Junior, Deshawn Parker and Dana Whitney.
        That morning, Mr. Fiss told my wife that I did not have to
    leave Squirrel Hill because the Guild would pay for the
    additional 4 weeks, just as the jockeys at Mountaineer Park,
    David Shepherd, and all my family.
        Somehow things changed in that meeting later that day. I
    went into a meeting thinking I was going to stay but the
    meeting went on, the discussion turned into a different
    direction. I was going to West Virginia. They assured me that
    the people are friendly, but they were not specialized in
    spinal cord injury. The day before I was to leave Squirrel
    Hill, Dr. Gertmenian and Albert Fiss came to visit me. The only
    thing they wanted to discuss was that I should sue Mountaineer
    Park, not why the Guild couldn't help me.
        I was then transported by ambulance to West Virginia Rehab
    Center. I fell into a deep depression there during my stay.
    While I was there I had three visitors, Kelly Witsma, Jose
    Santos, and Johnny Velazquez. They indicated to me that they
    were also not aware of the catastrophic insurance being
    canceled. Terry Thompson, a fellow jockey at Prairie Meadows
    racetrack, was listening to a radio program called The Races
    and Beyond where Dr. Gertmenian was speaking. He heard that Dr.
    Gertmenian said on the air that the Guild was taking care of
    all of Gary Birzer's medical bills. Do I go ahead and keep
    reading, sir?
        Mr. Whitfield. You can continue.
        Mr. Gary Birzer. Thank you. He then called my brother Alex
    and told him what he had heard. Alex said something to my
    agent, Jimmy Isabel. Jimmy immediately called the radio
    station. Jimmy was available to speak on the air and confirmed
    what was said. As Dr. Gertmenian had already hung up the phone
    and was no longer speaking, the radio station confirmed that
    yes, that is what we also heard, Dr. Gertmenian saying that all
    of Gary Birzer's bills were being paid. Then Jimmy on the air
    confirmed through the station it was not true, that Gary's
    medical bills were not being paid by the Guild.
        I then left West Virginia on November 18, 2004, after 4
    long months of being bounced around hospitals, rehab centers,
    struggling to accept my new life I've been dealt battling with
    management and the representatives of the Guild to provide some
    assistance and trying to keep my family from falling apart.
        If it wasn't for my dear wife, Amy, I would never come
    through this as well as I have. She's been my rock and my
    soulmate. We decided to come home to Cincinnati to be closer to
    family. In September 2005, I traveled back up to Mountaineer
    Park to visit my jockey friends. They said that the Guild had
    informed them that they were taking care of Gary Birzer, and
    taking care of all my medical bills. They said that West
    Virginia State Rehab Center was one of the best in the country.
        In the last year, I've had a lot of trouble with the Guild
    for reimbursing us for all my catheters and the need for
    medical supplies. We have to make many phone calls and dealt
    with much aggravation trying to get the reimbursements
    processed. After remaining loyal for so many years and relying
    on the promises, and when they have talked directly to me, I
    have felt I've been completely let down.
        [The prepared statement of Gary Birzer follows:]

                       Prepared Statement of Gary Birzer

        My name is Gary Birzer. I am a second generation jockey. My father
    rode and trained horses. I started riding in February, 1997 at Fonner
    Park in Grand Island, Nebraska. I rode at many racetracks such as
    Lincoln Park, River Downs, Hoosier Park, Turfway Park, Buehla Park,
    Suffolk Downs, Canterberry Park and Mountaineer Park. My wife and I
    were engaged in July 1998. After talking to two Guild members, they
    suggested that I join the Guild, pay the $100 yearly fee and the $2.00
    per mount member fee. I agreed and six months before Amy and I were
    married, I became a full member, feeling secure in the fact that me and
    my family would have the proper insurance. When I joined the Guild,
    Gary Stevens was President. When I received my handbook, it read ``WE
    TAKE CARE OF OUR OWN''. And that included insurance for on-track
    injuries.
        When the Guild was in financial trouble in 2001, I was one of the
    few that stayed a full $10.00 per mount member, plus the $100 annual
    fee, thinking that if anything would happen to me, they would take care
    of those who remained loyal. When Dr. Gertmenian and his management
    company, Matrix Capital, took over, I remained a loyal member, still
    putting in the maximum $10.00 per ride. I attended all the Guild
    meetings when they came to the track. Not once during any of those
    meetings was anything said about the catastrophic insurance being
    canceled. No other rider said anything about it either. If any of the
    other 20 riders in the meeting had heard it, the news would have spread
    like wildfire. I believed that the Guild insurance would cover me. I
    would have never ridden without insurance and put my family in
    jeopardy.
        On July 20, 2004 my life changed forever. I only remember bits and
    pieces right after my accident, as I was being heavily medicated to
    lessen the pain from my injuries and to treat infections. I don't
    remember exactly when I found out that the Guild was not going to help
    me; however, my wife was dealing with it well before I became aware of
    the situation. I was in denial and very depressed for the longest time.
    The first time I talked to the Guild, I was in Squirrel Hill, one of
    the best rehabilitation centers for spinal cord injuries in the
    country. Amy was crying and near a nervous break down.
        I called Mr. Albert Fiss. I left messages on his answering machine
    to call me. He finally called me back and asked me what he could do for
    me. I said, ``Squirrel Hill is going to give me four weeks as charity
    but I need another 4 weeks. Can the Guild pay?'' Albert answered back
    ``yes.'' I told him he needed to talk to Ms. Joyce Watson in
    Admissions. Later, Ms. Watson came back to my room and said that Mr.
    Fiss agreed that the Guild would pay for 4 more weeks and take care of
    anything I needed.
        We had a meeting a few days later at Squirrel Hill that involved
    Squirrel Hill management, Guild representatives Mr. Fiss, Darrell
    Haire, and Larry Saumell, Jockeys Bobby Walker Jr., Deshawn Parker, and
    Dana Whitney. That morning Mr. Fiss told my wife that I did not have to
    leave Squirrel Hill because the Guild would pay for the additional 4
    weeks, just as he told the jockey colony at Mountaineer Park, Dave
    Shepard, and all my family. Somehow, things changed in the meeting
    later that day. I went into the meeting thinking I was going to stay,
    but as the meeting went on, the discussion turned in a different
    direction and was around me going to the facility in West Virginia.
    They reassured us that the people were friendly there, but were not
    specialized in spinal cord injuries.
        The day before I was to leave Squirrel Hill, Dr. Gertmenian and Mr.
    Fiss came to visit me. The only thing they wanted to discuss was how I
    should sue Mountaineer Park, not why the Guild couldn't help me. I was
    then transported by ambulance to the West Virginia rehabilitation
    center. I fell into a deep depression during my stay there. While I was
    there, I had three visitors, Kelly Witsma, Jose Santos, and Johnny
    Valesquez. They indicated to me that they were also not aware that the
    catastrophic insurance was canceled.
        I then left West Virginia on October 18, 2004, after three long
    months of being bounced around hospitals and rehab centers, struggling
    to accept the new life I've been dealt, battling with the management
    and representatives at the Guild to provide some assistance, and trying
    to keep my family from falling apart. If it wasn't for my dear wife,
    Amy, I would have never come through this as well as I have. She is my
    rock--She is my soul mate. We decided to come home to Cincinnati to be
    close to family.
        After I was home, Terry Thompson, a fellow jockey at Prairie
    Meadows racetrack, was listening to a radio program called Races and
    Beyond, where Dr. Gertmenian was speaking. He heard Dr. Gertmenian say,
    on air, that the Guild was taking care of all of Gary Birzer's medical
    bills. He then called my brother Alex and told him what he heard. Alex
    said something to my agent, Jimmy Isabel and Jimmy immediately called
    the radio station. Jimmy was able to speak on air to confirm what was
    said. As Dr. Gertmenian had already hung up the phone and was no longer
    speaking, the radio station confirmed that ``yes, that is what we heard
    also--Dr. Gertmenian said that all of Gary Birzer's bills were being
    paid''. Then Jimmy, on air, informed the station that this was not
    true--that none of Gary's medical bills were being paid by the Guild.
        In September 2005, I traveled back up to Mountaineer Park to visit
    my jockey friends. They said that the Guild had informed them that they
    were taking care of Gary Birzer and taking care of all of his medical
    bills. They said that the West Virginia State Rehab Center was one of
    the best in the country.
        In the last year, I have had a lot of trouble with the Guild
    reimbursing us for my catheters and other needed medical supplies. We
    have had to make many phone calls and dealt with much aggravation in
    trying to get the reimbursements processed.
        After remaining loyal to the Guild for so many years and relying on
    their promises, both in group meetings and when they have talked
    directly to me, I feel that they have completely let me down.

        Mr. Whitfield. Mr. Birzer, thank you very much, and at this
    time, we'll recognize Mrs. Birzer for her opening statement.
    Mrs. Birzer.

                        TESTIMONY OF AMY BIRZER

        Mrs. Amy Birzer. My name is Amy Birzer. My husband is Gary
    Birzer. On July 20, 2004 our lives were changed forever. This
    summarizes events that have occurred since that day. It was the
    seventh race at Mountaineer Race Park in West Virginia. Going
    into the first turn, Lil Bit of Rouge was for four wide and
    making her move. A jockey's wife ran over to me and said ``Amy,
    Gary went down.'' She had a panicked look on her face. Okay. I
    thought calm down and give him a minute to catch his breath and
    get to his feet. I walked outside to talk to the security guard
    but he didn't know anything as of yet. A few more minutes have
    passed and Gary still hadn't gotten to his feet. I went inside
    and watched the replay, that's when I saw all 110 pounds of my
    husband being thrown head first into the dirt going 40 miles
    per hour.
        I raced over to be with him. By this time they were loading
    him in the ambulance. I rode in the front seat. I heard my
    husband say no, sir, I can't feel that. That's when the tears
    started streaming down my face. Never did it enter my mind that
    Gary wouldn't be covered for these medical services. It wasn't
    even a concern since I knew we had insurance and there was also
    catastrophic policy in place for jockeys. After being at the
    local hospital for several hours, Gary was transported by
    helicopter to the University of Pittsburgh Medical Center. It
    was there that I learned my husband would never be able to walk
    again. In fact, they had to perform a surgery and place a metal
    rod in his neck just so he would be able to hold his head up
    right.
        My husband was diagnosed as a C6, C7 quadriplegic. He was
    at the University of Pittsburgh Medical Center for 4 weeks with
    bills that escalated to over $450,000. We were in for the
    battle of our lives. It was the first week in August 2004, when
    Mr. Albert Fiss, vice president of the Jockeys Guild, came to
    see Gary in the ICU in Pittsburgh. Present at the time were
    myself, Bonnie Birzer, sister-in-law, and a family friend, Pam
    Isabel.
        It was at this time that they informed us the Guild could
    be of no help to Gary. He indicated the Guild had no money to
    help at all. He said you need to get a lawyer and go after the
    racetrack. Bonnie then asked if they could help us by using one
    of the Guild's lawyers. Mr. Fiss said no, but they could
    recommend one in our area. I thought to myself here's a guy
    who's supposed to want nothing but the best for jockeys, and
    while my husband was fighting for his life with ventilators
    sustaining him, running excessively high temperatures, being
    packed in ice around the clock, all he wants to know is how
    come I haven't thought about suing the racetrack.
        I wanted to scream at him do you not understand that my
    husband is fighting for his life right now and we thought you
    were the very organization that was committed to helping
    jockeys and their families through tragedies like this.
        It was at this point that I realized from my conversation
    with Mr. Fiss that Gary was not covered for on-track injuries
    and the catastrophic policy was no longer in existence. We were
    completely left with no coverage whatsoever. The second week in
    August, Gary's father came to be with Gary. That same week, Mr.
    Johnny Beech, a Guild rep, was at Prairie Meadow Racetrack in
    Iowa. He was talking to Gary's mother. However, he was not
    aware at the time that it was his mother. She asked him how he
    was planning to help Gary Birzer.
        He replied I have a meeting with his parents tonight to
    discuss it. Gary's mom said really; his father is in Pittsburgh
    with Gary, I'm his mother, what time is the meeting? Mr. Beech
    turned and walked out of the jockeys room.
        The third week in August, Gary's mom came up for a visit.
    Ms. Kelly from Pittsburgh medical said next week Gary will be
    ready for rehabilitation. You have three options, the 11th
    floor here at the hospital, Squirrel Hill or a nursing home.
    Tears instantly started coming out of my eyes. I know that
    Squirrel Hill would not take Gary without insurance. My husband
    is only 29 years old. There was no way I was going to send him
    to a nursing home. The 11th floor of the hospital was out of
    the question. He needed to be in a rehabilitation center where
    they specialized in spinal cord injuries.
        He was already in deep depression, and I could not bear to
    go into his hospital room and tell him he could have gone to
    Squirrel Hill if we had had insurance, but instead, had to
    settle for a nursing home or rehab on the 11th floor of the
    hospital. She suggested then that we get an advocate. Mr. Joe
    Delong, a West Virginia State representative was called. He
    used to be a jockey's agent, and his dad trains horses at
    Mountaineer so he knows Gary and his agent very well.
        Joe Delong sprung into action right away speaking out on
    our behalf, trying to find a way for Gary to stay in
    Pennsylvania to get the therapy he so desperately needed.
    During these 2 weeks, phone calls were placed to Mr. Fiss from
    Jimmy Isabel, Gary's parents and myself. None of the phone
    calls were ever returned. During this time, I also applied for
    help from the State of West Virginia but was turned down on the
    spot. The lady who helped me said, Ms. Birzer, you have too
    many assets for us to be of assistance to you at this time. In
    the State of West Virginia if you're over the age of 21, acute
    rehabilitation is not provided.
        Then Ms. Kelly came back to tell us our story has really
    touched her heart. She's been working with people from Squirrel
    Hill and they agreed to take Gary for 4 weeks as a charity
    case. For the first time since the accident I cried tears of
    joy. Finally, I had some kind of hope to give my husband. Gary
    went to Squirrel Hill where he was teamed up with Randy, one of
    the best therapists there. I started seeing my husband's will
    to live. The first week was very hard for Gary. Our 2-year old
    daughter wanted nothing to do with her daddy because she was so
    afraid of the wheelchair. Although it broke his heart, he was
    determined to find a ways to ease her fears. His chair has a
    horn and soon he taught her how to honk it. She was soon
    warming up to the chair and coming around her daddy again.
        Randy told us that Gary could live completely independent
    but it would take hard work and determination. He told us a few
    success stories about spinal cord-injured patients. I saw a
    change in my husband's attitude. You see, Gary thought
    everything was stripped away from him. He went from being a
    successful jockey to being someone who could no longer use the
    restroom, roll over in bed, feed himself, cook for himself or
    even hold his daughter. The bed sores were a constant worry
    too. From his nipple line down he could no longer feel his
    body. He has the use of wrist flexors but not his fingers. So
    picking up things was next to impossible.
        Now there's someone telling him he can live completely
    independent with a little hard work. This was huge. The next
    few weeks they worked with Gary on transferring him in and out
    of his wheelchair and getting him stronger; however, the four
    charity weeks were come to an end, and we still had no response
    from Mr. Fiss on how the Guild could help my husband. I was
    still calling his office and cell phone leaving message after
    message but still no response. I was simply asking for any help
    with his rehab at Squirrel Hill or maybe a wheelchair, anything
    would be greatly appreciated.
        Gary decides to call Mr. Fiss himself, and finally the
    phone call is returned. Albert informed Gary that whatever he
    needed, the Guild would take care of it. Gary asked about 4
    more weeks of rehabilitation and a wheelchair. Mr. Fiss agreed
    they would take care of that also. He just needed the name of
    the person to make the arrangements. Gary told him to speak to
    Joyce Watson from admissions.
        Ms. Watson spoke with Mr. Fiss, and soon she was back in
    Gary's room, all smiles, stating Mr. Fiss agreed the Guild
    would pay for Gary to stay and they would take care of any of
    his needs. Again, tears of joy rolled down my face. I remember
    saying see, baby, things are going to be okay, just don't give
    up. I remember driving home that evening calling everyone and
    telling them the Guild is going to help Gary, he gets to stay
    at Squirrel Hill.
        Unfortunately, we soon learned this was just another lie
    from Mr. Fiss. He went back on his word. I tried calling by
    phone again and when I finally reached him, I asked why won't
    you help my husband. Mr. Fiss said try to understand horse
    racing is a billion dollar industry. Jockeys should not be
    paying their own insurance. We're using your husband as a
    guinea pig to make a statement. I immediately broke down
    raising, my voice and fighting back tears. Gary needs the
    guild's help. What about the fund; can you use that to help
    him?
        What about the Endowment Fund? Can you use that to help
    him? Mr. Fiss said that he would talk to the Board on Monday,
    as they were closed on the weekends.
        I was so distraught over what to do. I talked to Alex,
    Gary's brother and also a jockey and a member of the Guild.
    Alex told me that Dave Shepherd, a high member in the Guild, is
    a family friend. He thinks of Gary like a son. Dave was even
    there when Gary rode his first race. He said to me that Dave
    was going to take care of things, and there is no way he is
    going to let his little brother get moved from Squirrel Hill.
    It is all part of a plan and not to worry.
        I felt I had to do something more, so I started talking to
    other jockeys and their girlfriends. That's when I learned that
    Larry Saumell and Darrell Haire had been down at the track
    telling everyone that the Guild is helping Gary Birzer. I
    became upset, again knowing they were lying to these jockeys. I
    had tears in my eyes when I looked at the riders and pleaded
    with them. Please, listen to me. If you go down during a race,
    the Guild will not help you. They all looked at me with
    disbelief. I told them they better pray to God they don't go
    down tonight because they will soon learn the truth about the
    Jockeys' Guild.
        The Guild reps were to be back at the track on Monday,
    September 13, around 6 o'clock so everyone could hear what they
    had to say. I arrived at the track at 6 with Mr. Joe Delong,
    Dan Taylor, my lawyer at the time, and two of my girlfriends.
    Larry Saumell and Darrell Haire showed up at 7. They were
    talking to Chad Murphy, and all three came over to me to ask
    what the problem was. Again, with tears in my eyes, I simply
    asked the question, why aren't you helping my husband? He is a
    jockey and a member of the Jockeys' Guild. Why do you keep
    telling the jockeys that you're helping us when you're not?
        They said I was angry at the wrong organization. They said
    they had four lawyers working for Gary. I was shocked to hear
    this. What four lawyers? This was the first that I've heard of
    this.
        Mr. Haire also kept reassuring me they were paying for
    Gary's rehab. They said the Guild was going to cut a check for
    $15,000 so Gary could stay at Squirrel Hill. Dan Taylor
    immediately called Mr. Fiss to confirm the $15,000 for Gary's
    rehab. Mr. Fiss said that Gary was misinformed, and the Guild
    was not paying for the continued rehabilitation. Mr. Taylor
    informed him that he better get his ``boys'' in line because
    they are telling the jockeys and Mrs. Birzer that a check will
    be cut to be used for Squirrel Hill.
        When we walked back in the jocks' room, I stated, for all
    to hear, the Guild was indeed not paying for Gary's rehab and
    he is being moved to a State facility in West Virginia. Mr.
    Haire called Mr. Fiss and told him he needs to get down here
    right away. They moved the meeting out of the jocks' room to an
    upper office, as the jockeys were getting upset. They then
    asked me if I had asked the racetrack for help, and I replied
    that I had. Rosemary, who I talked to at the track, said she
    had talked to her legal team and said they have no money to
    help my husband. They offered to go with me to talk to her
    again, and I declined. They decided to have another meeting
    with the jockeys but advised that I should not attend because
    of my emotional state.
        The next day Larry Saumell and Darrell Haire went to
    Squirrel Hill with me to see Gary. They asked me about the
    guinea pig comment and apologized for Mr. Fiss making that
    statement. When we arrived, we went and talked to Joyce and
    they informed her they would be cutting a check for $15,000 to
    pay for the additional 4 weeks of rehab. My case manager at
    that time, Melissa, also spoke with them and discussed the
    facility in West Virginia. They asked Gary if they paid for an
    apartment for his wife in West Virginia would he be willing to
    go there. He said he needed to stay at Squirrel Hill, as it was
    one of the best rehab centers for spinal cord injuries.
        After Larry and Darrell left, Gary again called his brother
    Alex, crying, and telling him they are moving him to the State
    facility. Alex was upset because the Guild had reassured him
    that Gary was not to be moved.
        The next day Mr. Fiss came into town, and we had a meeting
    with the hospital staff. Mr. Fiss and Darrell Haire rode with
    me and kept assuring me they were not moving Gary. Darrell
    asked me about the State facility in West Virginia. I told him
    it's a step up from a nursing home and nothing compared to
    Squirrel Hill.
        When we got to the meeting, Mr. Fiss never offered any
    money. In fact, the discussion completely went in the opposite
    direction. He was pushing for Gary to go to West Virginia. Gary
    said he didn't want to get on Medicaid to go to a State
    facility. Squirrel Hill is where we thought he needed to stay.
    The specialist said that Gary could eventually lead a normal
    life if he could continue to work hard and should not have to
    give up everything he has worked so hard for just to be on
    Medicaid and go to a State facility.
        Our battle to keep Gary at Squirrel Hill was lost, and he
    was soon moved. The West Virginia institution agreed to take
    Gary without insurance or Medicaid. They said he needed to be
    transported by ambulance, and the cost would be $1,500. Mr.
    Fiss agreed that the Guild would pay for that bill.
        The day before Gary was to be moved, Dr. Gertmenian and Mr.
    Fiss came back to see Gary and I. Dr. Gertmenian began telling
    me about his daughter, who's in a wheelchair and how stressful
    it is. He went on to say that I'm going to need all the help
    and support from family and friends. With a 2-year-old daughter
    and a husband in this condition, things were going to be tough
    on me. He remembered his wife cried and cried over what
    happened to their daughter and how helpless he felt because he
    could do nothing to help her.
        He went on to say he knows what it is like to be in my
    shoes and how hard it is going to be for me. He said, I need
    the industry to think we have no money, but he knows people in
    high places and from time to time he would be sending me money.
    He also said he was going to give me his bedside number and if
    I needed anything just to call him. I became boiling mad at
    this point and thought, how dare he discuss this situation with
    me that was so far removed from what I was going through.
        Since July 20, I have been begging for help, and in return
    I've been given the runaround and told nothing but lies. The
    only thing he has done for my husband is make a spectacle out
    of him and convinced all the riders that Gary Birzer is going
    to help change the industry. The only thing Gary and my family
    got was the short end of the stick, and how dare he say he
    knows what it is like to be in my shoes. I got up as and walked
    out of the room, as I could listen no more.
        Gary ended up being transported to the Institute of West
    Virginia on September 20, 2004. They agreed to take him without
    insurance or without Medicaid. I was grateful they took him,
    but I can't stress enough the strain it put on my family and my
    daughter. I had to stay in a hotel room near the facility and
    could no longer be with my daughter Robin. It was the hardest
    thing I had to do, leaving her as she was screaming for her
    mommy.
        Gary was in the West Virginia facility when I received a
    call from Dr. Gertmenian asking me if I was going to sue the
    racetrack. I told him the track was putting a ramp at our home
    so Gary could get in the house, and they were also holding a
    benefit dinner for him. I told him I couldn't go after the
    track right now because they were the only ones helping at this
    point and we desperately needed help. His remark to me was, if
    you let them buy you for a couple hundred dollars, then there
    is nothing further I can help you with. If Gary wants to talk,
    he can call me. And then he hung up.
        Once we were settled in the rehab center, we soon learned
    the lack of experience and the knowledge they had about spinal
    cord injuries. It was a huge setback from where he was. It was
    a nightmare as we watched them try to take care of Gary.
        I asked them one day why Gary's hands were not washed.
    Their reply to me was, we thought it was buildup from horseback
    riding. They simply didn't know how to care for the skin or the
    hands of a spinal cordinjured patient.
        Also, instead of working with Gary on transferring him in
    and out of bed, they simply picked him up to move him. All the
    hard work teaching him to transfer was for nothing, as they did
    not continue the same therapy.
        Even when he needed a shower, the two aides just man-
    handled him and didn't try working with him to bathe himself so
    he could become more independent.
        I asked them if they could just assist Gary in transferring
    from bed to chair. They agreed to try. However, because of the
    lack of the knowledge on transferring a patient, they almost
    dropped him. Thank goodness I was there. If not, he would have
    been on the floor.
        The doctors were overmedicating him, and the therapists
    were not educated on spinal cord injuries. Gary got a bad staph
    infection and had to be quarantined to his room by himself.
    They said that he had to stay in bed and get turned every 2
    hours to prevent bedsores. Gary ended up getting a very bad and
    very large bedsore. I asked how he got that, and they indicated
    they were short-staffed over the weekend and he didn't get
    turned as much as he should. They apologized.
        Gary kept losing weight and went down to 94 pounds.
    Depression began setting in, and this was the very
    rehabilitation center that the Guild told the jockeys and my
    family that was one of the best places Gary could be.
        In October, a few weeks prior to Gary's move to Cincinnati,
    Dave Shepherd visited Gary in the West Virginia facility. He
    informed me, ``the war had begun.'' He was referring to the
    whole insurance issue between riders and racetracks. This was
    also soon after the incident when Shane Sellers was removed
    from Churchill Downs in handcuffs. He asked me again if we were
    going to sue Mountaineer. I said, no, not at this time. He
    promised me they were going to take care of Gary and not let
    him slip through the cracks and that he has discussed this with
    Dr. Gertmenian.
        Gary was losing his will to live and something needed to be
    done. We decided that we needed to move Gary out of West
    Virginia and back home in Cincinnati to be with family who
    wanted to help us. With many phone calls made by my family and
    much media attention, the Guild paid $15,000 for a wheelchair-
    accessible van and $9,000 for 1 year's rent for an apartment in
    Cincinnati. West Virginia agreed to pay for Gary's wheelchair
    and a shower chair.
        We registered Gary at Drake, a well-known rehabilitation
    facility in Cincinnati, as an outpatient, as they would not
    take him inpatient with no insurance. We secured a nurse to
    come in the home to help Gary with medical needs the first few
    weeks but had to discontinue that service as it was extremely
    expensive.
        We still live in Cincinnati in the apartment; and finally,
    after 6 months of effort, we have been approved for Ohio
    Medicaid. Gary no longer can work, and because I am his sole
    caregiver, I also cannot work outside the home. We are
    currently living on Social Security, which barely pays the
    bills. Our medical expenses have accumulated to over $500,000,
    which we cannot begin to pay back. The Guild has not done
    anything further to help us.
        Mr. Whitfield. Mrs. Birzer, thank you for your testimony;
    and, Gary, thank you for your testimony. I know it is not easy
    for you to give this testimony, but it certainly does provide
    valuable information for us.
        [The prepared statement of Amy Birzer follows:]

                        Prepared Statement of Amy Birzer

        My name is Amy Birzer. My husband is Gary Birzer. On July 20, 2004,
    our lives were changed forever. This summarizes the events that have
    occurred since that day.
        It was the 7th race at the Mountaineer Race Track in West Virginia,
    going into the first turn and ``Lil Bit of Rouge'' was four wide and
    making her move. A jockey's wife ran over to me and said ``Amy, Gary
    went down'' and she had a panic look on her face. Okay, I thought. Calm
    down. Give him a minute to catch his breath and get to his feet. I
    walked outside to talk to the security guard, but he didn't know
    anything yet. A few more minutes had passed and Gary still hadn't
    gotten to his feet. I went inside to watch the replay and that's when I
    saw all 110 pounds of my husband being thrown head first into the dirt
    going 40 mph. I raced over to be with him. By this time, though, they
    were loading him into the ambulance. I rode in the front seat. I heard
    my husband say, ``No Sir, I can't feel that''. That's when tears
    started streaming down my face. Never did it enter my mind that Gary
    wouldn't be covered for these medical services. It wasn't even a
    concern, since I knew we had insurance that we paid into and that there
    was also a catastrophic policy in place for the jockeys.
        After being at the local hospital for several hours, Gary was
    transported by helicopter to the University of Pittsburgh Medical
    Center. It was there that I learned my husband would never be able to
    walk again. In fact, they had to perform surgery and place a metal rod
    in his neck just so he would be able to hold his head up. My husband
    was diagnosed as a C6-C7 quadriplegic. He was at the University of
    Pittsburgh Medical Center for 4 weeks, with bills that escalated to
    over $450,000. We were in for the battle of our lives.
        It was the first week in August 2004 when Mr. Albert Fiss, Vice
    President of the Guild, came to see Gary in the ICU in Pittsburgh.
    Present at the time were myself, Bonnie Birzer (my sister-in-law) and a
    family friend Pam Isbel. It was at this time that Mr. Fiss informed us
    that the Guild could be of no help to Gary. He indicated that the Guild
    had no money to help at all. He said, ``You need to get a lawyer and go
    after the racetrack''. Bonnie asked if they could help us by using one
    of the Guild's lawyers. Mr. Fiss said no but they could recommend one
    in our area. I thought to myself--here was a guy who is supposed to
    want nothing but the best for the jockeys and, while my husband was
    fighting for his life, with ventilators sustaining him, running
    excessively high temperatures, being packed in ice around the clock--
    and all he wants to know is how come I haven't thought about suing the
    race tracks? Wow. I just wanted to scream at him and say ``do you not
    understand that my husband is in there fighting for his life right now
    and we thought your organization was committed to helping jockeys and
    their families through tragedies like this?'' It was at this point that
    I realized from my conversation with Mr. Fiss that Gary was not covered
    for an on-track injury and that the catastrophic policy was no longer
    in existence. We were completely left with no coverage whatsoever.
        The second week in August, Gary's father came to be with Gary. That
    same week, Mr. Johnnie Beech, a Guild Rep in the Iowa area, was at
    Prairie Meadows, a racetrack in Iowa, and was talking to Gary's mother
    (however, he was not aware she was his mother at the time). She asked
    him how he was planning to help Gary Birzer. He replied ``I have a
    meeting with his parents tonight to discuss it''. Gary's mom said ``Oh
    really? While his father is up in Pittsburgh with Gary and I am his
    mother''? So, what time is that meeting? Mr. Beech turned and walked
    out of the jockey's room.
        The third week in August, Gary's mom came up for a visit. Miss
    Kelly from Pittsburgh Medical said next week Gary will be ready to go
    to rehabilitation. You have 3 options: (1) the 11th floor here at this
    hospital, (2) Squirrel Hill, or (3) a nursing home. Tears instantly
    started coming out of my eyes. I knew that Squirrel Hill would not take
    Gary without insurance. My husband is only 29 years old and there was
    no way I was going to send him to a nursing home. The 11th floor of the
    hospital was out of the question. He needed to be in a rehabilitation
    center where they specialized in spinal cord injuries. He was already
    in deep depression and I could not bear to go into his hospital room
    and tell him he could have gone to Squirrel Hill, if he had insurance,
    but instead he had to settle for a nursing home or rehab on the 11th
    floor of the hospital.
        She suggested that we get an advocate. Mr. Joe Delong, a West
    Virginia state representative, was called. He used to be a jockey's
    agent and his dad trains horses at Mountaineer, so he knows Gary and
    Gary's agent Jimmy Isbel very well. Joe Delong sprung into action right
    away, speaking on our behalf, trying to find a way for Gary to stay in
    Pennsylvania to get the therapy he desperately needed.
        During these two weeks, phone calls were placed to Mr. Fiss from
    Jimmy Isbel, Gary's mom, Gary's dad and myself. None of the phone calls
    were ever returned. During this time, I also applied for help from the
    state of West Virginia but was turned down on the spot. The lady who
    helped me said ``Mrs. Birzer, you have too many assets for us to be of
    assistance to you at this time. In the state of West Virginia, if you
    are over the age 21, acute rehabilitation is not provided.''
        Then, Miss Kelly came back to us and said that our story had really
    touched her heart and that she had been working with the people from
    Squirrel Hill and they agreed to take Gary for his first 4 weeks of
    therapy as a charity case. For the first time since the accident, I
    cried tears of joy. Finally, I had some kind of hope to give my
    husband.
        Gary went to Squirrel Hill where he was teamed up with Randy, one
    of the best therapists there. I started seeing my husband's will to
    live. The first week was very hard for Gary. Our 2-year-old daughter
    wanted nothing to do with her daddy because she was so afraid of the
    wheel chair. Although it broke his heart, he was determined to find a
    way to ease her fears. His chair had a horn on it, so he taught her how
    to honk it. Soon she was warming up to the chair and coming around her
    daddy again.
        Randy told us that Gary could live completely independent but that
    it would take hard work and determination. He told us a few success
    stories about other spinal cord injured patients and I saw a change in
    my husband's attitude. You see, Gary felt that everything was stripped
    away from him--he went from being a successful jockey to being someone
    who could no longer use the restroom, or roll over in bed, or feed
    himself, or cook or hold his daughter. The bedsores were a constant
    worry too. From his nipple line down he no longer could feel his body.
    He has the use of his wrist flexor, but not his fingers. So picking up
    things was next to impossible. And now there's someone telling him that
    he can live completely independent with a little hard work. This was
    huge!
        The next few weeks they worked with Gary on transferring him in and
    out of his wheelchair and in getting him stronger. However, the four
    charity weeks were coming to an end and we still had no response from
    Mr. Fiss on how the Guild could help my husband. I was still calling
    his office and his cell phone, leaving message after message, but still
    with no response. I was simply asking for any help with his rahab at
    Squirrel Hill, or maybe a wheelchair or anything would be greatly
    appreciated. Then Gary decided to call him and Mr. Fiss finally
    returned the call. Albert informed Gary that whatever he needed, the
    Guild would take care of it. Gary asked about 4 more weeks of rehab and
    a wheelchair and Mr. Fiss agreed that he would take care of that also.
    He just needed the name of the person to talk to make the arrangements.
    Gary told him to speak with Joyce Watson, from Admissions. Ms. Watson
    spoke with Mr. Fiss and when she came back later into Gary's room, she
    was all smiles saying that Mr. Fiss agreed that the Guild would pay for
    him to stay there and take care of any of his needs. Again, tears of
    joy rolled down my face. I remember saying ``See, Baby, things are
    going to be okay''. Just don't give up. I remember driving home that
    evening calling everyone and telling them that the Guild is going to
    help Gary and he gets to stay at Squirrel Hill.
        Unfortunately, we soon learned that this was just another lie from
    Mr. Fiss. He went back on his word. I tried calling him by phone again,
    and when I finally reached him, I asked, ``Why won't you help my
    husband''? Mr. Fiss said, ``Try to understand. Horseracing is a billion
    dollar industry. Jockeys should not be paying for their own insurance
    and we are using your husband as a `guinea pig' to make a statement.''
    I immediately broke down, raising my voice and fighting back the tears.
    Again I stated: ``Gary needs the Guild's help. What about the Endowment
    Fund? Can you use that to help him?'' Mr. Fiss said he would have to
    talk to the Board on Monday, as they are closed on weekends.
        I was so distraught over what to do. Alex, Gary's brother and also
    a jockey and member of the Guild told me that Dave Shepard, a high
    member of the Guild, is a family friend and thinks of Gary like a son.
    Dave was there when Gary rode his first race. He said that Dave was
    going to take care of things and there is no way was he going to let
    his little brother move to that facility. It's all part of a plan and
    not to worry.
        I felt like I had to do something more so I started talking to
    other jockeys and their girlfriends. That's when I learned that Larry
    Saumell and Darrell Haire had been down at the track, telling everyone
    that the Guild is helping Gary Birzer. I became upset, again knowing
    that they were lying to these jockeys. I had tears in my eyes and
    looked at all the riders and pleaded with them to listen to me. I said,
    ``Please, listen--if you go down during a race, the Guild will not help
    you!'' They all looked at me with disbelief. I told them that they
    better pray to God that they don't go down tonight, because then they
    will learn the truth about the Guild.
        The Guild reps went back to the track on Monday, September 13th
    around so everyone can hear what they have to say. I arrived at the
    track at 6:00 with Mr. Joe Delong, Dan Taylor, my lawyer at the time,
    and two of my girl friends. Larry Saumell and Darrell Haire showed up
    around 7:00. They were talking to Chad Murphy and all three came over
    to me and asked me what the problem was. Again, with tears in my eyes,
    I simply asked the question again ``why aren't you helping my husband?
    He is a jockey and a member of the Jockey's Guild. Why do you keep
    telling the jockeys that you are helping us when you're not''. They
    said that I was angry at the wrong organization. They said they had
    four lawyers working for Gary. I was shocked to hear this--I said
    ``what four lawyers''. This was the first that I heard of this. Mr.
    Haire also kept reassuring me that they are paying for Gary's rehab.
    They said the Guild is going to cut a check for $15,000 so Gary can
    stay at Squirrel Hill. Dan Taylor immediately called Mr. Fiss to
    confirm the $15,000 for Gary's rehab. Mr. Fiss said that the family was
    misinformed and that the Guild was NOT paying for his continued rehab.
    Mr. Taylor informed Mr. Fiss that he better get his ``boys'' in line,
    because they are telling the jockeys and Mrs. Birzer that a check will
    be cut to be used for Squirrel Hill.
        When we walked back into the jocks room, I emotionally stated, for
    all to hear, that the Guild was indeed, NOT paying for Gary's rehab and
    that he is being moved to a state facility in West Virginia. Mr. Haire
    called Mr. Fiss and told him he needed to get down there right away.
    They then moved out of the jocks room to the upper offices, as the
    jockeys were getting upset. They then asked me if I had asked the
    racetrack for help and I replied that I had. Rosemary, who I talked to
    at the track, said she had talked to her legal folks and said they had
    no money to help my husband. They offered to go with me to talk to them
    again, and I declined. They decided to have another meeting with the
    jockeys, but advised that I should not attend because of my emotional
    state.
        The next day Larry Saumell and Darrell Haire went to Squirrel Hill
    with me to see Gary. They asked me about the ``guinea pig'' comment and
    apologized for Mr. Fiss making that statement. When we arrived, we went
    to talk to Joyce and they informed her that they were going to be
    cutting a check for $15,000 to pay for the additional 4 weeks of rehab.
    My case manager at that time, Melissa, also spoke with them and they
    discussed the facility in West Virginia. They asked Gary that if they
    paid for an apartment for his wife in West Virginia, would he be
    willing to go there. He said that he needed to stay at Squirrel Hill,
    as it was one of the best rehab centers for spinal cord injuries. After
    Larry and Darrell left, Gary again called his brother Alex, crying,
    telling him that they are going to move him down to the state facility.
    Alex was upset, because the Guild reassured him that Gary would not be
    moved.
        The next day Mr. Fiss came into town and we had a meeting with the
    hospital staff. Mr. Fiss and Darrell rode with me and during the entire
    ride. They kept reassuring me that they were not moving Gary. Darrell
    asked me about the state facility in West Virginia. I told him that it
    was a step up from a nursing home and nothing compared to Squirrel
    Hill. When we got to the meeting, Mr. Fiss never offered any money. In
    fact, the discussion completely went in the opposite direction. He was
    pushing for Gary to go to West Virginia. Gary said that he did not want
    to get on Medicaid and go to a state facility. Squirrel Hill is where
    he felt he needed to stay. The specialist said that Gary could
    eventually lead a normal life if he continues to work hard and he
    should not have to give everything up that he's worked hard for just to
    be on Medicaid and go to a state facility.
        Our battle to keep Gary at Squirrel Hill was lost and he was soon
    to be moved. The West Virginia institution agreed to take Gary without
    insurance or Medicaid. They said he needed to be transported by
    ambulance and that would cost $1500. Mr. Fiss agreed that the Guild
    would pay for that bill.
        The day before Gary was to be moved, Dr. Gertmenian and Mr. Fiss
    came back to see Gary. Dr. Gertmenian began telling me about his
    daughter who is in a wheelchair and how stressful it is. He went on to
    say that I am going to need all the help and support from family and
    friends, with a 2-year old daughter and a husband in this condition,
    and that it was going to be tough on me. He remembered how his wife
    cried and cried over what happened to their daughter and how helpless
    he felt because there was nothing he could do. He went on to say that
    he knows what it's like to be in my shoes and how hard he knows it's
    going to be for me. He said, ``I need the industry to think we have no
    money'' but that he knows people in high places and from time to time
    he would be sending me money. He also said he was going to give me his
    ``bedside number'' and that if I needed anything, to just call him. I
    became boiling mad at this point and thought ``how dare he discuss his
    situation with me that was so far removed from what I was going
    through''. Since July 20th, I have been begging for help and in return
    I have been given the run around and told nothing but lies. The only
    thing he has done for my husband is make a spectacle out of him and
    convinced all the riders that Gary Birzer is going to help change the
    industry. The only thing Gary and my family got was the short end of
    the stick and how dare he say that he knows what it's like to be in my
    shoes. I got up and walked out of the room, as I could listen to no
    more.
        Gary ended up being transported to the Institute of West Virginia
    on September 20, 2004. They agreed to take him without insurance and
    without Medicaid. I was grateful that they took him, but I can't stress
    enough the strain it put on my family and my daughter. I had to stay in
    a hotel room near the facility and could no longer be with my daughter.
    It was the hardest thing for me to leave her as she was screaming for
    her mommy.
        Gary was in the West Virginia facility when I received a call from
    Dr. Gertmenian asking me if I was going to sue the racetrack. I told
    him that the track was building a ramp at our home so Gary could get
    into the house and they were also going to hold a benefit dinner for
    him. I told him I couldn't go after the track right now because they
    were the only ones helping at this point and we desperately needed
    help. His remark to me was ``if you let them buy you for a couple
    hundred thousand dollars, then there's nothing further I can help you
    with. If Gary wants to talk, he can call me.'' And then he hung up
        Once we were settled in the rehab center, we soon learned of the
    lack of experience and knowledge that they had about spinal cord
    injuries. It was a huge setback from where he was. It was a nightmare
    as we watched them try to care for Gary. I asked them one day as to why
    Gary's hands were not washed and their reply to me was ``we thought it
    was build up from horseback riding''. They simply didn't know how to
    care for his skin on his hands as a spinal cored injured patient. Also,
    instead of working with Gary on transferring him in and out of bed,
    they simply picked him up to move him. All the hard work teaching him
    to transfer was for nothing, as they did not continue the same therapy.
    Even when he needed his shower--the two aides just manhandled him and
    didn't try working with him to bathe himself so he could be more
    independent. I asked them if they could just try to assist Gary in
    transferring himself from the bed to his chair and they agreed to try.
    However, because of their lack of knowledge of how to transfer a
    patient, they almost dropped him. Thank goodness I was there, as he
    would have been on the floor. The doctors were overmedicating him and
    the therapists were not well educated on spinal cord injuries. Gary got
    a bad staph infection and they had to quarantine him to a room by
    himself. They said he had to stay in bed and get turned every 2 hours
    to prevent bedsores. Gary ended up getting a very bad, very large bed
    sore. I asked how he got that, and they indicated that they were short
    staffed over the weekend and he didn't get turned as much as he should.
    They apologized. Gary kept losing weight and went down to 94 pounds,
    and depression began setting in. And this was the very rehab center
    that the Guild told the jockeys and my family was one of the best
    places that Gary could be.
        In October, a few weeks prior to Gary's move to Cincinnati, Dave
    Shepard visited Gary at the West Virginia facility. He informed me that
    the ``war has begun''. He was referring to the whole insurance issue
    between riders and racetracks. This was also soon after the incident
    where Shane Sellers was removed from Churchill Downs in handcuffs. He
    asked me again if we were going to sue Mountaineer. I said ``no'', not
    at this time. He promised that they were going to take care of Gary and
    not let him slip through the cracks and that he has discussed this with
    Dr. Gertmenian.
        Gary was losing his will to live and something needed to be done.
    We decided that we needed to move Gary out of West Virginia and back
    home to Cincinnati to be with family who wanted to help us. With many
    phone calls made by my family and much media attention, the Guild paid
    $15,000 for a wheelchair-accessible van and $9,000 for one year's rent
    for an apartment in Cincinnati. West Virginia agreed to pay for Gary's
    wheelchair and a shower chair. We registered Gary at Drake, a well-
    known rehabilitation facility in Cincinnati as outpatient, as they
    would not take him in-patient with no insurance. We secured a nurse to
    come into the home to help with Gary's medical needs the first few
    weeks, but had to discontinue that service as it was extremely
    expensive.
        We are still living in an apartment in Cincinnati and have finally,
    after 6 months of effort, been approved for Ohio Medicaid. Gary can no
    longer work, and because I am his soul caregiver, I also cannot work
    outside the home. We are currently living on Social Security, which
    barely pays our bills. Our medical expenses have accumulated to over
    $500,000, which we cannot begin to pay back. The Guild has not done
    anything further to help us.

        Mr. Whitfield. Gary, you had mentioned that you had been a
    jockey for a number of years. Why did you actually belong to
    the Jockeys' Guild?
        Mr. Gary Birzer. I talked to jockey Dean Kuntz and Dana Cox
    about getting family insurance; and they told me that, when I
    was single, that, as just a single person, that the Guild was
    more or less for family in case I get hurt and everything. So 6
    months before I got--a year before I got married, I joined as a
    small member, and then 6 months prior to that I became a full
    member because it takes a little bit of time for it to kick on
    in.
        Mr. Whitfield. Did you pay a hundred dollars every year
    plus X dollars----
        Mr. Gary Birzer. Yearly fee. A hundred dollars a yearly fee
    to keep in member mount----
        Mr. Whitfield. So for every time you rode a horse, a fee
    would be paid to the Jockeys' Guild; is that correct?
        Mr. Gary Birzer. Yes, sir.
        Mr. Whitfield. And would it be accurate to say that one of
    the benefits of your doing that was that you would have
    insurance for on-track accidents; is that correct?
        Mr. Gary Birzer. Yes, sir.
        Mr. Whitfield. And did you ever receive notification from
    the Jockeys' Guild by mail or in person or by any means that
    the catastrophic on-track coverage that you thought you had had
    been canceled or had lapsed?
        Mr. Gary Birzer. No, sir.
        Mr. Whitfield. So you never received any notification
    whatsoever, even though you were paying the annual dues and you
    were paying the per mount fees.
        Mr. Gary Birzer. No, sir.
        Mr. Whitfield. So it must have been quite a shock to you
    and your family when you discovered that you didn't have any
    insurance.
        Mr. Gary Birzer. Quite a shock.
        Mr. Whitfield. Now you know Mr. Fiss, in his testimony,
    talks about that every jockey, as a result of a meeting in
    Austin, Texas, when a decision was made to allow this policy to
    lapse, that all the jockeys were given notice that they no
    longer had insurance coverage. Do you and Amy still say you
    were not aware of it; is that correct?
        Mr. Gary Birzer. I was not aware of that.
        Mr. Whitfield. What about you, Amy? Did you know about it?
        Mrs. Amy Birzer. [Nodded in the negative.]
        Mr. Whitfield. And I am sure that your friends who are
    jockeys and your acquaintances who you socialize with, did you
    ever hear any of the other jockeys talking about, oh, we just
    lost our on-track coverage?
        Mr. Gary Birzer. No, sir.
        Mrs. Amy Birzer. No, sir.
        Mr. Whitfield. Now one of the statements that you made
    during your testimony struck me, and I want to make sure that I
    did not hear this incorrectly. I have read it myself, but I
    just find it a little bit difficult to believe. In here, you
    said that Mr. Fiss made the statement that jockeys should not
    be paying their own insurance, and we are going to use your
    husband as a guinea pig.
        Mrs. Amy Birzer. Yes, sir.
        Mr. Whitfield. Is that a statement he actually made?
        Mrs. Amy Birzer. Yes, sir.
        Mr. Whitfield. He said that to you?
        Mrs. Amy Birzer. On the phone, yes, sir.
        Mr. Whitfield. Now what did--you must have been shocked at
    that statement.
        Mrs. Amy Birzer. I became very angry.
        Mr. Whitfield. Now, you know, it is one thing--we can talk
    about the macroissues here of whose responsibility is it for
    insurance coverage for jockeys, but when you have jockeys that
    are paying the annual fee, paying the per mount fee and then
    not receive any notification that they do not have insurance
    and then suffer a permanently disabling injury where you are
    paralyzed and have no insurance and then, on top of that, to be
    told that we're using you as a guinea pig--I mean, I have great
    difficulty believing that anyone who professes to have
    compassion or interest in the jockey and their welfare would
    make a statement like that. And I did notice that one of the
    mission statements of the Jockeys' Guild indicates that one of
    their primary concerns is welfare for the jockey.
        Now do either one of you feel like that the welfare of the
    jockey was at the most important priority of the Jockeys'
    Guild?
        Mrs. Amy Birzer. No, sir.
        Mr. Gary Birzer. No, sir.
        Mr. Whitfield. It almost appears to me that it was the
    least important thing. Would you agree with that?
        Mr. Gary Birzer. Yes, sir.
        Mrs. Amy Birzer. Yes, sir.
        Mr. Whitfield. Now, I know--I mean, I don't know, and I
    can't imagine what you have been through, all the medical
    procedures. You have talked about being packed in ice. And you
    wanted to stay at Squirrel Hill, which was the best hospital
    for this problem in the country, it is my understanding; and
    had you had that full policy you would maybe have had an
    opportunity to stay there. But to go through everything that
    you have gone through, just the medical procedures alone--and
    from everything that's been said in your testimony, I got the
    impression that people were lying--I mean, Gertmenian was
    lying, Fiss was lying, representatives were lying, and then
    they were changing their mind and doing this and they were
    flip-flopping all over the place. Is that an adequate
    description of your experience with them?
        Mrs. Amy Birzer. Yes, sir.
        Mr. Gary Birzer. Yes, sir.
        Mr. Whitfield. Now, you did indicate that the Guild finally
    agreed to pay your ambulance bill, is that correct, to move you
    from Squirrel Hill to West Virginia? Did they pay that?
        Mrs. Amy Birzer. Yes, sir.
        Mr. Whitfield. Okay. And then you decided to move to
    Cincinnati because you wanted to be closer to your parents or
    have some more family support. And did they help pay for an
    apartment there; is that correct?
        Mrs. Amy Birzer. Yes, sir, 1 year's rent.
        Mr. Whitfield. One year's rent. How much was that?
        Mrs. Amy Birzer. $9,000.
        Mr. Whitfield. And did they pay for anything else?
        Mrs. Amy Birzer. The van, the wheelchair accessible van,
    that was $15,000.
        Mr. Whitfield. And you have that now.
        Mrs. Amy Birzer. Yes, sir.
        Mr. Whitfield. Now, your only income at this point in your
    life is what?
        Mrs. Amy Birzer. We get Social Security, and we also do get
    from the Guild--they pay for disabled riders. We do receive a
    check from them.
        Mr. Whitfield. Now is that from the so-called Disabled
    Jockeys' Fund----
        Mrs. Amy Birzer. I am not quite sure.
        Mr. Whitfield. [continuing] or is that from the health and
    welfare fund, or is that from the operating fund, or is that
    from some other fund, or do you know?
        Mrs. Amy Birzer. I am not quite sure where it comes from.
        Mr. Whitfield. Okay. So you have Social Security. And how
    much do you owe hospitals right now in outstanding medical
    bills?
        Mrs. Amy Birzer. Over $500,000.
        Mr. Whitfield. Over $500,000. And is there efforts being
    made by the hospitals or the healthcare providers to collect
    that money from you at all?
        Mrs. Amy Birzer. Yes.
        Mr. Whitfield. So you're receiving letters and receiving
    bills and they expect to be paid.
        Mrs. Amy Birzer. Yes. Excuse me, could I please say one
    more thing?
        Mr. Whitfield. Yes.
        Mrs. Amy Birzer. We would just like to take this
    opportunity to thank all the jockeys, the foundations, everyone
    who has helped us through this past year. It has been amazing
    the prayers and the support, so we just want to make sure
    everyone knows we do appreciate the help and the outpour of
    love that we have been given.
        Mr. Whitfield. So a lot of jockeys who face the same
    challenges and experiences that your husband faced on the
    racetrack, they have come to your assistance in some way?
        Mrs. Amy Birzer. Oh, yes.
        Mr. Whitfield. Providing some support. Well, that is a real
    testament to the jockeys individually that are doing that, and
    we appreciate that.
        Well, I have no further questions at this time; and I would
    yield to the gentleman from Michigan, Mr. Stupak.
        Mr. Stupak. Thank you, Mr. Chairman; and thank you both for
    being here today and your testimony.
        Gary, when you became a full member of the Jockeys' Guild,
    did you receive any kind of insurance policy, insurance card,
    disability policy, anything?
        Mr. Gary Birzer. Yes, sir. They mail you a handbook and a
    card.
        Mr. Stupak. The handbook and card, is that just for your
    membership in this----
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. Did they mail you anything concerning insurance
    policies, disability policies?
        Mr. Gary Birzer. Since the----
        Mr. Stupak. No, once you joined, not at the time of your
    accident.
        Mr. Gary Birzer. I believe, yes, sir.
        Mr. Stupak. Okay. Did you review that policy or anything?
    Were you aware of any expiration dates on it?
        Mr. Gary Birzer. It had no expiration dates on it that I
    believe.
        Mr. Stupak. Was this policy a copy of a policy that you
    received in your name or was it in the Jockey Guild's name?
        Mr. Gary Birzer. I'm not sure about that one.
        Mr. Stupak. Do you still have those documents?
        Mr. Gary Birzer. They are packed away somewhere.
        Mr. Stupak. So you would have them. They are just packed
    away somewhere.
        Mr. Gary Birzer. Yes.
        Mr. Stupak. Thanks. What was your understanding--once you
    became a full member, what was your understanding of the
    benefits, if you will, that you were entitled to receive?
        Mr. Gary Birzer. I can't remember at that time what the
    benefits were when I first joined the Guild.
        Mr. Stupak. Prior to your injury in the summer of 2004,
    what was your understanding--before you got on that horse to
    ride that day, what was your understanding of the benefits you
    would receive if anything happened to you?
        Mr. Gary Birzer. That my family would be taken care of with
    the catastrophic insurance.
        Mr. Stupak. Okay. With the catastrophic insurance. And what
    was your understanding catastrophic insurance would cover?
        Mr. Gary Birzer. I would have to look over the paperwork to
    make sure.
        Mr. Stupak. But you certainly expected it to take care of
    your medical bills?
        Mr. Gary Birzer. Oh, yes.
        Mr. Stupak. That if you had to have any type of adaptive
    living devices for home or for you, was it your understanding
    that that would be taken care of?
        Mr. Gary Birzer. Yes, sir. I knew I would have to write a
    little bullet panel to ask for assistance for supplies and
    everything, and they would give it to me.
        Mr. Stupak. Was it your understanding you would have
    disability income coming into your home?
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. And I take it you are receiving some disability
    income from the Jockey Endowment Fund?
        Mr. Gary Birzer. I'm not sure where that money is coming
    from.
        Mr. Stupak. But is it my--Amy, is it correct to say that
    you are receiving some income from--is it from the Endowment
    Fund?
        Mrs. Amy Birzer. It's from the Jockeys' Guild. I'm not sure
    where it is coming from, but we do receive a check from them.
        Mr. Stupak. If you don't mind me asking, how much is that a
    month?
        Mrs. Amy Birzer. Right now, it is still weekly, and it is
    $200 a week.
        Mr. Stupak. $200 a week?
        Mrs. Amy Birzer. Yes.
        Mr. Stupak. Okay. Gary, prior to your injury, did you have
    any knowledge of any other jockeys that were injured and were
    not being taken care of by the Guild?
        Mr. Gary Birzer. No, sir.
        Mr. Stupak. Do you have any knowledge now, after your
    injury, of any jockeys being injured and not being taken care
    of by the Guild?
        Mr. Gary Birzer. I am sorry, sir, can you re-ask----
        Mr. Stupak. After your injury, do you have any knowledge of
    any jockeys who have been injured and are not being taken care
    of by the Guild?
        Mr. Gary Birzer. I haven't followed horse racing that much
    since my accident, sir.
        Mr. Stupak. Sure. Amy, are you aware of anyone who is not
    being taken care of?
        Mrs. Amy Birzer. Not to my knowledge.
        Mr. Stupak. So to the best that we know, the only jockey
    who you're aware of--there may be others, but that you're aware
    of--would be Gary who is not being taken care of by the Guild.
        Mrs. Amy Birzer. Yes, sir.
        Mr. Stupak. Gary, can you think of any reason why they
    would cancel your insurance? I take it from your testimony and
    the documents I've seen you've paid every time. You've paid
    your hundred dollars. You paid your mount fees. You've paid
    everybody.
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. Okay. Besides jockeys, who else pays into this
    Jockeys' Guild? Do the racetrack owners? TV rights, things like
    this?
        Mr. Gary Birzer. I believe the racetrack used to give what
    they called a--the racetracks do give money, I forgot what they
    called it, but the racetracks do----
        Mr. Stupak. And this money the racetracks give would go to
    the Guild.
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. And is it your understanding that the specific
    purpose of that was to go into this catastrophic fund to help
    riders who have been injured?
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. When you ride--and when you rode, besides
    paying your fee, who else did you have to pay?
        Mr. Gary Birzer. My agent, my valet.
        Mr. Stupak. Your agent and your valet. What was a typical
    payment for a ride? What would you get paid if you rode?
        Mr. Gary Birzer. At the time I got hurt, they were giving
    me $55 per mount.
        Mr. Stupak. $55. And how much went to the Guild?
        Mr. Gary Birzer. $10.
        Mr. Stupak. And how much for your agent?
        Mr. Gary Birzer. 25 percent.
        Mr. Stupak. So 25 percent of $55, okay. And then your
    valet.
        Mr. Gary Birzer. My valet made 10 percent.
        Mr. Stupak. So there's 35 percent plus 10. And I take it
    they would take out taxes.
        Mr. Gary Birzer. Taxes, yes, sir.
        Mr. Stupak. So when you were done, what was the net income
    you had for a ride, if you will, on a $55 fee? What would you
    actually take home, if you can use that word, per ride?
        Mr. Gary Birzer. My wife would know more about that than I
    did.
        Mr. Stupak. Amy, do you have any idea what it would be?
        Mrs. Amy Birzer. No.
        Mr. Stupak. It's got go be less than 20 bucks, according to
    my----
        Mr. Gary Birzer. We had a savings set up for my taxes. We
    would always take out 25 percent for Federal and 5 percent for
    State.
        Mr. Stupak. That didn't leave you a lot left over, did it?
        Mr. Gary Birzer. No, sir.
        Mr. Stupak. There was a lot of, from your testimony, a lot
    of comments from the Guild about suing the racetrack----
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. [continuing] making a claim against the
    racetrack. Was this Mountaineer Park that is located in the
    panhandle there of West Virginia, around that area?
        Mr. Gary Birzer. Yes, sir, the Northwest panhandle.
        Mr. Stupak. Was that track known to have difficulties?
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. What kind of difficulties that would put a
    jockey at risk?
        Mr. Gary Birzer. The base of the racetrack.
        Mr. Stupak. Pardon?
        Mr. Gary Birzer. The base of the racetrack. It's got holes
    in it.
        Mr. Stupak. Okay. Do you race up there during the
    wintertime, too?
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. So if people saw snowflakes fall before they
    opened the gate, that is not unusual?
        Mr. Gary Birzer. No, sir.
        Mr. Stupak. Is it more dangerous to ride at, let's say,
    night during the winter?
        Mr. Gary Birzer. Yeah, it's colder. You've just got to take
    things a little more easier.
        Mr. Stupak. Is it more difficult to make sure that the
    horses maintain stable footing on those tracks?
        Mr. Gary Birzer. Yes, when it's about, like, 10 degrees.
        Mr. Stupak. Do jockeys get together and try to make
    improvements or suggest improvements to the tracks?
        Mr. Gary Birzer. We can suggest to the track
    superintendent. It is up to him if he does it or not.
        Mr. Stupak. What, really--being a jockey, you can control--
    at least try to control the horse that you are racing. You had
    no leverage, then, to force change in conditions for the type
    of weather you were riding?
        Mr. Gary Birzer. The management was very difficult to deal
    with at that racetrack.
        Mr. Stupak. Does your Guild get involved in trying to
    leverage, to make sure things are proper before you ride during
    winter conditions or just the condition of the track?
        Mr. Gary Birzer. They wouldn't listen to anybody but
    themselves, the management of the racetrack.
        Mr. Stupak. So you are basically left to the mercy of your
    Guild and the racetrack owners, operators?
        Mr. Gary Birzer. Yes, sir.
        Mr. Stupak. Thank you. I have no further questions. Thanks
    for being here.
        Mr. Whitfield. Thank you, Mr. Stupak.
        I recognize Mr. Walden.
        Mr. Walden. Thank you, Mr. Chairman.
        Mr. Birzer and Mrs. Birzer, thank you for being here today.
    I can't begin to understand what you are going through or have
    gone through or will, but we certainly appreciate your courage
    and your conviction of coming and speaking out.
        Has it--what has the reaction been from your former
    colleagues about the injuries you've sustained and what you've
    had to go through to sort of manage on your own?
        Mr. Gary Birzer. I am sorry, sir?
        Mr. Walden. How have the other jockeys reacted to what
    you've been through, not just injuries you have sustained, as
    awful as they are, but how you have been treated by the Guild?
    Are there people that say, well, you have should known the
    insurance policy was canceled and it's your own fault, or are
    people saying I had no idea that we weren't covered? What's the
    reaction been?
        Mr. Gary Birzer. I've had more riders come up to me going,
    we didn't ourselves realize the catastrophic insurance was
    canceled.
        Mr. Walden. Is that right?
        Mr. Gary Birzer. Yes, sir.
        Mr. Walden. You have spoken out, both of you, quite
    eloquently and boldly today. Did anybody ever try and tell you
    not to do that?
        I mean, it seems like there was this legal strategy to
    pursue, and I am very disturbed by the comments that somebody
    said that--Mr. Fiss, I guess--you have testified said we're
    going to treat you as a guinea pig and go after this legal
    course of action. Have there been others that have said, you
    know, you are going to be our example to get better benefits or
    something and just pursue the legal course?
        Mrs. Amy Birzer. No, sir.
        Mr. Walden. So Mr. Fiss is the only one who has made that
    argument?
        Mrs. Amy Birzer. About my husband being the guinea pig?
    Yes, sir.
        Mr. Walden. Right, and pursuing the legal, suing the track
    and all that.
        Mrs. Amy Birzer. The Guild reps and the Guild have been
    persistent about us suing the racetrack.
        Mr. Walden. Do you feel like they've been persistent to the
    point of denying you other benefits, this leverage to get you
    to sue? Any examples of that?
        Mrs. Amy Birzer. No, sir.
        Mr. Walden. So you feel like--what happens when you walk
    out of this hearing? What do you anticipate--what will the
    reaction be?
        Mrs. Amy Birzer. Reaction?
        Mr. Walden. Of your friends in the Guild. Do you think what
    you've said today will come as news to them?
        Mrs. Amy Birzer. No, sir.
        Mr. Walden. Gary, do you have any comment along those
    lines?
        Mr. Gary Birzer. No.
        Mr. Walden. Has there been any criticism of your being
    critical of Dr. Gertmenian?
        Mr. Gary Birzer. No, sir.
        Mr. Walden. Amy, have you had anybody come back and say you
    shouldn't be so critical of the Guild or Dr. Gertmenian?
        Mrs. Amy Birzer. Yes, sir.
        Mr. Walden. Can you elaborate on that? What have people
    told you?
        Mrs. Amy Birzer. That Gertmenian is indeed looking out for
    the jockeys, that he has helped the Guild tremendously.
        Mr. Walden. And is that before they know what's happened to
    you in your case or after you have explained to them what
    you've gone through?
        Mrs. Amy Birzer. Both ways, before and then even after they
    still insist that he's the best thing that has happened to the
    jockeys.
        Mr. Walden. To the Guild. All right.
        Well, I noticed in a news story here that was in one of the
    publications that--it quoted--let me see if I can find it here
    in just a second. It seemed to quote Dr. Gertmenian as saying
    he would help you even if he had to take money out of his own
    pocket. Do you remember that or seeing that?
        Mrs. Amy Birzer. Do I remember him stating that?
        Mr. Walden. Saying that, or do you remember reading that?
        Mrs. Amy Birzer. I remember reading it, that he had said--
    --
        Mr. Walden. This is the quote--and, Mr. Chairman, this is
    out of Sports Business Journal September 27, 2004, written by
    Liz Mullen. It talks about how the Birzers have health
    insurance through the Guild, but it does not cover on track
    accidents, he said.
        Then there is this quote. It says, what I said to--and in
    parenthesis to Amy Birzer, parenthesis--was I will do
    everything I can, and I will, if it has to come out of my own
    pocket, Gertmenian said. ``I knew this day was coming and I
    told everyone this day was coming and now hell comes to pay.''
    So he said he would take money out of his own pocket to help
    you if need be, but he never made that commitment to you?
        Mrs. Amy Birzer. No, sir.
        Mr. Walden. And did he ever take money out of his own
    pocket to help you?
        Mrs. Amy Birzer. No, sir.
        Mr. Stupak. Mr. Chairman, if I may, can we have that
    document entered into the record? We may need it for later
    examination of a witness.
        Mr. Whitfield. Without objection.
        [The article follows:]
        [GRAPHIC] [TIFF OMITTED] T4255.001

        [GRAPHIC] [TIFF OMITTED] T4255.002

        Mr. Walden. When you explained how unhelpful the Guild and
    Dr. Gertmenian have been, what is Dr. Gertmenian's response,
    that you're lying? What does he say?
        Mrs. Amy Birzer. I can never get in contact with him, I
    don't know what his response is to----
        Mr. Walden. To the best of your recollection--and I realize
    that you've been through a lot and so I understand--how many
    times since the accident have you had an opportunity to talk to
    Dr. Gertmenian?
        Mrs. Amy Birzer. Zero.
        Mr. Walden. Zero?
        Mrs. Amy Birzer. Since his accident?
        Mr. Walden. Since the accident.
        Mrs. Amy Birzer. I have talked to Gertmenian 2 or 3 times.
    I'm sorry, I thought you meant since he's been home.
        Mr. Walden. Gary, when did you come home?
        Mr. Gary Birzer. November 18.
        Mr. Walden. So since then there has been no follow-up from
    Dr. Gertmenian?
        Mrs. Amy Birzer. No, sir.
        Mr. Walden. What about from others that are in his employ
    at the Guild?
        Mrs. Amy Birzer. We have been in contact with Dave
    Shepherd.
        Mr. Walden. All right. Mr. Chairman, I thank you for having
    these witnesses here today.
        Thank you. It's been most helpful in hearing your story,
    and I wish you well with your recovery.
        And, Mr. Chairman, with that, I yield back.
        Mr. Whitfield. Ms. Schakowsky.
        Ms. Schakowsky. Thank you, Mr. Chairman; and I really want
    to thank you, Gary and Amy, for your testimony, so
    straightforward and simple and moving, I think, to everyone who
    would hear it.
        I wonder if, Gary, you are still getting any rehab
    assistance now, if you are in any kind of therapy?
        Mr. Gary Birzer. Due to the jockey that donated for the
    Breeder's Cup in 2004, I took that donation money and I am in
    an extensive program right now in Cincinnati.
        Ms. Schakowsky. So the only way, though, that you've been
    able now--and I'm so glad to hear that, that you are in a rehab
    program--has been because of the goodwill of a friend, someone
    who--a jockey that gave money to you; is that right?
        Mr. Gary Birzer. Yes, ma'am.
        Ms. Schakowsky. Amy, you said you're the only caregiver for
    Gary. Have you been able to get any training or assistance in
    how best to do that? You had talked about the transferring and
    the--I mean, you're pretty small, too. I just wondered how that
    works for you.
        Mrs. Amy Birzer. Yes. Before he left Squirrel Hill they
    were showing me how to transfer him and how to take care of his
    medical needs.
        Ms. Schakowsky. So you're taking care of your--is it Robin?
        Mrs. Amy Birzer. Yes, ma'am.
        Ms. Schakowsky. Your daughter. How is she doing?
        Mrs. Amy Birzer. Wonderful.
        Ms. Schakowsky. And she and dad are doing fine together?
        Mrs. Amy Birzer. Absolutely.
        Ms. Schakowsky. Great. How long will this money from the
    Guild--you said it's coming from the Guild. Do you know how
    long that money is going to be coming?
        Mrs. Amy Birzer. I've been told up to 2 years, until he
    gets Medicare, which is 24 months after he's been on Social
    Security. Then it will go down to a monthly payment. Right now,
    we get weekly payments from the Guild.
        Ms. Schakowsky. Right. And do you know--so that's a year
    from--about a year from now.
        Mrs. Amy Birzer. Yeah.
        Ms. Schakowsky. And are you aware if the money that you
    will then be getting from Medicare will then make up for that
    difference? Do you know how much money you are going to be
    getting?
        Mrs. Amy Birzer. No, ma'am.
        Ms. Schakowsky. Do you feel that, Gary, that you lost time
    because you had to go--and capacity because you had to leave
    Squirrel Hill and go to West Virginia?
        Mr. Gary Birzer. Oh, yes, ma'am.
        Ms. Schakowsky. And is that being made up for now by the
    rehab that you're in or is that time that was just lost?
        Mr. Gary Birzer. Time that's been lost.
        Ms. Schakowsky. What kind of things do you think might have
    been different in your life if you had been able to stay at
    Squirrel Hill?
        Mr. Gary Birzer. I would be further along right now. I
    would be able--like Squirrel Hill told us that, with a lot of
    hard work, that I would be able to walk, I would be able to
    transfer myself, and I am just now starting to be able to
    transfer myself out of my wheelchair onto a bed or a mat. And
    90 percent of the time I still need help transferring myself
    out of my wheelchair into my bed.
        Ms. Schakowsky. So all of this was really pretty much of a
    shock--obviously, the accident was, although hearing about the
    track, it was certainly a--it sounds like it was very dangerous
    conditions. What was the response of the track superintendent?
    I understand that he was approached--the track was approached
    about the dangerous conditions. What was their response to you
    when--when you were at Mountaineer Park, was the track
    superintendent approached about the dangerous track conditions?
        Mr. Gary Birzer. He always told us he could fix it.
        Ms. Schakowsky. And did that ever happen?
        Mr. Gary Birzer. No, ma'am.
        Ms. Schakowsky. Let me ask you what you think should be
    done to make Mountaineer and other tracks that run at night in
    northern winter safer for jockeys and exercise riders.
        Mr. Gary Birzer. My personal opinion, they need to replace
    the base in the racetrack. They need a new surface. The dirt
    there goes like kitty litter when it comes back and hits you in
    the face. Horses don't run in the dirt that well, so you've got
    to kind of swing them out a little bit more. Due to the ground,
    you don't know where all the holes are on the racetrack, and as
    the base gets used up more and more it will gather more holes
    up.
        Ms. Schakowsky. So there is no way that even the best that
    you can do, that you can actually figure out where those holes
    might be until you hit them.
        Mr. Gary Birzer. Correct.
        Ms. Schakowsky. Well, there's a lot of questions that are
    going to need to be asked of the panels that are upcoming, but
    I think that you've actually laid a very solid base for us, if
    you will, in telling us your story.
        In my personal opinion, and I think what I am hearing from
    the questions of this panel, we are very concerned about the
    fact that people like you, Gary and Amy, would be left with
    really no safety net under you, especially since it was your
    understanding that you were paying for something that you
    simply did not get, that that benefit was cut without your
    knowledge whatsoever and that, subsequently, were it not for
    the charity of others and--and all of us appreciate that, too,
    and I appreciated your statement, Amy, the thanks that you gave
    to people, the additional remarks you made--that we ought to be
    able to do better than that, all of us, and that would include
    the Guild.
        So thank you very much for your testimony.
        Mr. Whitfield. Thank you, Ms. Schakowsky.
        Dr. Burgess.
        Mr. Burgess. Thank you.
        I, too, want to thank our witnesses for being here today. I
    know it wasn't easy. I want to thank you for your testimony. I
    want to thank you for providing the timeline in such clear
    detail.
        I had a question about whether or not there were written
    copies of the policy that you received, but I guess we actually
    have some copies. Is this part of our record now?
        Mr. Whitfield. Yes. It has not been entered. We have some
    blanket policies of future--of prior years that was in force,
    but we do not have this one entered yet.
        Mr. Burgess. Okay. But we have that policy? Well, I guess
    the question I have is, are you still covered by the Guild?
        Mr. Gary Birzer. Yes, sir. I'm sorry, sir. What I meant is
    my wife and my daughter are.
        Mr. Whitfield. Dr. Burgess, there are two policies. There
    is an on-track policy that the Birzers thought that was in
    effect was not in effect. There is an off-track health policy
    for families that is in effect.
        Mr. Burgess. Okay. I thank you for----
        Mr. Whitfield. The last policy is tab 26 in your booklet.
        Mr. Burgess. Just when you described your startup with the
    Guild, the retainer fee that you paid them and the cost per
    ride, that actually seemed like a pretty low figure, and even
    when we were up to the $10 per ride. Can you give me any idea
    what the cost per month or what you paid per month or what you
    paid per year for the insurance?
        Mr. Gary Birzer. When Dr. Gertmenian and Matrix Capital was
    running the Guild, it was 560 a month.
        Mr. Burgess. That was your part of the premium? Did the
    track contribute any part to that or it was all covered by your
    contributions?
        Mr. Gary Birzer. That was covered by my--I'm not sure.
        Mr. Burgess. Can you give me any idea how many people
    nationwide would be under this insurance? What sort of revenue
    would they generate every year from the premiums that were
    gathered from the jockeys?
        Mr. Gary Birzer. I'm not sure, sir.
        Mr. Burgess. And I don't really have a clear idea of that
    either.
        Mr. Whitfield. Well, to date, Dr. Burgess--you can't hold
    me to this conclusion--but it's in the neighborhood of 1,100 or
    1,200 jockeys belong to the Jockeys' Guild; and at one time the
    tracks were contributing in the neighborhood of $2.2 million
    per year, in addition to what the jockeys were contributing
    through their dues or through their individual mount fees.
        Mr. Burgess. So there is significant cash within the Guild
    itself at this time. Is that a fair statement?
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. Now, you've covered it a little bit, but just
    so I understand, you have been instructed--and, of course,
    you're accompanied by what I consider is competent--I will
    wager as competent counsel. You have been told to consider
    suing the track itself, and you have described for us what the
    basis for that would be would be the condition of the base at
    the track.
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. Was this generally known before your accident,
    about the condition at the base of the track?
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. Did the jockeys discuss this amongst
    themselves?
        Mr. Gary Birzer. Yes, sir. You always know there are a
    couple spots in the base that's bad and everything, but they
    always changed the track surface, but they never, ever patched
    up the base or replaced the base or anything.
        Mr. Burgess. Well, just--the mental image you gave us of
    the kitty litter scenario--and I can't imagine running in kitty
    litter myself, let alone a horse in kitty litter. It doesn't
    sound inherently safe. But is this fairly typical for tracks
    around the country?
        Mr. Gary Birzer. No, sir.
        Mr. Burgess. Did the jockeys amongst themselves talk to the
    track management about this is not a good surface?
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. Why would you all not--and this is probably
    off the mark, but why wouldn't you all just say we are not
    going to ride here until you fix this darn thing?
        Mr. Gary Birzer. The management at Mountaineer Park is very
    difficult to deal with.
        Mr. Burgess. I appreciate that, but, of course, I expect
    jockeys to be difficult to deal with if they got together.
        Mr. Gary Birzer. Basically she would come down there and
    tell us to leave.
        Mr. Burgess. I see. And then they would find other jockeys
    to ride?
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. I don't know if it's fair to ask this, and
    your counsel may interrupt me, but are you at this time
    pursuing a claim against the track?
        Mr. Gary Birzer. Not at this time.
        Mr. Burgess. I presume they're watching the clock for you
    as far as the statute of limitations on this endeavor?
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. It sounds like the track may bear some
    culpability--I am not a lawyer--but just from what your
    description of the situation is.
        Well, what about do you think the Guild itself bears any
    responsibilities? Does the Guild itself have any culpability in
    what's happened to you since July 2004?
        Mr. Gary Birzer. I thought I would just be covered with my
    insurance and everything.
        Mr. Burgess. Again, you've got counsel at your side. I
    presume you've talked about it. Is there a claim against the
    Guild itself?
        Mr. Gary Birzer. We are trying to find out all the facts
    about that.
        Mr. Burgess. Well, just from my read of the Guild's
    financials for 2001 and 2002, they went from $4 million in
    receipts in 2001 to $6 million in 2002. I mean, I don't know
    what's happened to their financial since then, but it would
    seem to me that there is probably a significant amount of money
    within the Guild that is supposed to be available for just this
    type of injury that competent counsel could help you recover,
    just my opinion, of course.
        Do you have an idea of the financial health of the Guild
    today?
        Mr. Gary Birzer. No, sir.
        Mr. Burgess. Have you asked for that information?
        Mr. Gary Birzer. Every time somebody asks about the
    paperwork from the Guild they always get a runaround, sir, that
    I know of. I've never gotten--if I asked for paperwork, it
    doesn't come to me.
        Mr. Burgess. You know, Mr. Chairman, I appreciate you
    having this hearing. It seems to me so much of this really
    belongs in litigation rather than in a congressional hearing. I
    appreciate the facts we are trying to uncover, but it sounds
    like we're not to the end of this story, yet, and I hope the
    outcome is ultimately successful for you and your wife, sir.
        So the other jockeys right now that are covered, are they
    still covered by the Guild or has the Guild completely gone
    away?
        Mr. Gary Birzer. The jockeys that are still in the Guild, I
    don't know what they're doing. They say they're covered.
        Mr. Burgess. Well, again, horse racing is inherently
    dangerous, I would presume that since July 2004 there has been
    some other injury or claim against the Guild. Do you know
    whether or not that has happened and whether or not that claim
    has been successful? I mean, is the Guild just completely out
    of money at this point?
        Mr. Gary Birzer. I don't know what's going on.
        Mr. Burgess. Well, again, those are questions that, while I
    would be interested in the answer, I think you and your counsel
    would be significantly interested in the answer to those
    questions, and I wish you luck in getting those things
    resolved.
        I do thank both of you very much for being here today. I
    know it wasn't easy.
        Mr. Birzer, I guess I would probably ask you, you have
    probably been around horses all your life.
        Mr. Gary Birzer. Yes, sir.
        Mr. Burgess. Since your accident, have you been able to be
    around horses at all or has that just pretty much been
    eliminated?
        Mr. Gary Birzer. No, sir. I got hooked up with a trainer I
    used to ride for. She wound up quitting training and is running
    a riding center in Cincinnati, Ohio. I decided that I wanted to
    try to ride a horse again; and I called up the riding center,
    not knowing that she was running it. When she found out that I
    was wanting to try to ride and so she had gone ahead and called
    me back. And I have been riding there off and on the whole
    summer. Every Saturday I was riding a horse. And I wound up--I
    did get to go back to Riverdowns on September 4, and I did wind
    up riding a horse there at the grounds at Riverdowns.
        Mr. Burgess. Did your wife know about that? I assume you
    had permission.
        Thank you both very much for your testimony today. I yield
    back, Mr. Chairman.
        Mr. Whitfield. Thank you, Dr. Burgess.
        At this time, I recognize Mrs. Blackburn for 10 minutes.
        Mrs. Blackburn. Thank you, Mr. Chairman; and I want to
    thank our witnesses so much for taking the time to be with us
    today. We know it is not an easy day for you, and we do want to
    thank you for the time and the effort that you've gone through
    to be here with us today. It is important that we hear from you
    and get your perspective on this issue.
        Amy, I think I want to talk with you first, if I may. I
    want to go back to your testimony, on page two of your
    testimony where you are talking about Mr. Fiss coming in to see
    you and your sister-in-law, see you and Bonnie in August 2002,
    and then reading Gary's testimony. It seems like Mr. Fiss was
    telling Gary that they were going to take care of him, but he
    was telling you to go sue the racetrack. Am I right in reading
    these two testimonies?
        Mrs. Amy Birzer. Gary--when he first came to see us, he was
    saying they could be of no assistance. Then, after Gary got to
    Squirrel Hill and it became why aren't you helping a jockey, he
    is a member of the Guild, when Gary asked for help from Mr.
    Fiss, then he replied they could help him.
        Mrs. Blackburn. So basically, then, Mr. Fiss changed his
    story.
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. Okay. I just wanted to be sure that I was
    following that. That was not clear to me.
        So basically he said at first no help, then under pressure
    he bowed and changed his story to say that they were going to
    help.
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. And then he went back and changed his story
    gain.
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. That can't give other members of the Guild
    very much confidence in that Guild, can it?
        Mrs. Amy Birzer. I wouldn't think so.
        Mrs. Blackburn. I wouldn't think so either. That would
    cause me to have a lot of questions.
        Gary, let me ask you, if I may, please, sir, do we
    currently know how many jockeys are in the Guild?
        Mr. Gary Birzer. I don't know the numbers.
        Mrs. Blackburn. Okay. And then you were paying $10 a mount
    and a hundred dollars a month to the Guild.
        Mr. Gary Birzer. A hundred dollars, a yearly fee.
        Mrs. Blackburn. A hundred dollars a year. Excuse me, you're
    correct. Can you give me an idea of what the total amount was
    that you paid into the Guild during your career? Do you have
    that figure?
        Mr. Gary Birzer. No, ma'am.
        Mrs. Blackburn. Do you know how much it was on an annual
    basis?
        Mr. Gary Birzer. Not off the top of my head. My wife might
    know that.
        Mrs. Blackburn. Amy.
        Mrs. Amy Birzer. He paid about around $64,000 into the
    Guild throughout his career.
        Mrs. Blackburn. So you paid in a total of $64,000
    throughout his career, and that was to cover all of your fees
    and all of your insurance and the catastrophic care in case
    something were to be needed.
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. $64,000. And over what period of time did
    that turn out to be? How many years did that turn out to be?
        Mrs. Amy Birzer. Seven years.
        Mrs. Blackburn. Over a 7-year period of time, $64,000;
    that's pretty steep insurance, isn't it?
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. It certainly is.
        Let me ask you this. Amy, what has happened now? What kind
    of healthcare do you have or what kind of health insurance do
    you have? Is the Guild still providing something? Are you all
    still covered by a continuing policy? Was there any provision
    for that?
        Mrs. Amy Birzer. Myself and my daughter, yes, ma'am, we are
    still covered by the Jockeys' Guild.
        Mrs. Blackburn. You are still covered by the Jockeys' Guild
    with their insurance. All right.
        And, Gary, you said you were second generation, so I assume
    your dad was a jockey. Am I correct in that?
        Mr. Gary Birzer. Yes, ma'am.
        Mrs. Blackburn. Do you have other family members that work
    in the industry?
        Mr. Gary Birzer. Yes, ma'am. My brother rides racehorses,
    too.
        Mrs. Blackburn. Okay. So it kind of goes when your family
    has done something and been with an employer or part of a
    group, you kind of develop that trust, right?
        Mr. Gary Birzer. Yes, ma'am.
        Mrs. Blackburn. And you expect that if they have been there
    for a period of time, they're going to continue to be there,
    and it's always sad when someone breaks that trust.
        Now the other thing I want to know--and either of you to
    answer this--how much did the Guild and the racetracks
    compensate you for your injuries? Do we know what the monetary
    compensation is on that?
        Mrs. Amy Birzer. I don't understand.
        Mrs. Blackburn. Say that one more time, please, Amy.
        Mrs. Amy Birzer. I don't understand exactly what you're
    asking.
        Mrs. Blackburn. The Guild, when it came to paying all of
    the medical bills, do you know how much they covered? What was
    the total amount of the bills they covered?
        Mrs. Amy Birzer. The medical bills? Zero, ma'am.
        Mrs. Blackburn. They covered zero of the medical bills. So
    your $64,000 that you paid in bought you zero in health
    payments.
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. In medical bill payments. All right. And
    then the racetrack has paid you how much?
        Mrs. Amy Birzer. They've paid a hundred thousand dollars.
        Mrs. Blackburn. A hundred thousand dollars from the
    racetrack. Okay. Total?
        Mrs. Amy Birzer. Yes, ma'am.
        Mrs. Blackburn. And you don't know what the total amount of
    those bills, what is still outstanding.
        Mrs. Amy Birzer. Over $500,000.
        Mrs. Blackburn. Over $500,000.
        Mrs. Blackburn. All right. Gary, let me go back, if I may,
    please, sir, to the testimony when you--you stated that you met
    with Mr. Fiss and Dr. Gertmenian, and you talked about suing
    the racetrack for your injuries, or they talked to you about
    suing the racetrack. I think that's the way it is in your
    testimony. Did either of them ever mention that they had
    canceled the insurance?
        Mr. Gary Birzer. No, ma'am.
        Mrs. Blackburn. So that never came up.
        Mr. Gary Birzer. No, ma'am. All they talked to me is about
    how they wanted to sue Mountaineer Park.
        Mrs. Blackburn. Okay. Do we know at this point if the--
    okay. So they talked with you only about suing Mountaineer
    Park. They never mentioned that the insurance policy had been
    canceled.
        Mr. Gary Birzer. No, ma'am.
        Mrs. Blackburn. Okay. And when was it that you found out
    that the insurance policy had been canceled?
        Mr. Gary Birzer. I can't recall, I was being medicated.
        Mrs. Blackburn. Okay. Amy, do you recall when you found out
    for sure that that insurance policy had been canceled?
        Mrs. Amy Birzer. Yes, ma'am. It was the first meeting when
    Mr. Albert Fiss came to see Gary.
        Mrs. Blackburn. That August? That August meeting. Okay. And
    that's when you found out that it had been canceled. Before
    that you had not received anything in writing.
        Mrs. Amy Birzer. No, ma'am.
        Mrs. Blackburn. All right. Thank you both so much for your
    time and for being here and for talking with us. We really
    appreciate that, and we wish you well.
        Mrs. Amy Birzer. Thank you.
        Mr. Whitfield. Thank you, Mrs. Blackburn.
        Mr. Birzer, thank you and Amy very much for being with us
    today. We genuinely appreciate your testimony, and as I said in
    the opening, we're gathering facts. We're trying to determine
    if there's some action that can be taken at the Federal level
    to address this issue in the long term, and your testimony has
    been invaluable to us, and we look forward to staying in touch
    with you. And, of course, the record will be open for a number
    of days in the event you all have any additional material that
    you would like to present.
        Mr. Whitfield. So you're dismissed at this time, and we
    will now call up the second panel of witnesses. As we're
    changing out here, on the second panel we have a great group as
    well. We have Mr. Jerry Bailey, who's a professional jockey,
    Racing Hall of Fame. I think he recently--I'm not even going to
    say because I'm not sure, but he was a former Jockeys' Guild
    president. In addition, we have Mr. John Giovanni, who's a
    former professional jockey and former Jockeys' Guild national
    manager. We have Mr. Pat Day, former professional jockey,
    Racing Hall of Fame, and former Jockeys' Guild president. We
    have Mr. Eddie King, professional jockey and former Jockeys'
    Guild treasurer. We have Mr. Gary Donahue, who's a permanently
    disabled jockey. We have Ms. Tomey-Jean Swan, professional
    jockey and Co-vice Chair of the Jockeys' Guild Board of
    Directors. We have Mr. David Shepherd, professional jockey and
    Chairman of the Jockeys' Guild Board of Directors. We have Mr.
    Robert Colton, who's a professional exercise rider, former
    professional jockey and former member of the Jockeys' Guild
    Board of Directors, and then we have Mr. Chris McCarron, former
    professional jockey, Racing Hall of Fame, and former member of
    the Jockeys' Guild Board of Directors.
        So as you can see from this panel, we have a lot of
    expertise in this area of the Jockey's Guild and insurance and
    issues relating to jockeys.
        Now, some of you were here, and some of you were not here,
    but I'd indicated to you that it is the policy of this
    committee that we take all testimony under oath. And before we
    began, I wanted to ask any of you do you have any objection to
    testifying under oath? We're waiting for Ms. Tomey-Jean Swan
    and waiting for Chris McCarron. Everybody else is here. We'll
    wait for just a few minutes here.
        Thank you, Mr. McCarron, very much for joining us. By video
    is Ms. Tomey-Jean Swan, who I indicated is a professional
    jockey and Co-vice Chair of the Jockeys' Guild Board of
    Directors. Can you hear me okay, Ms. Swan?
        Ms. Swan. Yes, I can. Can you hear me?
        Mr. Whitfield. I can. Thank you.
        As you're aware, the committee is holding an investigative
    hearing, and, when doing so, we have the practice of taking
    testimony under oath. Do any of you witnesses today have any
    objection to testifying under oath?
        Okay. Now, do any of you have attorneys with you? As you
    know, it is the rules of the committee and the rules of the
    House that we do allow people to have legal counsel with them
    when they testify. Do any of you desire to be advised by
    counsel during your testimony today?
        Mr. Day. Yes, sir. Pat Day. Tim McCall is my legal counsel
    today.
        Mr. Whitfield. Mr. Pat Day has legal counsel with him.
        Mr. Donahue.
        Mr. King. Mr. King. I'm represented by Mr. Allen Milstein.
        Mr. Whitfield. Mr. Day, who is your legal counsel?
        Mr. Day. Tim McCall.
        Mr. Whitfield. Okay. Now, do your legal counsel intend to
    testify?
        Mr. McCarron. Chris McCarron. I'm being represented by
    George Cohen.
        Mr. Whitfield. Does Mr. Cohen intend to testify? No.
        Mr. Donahue. I'm also represented by Mr. Milstein.
        Mr. Whitfield. So he's advising two of you. Okay. But the
    counsel is not going to be testifying, so in that case I would
    ask those who can will rise and raise your right hand, and I
    will swear you in.
        [Witnesses sworn.]
        Mr. Whitfield. Each of you is now under oath, and you may
    give a 5-minute summary of your written statement. And, Mr.
    Bailey, we'll begin with you.

     TESTIMONY OF JERRY BAILEY, PROFESSIONAL JOCKEY, MEMBER, RACING
    HALL OF FAME, FORMER PRESIDENT, JOCKEYS' GUILD; JOHN GIOVANNI,
     FORMER PROFESSIONAL JOCKEY, FORMER NATIONAL MANAGER, JOCKEYS'
    GUILD; PAT DAY, FORMER PROFESSIONAL JOCKEY, MEMBER, RACING HALL
       OF FAME, FORMER PRESIDENT, JOCKEYS' GUILD; EDWIN L. KING,
      PROFESSIONAL JOCKEY, FORMER TREASURER, JOCKEYS' GUILD; GARY
         DONAHUE, FORMER PROFESSIONAL JOCKEY; TOMEY-JEAN SWAN,
      PROFESSIONAL JOCKEY, CO-VICE CHAIRMAN, BOARD OF DIRECTORS,
    JOCKEYS' GUILD; DAVID SHEPHERD, PROFESSIONAL JOCKEY, CHAIRMAN,
    BOARD OF DIRECTORS, JOCKEYS' GUILD; ROBERT COLTON, PROFESSIONAL
      EXERCISE RIDER, FORMER PROFESSIONAL JOCKEY, FORMER MEMBER,
    BOARD OF DIRECTORS, JOCKEYS' GUILD; AND CHRIS McCARRON, FORMER
       PROFESSIONAL JOCKEY, MEMBER, RACING HALL OF FAME, FORMER
               MEMBER, BOARD OF DIRECTORS, JOCKEYS' GUILD

        Mr. Bailey. Members of Congress, ladies and gentlemen,
    thank you for allowing me to address you today. As you know, my
    name is Jerry Bailey, and I'm a professional jockey in the
    thoroughbred racing industry and have been for the past 31
    years. Although I'm a member of racing's Hall of Fame and won
    numerous major races, one of the most gratifying aspects has
    been times I was able to be the voice of reason and a
    representative on behalf of the jockeys across American.
        I was an active member of the Guild for 29 years. During
    that time I served both as vice president and president. The
    Jockeys' Guild has traditionally been a social welfare
    organization, and their primary purpose over the years has been
    to provide jockeys in America with both health and on-track
    accident insurance, better and safer work conditions, as well
    as securing a fair and equitable pay scale.
        The Guild was funded in most part by two mechanisms, one
    being contributions by the jockeys themselves, and the second,
    the annual moneys received from most racetracks in exchange for
    the radio and television rights of the jockeys.
        Because of the rising costs of health care over the years
    and the fact that racetracks were unwilling to substantially
    increase their annual payments to the Guild, it was inevitable
    that the Guild was eventually going to be unable to afford the
    cost of both health care and on-track accident insurance for
    its membership. The membership was told of the financial
    concerns at each annual meeting in the late 1990's. The
    financial advisers warned that the Guild's investments, which
    had helped bridge the shortfall for several years, would fail
    to be the solution in the event the stock market took a
    downward turn of any great significance, and, of course, that
    indeed did occur in the late 2000's.
        As this economic downturn occurred, the Guild notified the
    membership that it could not afford to maintain its health
    insurance plan. The Guild did, however, maintain the on-track
    accident insurance. In short, the Guild could not afford to
    provide both the on-track accident and the health care
    insurance, so it chose the on-track accident.
        As news of the termination of the Guild insurance spread
    throughout the jockey colony, rumors of fraud and mismanagement
    were common, untrue but common. Those rumors were followed by
    allegations by those people that were seeking a change in
    management. It is my understanding that to this date no
    evidence of any wrongdoing by the former management was ever
    found.
        In early of April 2001, there was a meeting at the Guild
    offices in Lexington, Kentucky. The purpose of that meeting was
    for the management team of the Guild headed by John Giovanni to
    answer any questions that members might have concerning the
    allegations of mismanagement or fraud. In attendance were
    myself; Pat Day, who was president at the time; John Giovanni;
    Robert Colton; Mike McCarthy; Tomey Swan; Tony Black via phone;
    and Chris McCarron.
        At the conclusion of that meeting, it seemed to me as
    though all questions brought forth by McCarron, Colton and
    McCarthy were answered to their satisfaction. Sometime after
    that meeting, however, McCarron was in the process of
    introducing a Dr. Gertmenian to many Guild members across the
    country.
        In June 2001, there was a special meeting requested of the
    Guild executive board, of which I was a member. The purpose of
    that meeting was to discuss the removal of John Giovanni from
    the position of national managing secretary. After several
    hours of discussion, there was a consensus that there was some
    action necessary; however, as I remember, there was no vote
    taken. It is my understanding, though, that immediate lockdown
    of the Guild office took place either late that night or early
    the next morning. I was unaware of the lockdown at the time,
    but in reflection I can only believe that Mr. McCarron, Mr.
    Colton, Mr. McCarthy and Dr. Gertmenian were in concert on this
    takeover.
        I do recall that of all the executive Board members on the
    aforementioned call, five of us, Pat Day, Tony Black, Dean
    Kutz, Larry Melancon and myself, were opposed to Mr. Giovanni's
    removal. At some point during that conference call, the topic
    of who would replace Giovanni was discussed. The name of a Dr.
    Gertmenian was introduced into the conversation. Dr. G was
    described as a close personal friend of Mr. McCarron, a
    professor at Pepperdine University, and a wizard at
    negotiations.
        During the ensuing weeks I contacted Dr. G to conduct an
    informal interview so I might be well versed of his
    qualifications or lack thereof of the job of managing secretary
    of the Guild. I asked him to provide me with a few references,
    to which he answered repeatedly that those references were
    confidential, and that under no circumstances would he comply
    with my request. At that moment I began to distrust Dr. G.
        Sometime thereafter I resigned from the executive Board as
    I felt that I could not serve with someone I did not trust. It
    was then that I knew I would eventually extract myself from an
    organization that I had lived and breathed for 25 years. My
    objective then was to find health insurance for my family and
    me, a mission that took over a year. It was and still is very
    hard to obtain as a jockey.
        When Dr. G took control of the Guild, he made a promise to
    restore the health insurance to the jockeys. He did that all
    right, but he never notified me, still an active Guild member,
    that this new policy failed to cover jockeys for on-track
    accident insurance as the previous policy had, nor did he
    notify me that the on-track accident policy that was purchased
    by John Giovanni in April 2001 had lapsed. It is my
    understanding that there was never any formal notification of
    the lapse of that policy.
        At that point I found it critical to obtain my own health
    insurance policy that would also cover me for on-track
    accidents. As soon as I obtained that insurance, I resigned
    from the Guild. At that point I became very distant from any
    Guild business.
        To this day I truly hope that all the promises made to the
    jockeys from Dr. G come to fruition. Unfortunately over the
    past few years that doesn't seem to have happened. It is my
    humble opinion that the jockeys have been treated like
    secondhand citizens by this industry on many occasions. I also
    feel that we definitely do own our media rights and should be
    fairly compensated for them when used for profit by others. I
    also believe while we should be responsible for our own health
    insurance, we should not have to pay for health insurance
    coverage while on the job.
        I came to Washington today to make a difference. If we're
    going to help jockeys across America, we need to address the
    issue of insurance. In the area of on-track insurance, some
    type of national program or policy needs to be explored. A
    national workman's compensation policy would be a godsend. I
    have broken 21 bones in my career, and I consider myself to be
    fortunate, fortunate in the sense that I was injured in States
    that had workman's compensation in place or tracks that
    maintained an on-track accident insurance policy that went well
    beyond the $100,000 level. If 90 percent of the jockeys in
    America were to sustain a catastrophic injury tomorrow at a
    track that only insured them for $100,000, they would be wiped
    out financially. It is my hope that here today with the help of
    Congress we will begin the journey to find a solution to the
    insurance needs of all the jockeys across America.
        I sincerely thank you for taking the time out of your busy
    schedules to address the concerns of jockeys and the
    thoroughbred industry. Even though I'm in the twilight of my
    career, the issues we're addressing today are very important to
    me and will have a huge impact on an industry that contributes
    billions of dollars and countless jobs to the economy of our
    country. Thank you.
        [The prepared statement of Jerry Bailey follows:]

                       Prepared Statement of Jerry Bailey

        Distinguished members of Congress, ladies and gentlemen, thank you
    for allowing me to address you today.
        As you know my name is Jerry Bailey, I am a professional jockey in
    the Thoroughbred Racing Industry, and have been for the past 31 years.
    Although I am a member of Racing's Hall of Fame, won numerous major
    races, and received many prestigious awards, one of the most gratifying
    aspects of my career has been the times in which I was able to be the
    voice of reason and a representative on behalf of the jockey's across
    America. As I said previously, I have been a Rider, not a Writer, so
    please bear with me.
        In the next few minutes I would like to give you a brief overview
    of the situation that most jockeys in America find themselves in today
    as I see it . . . how we got here, some of the bumps in the road along
    the way and where we might be headed if the situation remains status
    quo.
        The Jockeys Guild has traditionally been a social welfare
    organization. Their primary purpose over the years has been to provide
    jockeys in America with both health and on-track accident insurance,
    better and safer working conditions, as well as securing a fair and
    equitable pay scale. I was an active member of the Guild from 1974
    until 2003 at which time I resigned due to my extreme distrust of the
    new management team headed by Dr. Wayne Gertmenian.
        During the term of my membership, I served as a Regional
    Representative, followed by terms as Vice President of the Eastern
    Section, and ultimately President of the Guild for 7 years. The Guild
    was funded in most part by two mechanisms. One, being contributions by
    the jockeys themselves, jockeys would pay to the Guild (in their name)
    a per mount fee. As years went by, the fee went from $2 to $8. The
    majority of each per mount fee went to pay for the riders health
    insurance premium, and the balance of the per mount fee paid for the
    expenditures of running the Guild, (the split was 6/2 on an 8 dollar
    fee.) The more mounts ridden in a calendar year, the more each rider
    would contribute to his, or her account. Once a jockey's insurance
    premium was satisfied, the surplus was applied to less fortunate guild
    members' premiums. In other words, the more fortunate would help the
    less fortunate.
        The second means of funding the Guild, was the annual monies
    received from most of the Racetracks in exchange for the radio and
    television rights of the jockeys. Those rights are assigned to the
    Guild by each member when said member joins the Guild. Because of the
    rising costs of health care over the years, and the fact that
    Racetracks were unwilling to substantially increase their annual
    payments to the Guild, it was inevitable that the Guild was eventually
    going to be unable to afford the costs of both the healthcare and on-
    track accident insurance for it's membership.
        The membership was told of the financial concerns at each annual
    meeting in the late nineties. The Guild financial advisors warned that
    even though the Guild's investments, (which helped bridge the shortfall
    for several years), would fail to be the solution in the event the
    stock market took a downward turn of any great significance. Of course
    that did indeed occur in late 2000 and early 2001.
        As this economic downturn occurred, the Guild notified the
    membership that since it could not afford to maintain it's health
    insurance plan, members would be placed in a Cobra plan which could
    satisfy the insurance needs of the riders for 18 months. During that
    time, each rider could obtain his own health insurance. The Guild did
    however maintain the ``ON-TRACK'' accident insurance. That insurance
    provided jockeys in states that did not have workman's compensation,
    coverage from $100,000 to $1,000,000 (by way of negotiation, the tracks
    provided the first $100,000 of insurance). In short, the Guild could
    not afford to provide BOTH the health AND on-track accident insurance,
    so it chose the latter.
        As the news of the termination of the health insurance spread
    through the jockey colony, rumors of fraud, and mismanagement of Guild
    funds by management were common.Untrue, but common.Those rumors were
    followed by allegations by some that were seeking a change in
    management. It is my understanding that to this day, no evidence of any
    wrongdoing was ever found.
        In early April of 2001, there was a meeting at the Guild offices in
    Lexington, Kentucky.The purpose of that meeting was for the management
    team of the Guild, headed by the National Managing Secretary John
    Giovanni to answer any questions that members might have concerning the
    allegations of mismanagement of funds or fraud. In attendance were
    myself, Pat Day, (president of the guild at that time), John Giovanni,
    Robert Colton, Mike McCarthy, Tomey Swan, Tony Black, (via phone), and
    Chris McCarron.
        At the conclusion of that meeting, it seemed to me as though all
    questions brought forth by McCarron, Colton, and McCarthy were answered
    to their satisfaction. Apparently that was not the case, because some
    time after that meeting, Mr. McCarron was in the process of introducing
    a Dr.Wayne Gertmenian to many Guild members across the country.
        In June of 2001 there was a special meeting (via conference call)
    requested of the Guild executive board (of which I was a member). The
    purpose of that meeting was to discuss the removal of John Giovanni
    from the position of National Managing Secretary. After several hours
    of discussion, there was a consensus that although there was some
    action necessary, there was no vote taken.It is my understanding that
    an immediate lock down of the Guild office took place either late that
    night or early the next morning. I was unaware of the lock down at that
    time. In reflection, I can only believe that Mr. McCarron, Mr. Colton,
    Mr. McCarthy, and Dr. Gertmenian were in concert on this take-over. I
    do recall that of all the executive board members on the aforementioned
    conference call, Pat Day, Tony Black, Dean Kutz, Larry Melancon and I
    were opposed to Mr. Giovanni's removal.
        At some point during that conference call, the topic of who would
    replace Giovanni was discussed.The name of Dr. Gertmenian was
    introduced into the conversation. This ``Dr. G'' was described as a
    close personal friend of Mr. McCarron, a professor at Pepperdine
    University, and a wizard at negotiations, as he had worked for the
    Nixon administration in that capacity. During the ensuing weeks, I
    contacted Dr. G by way of a phone number Mr. McCarron had given me. The
    purpose of my call was to conduct an informal interview of Dr. G so
    that I might be more well versed as to his qualifications, or lack
    thereof, for the job of National Managing Secretary of the Guild. (I
    felt an obligation to the membership to either endorse this man or
    not).I asked Dr. G to provide me with a few references of previous
    employment, to which he answered repeatedly that those references were
    confidential, and that under no circumstances would he comply. At that
    moment, I began to distrust this ``Dr. G''.
        Sometime thereafter I resigned from the executive board, as I felt
    that I could not serve with someone I did not trust. It was then that I
    knew I would eventually extract myself from an organization that I had
    lived and breathed for over 25 years. My objective then was to find
    health insurance for my family and me. A mission that took over a year
    (it was, and is still very hard to obtain as a jockey).
        In June of 2002, I had the occasion to learn that a jockey in
    Louisiana had been injured on track, and was incurring bills of over
    $100,000. I found that hard to believe. I was sure that the Guild had
    maintained its insurance policy for track accidents in states that did
    not have workmens[' comp. It just so happened that Dr. G was at Belmont
    Park (where I was riding) that week, so I asked him if our on track
    insurance policy was still in effect. He told me it was.Being
    distrustful of the man already, I asked him the same question the next
    day, in a manner suggesting that I knew differently. His answer this
    time was, that he checked it out and found that the policy in question
    was cancelled by John Giovanni. He added that the Guild was looking
    into restoring it. It is a matter of record that John Giovanni
    purchased said policy on or about April 1st of 2001 (shortly before his
    ousting). Under Dr. G's watch, the policy was allowed to lapse one year
    later.
        When Dr. G took control of the Guild, he made a promise to restore
    health insurance to the jockeys. He did that all right, but he never
    notified me, (still an active Guild member), that this new policy
    failed to cover jockeys for on-track accidents (as the previous policy
    had). Nor did he notify me that the on-track accident policy that was
    purchased by John Giovanni in April of 2001, and was in effect for one
    year had lapsed. It is my understanding that there was never any formal
    notification of the lapse of that policy.
        At that point I found it critical to obtain my own health insurance
    policy, that would also cover me for on track accidents.As soon as I
    obtained said insurance, I resigned from the Guild. At that point I
    became very distant from any Guild business. To this very day, I truly
    hope that all the promises made to the jockeys from Dr. G, come to
    fruition. Unfortunately, over the past few years that doesn't seem to
    have happened.
        It is my humble opinion that jockeys have been treated like second
    hand citizens by this industry on many occasions. I also feel that we
    definitely do own our media rights, and should be fairly compensated
    for them when used for a profit by others. I also believe that while we
    should be responsible for our own health insurance, we should not have
    to pay for insurance coverage while ``on the job.''
        I mentioned in my opening paragraph, the direction this industry
    might be headed if things remain status quo. In the area of ON TRACK
    insurance, some type of national program or policy needs to be
    explored. A National Workman's Compensation plan would be a Godsend. I
    have broken 21 bones in my career and I consider myself to be very
    fortunate. Fortunate in the sense that I was injured in states that had
    Workmen's Comp in place or at tracks that maintained an ON TRACK
    insurance policy that went well beyond the $100,000 level. If 95% of
    the Jockeys in America were to sustain a catastrophic injury tomorrow,
    at a track that only insured them for $100,000, they would be wiped out
    financially. It is my hope that here today, with the help of Congress,
    we will begin the journey to find a solution to the insurance needs of
    all Jockeys across America.
        I sincerely thank you for taking the time out of your busy
    schedules, to address the concerns of Jockeys in the Thoroughbred
    Industry. Even though I am in the twilight of my career, the issues we
    are addressing today are very important to me, and will have a huge
    impact on an industry that contributes billions of dollars and
    countless jobs to the economy of our Country. Thank you!

        Mr. Whitfield. Mr. Bailey, thank you very much. We also
    hope that from this testimony we can begin to go down that road
    to insure adequate health coverage for everyone.
        Our next witness is Mr. Giovanni.
        Mr. Giovanni, you are recognized for 5 minutes for your
    opening statement.

                       TESTIMONY OF JOHN GIOVANNI

        Mr. Giovanni. Thank you, Mr. Chairman, members of the
    subcommittee. My name is John Giovanni. I'm the former national
    manager and secretary of the Jockeys' Guild. Thank for the
    invitation to speak here today. I appreciate the opportunity,
    and I hope my testimony may be helpful to you.
        For the purpose of introduction, let me tell you that I am
    a former jockey. I rode for approximately 20 years, and for all
    of those years I was a member of the Jockeys' Guild. For the
    last 13 years of my riding career, I served as director on the
    national board, and upon retiring from the saddle, I was hired
    as a regional manager serving in that capacity for 6 years.
        In 1986, I was selected by a search committee from a group
    of 40-plus applicants to replace the retiring national manager
    Nick Jemas. At the December Board of Directors meeting, I was
    unanimously elected to that position; took office on January 1,
    1987. I was reelected either unanimously or by overwhelming
    majority to six more consecutive terms and served in that
    capacity for 14 years, until, along with my entire staff, I was
    ousted in June 2001.
        Now, I'll be the first to admit that we had plenty of work
    to do, and there were areas for improvement, but the Guild
    management had always been headed by a jockey, and in my
    written testimony you will see under the management and
    leadership of this former jockey, we accomplished much for the
    Guild and made great strides for members' health and welfare.
        The Jockeys' Guild was incorporated in New York in May 1940
    as a 501(c)(4) social welfare organization. It was founded by a
    group of the country's most prominent riders, the goal in mind
    of improving the quality of life for jockeys and their
    families. Their foremost concern was the need for insurance
    coverage to provide for their injuries.
        By January 1941, an insurance plan underwritten by Lloyds
    of London covering all jockeys for racing injuries with an
    accidental death benefit of $5,000 in place at most major
    racing facilities.
        Over the next 60 years the benefits increased. In the mid-
    1960's, by trading jockeys' media rights, the Guild acquired
    the funding for health insurance, and the original policy
    purchased was a $250,000 major medical plan. This plan paid for
    medical expenses for member jockeys who surpassed the cap on
    the on-track accident program and was incorporated into every
    ensuing health insurance contract provided by the Jockeys'
    Guild.
        Union Labor Life Insurance Company, ULLICO, was the
    Jockeys' Guild health insurer in 2000 and had been throughout
    much of the 1990's. It was a very bad year, and there were a
    great many health claims and several on-track injuries that
    went over the $100,000 mark. One track accident claim in
    particular was for over $600,000. These high claims led to a 43
    percent increase in premiums for the 2001 renewal. We were
    prepared for about a 20 percent increase and, in fact, had
    received comparable increases in two previous years, but 43
    percent was devastating, and we could not afford it.
        Through a series of meetings to address this problem, the
    Guild's executive committee directed me to renew the plan only
    in States where the Guild received State funding, namely
    California and Delaware. In all other States I was directed to
    make arrangements for the membership to switch to COBRA for
    their health care benefits. Members could make payments
    directly to ULLICO and keep their Guild health plan in place
    for another 18 months. In an effort to help the membership
    better afford these expenses, Guild fees were reduced from $8
    to $3 per mount.
        The executive committee also instructed me to find and
    secure a catastrophic policy that covered members for on-track
    injuries. We did that immediately and purchased a policy for $1
    million per accident. This policy covered all Guild members who
    required coverage whenever they raced, in any jurisdiction that
    lacked worker's compensation. This policy was paid for 1 year
    in advance and was effective April 1, 2001, through March 31,
    2002. The members were now guaranteed on-track medical coverage
    of at least $1 million. Additionally, members in California and
    Delaware and the others who opted for COBRA had family
    coverage. Because of the importance of these benefit changes,
    each member was notified well in advance.
        Mr. Chairman, I would like to emphasize that every single
    decision affecting the members or the direction of their Guild
    was authorized by the executive committee. We always advised
    the committee of the status of our financials and insurance and
    other major issues, and the committee made the final call on
    how to proceed. I worked for them, not the other way around.
        The Jockeys' Guild was a democratic labor organization,
    held regular elections of its Board of Directors every 2 years.
    I was elected in 2000 for a 2-year term as national manager;
    however, at the same time as our health care crisis, a small
    group of jockeys led by Chris McCarron, who had a long-standing
    relationship with Wayne Gertmenian, decided to capitalize on
    the health care emergency and hand over the Guild and its
    millions of dollars of assets to Gertmenian and its company,
    Matrix Capital Associates.
        I, along with my staff, was removed from office June 16,
    2001, 6 months into my term. Since then I've watched in dismay
    as the institution I served all of my adult life deteriorated
    into something I could barely recognize. The Guild is no longer
    an effective voice for jockeys and has abandoned its
    traditional role as their protectors. No longer is there a
    contract with the TRA, and no one can be certain if there's any
    on-track accident coverage, by whom it is underwritten or how
    much coverage it provides. The health insurance plan is at
    least double the cost, yet disallows coverage for on-track
    injuries.
        Many tracks no long recognize the media rights agreement
    and pay nothing to support member insurance benefits. Some
    horsemen's bookkeepers do not even collect mount fees. The
    Guild now faces antitrust litigation by one of the countries
    premier racing associations and several suits filed by members.
        The Disabled Jockeys' Fund is defunct, and there is at
    least one permanently disabled member facing enormous medical
    bills who had been left to fend for himself. The Guild
    financial information is cloaked in mystery, and, while it has
    been subpoenaed before the subcommittee, has not been
    forthcoming.
        More than 60 years of progress made in funding ever-
    increasing insurance benefits for the Guild's members appears
    to have vanished. On behalf of those who fought so long and
    hard for these basic needs, I ask why this occurred, who is
    responsible, and, most importantly, how it may be restored.
    Thank you.
        [The prepared statement of John Giovanni follows:]

                      Prepared Statement of John Giovanni

        Good morning Mr. Chairman and members of the Subcommittee. I am
    John Giovanni, former National Manager and Secretary of Jockeys' Guild,
    Inc. Thank you for the invitation to speak here today. I appreciate
    this opportunity and I hope my testimony may be helpful to you.
        For the purpose of introduction let me tell you that I am a former
    jockey. I rode for approximately twenty years (September 2, 1961 to
    March 30, 1981) and for all of those years I was a member of the
    Jockeys' Guild. For most of those years I was an active member on all
    the jockeys' room committees at every racetrack where I rode and for
    the last thirteen years of my riding career, I served as a director on
    the national board. Upon retiring from the saddle I was hired as a
    regional manager serving in that capacity for six years. Although
    originally assigned to the Maryland, Delaware, West Virginia and
    Pennsylvania, within six months I was traveling the entire country on
    Guild business. In 1986 I was selected by the Jockeys' Guild Search
    Committee from a group of forty plus applicants to replace the retiring
    National Manager Nick Jemas. At the December Board of Directors meeting
    that year I was unanimously elected to the position and took office on
    January 1, 1987 to serve a two year term. I was reelected either
    unanimously or by an overwhelming majority to six more consecutive
    terms and served as the Jockeys' Guild National Manager and Secretary
    for fourteen years until, along with my entire staff, I was ousted on
    June 16, 2001.
        The Jockeys' Guild was incorporated in New York in May of 1940 as a
    501(c) 4 social welfare organization. It was founded by a group of the
    country's most prominent riders with the goal of improving the quality
    of life for jockeys and their families. Before the Guild was formed a
    jockey colony had to deal with injuries, medical emergencies and
    financial difficulties by passing the hat. The jockeys who had gave to
    the jockeys in need.
        To illustrate, in the 1930's there were no ambulances, first aid
    rooms or doctors on the grounds of a racetrack. If a rider was hurt he
    had to fend for himself. My friend Sam Renick told me how he fell in a
    race at the old Jamaica Race Course in New York in 1939. He suffered a
    compound fracture to his left leg and was taken to the hospital by a
    member of the starting gate crew in an old pickup truck after the last
    race. Sam considered himself lucky because at the time he was under
    contract to one of the most powerful stables in the industry and could
    afford to pay his own medical bills. That incident however, was the
    last straw. Sam, Eddie Arcaro, John Longden, Irving Anderson and a
    small group of jockeys riding in New York went to work and founded the
    Jockeys' Community Fund and Guild.
        Among the first concerns for the new Guild was the need for
    insurance coverage to provide for the expense of their injuries. They
    pressed hard and by January of 1941 an insurance plan covering jockeys
    for racing injuries and accidental death was in place at most of the
    major racing facilities across the country. Lloyds of London underwrote
    the policy and it covered all jockeys, not just Guild members. Sadly,
    the first benefit of $5000 was paid in February of that year to the
    family of Joseph Giangasparo, a nonGuild member, who was killed at
    Hialeah Park in Florida.
        Over the next 60 years, as a result of some difficult negotiations
    and bitter battles, the benefits increased. In the mid 1960 's by
    trading media rights to the racing associations the Guild acquired the
    funding for health insurance. The original health plan was with Blue
    Cross Blue Shield of Rockford Illinois and it covered all Guild members
    and their dependents. The plan maximum was $250,000 per insured and it
    included a provision to pay medical expenses for a member jockey who
    was hurt on track and who had reached the maximum coverage provided by
    the racing association. Until April of 2001 the provision to pay
    medical expenses for member jockeys who surpassed the cap on the track
    accident program was incorporated in every health insurance contract
    purchased by the Jockeys' Guild. At that time the Guild members were
    covered for $100,000 by the on track accident coverage and $1,000,000
    through our health plan with ULLICO.
        The year 2000, however, was a very bad year injury and health wise
    for the membership. There were a great many health claims paid by
    ULLICO and several on track injuries that went over the $100,000 mark.
    One claim in particular was for a young lady named Stacy Burton who
    fell at Prescott Downs in Arizona. Miss Burton was in a coma for quite
    some time and was lucky to be alive. Her medical expenses were
    tremendous and I believe ULLICO paid about $600,000 on her behalf.
        These high claims costs led to a 43% increase in premium for the
    ULLICO policy renewal in 2001. We were prepared for about a 20%
    increase and, in fact, had received comparable increases the two
    previous years but 43% was devastating and we could not afford it.
    Through a series of executive committee meetings, it was decided to
    renew the ULLICO plan only in the states where the Guild received state
    funding, namely California and Delaware. In all the other states
    arrangements were made for the membership to switch to COBRA. In this
    way, each member not eligible for health coverage in California or
    Delaware could make payment directly to ULLICO thereby keeping their
    Guild health plan in place for another 18 months. In an effort to help
    the membership better afford these expenses, mount fee assessments were
    reduced from $8.00 to $3.00.
        Realizing it would be easy for a member to forget to make payments
    on a timely basis and lose their coverage, I proposed that we find a
    company to insure the jockeys for $1,000,000 over and above the
    racetrack limit of $100,000 for accidents that would happen at the
    track. I suggested that we use monies earmarked specifically to
    subsidize the now unaffordable health plan to pay for it. Mather and
    Company, American Specialty Underwriters, Inc, and Segal and Company
    were requested to find such a policy. Mather and Company was the only
    broker who could place such a catastrophic plan and the cost was
    $443,000.00. Given the risks that jockeys take, this was a very
    reasonable cost for a policy.
        The catastrophic policy was paid in full, for one year in advance,
    became effective April 1, 2001 and was to be in force through March 31,
    2002. Now at least Guild members injured on track were guaranteed
    medical coverage of $1,000,000. And contrary to the claims by the
    current Guild leadership, that policy covered all of our members who
    required coverage any time they were not riding in a state that had
    workers compensation for jockeys (there were a handful of $2 members
    who expressly chose not to have Guild coverage). Members in California
    and Delaware and those who elected COBRA also had family coverage. With
    this plan in place, I felt I had enough time to lobby for funding to
    again provide a lowcost subsidized health plan for our members and
    their families.
        However, while we were dealing with these issues a small group of
    individuals was maneuvering to take over the Jockeys' Guild. Chris
    McCarron who had resigned from the Guild some years previously, and
    Robert Colton who was not a member for many years rejoined the Guild
    sometime around August of 2000. They campaigned vigorously for
    positions on the national board, lobbied aggressively for seats on the
    executive committee and came to the December 2000 board meeting
    equipped with a plan. This plan, I have every reason to believe, was
    designed by McCarron's close friend Wayne Gertmenian. For weeks before
    the board meeting McCarron and Colton deluged my office with pages of
    questions regarding Guild transactions and requests for supporting
    documentation. Every question was answered and every supporting
    document was forwarded in a timely fashion.
        At the December board meeting McCarron and Colton initiated rumors
    of mismanagement and fraud. They continued to make these allegations
    after the board meeting and traveled from track to track, sometimes
    with Gertmenian, spreading these rumors all across the country.
        In January Colton and Michael McCarthy came to the Lexington office
    and spent three days copying reams of documents. They were shown
    everything they requested and were given unfettered access to the file
    room and copy machine. They left with boxes of paper and then spread
    the report that I would not cooperate and give them what they needed.
        After their visit things progressively worsened. With a hope of
    clearing the air, Guild President, Pat Day called for an executive
    committee meeting in the Lexington office for April 2nd and 3rd. The
    meeting was attended by Chris McCarron, Robert Colton, Tomey Swan,
    Michael McCarthy, Jerry Bailey, Larry Melancon, Dean Kutz, Anthony
    Black (by telephone), Tom Kennedy, Pat Day and myself. I answered and
    provided support and documentation for all of the questions asked. Just
    two months before I was fired in the middle of the night, I was given a
    unanimous vote of confidence by the executive committee to continue in
    my capacity as national manager.
        Now, I will be the first to admit that we had plenty of work to do,
    and that improvements needed to be made. But I would also like to point
    out that under my leadership, our management team had accomplished
    much. I was one of the main architects of the New York Jockeys Injury
    Compensation Fund, a workers' comp program for jockeys and exercise
    riders that should be the model for the rest of the nation's racing
    jurisdictions. Mr. Chairman, I understand you are having follow-on
    hearings on that topic, and I would be more than happy to provide
    further testimony about the advantages of a New York-styled fund at
    that time. I would also be happy today to briefly comment on the
    workers' comp plan that your home state is considering at this very
    moment.
        Mr. Chairman, I was also part of the team that pushed the Maryland
    legislature to adopt a workers' comp program for jockeys in that state.
    Further, it was under my leadership that the Guild persuaded California
    to give the Guild a half million dollars, increased annually, and
    Delaware to give the Guild $350,000 annually, to subsidize the health
    insurance costs of jockeys from those respective states. Today, those
    funding streams appear to be in jeopardy because of the current Guild's
    lack of transparency. It would be a devastating loss if the Guild were
    to lose these resources from California and Delaware
        We also persuaded the Massachusetts and West Virginia legislatures
    to do the same. We also had made plans to convince other racing
    jurisdictions to help our jockeys in the same way. I never got the
    chance. The real shame is that the new Guild management has never taken
    advantage of the moneys we convinced West Virginia to set aside for us.
    And finally, I would like to point out that my management team created
    the Disabled Jockeys' Fund--that fund started with little more than a
    personal $100 contribution, but when I was fired, we had over $1.3
    million in that fund. We aggressively pushed for donations and raised
    funds for that account, and each year we always had more money coming
    in than going out. There was nothing more important to me than taking
    care of our disabled membership. And we did. We never let them down. My
    understanding is that the new management has never sought donations and
    revenue for that fund.
        Moving back to my earlier comment about providing to the Executive
    Committee documentation supporting everything the Guild management did
    and answering all the questions the Committee had--let me emphasize
    that this was always the case during my time as national manager. Every
    single decision affecting the members or the direction of their Guild
    was authorized by the Executive Committee. We always advised the
    Committee of the status of our financials and insurance and other major
    issues, and the Committee made the final call on how to proceed. I
    worked for them, not the other way around.
        I must make one final comment in defense of my tenure as National
    Manager. I have heard that the current Guild's management has made
    statements to the effect that I was opposed to growing our membership
    and that I was opposed to including Latinos in our organization. That
    is a ridiculous and untrue characterization of either me personally or
    my policies as National manager. Our organization was open to all
    professional jockeys who met the membership standards and everyone of
    any color or background was welcome. We worked hard to keep our
    membership numbers strong. Today, the Guild's management and board
    members may testify that the Guild has tremendously grown, but that is
    somewhat a hollow claim. Today's Guild has largely increased its
    membership by reducing the eligibility requirements from riding 100
    mounts in a year, to riding a single mount in the past 12 months. Thus,
    many of those in the Guild's expanded membership today are exercise
    riders--not professional jockeys.
        After the April meeting's conclusion, and the unanimous vote of
    confidence, I left the meeting believing that everything had been
    resolved and that we could all move forward. I could not have been more
    wrong. Colton and McCarthy were in Pennsylvania two days later denying
    they had given me a unanimous vote of confidence and continued their
    allegations of mismanagement and fraud.
        All these events culminated in a hastily convened conference call
    that was requested by McCarron on June 15th, 2001. The conference was
    to include only the executive committee members and I was not allowed
    to participate. I have only second hand knowledge of what transpired,
    but I do know that there are widely differing opinions regarding the
    meeting and exactly what did transpire. In any event the following
    morning, June 16th, I received a fax signed only by McCarron informing
    me that my entire staff and I were terminated. We were locked out of
    the Guild offices and a new group literally moved in.
        Pat Day, as president, called for an executive committee meeting to
    sort out the differences. The meeting was boycotted by McCarron, Swan,
    Colton and McCarthy leaving the committee one member short of a quorum
    and rendering it unable to conduct business.
        For the last 4\1/2\ years I have remained relatively silent but
    this continuing calamity for jockeys and their families precludes me
    from being silent any longer. Somewhere along the way the people who
    orchestrated these changes lost sight of the original objective and
    turned the Jockeys' Guild into something I barely recognize. There is
    no longer a contract with the TRA and no one can be certain if there is
    any on track accident coverage, by whom it is underwritten or how much
    coverage it provides. The health insurance plan is at least double the
    cost yet disallows coverage for on track injuries. Many tracks no
    longer recognize the media rights agreement and pay nothing to support
    member insurance benefits. Some horsemen's bookkeepers do not collect
    mount fees. The guild is facing antitrust litigation filed by one of
    the country's premier racing associations and has several lawsuits
    filed against it by its own members. The Disabled Jockeys' Fund is
    defunct and there is at least one disabled member facing enormous
    medical bills who has been left to fend for himself. The Guild
    financial information is cloaked in mystery and, while it has been
    subpoenaed before this subcommittee, has not been forthcoming.
        More than sixty years of progress made in funding everincreasing
    insurance benefits for the Guild's members appears to have vanished. On
    behalf of those who fought so long and hard for these basic needs, I
    ask why this occurred, who is responsible and, more importantly, how it
    may be restored. Thank you.

        Mr. Whitfield. Thank you, Mr. Giovanni.
        At this time I recognize Mr. Pat Day for his opening
    statement.

                          TESTIMONY OF PAT DAY

        Mr. Day. Thank you, Mr. Chairman.
        I would like to first state how proud I am of Gary and Amy
    and for their courage to come and testify here today. It was
    heartrending to say the very least.
        Distinguished Members of Congress, thank you very much for
    the opportunity to address you today. My name is Patrick Alan
    Day. I'm a recently retired professional thoroughbred jockey.
    On August 4, 2005, I announced my retirement after a highly
    successful career that lasted 32 years, all of which I was a
    member of the Jockeys' Guild. Let me restate that: Up until
    2001.
        I'm a member of the National Racing Hall of Fame, have
    received numerous prestigious awards, won over 8,000 races, and
    my mounts have earned nearly $300 million in purses. I've
    always been an advocate for the jockey colony and had been a
    member in good standing with the Jockeys' Guild until June 2001
    when I resigned from that organization because of what I felt
    was wrongful treatment of the national director John Giovanni
    and my distrust of the new management company and the parties
    directly responsible for the aforementioned action.
        At the time I was the president, a position I had been
    holding for approximately 18 months. I had previously been the
    vice president, and I had been active on the Board of Directors
    for a number of years.
        I am here today, sir, to answer any questions you might
    have relating to the Jockeys' Guild and business relevant to
    this hearing. I appreciate your concern for the plight of the
    jockey colony and all the time and understanding expended, and
    I'd like to add that throughout the entire time that I was
    working with John Giovanni as the national managing director
    and the executive committee at that time, I had no reason then,
    nor do I now, to feel that he was ever anything but trustworthy
    and fully committed to the organization.
        Thank you very much, sir.
        Mr. Whitfield. Thank you, Mr. Day.
        At this time we'll recognize Mr. Eddie King.

                       TESTIMONY OF EDWIN L. KING

        Mr. King. Thank you, Mr. Chairman. Mr. Chairman,
    distinguished members of the subcommittee, thank you for the
    opportunity to speak today. My name is Edwin L. King, and I
    have been a member of the Jockeys' Guild 26, 27 years that I
    have been riding thoroughbreds. As a Guild member I served as a
    Guild rep, and many checks I have written. In 1999, I was
    elected to be a director, in 2002 I became treasurer of the
    Guild.
        The Guild was started in 1940 by Eddie Arcaro to protect
    jockeys by placing their safety and welfare first. He developed
    a code of standards members were to abide by. I feel that most
    important is to assist in a very honorable way of furthering
    and protecting the interests of our members. These are tasks
    the Guild's current management has failed to do by allowing our
    catastrophic insurance to be canceled.
        Being jockeys comes with dangers. We've all experienced
    fractures.
        Mr. Whitfield. Excuse me, would you mind moving the
    microphone a little closer?
        Mr. King. I can't explain the shock and dismay I had when
    Gary Birzer went down, learning Guild members had been riding
    without catastrophic insurance for over 2 years.
        We risk our lives on track. The Guild cannot play Russian
    roulette with our health. This is reprehensible. Catastrophic
    insurance is not a luxury, it's a necessity. I'm here to tell
    you what I know about the troubling experience I've had with
    the current Guild leadership.
        Shortly after becoming treasurer, Dr. Gertmenian called my
    home requesting my permission to move $1 million from the
    Disabled Riders Fund to another account unspecified at the
    TIME. He assured me all moneys would still be accessible to
    take care of the special needs of our disabled riders. He
    explained we needed to create the impression the fund would be
    bankrupt very soon, and that doing this would encourage
    donations. I asked him if he was sure this action was proper.
    He stated that I should trust him because he was more
    intelligent and much more highly educated than I was and would
    not do anything to jeopardize that trust. So I agreed.
        In March 2003, an event took place that gave me even more
    alarm to my removal of money from the fund. Robert Colton,
    former Jockeys' Guild member, expressed concerns about the
    Guild's accounting and recordkeeping. I repeatedly contacted
    the Guild office, Tomey Swan and fellow Board members to get
    documentation on where, when or if the money had actually been
    transferred. I never got an answer. I became more and more
    frustrated as important financial documents I'd ask for were
    never given to me.
        On May 15, 2003, I resigned from the treasurer, but when I
    received assurances from friends and members that I would have
    no more problems, I withdrew my resignation. At the national
    assembly in 2003, I was replaced as treasurer even though my
    term was to last 3 years. I still wanted to know about the
    Disabled Riders Fund's money and spent most of 2004 trying to
    figure out where it went.
        During a teleconference on August 8, 2004, Tomey Swan
    stated I was trying to start trouble. After explaining the
    initial conversation Dr. Gertmenian and I had December 2002
    regarding the $1 million, Dr. Gertmenian first said that we
    never had spoken. Then he said I misunderstood, it was only
    $250,000 to be deposited into the disabled jockeys endowment.
    When Dr. Gertmenian originally asked for the $1 million, the
    endowment was not in place.
        In October 2004, after I spoke to the press about the
    Guild's problems, my wife and I began receiving harassing phone
    calls from various members of the Guild. Darrell Haire and
    Tomey Swan told me I should resign so the issues would go away.
    However, I was determined to make sure that my fellow riders'
    member payments and mount fees were being used responsibly and
    the disabled would be cared for, so I refused.
        November 7, 2004, via teleconference, the senate of the
    Guild removed me from my seat without formal charges. In
    December I was expelled from the Guild during a meeting I was
    not allowed to attend, I believe at the direction of Dr.
    Gertmenian.
        Today my family and I continue to fight to get the off-
    track health benefits I am eligible for as a jockey riding in
    Delaware. The Guild continues to deny me that right. After 3
    years we still have no answers about what happened to the money
    from the Disabled Riders Fund. The current Guild leadership
    still refuses to be financially transparent and accountable to
    its members. My family and I are struggling to get health
    coverage we have earned. In addition, perhaps most important,
    the national program for catastrophic insurance is gone.
        Dr. Gertmenian has a great account, but Gary Birzer is
    without the help he desperately needs. For the sake of my
    fellow riders, I hope this hearing will help right these
    wrongs.
        Mr. Chairman, thank you for the opportunity to address the
    subcommittee. Please accept my full written testimony to the
    Congressional Record. I would be happy to respond to any
    further questions.
        [The prepared statement of Edwin L. King follows:]

    Prepared Statement of Edwin L. King, Thoroughbred Horse Jockey, Former
                           Treasurer, Jockeys, Guild

        Mr. Chairman and distinguished Members of the Subcommittee, thank
    you for the opportunity to discuss the health and welfare of our
    jockeys.
        My name is Edwin King and I have been a member of the Jockeys'
    Guild for 26 of the 27 years I have been a thoroughbred jockey. If it
    had not been for the many barriers and lies by Dr. Gertmenian, Albert
    Fiss, and the present Guild management, I would still be a member.
    During my years as a member I served as a Guild representative at many
    different racetracks. I have ridden in Colorado, Arizona, Illinois, New
    York, and Florida. I have spent the last 17 years based in New Jersey.
    In 1999, I was elected to be a Director of the Guild. In 2002, I became
    Treasurer. I was very proud my fellow members had put their faith in
    me, to be one of their leaders. Now because of the above mentioned and
    their campaign of lies against me around the riding colonies in the
    U.S., the same riders look upon me as if I have done something wrong.
        I am probably one of the few riders who also have family ties to
    the original Guild organization. Two of my grandfathers, three of my
    uncles and my father were all Guild members. The Guild was started in
    1940 by Eddie Arcaro to protect its members and put their safety and
    welfare first, which the current Guild leadership has failed to do by
    allowing our catastrophic insurance to be canceled without a plan in
    place.

    Health and Welfare of Jockeys
        It was very sad to hear of Gary Birzer's accident and even more so
    to hear that our catastrophic insurance had been canceled. Only after
    the accident was it brought to my attention we no longer had this
    benefit. Immediately I contacted Albert Fiss to find out the truth.
    After dancing around the question he admitted the policy was no longer
    in affect and had not been for sometime. As a Guild board member, this
    is something that I should have known. From the time it was put in
    place by John Giovanni, I had informed my wife, if ever I was severely
    injured, she should know there is an on-track insurance policy through
    the Jockeys' Guild. To my knowledge, this policy was still in place and
    it had never been discussed on any calls or meetings that I had
    attended.
        Once the news of the loss of our catastrophic policy was revealed,
    Dr. Gertmenian started with the lies. He began by spreading rumors that
    Mr. Giovanni had canceled the policy, and then it was Jerry Bailey and
    Pat Day. I recently heard that it was cancelled by the board that was
    serving at that time. Now we all know Dr. Gertmenian took it upon
    himself or by the advice of Matrix to cancel the one most important
    things to a jockey. He just fails to take responsibility for his
    mistakes and failures.
        We as jockeys risk our lives every minute we are in our workplace
    environment. Catastrophic insurance is not a luxury; it is an absolute
    necessity. This management should be ashamed of itself for allowing
    this to happen and it should be held accountable for the riders and
    their families that have been injured during the time period after this
    policy was dropped. Dropping this policy without having another one in
    place was just playing Russian roulette with the members' lives. This
    is a game they lost and continue to deny responsibility for by finding
    others to blame.
        This is just one of the many barriers that I have faced trying to
    work with the current Guild leadership. I do believe that the cost
    should be shared in our industry for catastrophic insurance.
    Thoroughbred horseracing is considered to be one of the most dangerous
    occupations you can be in. It is time that a thoroughbred jockey is
    considered a viable part of this industry.

    Disabled Jockeys' Fund
        In December 2002, I became the Treasurer of the Jockeys' Guild.
    This is a position I did not want. Dave Sheppard, now our Chairman,
    nominated me to the position. There were no other nominations so I did
    what I always do and accepted the responsibility. I took my new
    position very seriously. After reviewing what was expected of the
    Treasurer and all the duties that came with it, I was not sure I really
    wanted it. Approximately two to three weeks after the Guild Assembly
    that was held in Dallas, Texas, I received a call from Dr. Gertmenian
    requesting approval to remove $1 million from the Disabled Jockeys'
    Fund in order to give the impression that the Fund was going bankrupt
    and entice people in and around the horseracing industry to make
    donations. During our conversation, I asked if he was sure it was okay
    to do what he was asking. Dr. Gertmenian said that he was highly
    educated and much more intelligent than I was and that should merit my
    trust. At that time, I gave my approval.
        In the latter part of March 2003, I received phone calls from
    fellow board members and Robert Colton who was working for the Guild in
    California. He was having some concerns regarding the new Guild
    management team and stated that the accounting and record keeping was
    less than desirable. An emergency Board meeting was called for all
    Board members to meet in California. At the meeting Mr. Colton appeared
    to have done his homework. Those of us who know Robert know he is very
    articulate. During his presentation the management team, specifically
    Lisa Haley, Albert Fiss, and Steven Rice constantly cut Robert short
    saying he did not understand the dynamics of creative bookkeeping. He
    was not seeing the picture they told him repeatedly. He tried to show
    us the number of riders who were in error on the health insurance plan.
    That number was between 50 and 100. Robert talked to us about the
    commingling of riders' dues and per mount fees in the operating
    account, which Steven Rice admitted to me later the next month was
    actually true. After the continued abuse by Dr. Gertmenian's team
    Robert, lacking any other choices, packed up and left the premises.
    After listening to the information Robert had presented I became very
    concerned I had made a tremendous mistake approving the removal of any
    funds from the Disabled Jockeys' Fund. Because I hadn't received any
    documentation on where the $1 million had been transferred to, exactly
    when it had been transferred, or if it had been transferred I knew my
    mission was to make sure the money was in a separate account, earmarked
    just for the permanently disabled with every penny accounted for. I
    have since then learned that a portion of the $1 million was
    transferred around the middle of December 2002, which was prior to Dr.
    Gertmenian's call to me. Where those funds were distributed, I am still
    not clear on.
        On numerous occasions, I contacted the Guild office looking for
    these answers without resolution. I not only was in search of the
    disabled Riders Fund but also records on the numerous bank accounts--
    i.e., the operating, payroll, and media rights accounts,--investments,
    credit card statements, along with receipts and corresponding logs. I
    asked for rental receipts for the office. The list seems that it could
    go on forever on what was asked for and what was never received. I had
    e-mailed Tomey Jean Swan and my fellow Board members with the hope they
    would help me resolve this problem. This went on for approximately 18
    months. Ms. Swan's responses to my e-mail were always very vague, but
    at one point, Ms. Swan did advise me that the $1 million was being used
    by the Guild to self-insure. That was the first I had heard that. I got
    so many different answers it was amazing where this $1 million was
    moved. However, never did I get what I was asking for: the
    documentation to prove where it was.
        Finally, a phone conference was scheduled for August 8, 2004, which
    happened to be our biggest day in racing at Monmouth Park. My wife and
    I had a dinner engagement with an owner and trainer of a horse that I
    had ridden that day, resulting in me being late for the call. A few
    moments after connecting I heard Ms. Swan state that I was trying to
    start trouble in the organization. At that time, I explained that I
    would state my reasons for asking for the conference. I explained the
    conversation between Dr. Gertmenian and me about the $1 million.
        Dr. Gertmenian immediately stated that our conversation had never
    happened, that I misunderstood him, and then that he only asked for
    $250,000. I became very angry and Dr. Gertmenian and I had an extremely
    volatile exchange in the presence of the entire Guild senate. After a
    cooling out period, Ms. Swan explained that Dr. Gertmenian would often
    say something that was false and she would have to correct him by
    saying, this is probably what you meant to say.
        It was decided that Albert Fiss, Ray Sibille, and myself would get
    together via a three-way phone call and go through the account
    transactions and reach a conclusion on the Disabled Jockeys' Fund. Due
    to some unforeseen circumstances, we were not able to accomplish this.
    In the meanwhile, I copied everything and forwarded it on to Tom
    Megale, a CPA based in New York. Tom advised me that he could not make
    any conclusions or recommendations based on the information he was
    going through and that he did not think it was what I was looking for.
    With the information I was provided I noticed some temporarily and
    permanently disabled riders from California and Delaware were paid from
    The Disabled Jockeys' Fund. Normally you might think this was not
    improper but there are state programs to take care of riders eligible
    in those states. I had asked Albert Fiss how the Disabled Jockeys' Fund
    was disbursed to pay temporarily disabled riders, including the
    Delaware and California jockey colonies, and how the funds were
    reimbursed. Mr. Fiss advised me that when those programs paid in, they
    would reimburse the Disabled Jockeys' Fund. The real problem here is
    that the fund is a charity and was set up for the special needs
    (electric bills, house payments, auto repair bills, doctors' bills,
    etc.) for the disabled riders, not to make the temporary disability
    payments for the guild.

    Expulsion from the Guild
        In October 2004, a friend informed me that he had been talking to
    the Labor Department and I would be receiving a call from a woman
    investigator. Two days later, reporter Liz Mullen called. It did not
    register exactly who she said she was, so when she asked a question I
    answered it to the best of my knowledge. Ms. Mullen's questions were
    all in reference to the catastrophic policy and the Disabled Jockeys'
    Fund. Ms. Mullen asked if I was aware the catastrophic insurance had
    been dropped and when or if I had been notified. I explained to her
    that I was unaware until I heard about Gary Birzer. Liz asked me about
    the Fund and I gave her the full explanation. How I had spent months
    trying to find answers and the roadblocks I had encountered. She
    actually knew that most of the money was gone before I did. Liz went to
    the Internet to find out information and helped me to find out more
    disturbing facts. She showed me how to find the Guild's filings with
    the IRS and the Labor Department LM2 and LM30 forms. They were either
    not filed or were extremely late.
        Approximately one week after Ms. Mullen's article was published and
    another by Bill Christine from the LA Times I received an angry phone
    call from Dave Shepherd, our Vice Chairman. He said that I should not
    have aired anything to do with the Guild in any open forum. During our
    conversation, I informed him that as members of the Board of Directors
    we were not doing our fiduciary duties with the way things were being
    handled. In response, he informed me that I should resign because I had
    done tremendous damage to the Guild, and threatened that if I did not
    resign, ``there would be consequences.'' He would not elaborate on what
    that might be.
        Mr. Shepherd called about a week later reiterating our first
    conversation and shortly afterwards, I began to receive calls from
    jockeys that I hardly knew asking me to resign or they would throw me
    out of the Guild. The callers included Mr. Shepherd and jockeys G.R.
    Carter, Brian Peck and Glenn Murphy, who I learned were instructed to
    call by John Beech. The calls even came in at night, when the callers
    knew I was away and riding at the Meadowlands. Instead of talking to
    me, they harassed my wife, hoping she could get me to resign.
        On November 3, 2004, I attended a three-way call with Tomey Swan
    and Darrell Haire. They told me how I damaged the Guild and were
    hurting the membership. Again, both Tomey and Darrell told me that it
    would be in the best interests of the Guild for me to QUIETLY resign so
    that everything that was happening would QUIETLY go away.
        On Sunday, November 7, 2004, a phone conference was scheduled in
    which I was on the agenda for expulsion. The Guild failed to charge me
    or notify me of any charges before the conference. During the
    conference they accused me of having my own agenda, and that I was
    involved with Robert Colton and his issues with the Guild. They read
    seven reasons for removing me from my senate and Executive Board seat.
    Dave Shepherd had the gall to blame me for the walkout at Churchill
    Downs on the same day.
        Without allowing me to defend myself, they voted me off the Board.
    Ms. Swan informed me I was no longer to call the Guild office and
    harass them for the information that I had been seeking for the past 22
    months. A recording of this call has been circulated and played on ``At
    The Races and Beyond,'' a radio program heard on Sirius Satellite
    Radio.
        On December 5, 2004, at the Guild's national assembly, which I
    attended only briefly before being totally expelled from the
    organization, I sat in the seat designated for New Jersey's Monmouth
    Park and Meadowlands racetrack delegate. After a very short time, the
    Executive Board and Senate went to what they call a breakaway session.
    After approximately 45 minutes, all the members returned to the main
    room, at which time Kent Desormeaux informed me that the Board had met
    with its attorneys and the vote for my expulsion was unanimous. When I
    asked Kent for the reasons, he said that Dr. Gertmenian had told the
    Board that they had spent over $ 5,000 to send Albert Fiss to explain
    the Fund to me. Another lie!
        Mr. Fiss did come over to the Meadowlands racetrack to see me. Upon
    his visit he failed to bring any material or information concerning the
    Fund. Mr. Fiss was actually scheduled to be in New York for a committee
    meeting on workmen's compensation. Coming to see me was a side trip.

    May 2003 Dr. Gertmenian's Matrix Contract
        After returning home from the March 2003 Board meeting in
    California, Ms. Swan contacted me and asked if I knew a contract
    attorney that could help us with Dr. Gertmenian's Matrix contract. I
    indicated that I knew attorneys on the East Coast but felt that it was
    a conflict of interest to consider someone that was involved in the
    horseracing industry. Therefore, I contacted a firm out of Denver who
    highly recommended Steven Blitz. We worked with Steve for approximately
    three weeks, putting together a draft contract for Dr. Gertmenian. The
    board was to have a conference call on a Wednesday to go over the
    draft. Ms. Swan set up a conference call prior to the scheduled Board
    call with Dr. Gertmenian and the Board and advised me this would just
    be a question and answer call. I advised it was just a draft and it was
    not ready to be presented to Dr. Gertmenian at this time and she
    responded that she understood. At approximately 11:20 p.m. Eastern time
    I was ordered by Tomey Swan to fax the draft. Once Dr. Gertmenian and
    Mr. Fiss read over it they decided they could handle our terms. Around
    12:30 AM Eastern time, Dave Shepherd made the motion to vote to accept
    the contract. It was seconded and a vote was taken passing the new
    contract.
        After Dr. Gertmenian had made phone calls that day to Board members
    threatening to walk away, it came down to a 5--4 vote to give him what
    he wanted. On May 15, 2003, stressed by the Board's inability to make
    what I felt was the right decision and make Dr. Gertmenian and Matrix
    more accountable, I submitted my resignation (see Attachment). In the
    letter I pointed out the lack of legal documentation, bank statements,
    credit card receipts, the negligence in keeping track of the riders'
    insurance premiums (many riders were and most likely still are in
    error).
        Other Board members reassured me that we would hold Dr. Gertmenian
    accountable and persuaded me to stay on. In December 2003, Dr.
    Gertmenian again wanted to renegotiate his contract, only this time he
    failed to have a notice sent out so all Board members could attend.
    After all he only needed 5 votes.

    Delaware Health Insurance
        As a guild member, I always carried the Guild's health insurance
    program and in 2002, I rode primarily at Delaware Park becoming
    eligible for Delaware's subsidized premiums. It now only cost me
    approximately $280.00 a month. In 2003, I did not meet the eligibility
    to retain the subsidized cost and decided since my wife covered the
    family through her employment with United Airlines we would cancel it
    with the Guild. During the 2004 racing season at Delaware Park I rode
    enough horses to again become eligible for the program. On or around
    November 3 I rode my 50th horse, completing eligibility requirements.
    During the last week of Delaware racing, I contacted the Guild office
    and informed Eric South that I would like to start receiving the
    insurance again from the Delaware fund. At that time, he faxed all the
    required forms to my home, which I immediately completed and returned
    to the Guild's office. Mr. South advised me that if all the
    documentation was in place, this policy would take effect December 1,
    2004.
        I again spoke with Eric South in early December at the Guild's
    Annual Assembly in Texas to see what the status with my insurance was
    and he stated everything was in place. Around December 20, 2004, I
    contacted Larry Saumell, the Guild representative, and asked if he
    would check into this for me because I had not received any information
    that this policy was in effect. On or about December 29, my wife and I
    spoke with Larry Saumell on separate calls. He advised us it was under
    review and I needed to speak with Albert Fiss. I called the Guild
    office that same day and spoke with Eric South who also informed me it
    was under review and I needed to speak with Albert Fiss. I left a
    message on Albert's cell phone that I needed to speak with him
    regarding my insurance. I did not receive a return phone call. On
    January 3, 2005, I spoke with Earlie Fires about this matter and he
    advised me that because of my pending lawsuit with the Jockeys' Guild,
    Mr. Fiss refused to talk to me. My wife Penny has spent time attending
    Delaware Racing Commission Meetings and also the Delaware Health and
    Welfare Meetings. The Guild was advised on many occasions to get our
    health insurance in place. One request from the Guild by its CFO Gevork
    Asatryan was that that all five of our family members needed physicals
    and that a payment for two months in advance needed to be made to get
    our family active. On August 9, 2005, all required information was sent
    overnight to the Guild office. After my wife called to see when we
    would receive our insurance cards, she was advised by Lisa Haley that
    Delaware had not paid them in two years and they were not adding any
    new members to the policy. Lisa also advised that Albert Fiss would
    call us, but he never has. Gevork Asatryan later contradicted what Ms.
    Haley had said about Delaware not paying, saying that she must have
    been mistaken. We have not yet received our check back, or a letter
    explaining why we are being denied our health insurance benefits. Mr.
    Asatryan did advise verbally that we would not be getting our insurance
    through the Guild. The administrator of the Delaware Racing Commission,
    John F. Wayne, has been very helpful in trying to help my family get
    back on the health insurance plan.

    Closing Statement
        It was not easy this year, but I know what I have done is the right
    thing. The problems I have experienced with this Guild management and
    rapport they now have with the thoroughbred industry has only
    strengthened my belief that this man and his team that are so much
    smarter than I am are incapable of running this organization like it
    should be run. Dr. Gertmenian took it upon himself to accept disability
    insurance from the jockeys while he pulled the jockeys' security
    blanket right from beneath them. If that is not bad enough, he did not
    properly inform us that it was gone. In addition, they have been
    unwilling to share with me the financial records that I have every
    right too see and that the law required me to obtain, and they have
    also criticized me and tarnished my reputation for doing so. And to top
    it off they have essentially made it impossible for me to enjoy the
    health insurance benefits I deserve as a Delaware jockey.
        Mr. Chairman, thank you for providing me with the opportunity to
    address the Subcommittee. Please accept my full written testimony to
    the Congressional record.
                                   Attachment
                                                           May 15, 2003
    Mr. Robbie Davis
    70 St. Paul's Place
    Hempstead, NY 11550
        Dear Robbie, With much regret this letter is to inform you that I
    am resigning my position, as treasurer on the Executive Board from the
    Jockeys' Guild. I do not feel that I can represent the members of this
    organization in a professional manner. There are several reasons that I
    am turning in this resignation. The responsibility of the treasurer is
    to account for all financial records including past records, current
    funds, accounts receivable and accounts payable. After requests were
    made to the Jockeys' Guild/ Matrix Office I was unable to acquire bank
    statements and other records applicable to be able to fulfill my
    responsibilities as treasurer. This is very frustrating when you are
    appointed a position and cannot attain the information needed to
    fulfill my duties. I will not be liable for incorrect accounting
    procedures.

    (A) The lack of legal documents. (stated it will take 60 to 90 days to
            acquire them)
    (B) The lack of logs for travel and expenses. (Stated to me these are
            very honorable people) this still should have been done.
    (C) The negligence in not keeping track of the rider's insurance
            premiums. (many riders are now in arrears which could cost the
            membership thousands of dollars)
        These are just a few of many problems I feel the Guild is facing
    for not keeping and tracking the accounts. As pertaining to the
    Delaware and California Trust Agreements it is required under the
    agreement the Guild shall;

    (A) Maintain at all times as a tax-exempt entity. The Trust shall
            appoint a Certified Public Accountant for the purpose of
            providing an annual audit to TOC and the California Horse
            Racing Board of all moneys received and expended by the trust.
            The TOC and the California Horse Racing Board shall have the
            right upon reasonable notice to the trust to review the books
            and records of the Trust at any time. (Stated it does not
            matter it is mandated, it cannot be taken away.)
    (B) Delaware--I did not receive a Vine Street Trust Agreement
            pertaining to this fund.
        This is just a few reasons I have for resigning. After being told,
    many times we have nothing to worry about. I feel we have many reasons
    to worry. Ignorance is not a defense! A request by our chairman Tomey
    Swan was made for me to seek outside Legal Council concerning the new
    agreement proposed to us in March by Dr. Gertmenian/Matrix. There were
    many Attorneys on the East Coast that I knew but thought it was a
    conflict of interest to be connected with horse racing therefore I
    contacted a firm out of Denver Colorado who came highly recommended.
    Steven Blitz a specialized contract attorney that presently sits on two
    Executive Boards. He made a draft and a memo stating that there were
    many ambiguities and wished to discuss this with the Board. Mr. Blitz
    was going out of town so we scheduled a conference call for Tuesday May
    13 at 7pm. It was discussed with Tomey and Dave to defer the conference
    call with Dr. Gertmenian until we had reviewed the ambiguities on the
    conference call that was scheduled with Mr. Blitz. I was advised that
    we should continue with the call on Monday night and it would just be a
    questions and answers session, so I had no problem being on this call.
    After reviewing my fax records at 11:19pm Eastern Time the draft was
    faxed to Dr. Gertmenian, with in minutes the draft was passed. The
    $3000 dollars that was spent on council was a waste of the membership's
    money since the Board failed to follow through.
        This organization has struggled over the past few years. One would
    have thought some of the lessons learned would have been a guiding
    factor in the decision the Board recently made.
                                                     Sincerely,
                                                          Edwin L. King
    cc: Tomey Swan; Ray Sibille; Deirdre Panas; Jockeys' Guild Inc.; Kent
    Desormeaux; Larry Reynolds; Dave Shepherd; and Abad Cabassa

        Mr. Whitfield. Mr. King, thank you.
        At this time I recognize Mr. Donahue for his opening
    statement.

                        TESTIMONY OF GARY DONAHUE

        Mr. Donahue. Thank you, Mr. Chairman, for an opportunity to
    be here. I'd like to start off that I became a jockey in 1980.
    I was a Guild representative in 1982. I also competed in races
    against my father. My father was a jockey for 25 years.
        I rode for 7 years until I was injured March 1, 1986. When
    I first got injured, at the time the hospital on-track
    insurance was $50,000 in 1986. Any time after the $50,000 was
    absorbed when I got injured, John Giovanni and the Jockeys'
    Guild took care of all the medical bills, everything that was
    left over from my injury. Whenever I needed to speak to John,
    he was always there for me.
        When I was a kid growing up, John--I remember my father had
    concerns about the financials or anything of the matter with
    the Guild, John was always there. Nick Jemas always answered
    all the questions whenever my father wanted to know. When--
    after I got injured, there was a Roger Van Hoosier who oversaw
    the Disabled Riders Fund, as far as he was like a disabled
    liaison. He did a very good job when John was national manager,
    and in 2001 when the new management took over, that's when I
    was asked to oversee the Disabled Riders Fund, to become
    cochairperson.
        One of my--some of my duties were to respond to letters, e-
    mails and phone calls from permanently disabled riders, not
    temporary riders at all. The questions could vary from needing
    wheelchair, medical supplies, to having the bills taken care
    of, car repair, home repair, et cetera. If someone needed
    durable medical equipment, I would inquire around the country
    to get the best prices possible to help save the disabled
    riders some money, of course, but also to get the proper
    equipment they needed. I would then contact the Jockeys' Guild
    as cochairperson, Jamie Hall. She would relate it to Albert
    Fiss and Wayne Gertmenian. If they were to approve the funds,
    they would then allocate it from the Disabled Riders Fund. This
    is the same fund John Giovanni started in 1990 with $100 of his
    own money. In 2001, the amount in that fund grew to $l.3
    million. That money almost doubled every year from 1997 to
    2001, which was very good.
        That all came to a halt when John Giovanni was taken out of
    the Guild. I became concerned after I learned that the money in
    that account would be gone at the end of 2004. I found out
    about this on line by reviewing public records, the 2003
    financial report. This statement on the form that Wayne
    Gertmenian signed that the fund would no longer exist at the
    end of 2004 was very disturbing when I read this. I was never
    told this; I had to read it on line.
        After this, month after month of asking the Guild to send
    me records of how much was in that account. As cochairperson I
    needed to know the state of the account, how much was being
    spent and how much was coming in. I also learned that the fund
    was being used for temporary disabled riders. Now, I know in
    the past when John was national manager he never used that
    money for temporary disabled riders whatsoever. That fund was
    set up, was born to help permanently disabled riders, and
    that's it, for special needs.
        For instance, in my situation I became paralyzed from a
    horseracing accident. I was permanently disabled, although I
    was considered temporary for the 104 weeks by the Jockeys'
    Guild's standards. Although John knew that I had a permanent
    injury, that I would never walk again or ride again, I would
    receive benefits from that Disabled Riders Fund that was
    established. In the situation like mine, John knew that was the
    case, so I was deemed temporary; then I became permanent. John
    used the money from the Disabled Riders Fund to help me with my
    durable medical equipment, such as wheelchairs and different
    devices to help me walk with braces, so forth, to have a better
    productive life. He would then do that with other critically
    injured jockeys. But for jockeys that broke a collar bone or
    arm or sustained a minor injury, the money for the temporary
    riders would come from another account.
        I asked Wayne Gertmenian and Albert Fiss many times why
    they were using money from the Disabled Riders Fund to help
    temporary disabled jockeys. He told me they voted to use that
    for temporary disabled riders. He gave me four names of jockeys
    on the Board that voted for this change: Mr. McCarron, Mike
    McCarthy, Robert Colton and Ken Desormeaux. I spoke to all four
    of them the evening that I was told this, and I ended up
    talking to Mr. McCarthy the next day, and all four related to
    me they don't remember that vote ever being taken.
        I was also told by Albert Fiss and Wayne Gertmenian I
    should not be concerned with this matter, so from then on I
    started to gather my own information by reviewing form LM-2
    Labor Organization Annual Reports 2001 through 2003. On those
    forms I was able to review what the Guild was reporting for
    expenses. In--excuse me, in the LM-2 reports I saw expenses on
    an incline, not a little bit, but a lot. That's when I started
    asking Gertmenian and Fiss about different expenses. As a Guild
    member I have every right to ask any questions I have about
    finances, whether you're a disabled or active jockey. Once
    again I was told I should not be concerned about these matters.
        I do not know what ``additional supporting services'' and
    ``promotion of racing'' are. I viewed these on one of the
    financial reports. Because so many--there was hundreds of
    thousands of dollars of expenses being paid by the jockey going
    out for these additional supporting services and promotional
    racing. Any time during John Giovanni's tenure, if a jockey
    would have a question about the Guild finances, they would do
    whatever they could to comply with the request.
        Now in 2001 I reviewed the LM-2 reports. Supporting
    services and promotional racing in the amounts of $610,000 went
    out. In 2002, $843,000 was spent, and in 2003, $1,182,000 was
    spent for supporting services and promotional racing. Once
    again I asked where this money is going, who is it being paid
    to. Once again, none of my concern. I should not be concerned
    with this matter. Well, I should be because it's our money, and
    where is this money going?
        I also noticed there was a steep incline in office expenses
    and administrative expenses in the amount of $176,000 in 2001,
    $434,000 in 2002, and it went down slightly in 2003. So far
    from 2001 and 2003, these expenses were alarming, in the amount
    of $2,635,000 for additional supporting services and
    promotional racing, $854,000 for office and administrative
    expenses.
        I was not receiving any help from the Guild as to why these
    expenses have jumped from 2001 to 2003, so I decided to become
    involved in the lawsuit against the Jockeys' Guild concerning
    these expenses and the downfall of the Disabled Riders Fund.
    After the Guild learned I joined the lawsuit against them, I
    was fired as cochairman of the Disabled Riders Funds.
    Ironically a month prior to being fired, I was told by Tomey
    Swan and Albert Fiss that I was doing a great job and that he
    had saved the Disabled Riders Fund and the Guild thousands of
    dollars.
        In closing, I would like to say that as a jockey or a
    disabled jockey, I have every right to ask about the expense of
    the Jockeys' Guild management. They work for the jockeys. The
    Jockeys' Guild management has a fiduciary duty to manage our
    money. It's not theirs.
        Thank you very much, Mr. Chairman.
        Mr. Whitfield. Thank you, Mr. Donahue.
        Before I ask Tomey-Jean Swan for her opening statement, I
    just want to be sure, because you were by video, that you are
    testifying under oath. I did swear you in; is that correct?
        Ms. Swan. Yes, sir, you did.
        Mr. Whitfield. I just want to make sure, do you have legal
    counsel with you or not?
        Ms. Swan. No, I do not.
        Mr. Whitfield. Then you're recognized for your 5-minute
    opening statement.

                      TESTIMONY OF TOMEY-JEAN SWAN

        Ms. Swan. Mr. Chairman and members of the committee, my
    name is Tomey-Jean Swan. I've been a jockey since 1969, when
    the law was actually changed so that women could be allowed to
    ride. It was 3 weeks ago that my doctor told me I would not
    ride again. That is a result of on-track injuries.
        There's no need for me to reiterate what has been stated by
    most of you on the panel, and that is the urgency to obtain
    adequate catastrophic insurance for jockeys. The one thing I
    sincerely believe is that it is the responsibility of the
    racetracks. For racetracks to say that jockeys need to supply
    their own is unconscionable. They know that many, many riders
    make only minimum wage, and to expect them to even to pay for
    insurance when tracks are making millions off our image
    simulcast around the world is ridiculous. Understand that
    owners and trainers are in the same boat. There's a small
    percentage that make a lot of money, but most of them are just
    getting by and can't afford to stay in the business if they are
    hit with these high costs.
        As far as Dr. G and his team goes, look at our membership
    numbers. We are happy with our leadership. We finally have
    someone who knows how to stand up for us. He has in place
    attorneys around the country, most pro bono, who can help us
    when we have problems with the racetracks. He got our health
    insurance for us and our families back in place.
        Our problem is with the callousness of the racetracks, not
    our leadership. Dr. G and his team came up with a list of
    safety issues that needed to be in place at every racetrack.
    These are common-sense, but very necessary things to help
    ensure our safety, and yet we fight tracks at every turn trying
    to get them in place.
        The safety rail is one issue. It has been proven time and
    again not only to save jockeys serious injury, but our partner,
    the equine athlete, as well. And yet many tracks across the
    Nation refuse to put it into place until there is a life lost
    or an arm or a leg, then a lawsuit. Then they put it in.
        I can speak from experience on that. At a track at
    Farmington, New Mexico, where I had begged and pleaded for a
    safety rail for years, it took my horse getting speared and
    dying on their archaic rail and me being on crutches and then a
    wheelchair for 2\1/2\ years, subsequently winning a lawsuit,
    before they installed the safety rail.
        Most racetracks across the country do not care about their
    equine or their human athletes, or they would welcome any
    benefits to safety. They do not have a conscience on their own,
    and so we need your help to help make them take on this
    responsibility. Thank you.
        [The prepared statement of Tomey-Jean Swan follows:]

                     Prepared Statement of Tomey Jean Swan

        Hello, my name is Tomey Jean Swan. I was fortunate enough to have
    grown up in a family that revolved around horse racing. My father was
    one of the leading Quarter Horse trainers in the nation and taught me a
    love and respect for this incredible specimen of speed, the racehorse.
    He used me as his jockey from an early age, but of course, only on
    backcountry roads or bush tracks against friends and neighbors, as it
    was against the law for a woman to be a professional jockey. I would
    get his horses ready to go to the real races, the pari-mutuels and then
    a male counterpart would take over the reins. It wasn't until my senior
    year in high school in 1969 that this archaic law was changed and I
    began my official career in California. I was the first woman to win at
    every QH meet in the state and did lots of promotional horse racing
    spots with the then-governor, Ronald Reagan. Since that time, I have
    been the leading female QH jockey in the nation for most of those 35
    years. I joined the Jockeys' Guild around 1975 and have been an active
    member ever since. I was a Guild representative at the various tracks
    at which I rode and was the first female delegate for the Guild. I then
    was voted the Vice Chairman, beating out Kent Desormeaux, becoming the
    first female on the board. In 2001, I was voted the Chairman of the
    Board of the Jockeys' Guild and became the first female and more
    importantly to me, the first Quarter Horse jockey to hold this highest
    of honors. In 2004, I was named Co-Vice Chairman of the Board with John
    Velasquez and currently hold that position.
        Upon receiving your invitation, I was very disappointed, if not
    surprised, to see this hearing titled, ``Thoroughbred Horse Racing
    Jockeys . . .''. Just as a point of fact in 2004,

    a. there were 8799 Quarter Horse races run in 25 states
    b. QH purse money was almost $94 million
    c. pari-mutuel handle for QH races was over $324 million
    d. 950 jockeys rode Quarter Horses, there were 5530 QH breeders and
            7395 owners of QH
        As you can see, Quarter Horse racing is a vital part of the overall
    racing industry.
        Allow me to take this opportunity to explain to you the
    unbelievable risks involved in this sport. Time magazine did an article
    on athletes years ago, that listed being a jockey as the #1 most
    dangerous athletic profession. Speaking personally, I have had 14 knee
    surgeries and now a total knee replacement, a punctured and collapsed
    lung, broken ribs, toes, wrist, femur, knee and shoulder, hospitalized
    for eye injuries from rocks busting through my goggles and uncountable
    concussions and I have been one of the lucky ones, because I am not
    paralyzed or dead. The old adage around the jock's room is, ``it's not
    if you are going to hurt, it is how badly are you going to be hurt''.
    With today's rising hospital costs, it is unconscionable that the
    racetracks only offer $100,000 accident insurance for their jockey
    participants. And keep in mind that during all the injuries we suffer,
    we are out of work while we are healing. Only a few states offer us any
    kind of workman's comp.
        You would assume, that over the years, things would get better for
    the jockeys; but that is not the case. The only light we have seen, has
    been since Dr. G and The Matrix team have taken over the reins of our
    organization. Before the ``G'' era, we had dwindled down to a paltry
    500 or 600 jockeys and practically no respect from the racetracks at
    which we participated. We lost our health insurance for ourselves and
    our families and saw our staff members receiving good pensions and the
    jockeys receiving nothing. As soon as we made the change to the ``G
    Team'' we immediately regained our health insurance and steadily have
    regained our members and have reached an all time high. We now have at
    our disposal, a wonderful and talented staff of experts. I have used
    them myself to help intercede at tracks that were being discriminatory
    against us. Pro bono attorneys hopped on a plane and were there the
    next day to set things right. We are finally realizing that even though
    we are locked in a jock's room, we still have the constitutional rights
    of any other American citizen. Respecting jockey's constitutional
    rights, has never been the intention of ANY racetrack in this country.
    And the sooner this committee realizes that, the sooner you will
    realize the plight of the American jockey. Dr. G has given us a long
    term negotiating plan that will enable us to be a respected and
    protected American athlete. All jockeys are working toward this goal
    and that is why I believe Churchill Downs is so afraid of Dr. G and
    what he can accomplish for jockeys nationwide. They want to retain the
    foot on our throats that they have had since the beginning of racing.
    Would you expect any pro athlete, such as Peyton Manning or Brett Favre
    to set food on the field and be told that their insurance would have to
    come from their player's union dues or out of their own pockets? I can
    assure you, there would be no Super Bowl.
        Our problem does not lie with our organization, our problem lies
    with the racetracks, and we need your help to make them step up to the
    plate and protect their athletes.
        Thank you for your time and consideration.

        Mr. Whitfield. Ms. Swan, thank you very much for that
    testimony.
        And at this time, Mr. Shepherd, you're recognized for your
    opening statement.

                       TESTIMONY OF DAVID SHEPHERD

        Mr. Shepherd. Thank you, sir. It's an honor to be here. My
    name is Dave Shepherd. I've been a professional jockey since
    1975, 30 years. Never been a star. I think I have gained the
    respect of my peers. The most important thing to my life has
    been being a dad, and my family comes first. My wife is a
    third-generation trainer. My son is 19 and rides in Kentucky.
    I've got a 14-year-old son working horses already and will be a
    jockey, and a 7-year old daughter that I don't think we can
    keep her, she's rodeoing and will be a jockey also.
        That's what brings me to where we're at. With the Birzers,
    when all that happened, Gary is like family to me, and it hurt.
    There's a lot of tears on my part as well as his. He's family.
    And we did everything we could to help.
        I've got to back up a little bit. I don't think we should
    pay for our on-track insurance. The history of what's happened
    over the years, the callousness and the way that Gary has been,
    he told you how it happened from the racetracks, that's a true
    story. That is how it is. We're treated--we're expendable. To
    the industry we're expendable. If one of us gets killed, two
    more come. They don't really care about us as persons.
        When Chris started bringing Dr. G in, I was against that
    for the problems that would cause and subsequently to where
    nobody would believe anything that anybody said, that we lost
    all respect in the industry. When Dr. G came into it, we was
    close to bankruptcy. Talking about all the millions of dollars
    that were supposed to be there, talking about the $2.2 million,
    last year they billed $2.5 and received $2.2. We're not
    receiving it.
        We give up our media rights, which that's 85 percent of the
    industry right now; we give up our media rights in exchange for
    what? Mountaineer Park has never given the riders a nickel.
    It's one of the worst tracks in the Nation. You have had four
    riders that have been permanently disabled there, five riders
    killed there, and they're still callous. They don't care about
    us.
        We all thought we had insurance from the racetracks any
    time we were injured, any time we were hurt. It wasn't until
    Stacey Burden went down in Arizona and got hurt, and
    consequently from that accident there that's where we lost our
    insurance. That was one of the major proponents of how we lost
    our insurance.
        Mr. Whitfield. What year was that?
        Mr. Shepherd. 2000. That was the big one that John Giovanni
    talked about that cost so much. Now because of that they had to
    make a choice, like you said, between the catastrophic
    insurance and health insurance, and the health insurance got
    the boot. Well, by the time Dr. G and them come in, the noise
    around the country from everybody I was hearing, everything
    from everybody I was around was they wanted the health
    insurance, they wanted the family insurance back. And when Dr.
    G come in, he was able to find some health insurance that we
    could get, which we all had trouble. There's a bunch of us that
    were uninsurable because of the injuries that we'd had. I've
    been riding 30 years and been in multiple, multiple accidents,
    probably 13. Of that, I've got a lot of metal in my back and my
    leg, and I've had a lot of serious injuries. But the point
    being, everybody around me was more interested in the health
    insurance.
        Gary Birzer bought up Dean Kuntz. If we had kept the
    catastrophic insurance instead of the health insurance, because
    we had to make a choice between one or the other--I wasn't on
    the board, I was just a member that was interested because my
    family, my kids were going to--it's their future. So when the
    choice was made for health insurance, Dean Kuntz was one of
    them that had they not got the health insurance, at 18 months
    the COBRA was up, Dean Kuntz wouldn't have had health
    insurance, and when he died last year, he probably would have
    died in a State institute or something because there wasn't
    anything there, there was not enough money. There is not enough
    money supplied to our organization in any way, shape or form to
    support the insurance needs, be it catastrophic or health.
        The Guild's role needed to change because the industry was
    so callous toward us. Everybody on the panel and everybody will
    testify to the fact that the tracks have no regard for human
    life or equine life; it's all about the dollar. The role had to
    change somewhere along the line. We had to force the tracks to
    come up and stand up to the plate and pick up their part of it.
        It was brought up earlier that why don't the jockeys not
    ride. Well, when we go around the Nation to stand up and not
    ride, we were told we would be sued for every dollar it cost.
    The attorney general in Florida informed the Jockeys' Guild if
    we was to not ride, because we were not recognized by the NLRB
    we should be sued for every nickel that it cost the industry.
    The industry has used this leverage against us time and time
    again, so we were unable to stand up for our rights. Now,
    unless we make the change--the industry is at a crossroads. If
    we don't change right now and force the change, we're the only
    organization that's strong enough to stand up to the
    racetracks. Thirty-eight racing jurisdictions, there's probably
    2 to 3 horsemen associations in every State, we're the only one
    that has a chance to help the horsemen as a general--as one
    lump some. The horsemen as a whole is who we're trying to help.
    Until we stand up and force them to change, it never will.
        There's a lot of little things coming from my heart, and
    I'm not reading a piece of paper. I'll answer any questions you
    have later. I just know that our leadership that we have, most
    of the allegations made will be proven wrong in litigation. He
    is looking out for our best interests, and he's the first
    person that's come in, and the reason he's caught such fire
    from the industry is because he's the first person that stood
    up and tried to make them accountable for the way they were
    treating all horsemen. And any time you try and bring about
    change, like chess or war or anything, you go after the
    general. You don't like--if you want to beat the opposing army,
    you get after their general. That's the same way--that's why
    they're after him.
        I believe John Giovanni, the accusations made against him
    were all false. I believe that with all my heart. I stood
    against the change there. But like some of them, I couldn't
    walk away because the next generation, and I'll take whatever
    heat comes because of it. When the Birzers got hurt, that was a
    little brother.
        [The prepared statement of David Shepherd follows:]

                      Prepared Statement of David Shepherd

        After a catastrophic injury a rider's life is changed forever.
    However everyday life goes on. Home and car payments due every month.
    Children still need to eat. How do you provide for your family now
    without an income? Then come all the medical bills and the collection
    agencies, threatening you for their money. Then you need another
    specialist, but told there is no more insurance. That was used up in
    just a few days. The race track promised they would help, but then
    turned there back on you. You realize again, in a multi-billion dollar
    industry you are expendable, a piece of meat, dime a dozen. When we get
    hurt, its out of sight, out of mind. Please don't bring us out, because
    that is the side of the business they don't want the public to see.
    Things are going to change. You can blame all the problems on Dr. G.
    Call him a thief and a lier who is leading all those poor fools astray,
    al you want but we will not lay down and do nothing while we are being
    abused any more. Thing will change. Nothing changes but the changes!
        My name is David Reed Shepherd, I have been a professional Jockey
    since 1975. I won the first I rode on a recognized (Para mutual) race
    track, and joined the Guild that day. In 30 years as an active guild
    member I have been threatened and pressured into riding under such
    extreme conditions as, wind chills of -50 degrees below zero, Frozen
    tracks, extreme heat, wet, slick tracks, conditions unsafe for horse or
    rider. I've spent about 13 years off with multiple injuries (broken
    back 3 times, neck broke in 3 places, crushed femur &broken hip, both
    collar bones, shoulder surgery, and many more broken bones and
    injuries). Try taking care of a family on $150 dollars a week. I came
    to the conclusion years ago, that we were expendable, a piece of meat,
    dime a dozen, kill one two more will take their place. Actions have
    proven me right, time and time again. As a father of one rider (Justin
    19 riding in KY.), and two more who will probably ride (Dusty 14
    already galloping and breezing race horses, and Bucki 7, barrel racing,
    and every other rodeo event she can get in for her age), I could not
    set idly by and watch them be subjected to the same mistreatment I had
    been subjected to.
        In 2000, knowing my oldest son would start riding races soon I knew
    I had to get more involved on a national level. At that assembly in
    Vegas, I saw the beginnings of a hostile takeover taking place, and I
    spoke out against it. I felt that McCarron, Colton, and McCarthy, had
    their own agenda. Over the next six months I spent a lot of time
    arguing that their approach would be counter productive, and give the
    perception of weakness. We should fix our problems internally. A
    private internal repair, would be far less damaging than a public
    hostile takeover. A opinion I voiced over and over again, to Tomey Swan
    and anyone else I could get to listen. There were many, many phone
    calls to Chris McCarron, and Eddie King. I was unable to stop what I
    believed was not in the best interest of the majority of the jockeys in
    the nation. Unfortunately, I was right. At the next negotiations for a
    new TRA contract, they would not even negotiate in good faith.
        We had always been told that our medical insurance would not cover
    anything on track. So when we lost it, in the spring of 2001 we could
    not figure out why? It was not till long after we lost our insurance
    that I realized why. In 2000 Stacy Burton was injured in Arizona on an
    unsafe racing surface, a terrible accident she was very fortunate to
    survive. The bills over $100,000 to $1,000,000 were paid out of our
    family heath insurance. No wonder we were not informed about sudden
    rise in our insurance rates. I had always been led to believe all the
    bills due to on track injuries were paid by the track insurance. If the
    racetracks had cared, even a little bit, they would not have let this
    happen. Where was all the concern when we lost our family insurance,
    due to an on the job injury? We were allowed to get on Cobra insurance,
    for 18 months, and then we would have none. When several riders tried
    to get other insurance, they found they either could not get any, or
    certain body parts would be excluded. There were many of us that were
    uninsurable! Where was the congressional inquiry into fact that that we
    had all lost our family health insurance due to a on the job injury?
    Again we were shown, nobody cares! In a multi-billion dollar industry,
    the humane athletes who risk their lives, were shown we were
    unimportant, expendable, not worth worrying about our personal
    problems.
        The band-aid, after we lost our insurance, was to up the temporary
    disability from $100 per week, to $200 per week. And buy a $1,000,000
    insurance policy for on track accidents. We didn't have enough money to
    keep our family health insurance, but we could afford almost half a
    million dollars for on track insurance. It made no sense to me. Why was
    I paying to work? But I still felt we should handle our problems
    internally. At this point in time I was only an active member. No vote,
    But I ask a lot of questions, and I voiced my opinion. I don't know
    what was said to the board members, all I know is how it was presented
    to me. Chris's big thing was that no ex-jockey was smart enough to run
    the guild. We need someone from the out side to run it for us. We
    cannot afford Dr. G and his group, but they will come in and help us
    for six months, and then stay on as advisers. My view was ok, but then
    what? You don't tear down a building without a blueprint to rebuild. It
    will take someone three or four years to get a handle on this. When Dr.
    G and Matrix step aside who will run the guild then? The answer was
    always the same, ``well I don't know we will find some one.'' I am sure
    I know who that someone would have been. Then there would have been
    another character assassination, dragging us farther down, with no
    credibility at all. It took them till June, but they got John Giovanni
    Fired, and everyone else fired.
        When I got the phone call from David Moore about it, I was very
    angry and I started to call Chris. But I hung up, because I knew it
    would not help my children, and do more harm than good to say what I
    felt at that time. So I started putting my questions together, and
    gathering information, about how we could move forward. There had to be
    a way, to pick up the pieces and make it better for the next
    generation. I figured we had shot any chance for it happening during my
    career. Chris tried to get me to talk to Dr. G, but I refused. I was
    not buying into this. I was going to wait till we got to Austin, and
    take care of this face to face.
        December of 2001 at Austin, Texas. I had my guns loaded for bear,
    but I had always been taught to learn, keep your eyes and ears open and
    your mouth shut. So I would wait and see how they were going to play
    this out. By the lunch break on Monday, Tomey ask me why I wasn't
    asking questions, She knew I had a bunch. I told her Dr. G had answered
    them, He was saying the same thing I had been saying, not what Chris
    and Bobby were saying. I walked up, introduced myself, and told Dr. G,
    I was never so glad to be wrong about something in my life. Eddie King
    was not at the assembly, so I could not tell him that. I did tell Chris
    the same thing, though events in the future proved I was only wrong
    about Dr. Gs involvement. I was getting poked in the back with a pencil
    to make sure I stood up and volunteered for a senator though I did not
    need the push. Things were going to change, and if I did nothing, I had
    no right to complain about the direction they went.
        Dr. G told us they could not find any theft by the old management
    even though Bobby Colton said he had the proof in black and white. But
    the hottest subject in Austin was health insurance for our families. We
    learned how we lost it (an on the job accident). We learned that we
    could not afford both family, and on the job insurance. I don't
    remember a single rider making an argument for on track insurance. The
    Pros and Cons of both were pointed out. But the overwhelming choice was
    family health care.
        If someone is walking through the grandstand, slips and gets hurt
    the racetrack will have at least $1,000,000 liability insurance. But if
    you are a jockey, who the people have come to see, you are only insured
    for $100,000 with a $50,000 life insurance policy. That says we care
    and appreciate you all over doesn't it! Dangerous enough to have an
    ambulance follow you, but we don't care enough to insure you properly.
    That is reality! Nowhere in the TRA contract does it say anything about
    them giving us money for insurance. It says in exchange for us giving
    up all our media rights, they will give us $100,000 of on track medical
    insurance, and $50,000 life insurance, and $200 per week temporary
    disability. There is a formula for deciding how much money they will
    give the guild. The contract is very detailed and nowhere in it is the
    money earmarked for insurance. Nowhere is it even implied that it
    should be used for insurance.
        I was not on the board at the time, so I don't have all the details
    but, I know that everyone I talked to wanted family help care back.
    There was a choice to make, a tough choice. But the right choice was
    made for the majority. In our occupation it is easy to lose track of
    everything going on around you. This was all the talk everywhere I went
    for a long time. But I can understand how there could have been a few
    riders that didn't know about it. That does not mean that they were not
    told, it does not mean they did not receive documentation. When you
    tune out everything except what you are riding that day, you become
    oblivious to the world around you. The day to day grind can get you
    into a rut so deep you cant see out.
        In the summer of 2002 I went down and broke my neck in three
    places, C-l in one place and C-2 in two places, They called it a
    hangman's and told me I was lucky to be alive. Within a couple months
    David Guillory, broke his neck, and Terry Houghton, sustained a serious
    head injury. We were still under contract that we agreed to the
    $100,000 insurance, so if we went over we were stuck for it. Less than
    2 months and 3 of us are seriously injured. Terry and I are family. My
    son rode his first race about then. Things had to change. The
    racetracks did not even care enough to talk to us about it. When
    talking to Dr. G, I was emphatic that we could not sign another
    contract agreeing to the $100,000 insurance. We discussed a lot of
    options but the only one that made since to me was. When the contract
    was over, anyone who went over would have to sue the race track for
    enough money to take care of everything, and make it worth going to all
    the trouble. If enough lawsuits were paid they might realize it would
    be cheaper to have us properly insured. That was the only way it looked
    like they would listen to us. Money will not give you back your career,
    but if it would get the race tracks to step up and do the right thing.
    And make the injured rider a little more comfortable, it was way better
    than what we had. David Guillory will never ride again. Terry Houghton
    was told he would probably never be able to drive a car again. He
    proved all the Dr.'s wrong and is back riding. Both of the went over
    the $100,000, but the guild was able to negotiate with the Dr.'s and
    keep the cost down where we could handle them. I was very fortunate,
    mine healed good, and I was back riding in 6 months. My point of view
    came from being one of the injured riders. $1,000,000 of insurance is
    minimum coverage. And the racetracks felt we should be satisfied with a
    sub minimum amount of $100,000. They sure wanted all of our media
    rights but they were not willing to give much in return. They wanted
    something for nothing.
        In March I received a phone call from Deidre Panas, that Dr. G was
    stealing from us. We needed to have an emergency board meeting and get
    rid of him. That was just exactly what Bobby Colton was saying about
    John Giovanni. On the conference call Bobby told us, he had proof in
    black and white, and we should vote him out right now. I said no way we
    have heard this song and dance about Giovanni and Nick Jemas We would
    have to all be there in person, and show us. Of all the accusations in
    the past, none of us had ever seen a shred of evidence, just a lot of
    questions and accusations. So we voted to meet in California. When we
    got there, financial statements and anything else we ask for was given
    to us. Except Bobby's proof in black and white. When we ask for it he
    rambled on for some time telling us our job and that we were incapable
    of doing it. Finally Tomey told him to quit telling us how stupid we
    were and show us his proof! He stomped out, without showing us
    anything. This same strategy had always worked but not this time. At
    that meeting I learned a lot about how we needed to operate as an
    organization. But more importantly, I began to understand the
    personalities and traits of the people I was dealing with. When the
    dust all settled, there was nothing to the accusations. Just another
    power play. I began to realize that it was not about the answers, but
    about the questions, if they ask the questions often enough, people
    would start to think there was something to them! I still haven't
    figured out what they hope to gain. If they are successful there will
    be nothing left to take over. The jockeys in America will have no
    credibility. The racetracks will go on screwing all horsemen, because
    they have broke the strongest horseman's organization, that could
    challenge their status quo. And generations of horsemen (we are
    horsemen), will pay. For what?????
        Shortly after that I was riding at Lone Star (Dallas). Deirdre was
    riding there also I talked to her trying to piece together the
    reasoning for what was going on. I tried to point out the down side of
    Bobby's actions. She told me that Dr. G was nothing but a school
    teacher. That Bobby was so dedicated to the guild she could dance
    around in front of him in a negligee, and he wouldn't even notice.
    Bobby should be the president of the guild. He was the only one capable
    of running the guild. I've known Bobby since 1976, and I told her I
    thought she was wrong.
        A few days later I went to Oklahoma, to work some horses that were
    going to Minnesota, where I was going for the summer. While I was home
    (Oklahoma), a friend ask me to do a favor and get on a horse for him. I
    did and it got on top of me. They had to life flight me to the
    hospital. I had crushed the femur just above the knee, and broke it off
    the ball at the hip. I am still recovering from that accident. If I
    quit I will never get any better than I am right now, and that is
    unacceptable. I was injured on a Friday, the next Friday I was on a
    plane to meet Dr. G in Delaware. Over the next several days we talked
    about a lot of things. Things he had been told by themselves, left a
    lot of holes. Things I had been told by themselves did the same. But
    when we put 2 and 2 together, it made quite a picture. All the
    Questions and accusations made more sense. We talked about everything
    from Business, to Personal, Religion, Politics, Feelings, Thoughts, the
    past, the future. We agreed, and disagreed. We would argue till we
    would both understand the others point of view. He showed me Washington
    DC. We left Delaware at 3:00AM so we could be at the Lincoln Memorial
    when the sun was coming up. Just as he had shown it to his children. I
    realized how much of our freedom we take for granted. Was reminded not
    just what our Constitution is, but why we have it.
        When I first met Gary Birzer, his brother introduced him as little
    brother, a name that stuck. His brother Alex is one of my best friends,
    our box's are right next to each others where ever we are riding.
    Little brothers as with son's are going to listen to others more than
    family. Gary would come to me. I loved to watch his eyes light up when
    he would figure out how to do what you were telling him. With great
    pleasure and pride I watched him becoming a good little race rider. All
    the feelings turned to pain when he was injured. I was on the phone to
    Alex all the time, I was determined that he not fall through the
    cracks. He was not the first rider injured with no contract. Chris
    Quinn, at Fairmont Park, He later died of complications. Remi Gunn, was
    injured at Ellis Park. She is paralyzed due to her injury. Still the
    Industry thumbed their nose at us, and refused to even talk to us. We
    were not ready to make a stand, but I insisted, we had a racetrack,
    making millions of dollars a week with the slots, that had never given
    a dime to the guild. Mountaineer is notorious for having extreme
    conditions, a terrible racing surface, and threatening and pressuring
    the riders to ride over it. Here was a very personable rider who
    everybody loved. I told Dr. G and Albert, here is our Alamo. We need to
    be there to help any way we can. I was on the phone to Alex almost
    daily. But I'm the one how should have been there. Dr. G and Albert
    could not prepared for the emotional storm they walked into. The more
    they tried to explain, the more they were misinterpreted, no matter
    what was said only the negative was heard. I was the one who should
    have been there. But I was struggling with the pain my own way, and was
    not where I should have been.
        When Tony D'Amico was injured in Kentucky, and the jockeys ask for
    help, management literally turned their backs on them, and then refused
    to meet with them. When I arrived at Churchill on Friday to visit my
    son, I was told all the riders had signed a petition not to take calls
    for the next entry day, if management would not talk to them. I advised
    against it for several reasons, but they were dead set. I could not
    argue with how they felt. How many times do you get screwed before you
    quit laying down and taking it. When it all went down my son ask me
    about it. I ask him if he signed the petition, he said yes, every
    single rider did. I told him, all we have is our word. You say what
    your going to do, then you do what you say your going to do. He did.
        Churchill management then showed there concern and compassion, by
    ruling off the riders that had shown the audacity, to challenge their
    compete authority. After all they had already informed us that the
    Constitution did not apply to horse racing. On Saturday night I was at
    Hoosier Park, the riders there were all upset that they were not
    included. I explained things to they and ask them please don't get
    involved. Let it be a Kentucky thing. The rest is history.
        At Gulfstream Park, Gary Boulanger was injured. When the riders
    called a meeting with management, management actually showed up. They
    upped the insurance to $500,000, temporarily. Gary was told that all
    his bills would be paid. Of course when it came to keeping their word
    to Gary, he was told NO!!
        Two very similer sets of circumstances. Two very different ways of
    handling them. Both show how very little regard management has for
    humane life!
        And then to top it all off they put there media machine to work.
    The best way to stop an uprising is to destroy the leadership. And they
    pulled out all the stop's to do it. And they had help from within our
    own ranks. They have gone to great lengths to find even the appearance
    of wrong doing. They have even gotten the federal government involved.
    In all the interviews, we have not been ask about health and welfare
    issues. I know what the title of the hearings are, but everything I've
    seen and heard Paint an entirely different picture.
        Please don't tell us you interested show us you are interested. A
    National work comp would be the least expensive and most efficient, way
    to help all horsemen.

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        Mr. Whitfield. Thank you, Mr. Shepherd. Your time has
    expired. Thank you very much for your testimony.
        Mr. Colton, you're recognized for 5 minutes.

                      TESTIMONY OF ROBERT E. COLTON

        Mr. Colton. Mr. Chairman, distinguished members of the
    committee, I am both pleased and ashamed to appear before you
    today. I'm ashamed for two reasons: That the collective talent
    within the horseracing industry cannot solve on-track injury
    insurance, and I played an instrumental role in placing Wayne
    Gertmenian as the Guild's current president. Concerning
    Gertmenian, I say this because in my view he's alienated the
    entire racing industry to the extent jockeys no longer have a
    respected representative to voice their concerns. However, I am
    grateful to the committee's attention to the issue of on-track
    insurance. I believe this hearing could someday lead toward
    creating a nationwide program that would include insurance for
    all backside workers as well as national uniform safety
    standards that would help to reduce injuries.
        Our sport is incredibly dangerous, and, like most jockeys,
    I have suffered numerous injuries. In my most traumatic
    incident, I was dropped in a race and trampled. Several bones
    were broken, including my neck. That left me temporarily
    paralyzed. It was brief, but nonetheless terrifying.
        In my written testimony I elaborate my opinions and
    included a simple proposal for resolution. The debate here is
    not that coverage is sorely needed, but rather who carries the
    physical responsibility. In this business, working with high-
    spirited race horses where anything can get you hurt, all the
    players have a joint responsibility to ensure no one is denied
    on-track benefits.
        Mr. Chairman, I have struggled writing this testimony
    covering my involvement with the Jockeys' Guild. How do I
    explain in 5 minutes what took place over a few years?
    Furthermore, this committee will hear narratives from many
    individuals who were involved with Gertmenian in different
    periods of time. To my recollection I can't recall the last
    time Gertmenian gave an accurate statement. The Guild is
    skilled at stonewalling. They often don't provide factual
    documents and instead dispute claims with the I said-you said
    spin. In my written testimony verifiable facts are provided.
        In regard to Gertmenian's empowerment, I was a part of a
    group of members who under his direction led the charge to
    replace longtime manager John Giovanni. Gertmenian orchestrated
    every detail of that takeover. My involvement with the takeover
    was the biggest mistake of my career, a mistake I deeply regret
    and have tried to rectify.
        The largest controversy surrounding this matter is why and
    by whom the $1 million on-track policy was canceled. In
    December 2001, at the Guild's annual assembly, Gertmenian
    stated the Guild was broke and a few months away from
    insolvency. He further stated because of the financial
    problems, his staff was attempting to renegotiate the on-track
    policy while shopping for another. Unfortunately, no minutes of
    the 2000 assembly were made transparent. There are, however,
    minutes of the 2003 assembly where he repeated his 2001 claim.
    He stated, quote, now by the time you hired us to come and take
    a look at these books, you were down to about $800,000, end
    quote. He further claimed the Guild had lost everything and was
    a very few months away from insolvency.
        To counter Gertmenian's claims are IRS returns filed for
    2001. In these filings the Guild and its disabled fund reported
    combined assets of $5 million. These were mostly cash and
    investments.
        To say the membership was deceived is an understatement.
    With regard to the on-track insurance policy, no vote was ever
    taken by the board, and no authority was ever granted to the
    Guild management to cancel that policy. Mr. Chairman, I was a
    member of the Board at the time. The jockeys of the Guild would
    never get rid of the most vital benefit of our membership.
    Instead, this decision was made by people who never put their
    lives in danger on a saddle on a racehorse.
        Despite Gertmenian's testimony in Federal litigation that
    the Board canceled the policy, many of the Board members have
    publicly disputed this. Some of them are here today. Regardless
    of any of Gertmenian's claims, no written notification was ever
    mailed to members informing them of the cancellation.
        In my written testimony I cite numerous problems within the
    Guild concerning their integrity and truthfulness. The
    following incident is just one such occurrence. After retiring
    from riding at the end of 2002, I worked briefly for
    Gertmenian. I was being trained to manage the Guild's finances.
    On audits I was preparing, Gertmenian instructed me to double-
    bill the States of California and Delaware for benefits which
    the Disabled Jockeys' Fund had already reimbursed the Guild
    for. I refused the billing, to believe unethical.
        Mr. Whitfield. I'm sorry, would you repeat that?
        Mr. Colton. I refused, believing the billing to be
    unethical. Gertmenian refuted my beliefs, informing me I was,
    quote, undereducated and did not understand innovative
    accounting, end quote.
        I alerted then-chairman Tomey Swan with my concerns, along
    with other problems recently discovered. Her response was to
    close the financials to all members including the Board with
    the exception of three handpicked by Gertmenian. Closing the
    financials violated the Guild's bylaws and the Department of
    Labor regulations.
        The unethical conduct I witnessed led me to quit my job in
    frustration. After my departure, the Guild immediately started
    a vicious campaign against me. I was eventually expelled from
    the Guild, falsely accused of theft and vandalism. Guild
    management stated on numerous occasions to both members and the
    public that criminal charges were filed against me. To this day
    no criminal charges have ever been filed against me. I did
    attempt to clear my name and sued for defamation.
    Unfortunately, I could not match the Guild's financial
    resources and had to settle.
        In closing, Mr. Chairman, I would like to make a public
    statement to Mr. John Giovanni. John, you and your staff did
    absolutely nothing wrong, and I am truly sorry for my part in
    your removal as national manager of the Jockeys' Guild.
        Mr. Chairman, I thank the committee for bringing attention
    to the lack of adequate on-track injury insurance. Labor
    organizations have a long history of internal strife. I would
    hope that these issues--I apologize here. I hope that the
    issues remain a part in your inquiry. The needed benefits for
    all backside workers should not be delayed nor denied because
    of what has taken place inside of the Jockeys' Guild. I welcome
    further questions.
        [The prepared statement of Robert E. Colton follows:]

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        Mr. Whitfield. Mr. Colton, thank you.
        At this time I recognize Mr. McCarron for his opening
    statement.

                       TESTIMONY OF CHRIS McCARRON

        Mr. McCarron. Thank you, Mr. Chairman.
        Mr. Chairman and distinguished members of the subcommittee,
    thank you for the invitation to participate in this hearing. My
    career as a professional jockey began in 1974 and continued
    until I retired on June 23, 2002. During that 28-year period I
    rode 7,141 winners, the seventh highest among all jockeys, and
    had purses range of over $264 million, then the all-time
    leader. My record includes two Kentucky Derby winners, two
    Preaknesses, two Belmonts and nine Breeders' Cup winners.
    Before retiring at age 47, I had the good fortune of winning
    virtually every major race in North America at least ones.
        As you know, Mr. Chairman, I moved to Kentucky to establish
    a school to train jockeys. It's the first of its kind in this
    country. Jockeys engage in one, if not the most, hazardous of
    occupations. You all know that. On-track injuries have left
    jockeys victims of fatalities and permanently disabling
    injuries. Over 180 jockeys have been killed in racing or
    training accidents since the Guild began keeping records in
    1940. I'm not sure how many permanently disabled jockeys there
    are, but it's many.
        On a personal note, I broke both my arms and my leg--both
    my legs and my right arm in a spill in 1990, and as most
    jockeys would, I considered it just a minor injury. I returned
    to the races 87 days later with a rod in my left femur and a
    pin in my arm. Without doubt, as you have seen here today,
    jockeys have a major incentive to return to work as soon as
    possible not only because of our temperaments, but because even
    in the five States which provide worker's compensation
    insurance, it is very difficult to provide for a family on
    those weekly benefits.
        I joined the Jockeys' Guild soon after I started riding
    professionally. I've always been an active supporter of efforts
    to persuade management to provide safe and helpful working
    conditions. While a jockey, I prevailed on Santa Anita Park to
    install an audible emergency alert system. I have also endorsed
    the use of safety rails, complaining to management when hot
    boxes were unsanitary, endorsed rules to require jockeys to
    wear safety vests, worked to improve padding inside the
    starting gate, and served on various committees to examine
    equine medications.
        Jockeys know they face significant dangers every time they
    mount a horse on the track and that some injuries are
    inevitable. What is needed is a system of--some system of
    insurance to provide jockeys and their families appropriate
    assistance when a serious or catastrophic injury occurs.
        I have been actively involved in attempting to achieve that
    result throughout my tenure with the Jockeys' Guild. I served
    as an elected member of the Board of Directors for more than 10
    years and was elected treasurer in 2001. In 1987, I cofounded
    the Don MacBeth Memorial Jockey Fund, which assists disabled
    jockeys and their families. So I am very pleased that the
    subcommittee is focusing on examining on-track injury insurance
    and other health and welfare issues.
        The regrettable fact is that as of today no such national
    plan exists. That should be the starting point for your
    consideration. The fight to provide catastrophic insurance has
    been complicated and contentious. As Dave Shepherd had already
    stated, this has frustrated jockeys for many years. As a last
    result, in late 1994, with the involvement of the Jockeys'
    Guild managing director John Giovanni, the jockeys decided to
    conducted a nationwide refusal to ride their mounts on January
    11, 1995. As I recall, the track owners persuade--succeeded in
    persuading the attorney general of Florida to threaten the
    Guild with a massive antitrust damage lawsuit unless it
    canceled the planned action. The jockeys were forced to back
    down. I was among the most unhappy because I believed strongly
    in the righteousness of our cause.
        The jockeys, acting through the Guild, were forced to
    continue to purchase and pay for out of its treasury both an
    on-track catastrophic group insurance policy for its members
    and their families and a group health insurance policy. To meet
    that financial burden, the Guild, among other things, solicited
    written authorizations from individual jockeys to license for a
    fee their media rights to the Thoroughbred Racing Association
    whose members consisted of numerous racetrack owners. Guild
    representatives would periodically negotiate an agreement with
    TRA in exchange for jockeys' media rights for an annual payment
    to the Guild. For a number of years those agreed-upon payments
    covered the premium costs of the Guild's two policies; however,
    in recent years the cost of health insurance soared to record
    high levels, and the payments the Guild received from the TRA
    did not keep pace.
        Mr. Giovanni recommended that effective April 1, the Guild
    should--April 1, 2001, the Guild should cease offering health
    insurance for its members not covered by the California or
    Delaware health insurance plans. The Guild's nine-member
    executive committee, of which I was then a member, approved
    that recommendation. As I recall, members then received a
    written notice that they would be responsible for their own
    health insurance. The Guild's $1 million on-track accident
    insurance policy continued in full force.
        I believe that the Guild's financial problems were partly
    attributable to the fact that Mr. Giovanni, a former jockey
    himself and not a professional negotiator, was at a
    disadvantage when negotiating against the TRA's sophisticated
    attorneys and financial advisors. For that and other reasons,
    in the spring of 2001 I thought that Guild members would be
    better served if the national managing director position was
    filled by a professional. That is the model I have been told
    that entertainment guilds in most sports unions have been
    following for years with great success.
        In 1994, I was introduced to Dr. Wayne Gertmenian through
    my daughter. He was an economics professor at Pepperdine
    University, and I understood he had significant negotiating
    experience in handling multimillion dollar international
    business transactions. In fact, his resume on the Pepperdine
    Web site states, and I quote, ``Dr. Gertmenian served the Nixon
    and Ford administrations as the chief detente negotiator in
    Moscow for the Chairman of the National Security Council.''
        Further, I was impressed with the manner in which he
    expressed his views, his stated interest in learning about the
    problems jockeys faced and his stated desire to help us resolve
    them. This led me to recommend to my fellow committee members
    that we replace John Giovanni with Dr. Gertmenian.
        In early June 2001, a majority of the committee, on a
    conference call, voted to replace Mr. Giovanni with Dr.
    Gertmenian. I would like to--at this point in time, I would
    like to offer a public apology to Mr. Giovanni and his staff
    for the undeserved and inappropriate manner in which they were
    treated by Matrix Capital Associates.
        Regrettably, I thereafter became dissatisfied with Dr.
    Gertmenian in several other important respects. First, he
    continually refused Board member Jerry Bailey's request for his
    resume. I found Dr. Gertmenian's explanation that confidential
    information was involved totally unacceptable.
        Second, the terms of his contract that Dr. Gertmenian was
    insisting upon for Matrix Capital were unreasonable.
        Third, Dr. Gertmenian's presentations at several jockey
    meetings I attended demonstrated a bad habit of exaggerating
    the true nature of the problems jockeys face. I shared many of
    my reservations with him, but his responses were extremely
    negative. I also shared my reservations with Board chair Tomey
    Jean Swan and executive committee member Dave Shepherd.
        Bringing Dr. Gertmenian into the mix was the worst mistake
    I have ever made.
        Finally, I am absolutely certain that I did not learn that
    Dr. Gertmenian had not renewed, effectively canceling, the
    Guild's on-track catastrophic insurance policy in April 2002
    until 2 years later. I learned of it in July 2004 upon reading
    various articles shortly after Gary Birzer's horrible on-track
    accident in West Virginia. I was stunned to learn of these
    circumstances. I know that at no time prior to my resignation
    from office in June 2002 did the committee take any action to
    renew that policy, nor did Dr. Gertmenian ever notify the
    jockeys that the policy had been non-renewed or that they no
    longer were insured against on-track injuries in those States
    covered by the policy that had lapsed.
        I want to assure the committee that I never would have
    voted to non-renew that policy. Whatever led Dr. Gertmenian to
    do so, I believe that he took that action on his own.
        Having described this unfortunate turn of events, I have
    one all-important concern. Please do not lose sight of the fact
    that there remains a critical need to ensure that jockeys and
    their families receive the protection against catastrophic
    injuries they most assuredly are entitled to.
        I welcome your assistance in achieving this goal, and I am
    happy and ready to answer any questions you may have of me.
        [The prepared statement of Chris McCarron follows:]

                      Prepared Statement of Chris McCarron

        Mr. Chairman and Distinguished Members of the Subcommittee: Thank
    you very much for inviting me to participate in this hearing. I am
    appearing on my own behalf. As my attached resume describes, my career
    as a professional jockey began in 1974 and continued without
    interruption (with the exception of several injury recovery periods)
    until I retired on June 23, 2002. During that 28-year period I rode
    horses at numerous major and minor race tracks throughout the United
    States (including Maryland, New York, New Jersey, Delaware, and
    California) and North America. Among the accomplishments of which I am
    most proud, as of my retirement date, I had ridden 7,141 winners (the
    7th highest among all jockeys) and had purse earnings over $264 million
    (then the all-time leader). Horse-racing fans would appreciate that my
    record includes two Kentucky Derby winners, two Preaknesses, two
    Belmonts, six Triple Crown wins in total, and nine Breeders' Cup
    winners. Before retiring at age 47, I had the good fortune of winning
    virtually every major race in North America at least once.
        Since my retirement, I have remained actively engaged in the unique
    world of horse racing. As you know Mr. Chairman, I am currently
    involved in the exciting and challenging process of establishing a
    school to train jockeys in Lexington, KY--a first of its kind in the
    United States.
        Based on my personal experiences as well as a simple look at the
    statistics, I am acutely aware that professional jockeys engage in one
    of--if not the--most hazardous occupations. This should not come as a
    surprise to anyone. I fully expect that each member of the Subcommittee
    and the general public recognizes this reality. On-track injuries
    incurred during the course of employment have left jockeys the victims
    of fatalities (over 100 jockeys have been killed as a result of a
    racing or training accidents since the Jockeys Guild of America began
    keeping records in 1940, at an average of two per year), permanently
    disabling injuries (there are currently over fifty permanently disabled
    jockeys), and a disturbingly long list of serious injuries that have
    had both short-term and cumulative effects on virtually every bone in
    their bodies. According to a study conducted by and recorded in the
    Journal of the American Medical Association in the late 1990's, jockeys
    experienced on a nation-wide basis 35 accidents per week. That's 1,820
    per year reported to the first-aid rooms at tracks around the country.
    The injuries range from minor to permanently disabling catastrophes. To
    provide a perspective with regard to how most jockeys have viewed the
    degree of their injuries, I broke both my legs and my right arm in a
    spill in 1990 and considered it just a ``minor'' injury. I knew I would
    be back riding and, in fact, I returned to the races only 87 days later
    with a rod in my left femur and a pin in my arm. Like most jockeys, I
    am very impatient when it comes to returning to the saddle after an
    injury, for two reasons: First, because we are not earning any income
    to support our families; and second, because we hate to see our mounts
    ridden by others. Additionally, there are only five states (California,
    New York, New Jersey, Maryland and Idaho) that have laws requiring
    owners and/or trainers to provide worker compensation insurance for
    jockeys. And even where such coverage applies, the reality is that it
    is very difficult to care for a family on the weekly compensation
    provided by such coverage. Consequently, jockeys have a major incentive
    to return to work ASAP.
        I joined the Jockeys Guild soon after I started riding
    professionally. Throughout my career, I have been actively involved in
    supporting efforts on behalf of myself and fellow jockeys to persuade
    management to provide more safe and healthful working conditions, i.e.
    endorsing the implementation of safety rails, being involved in judging
    unsafe track conditions, complaining to management when our ``hot
    boxes'' (steam rooms) are unclean and unhealthful, endorsing a
    requirement that jockeys wear safety vests while riding, and improving
    the padding inside the starting gate. Jockeys are not stupid. They know
    they face inherent dangers each time they mount a horse to participate
    in a race.
        Experience shows that, to the extent these dangers cannot be
    completely eliminated, serious injuries--some catastrophic--will
    continue to occur periodically. In those instances, some system of
    insurance must be in place to provide jockeys and their families
    appropriate assistance in their times of dire need. In this vein, I
    have also been actively involved in attempting to achieve that result
    for my fellow jockeys during my tenure first as a member and later as
    an officer of the Jockeys Guild of America. (I was elected to the Board
    of Directors in the early 1980's, re-elected to the Board in 1998 or
    1999, and then elected Treasurer in 2001.) An example of my commitment
    to this cause is that in 1987 I co-founded, with my wife Judy and
    actor/comedian Tim Conway, the Don MacBeth Memorial Jockey Fund, which
    financially and emotionally assists disabled jockeys and their
    families. We have raised over $2 million to date and assisted over
    1,600 jockeys.
        So, I am especially pleased that a major focus of the
    Subcommittee's attention involves ``Examining On-Track Injury Insurance
    and Other Health and Welfare Issues.'' The lack of a national on-track
    accident plan should be the starting point for your investigation and
    consideration. The Subcommittee may find it hard to believe that as of
    today no such plan exists. That is, however, the regrettable fact.
        Now let me offer some background information to assist you in
    understanding ``why'' none exists. The fight to provide jockeys and
    their families adequate catastrophic insurance for on-track injuries
    has proven to be complicated and contentious. In plain words,
    management--race-track owners, horse owners and trainers--has refused
    to a great degree to accept the responsibility for providing such
    insurance. For many years this has frustrated me and my fellow jockeys.
    Our level of frustration reached a peak in late 1994. After ongoing
    discussions among jockeys and with the involvement of the Guild,
    through then National Managing Director, John Giovanni, the jockeys
    decided as a last resort to conduct a nation-wide refusal to ride their
    mounts on January 1, 1995. Our objective was to call the public's
    attention to our plight and specifically to pressure race-track owners
    to provide the revenues necessary to finance the cost of on-track
    insurance coverage for jockeys and their families. As I recall, shortly
    before the scheduled work stoppage the track owners succeeded in
    persuading the Attorney General of Florida to threaten the Guild with a
    massive anti-trust damage lawsuit unless it cancelled the planned
    action. Mr. Giovanni then advised the Guild officers that we were
    facing a perilous situation and the decision was made to call off the
    event and ride our mounts on that date. I was among the most resistant
    and the most unhappy because I believed strongly in the righteousness
    of our cause.
        What this meant was that the jockeys, acting through the Guild,
    were reduced to purchasing and paying for (out of the Guild's treasury)
    both an on-track catastrophic group insurance policy for its members
    and their families and a group health insurance policy. To meet the
    resulting financial burden, the Guild, among other things, solicited
    and obtained written authorizations from individual jockeys to license
    for a fee their ``Media Rights'' (publicity rights to our faces,
    pictures, images and names) to the Thoroughbred Racing Association
    (``TRA''), whose members consisted of numerous race-track owners. In
    turn, Guild representatives would periodically negotiate an agreement
    with TRA representatives with the goal of exchanging the jockeys' media
    rights for as large an annual payment to the Guild as possible. For a
    number of years those agreed-upon payments from the TRA were sufficient
    to cover the premium costs of the two major policies obtained by the
    Guild.
        However, in recent years, the cost of health insurance soared to
    record high levels and the payments we received from the TRA did not
    keep pace. From 1998 to 2000 the gap between the negotiated payments
    obtained from TRA and premium costs became larger and larger.
        This ultimately resulted in a recommendation from National Managing
    Director, Mr. Giovanni, that effective April 1, 2001, the Guild should
    cease offering health insurance for active members not covered by the
    California or Delaware insurance plans. The nine-member Executive
    Committee of the Guild (of which I was then a member) approved that
    recommendation, that group policy was cancelled, and, as I recall,
    members were notified in writing that they would thereafter be
    responsible for obtaining and paying for health insurance for
    themselves and their families. The fact that the Guild cancelled that
    policy had no effect on its $1 million on-track accident insurance
    policy which continued in full force.
        It was my judgment that the financial problem which caused the
    Guild to cancel the health policy was, in large measure, attributable
    to the fact that Mr. Giovanni, a former jockey himself and not a
    professional negotiator, was at a major disadvantage when conducting
    negotiations against the TRA's sophisticated attorneys and financial
    advisors. In particular, I was dissatisfied that Mr. Giovanni failed to
    prevail upon the TRA to finance the increasing premium costs of the
    Guild's policies.
        For that and other reasons, in the spring of 2001, I made the
    judgment that Guild members would be better served if the National
    Managing Director position was filled by a professional. That is the
    model, I have been told, that the entertainment guilds and most sports
    unions have been following for years.
        In 1994 I was introduced to Dr. Wayne Gertmenian through my
    daughter. I was aware that he was an Economics Professor at Pepperdine
    University and I understood that, as well, he had acquired significant
    negotiating experience in handling multi-million dollar international
    business transactions. His resume on Pepperdine's website states: ``Dr.
    Gertmenian served the Nixon and Ford administrations as a chief detente
    negotiator in Moscow for the chairman of the National Security Council,
    as an emissary to Teheran for the Secretary of Commerce, and as a
    special assistant to the Secretary of Housing and Urban Development.
    Today, he is a distinguished professor at two universities in China and
    advises Russian leaders on a free market economy.'' Further, based upon
    a number of informal discussions, I was impressed with the articulate,
    confident manner in which he expressed his views, his stated interest
    in learning about the problems jockeys face, and his stated desire to
    help us resolve them. This led me to recommend to my fellow Executive
    Committee members that we replace John Giovanni with Dr. Gertmenian.
        During the course of an Executive Committee conference call meeting
    in early June 2001 we discussed the question whether to replace Mr.
    Giovanni with Dr. Gertmenian. A number of Mr. Giovanni's supporters
    disagreed with my position but ultimately a majority of the Committee
    voted to replace Mr. Giovanni with Dr. Gertmenian. To conduct the broad
    spectrum of administrative, financial, and recordkeeping functions that
    the Guild staff performs on a daily basis, Dr. Gertmenian hired and
    utilized the services of employees of Matrix Capital Associates, Inc.,
    an organization he established. The staff worked out of the Guild's
    headquarters in Lexington, Kentucky until the Guild moved to Monrovia,
    California in late 2002.
        Commencing several months after Dr. Gertmenian assumed his duties,
    I became dissatisfied with his actions in several important respects.
    First, I was unable to understand why he continually refused fellow
    Board member Jerry Bailey's request that he provide a comprehensive
    resume detailing his credentials and his career activities. I found Dr.
    Gertmenian's explanation that confidential information was involved
    totally unacceptable. Second, I became concerned that the fees Dr.
    Gertmenian was insisting upon in his contract with the Guild covering
    services to be rendered through Matrix Capital were unreasonably high.
    In my capacity as treasurer, I prevailed upon him to make certain
    adjustments but, in retrospect, they should have been more extensive.
    Third, Dr. Gertmenian's presentations at several jockey meetings I
    attended were troubling to me. He had a bad habit of exaggerating his
    credentials and his ability to achieve the jockeys' goals. Thus, at
    least as early as the time that I retired as a jockey and resigned as
    Guild Treasurer (June 2002), I had serious reservations about Dr.
    Gertmenian. I had shared many of my reservations with him but his
    responses to me were extremely negative, to say the least.
        Next, I want to state with absolute certainty that I did not learn
    that Dr. Gertmenian had non-renewed (effectively canceling) the Guild's
    on-track catastrophic injury policy in April 2002 until two years
    later. Specifically, I first learned of the non-renewal upon reading
    various articles shortly after Gary Birzer's horrible on-track injury
    in West Virginia in July 2004. I was stunned to learn of these
    circumstances. I know that at no time prior to my resignation from
    office in June 2002 did the Committee take any action to non-renew that
    policy. I want to assure the Subcommittee that I never would have voted
    to do so. The only conclusion that I can offer, without knowing what
    led Dr. Gertmenian not to renew the on-track insurance policy, is that
    he did so on his own.
        Having described this unfortunate turn of events, I have one all-
    important concern: I would implore the Subcommittee not to lose sight
    of the fact that there remains a critical need to take all appropriate
    steps to ensure that jockeys and their families receive the requisite
    catastrophic insurance they most assuredly are entitled to. I welcome
    your assistance in achieving this worthy goal.

        Mr. Whitfield. Mr. McCarron, thank you, and I want to thank
    all of the witnesses for your testimony.
        Obviously, there are a lot of issues out there that we are
    considering for the macro health and welfare of the jockeys in
    the future. Is there anything that can be done at the Federal
    level to assist in that, to the micro aspects of trying to
    determine precisely what happened to a fellow like Gary Birzer,
    who thought he had insurance for on-track accidents and then
    realized that he didn't.
        And Mr. Giovanni, I would like to start with you because
    you were the previous national manager of the Jockeys' Guild.
    And it's my understanding that in, I guess, April 2001, you
    took out a policy for on-track injuries that had already been
    determined by your Board or by the appropriate body that you
    were not going to able to afford the family health policy or
    the off-track policy and the on-track policy, that you would
    only do one; and your Board made the decision to maintain the
    on-track policy for catastrophic injury. Is that correct?
        Mr. Giovanni. Somewhat. If I may, sir, the Jockeys' Guild
    has always negotiated with the racing associations, and the
    racing associations provided the first $100,000 worth of
    coverage anytime there was an accident on track.
        What we did was--through our negotiations we also received
    dollars from the racing associations that we put into a special
    fund. Those dollars were used to offset the costs for health
    insurance, and the health insurance plan picked up all of the
    costs of any of our members who had an injury on track, and it
    went beyond the first $100,000 that was provided by the track.
        So our health insurance did two things: It protected the
    families, and it also protected the jockey who was injured on
    track and his expenses went beyond $100,000.
        In the year 2000, as Mr. Bailey alluded to, we lost some
    money in the stock market. It was a bad year; we had a number
    of injuries that went over $100,000--we had one in particular;
    it was over $600,000--and we had a bunch of health claims from
    the members.
        We got hit with a 43 percent increase for the health
    coverage. We couldn't afford it, so after a number of meetings
    with the executive committee, what we decided to do was to take
    the money that we would normally buy the health insurance with
    and buy a policy that would protect the jockeys when they were
    working on the racetrack so if anything happened, they would be
    covered for a million dollars, at least, in medical.
        We took everybody and put them on COBRA. We sent them all
    letters and notified them that they were eligible for COBRA,
    what to do, how to do it; and this way they could make payment
    directly to Union Labor Life Insurance Company----
        Mr. Whitfield. And that was for the family policy?
        Mr. Giovanni. Yes, sir. And they could pay directly and
    keep the coverage for at least 18 months. In the meantime, I
    felt that would give us an opportunity to try to renegotiate
    another plan, and everybody would be covered.
        Mr. Whitfield. Okay, so everyone was covered with this on-
    track policy. And do you recall what the premium was for that
    policy?
        Mr. Giovanni. The premium was $443,000.
        Now this plan covered all of the jockeys who were riding--
    who would ride in a State that was not covered by Worker's
    Compensation. And it did not--and it was a patchwork, sir,
    because----
        Mr. Whitfield. Four States did Workmen's Comp, correct?
        Mr. Giovanni. Yes. Because there were other--two States
    that we received funding from, we lobbied in California and
    Delaware and received funding from those States. In those
    States the jockeys did not lose their health insurance
    coverage; they were able to keep that. And that plan also
    covered them when they fell on a racetrack and the expense went
    beyond $100,0000.
        So the million dollar policy covered them if there was no
    coverage by the on-track--by the health insurance program or by
    Worker's Compensation.
        Mr. Whitfield. So you had Workman's Comp in four States,
    and you had Delaware and California in this special deal?
        Mr. Giovanni. That's correct.
        Mr. Whitfield. And the policy was $443,000 a year?
        Mr. Giovanni. Yes, sir.
        Mr. Whitfield. And at that time, when you were the national
    manager, how many mounts did a jockey have to have per year to
    be eligible to be a member of the Guild?
        Mr. Giovanni. They had to ride 100 a year. If they failed
    to ride 100 horses a year for 2 consecutive years, then we put
    them on the retired list. They were no longer--we considered
    them no longer an active member.
        Mr. Whitfield. They had to have 100 a year?
        Mr. Giovanni. Yes, sir. If they failed to ride 100 for 2
    consecutive years, then they were retired. But if they were
    injured and their injuries would extend 6 months or more, they
    were forgiven that year. So----
        Mr. Whitfield. Now, how much would you say you received
    each year, at the time you were there, from the racetracks, in
    dollar amount?
        Mr. Giovanni. I believe it was $2.2 million.
        Mr. Whitfield. And then how much roughly were you receiving
    in dues from the jockeys themselves?
        Mr. Giovanni. About the same amount, maybe a little more.
        Mr. Whitfield. That is 2.2?
        Mr. Giovanni. Yes, sir.
        Mr. Whitfield. Now, Mr. Shepherd made a comment in his
    opening statement that as your tenure was coming to an end at
    the Jockeys' Guild, the Jockeys' Guild was basically bankrupt;
    is that true?
        Mr. Giovanni. No, sir.
        Mr. Whitfield. What was the state of the Jockeys' Guild at
    that point?
        Mr. Giovanni. What we did was, when we couldn't afford the
    health insurance, we restructured the mount fees, and everybody
    went from an $8 member to a $3 member. When I say $8 member, we
    used to collect $8, $5 came to the Jockeys' Guild and $3 went
    into a savings account in each individual jockey's name. And
    what we did was, we reduced it to strictly $3; that's all they
    had to pay, and that leveled us off----
        Mr. Whitfield. What were the assets at the time you left?
        Mr. Giovanni. I think there was $1.6 million in a stock
    portfolio, stock account with--I'm trying to think, Manhattan--
    --
        Mr. Whitfield. Amalgamated?
        Mr. Giovanni. No, sir.
        Mr. Whitfield. All right----
        Mr. Giovanni. First Manhattan. There was $1.6 million
    there, there was $1.3 million in the Disabled Jockey Fund that
    was separate and distinct; but that's $2.9 million right there.
        Mr. Whitfield. So from your perspective it was not close to
    bankruptcy?
        Mr. Giovanni. No, sir. We had rearranged things, but we
    were not bankrupt.
        Mr. Whitfield. Okay, okay.
        Now, one of the key points that we were looking at--as I
    said, we're looking at some macro issues. But one of the
    microissues relates to the actual decision to allow the policy
    that you all continued on the track, which was set to expire
    March 31, 2002--who made the decision to allow that policy to
    lapse or to not renew that policy?
        Mr. Giovanni. I don't know, sir, I can't answer that
    question. In 2001, in June, I paid for the program, the program
    was paid for----
        Mr. Whitfield. Now, in tab 85, which you probably do not
    have--there is the binder. Tab 85 is a tab that is a legal
    action between Mr. Edwin King and Gary Donahue versus the
    Jockeys' Guild. And on page 5 of that legal document, question
    6, this was an interrogatory or deposition taken of Dr.
    Gertmenian, and it says, ``List the name and title of each
    individual who was involved in any way in the decision to allow
    the policy of insurance referenced''--that is, the on-track
    policy--``to lapse in 2002.'' And the response--and this was,
    of course, under oath--was given by Dr. Gertmenian. And his
    answer here is that the decision was made by the defendant, the
    Jockeys' Guild Board of Directors.
        Is that what your document says there?
        Mr. Giovanni. Yes, sir, it does.
        Mr. Whitfield. Now, I understand we have with us today
    three members of the--who were members of the Board of
    Directors at that time. One is Mr. McCarron.
        Is that true, Mr. McCarron, were you a member of the Board
    of Directors at that time?
        Mr. McCarron. Yes, sir, I was.
        Mr. Whitfield. And Mr. Colton, were you a member of the
    Board of Directors at that time?
        Mr. Colton. Yes, sir, I was.
        Mr. Whitfield. Ms. Swan, were you a member of the Board of
    Directors at that time?
        Ms. Swan. Yes, I was.
        Mr. Whitfield. Was there a meeting of the Board of
    Directors during that timeframe to discuss whether or not that
    policy would be allowed to lapse or be renewed or whatever?
        Ms. Swan, what about it, was there a meeting of the board?
        Ms. Swan. I don't remember that. I remember we had a lot of
    meetings where we discussed the problems with the health
    insurance and----
        Mr. Whitfield. Yes, but my question is, was there a meeting
    of the Jockeys' Guild Board of Directors to discuss this one
    issue about allowing the policy to lapse or whether to renew it
    or what to do about it? And did you vote on it?
        Ms. Swan. I don't remember.
        Mr. Whitfield. You don't remember?
        Ms. Swan. I don't remember.
        Mr. Whitfield. Okay. So you don't remember the meeting. And
    do you remember voting on it?
        Ms. Swan. I don't.
        Mr. Whitfield. You don't.
        Mr. Colton, was there a meeting?
        Mr. Colton. Not to my recollection, sir. The only knowledge
    I had of it was at the 2001 assembly where there had been
    discussion.
        Mr. Whitfield. So did you vote on this?
        Mr. Colton. There was no vote there.
        Mr. Whitfield. And, Mr. McCarron, what about you?
        Mr. McCarron. No, Mr. Chairman, I never voted on that. I
    never would have voted on that.
        Mr. Whitfield. And did you ever attend a meeting of the
    Board for the purpose of taking this issue up?
        Mr. McCarron. No, sir. There was no such meeting, to my
    knowledge.
        Mr. Whitfield. So we have three members of the Board of
    Directors here, and I'm assuming that you all would have been
    advised, as members of the board, if there was a meeting of the
    Board to discuss this issue; is that correct?
        Mr. McCarron. Yes.
        Mr. Whitfield. Now, who would have the authority to make
    that decision without the board's approval?
        Mr. McCarron, do you know?
        Mr. McCarron. I don't know off the top of my head. I would
    have to review the bylaws of the Guild, which actually were
    changed when Dr. Gertmenian took over.
        Mr. Whitfield. Okay.
        Ms. Swan, you're still with the--you work at the Jockeys'
    Guild now; is that correct, Ms. Swan?
        Ms. Swan. Yes, I'm vice chairman. And it's Swan, sir.
        Mr. Whitfield. I'm sorry, Ms. Swan.
        Do you have access to any Board meetings in which that
    decision was made in your possession?
        Ms. Swan. I know that we did discuss it extensively, the
    health and the catastrophic, at the 2001 Board meeting; but to
    answer your question----
        Mr. Whitfield. Are there any minutes to that meeting? Do
    you have minutes to that meeting?
        Ms. Swan. We would have to check with the Guild office.
        Mr. Whitfield. Well, we've asked for those minutes.
        Ms. Swan. The 2001 meeting you're talking about? You're
    talking about the 2001----
        Mr. Whitfield. The meeting in which the decision was made
    to drop the policy.
        Ms. Swan. No, I don't know.
        Mr. Whitfield. Okay, okay. My time has expired.
        I recognize the gentleman from Michigan, Mr. Stupak.
        Mr. Stupak. Thank you, Mr. Chairman.
        And thank you, all the witnesses, for being here. I'm sorry
    I've been in and out--have a number of other things going on
    today, but this is a very important hearing.
        Mr. Giovanni, I understand that when you were there and
    when you left--I want to make sure that I've got this straight.
    Until March 31 there was an insurance policy covering the
    jockeys for any kind of on-track accident; is that correct?
        Mr. Giovanni. Yes, sir, for $1 million.
        Mr. Stupak. Correct. And then you were ousted before the
    expiration of that policy?
        Mr. Giovanni. It went into effect on April 1, 2001, and I
    was ousted on June 15, 2001.
        Mr. Stupak. And that basically was a 2-year policy?
        Mr. Giovanni. It was a 1-year policy.
        Mr. Whitfield. Okay. So it went to March 31, 2001?
        Mr. Giovanni. 2001 to 2002. I'm sorry, to March 31, 2002.
        Mr. Stupak. Got it.
        Let me ask, Mr. McCarron, were you aware that the policy
    expired on March 31, 2002?
        Mr. McCarron. No, sir, I was not aware of that.
        Mr. Stupak. How about you, Mr. Colton?
        Mr. Colton. No, sir, I was not aware of that.
        Mr. Stupak. How about you, Ms. Swan, were you aware that
    the policy would expire on March 31, 2002?
        Ms. Swan. I knew that our policy was going to expire. I
    wasn't sure of the date.
        Mr. Stupak. Okay. You knew it was going to expire, but you
    didn't know the date. Did you bring it to anyone's attention
    that this policy was due to expire sometime in 2002?
        Ms. Swan. We did discuss it at the 2001 Board meeting.
        Mr. Stupak. So it went through March 31, 2002, right?
        Ms. Swan. I'm sorry, I can't----
        Mr. Stupak. The policy of $1 million--for $1 million for
    the jockeys' on-track injuries expired March 31, 2002. In your
    capacity as a member of the Board did you make any--did you
    tell anyone this policy was going to expire, we have to do
    something with it?
        Ms. Swan. At the 2001 meeting we discussed it. We discussed
    the absence of the health insurance and this catastrophic
    policy, and we did know that it was going to expire.
        Mr. Stupak. Okay. You knew it was going to expire.
        Ms. Swan. On what date I'm not sure, but we did know it was
    going to expire and that we were trying to do something to put
    something different in place.
        Mr. Stupak. What was the direction of the Board then, if
    the Board knew it was going to expire and you discussed it,
    what was the direction of the Board to get replacement
    insurance for these jockeys?
        Ms. Swan. We directed Dr. Gertmenian's team to do what he
    could to get it done, and also that--in my recollection, the
    No. 1 priority at that time was the health insurance. Everybody
    was freaking that we did not have health insurance for our
    families. Keep in mind that even though there was COBRA offered
    to us by Mr. Giovanni, most riders could not afford to get it.
    Most riders were without health insurance for themselves and
    their families.
        Mr. Stupak. Correct. Most people cannot afford the COBRA
    even though they're offered it.
        Ms. Swan. They couldn't.
        Mr. Stupak. You said Dr. Gertmenian and his team, what did
    you mean by Dr. Gertmenian and his team?
        Ms. Swan. I consider all the people that--he has a lot of
    connections, he was able to get our health insurance back for
    us. By his team, I mean everybody that he uses to help get
    things done for the jockeys.
        Mr. Stupak. Okay. You hired Dr. Gertmenian, and then you
    hired a company called Matrix, is that correct, the Board did?
        Ms. Swan. Yes, sir.
        Mr. Stupak. Why would you hire two different entities, Dr.
    Gertmenian and Matrix? What was the purpose----
        Ms. Swan. Dr. Gertmenian----
        Mr. Stupak. What was the purpose of each? What was Dr.
    Gertmenian's job and what was Matrix's job?
        Ms. Swan. It's pretty much the same thing as when we had
    Mr. Giovanni in place. He had attorneys, staff hired, everybody
    hired. We included this all in one package, the Matrix team,
    and we were shown that it was equivalent to what we were
    currently paying.
        Mr. Stupak. So on those insurance policies then, that you
    knew were going to lapse, was it Dr. Gertmenian's and his
    team's responsibility to keep them in place or to find a
    successor insurance? What was your understanding?
        Ms. Swan. We were hoping to find a successor insurance. Can
    you hear me?
        Mr. Stupak. Yes, I can. You were hoping to. Did you ever
    find a successor insurer?
        Ms. Swan. For the catastrophic?
        Mr. Stupak. Yes.
        Ms. Swan. No, sir.
        Mr. Stupak. Mr. Colton, is that your recollection?
        Mr. Colton. Yes, sir.
        Just expanding a little bit on what Matrix's purpose was,
    we were given some extensive documentation at one time. It had
    several resumes. A lot of them had taught, but had a lot of
    their business experiences in it.
        It was our understanding that it had 11 attorneys on there;
    everybody had more letters than what was in the alphabet. And
    everybody was MBAs or whatever area that we would need their
    expertise in; they would be brought on board, and we would be
    able to--basically he would negotiate the fees between them and
    we could get things done cheaper and more in unison.
        Mr. Stupak. Okay. Can you relate to us, Mr. Colton, the
    sequence of your discussions with Dr. Gertmenian about the on-
    track policy and the insurance policy? I mean, you were all
    concerned that it was going to lapse, and you had discussions.
    And then what happened?
        Mr. Colton. Well, first of all, a lot of us were still
    riding full-time, so there wasn't an enormous amount of contact
    between us and the office.
        Mr. Stupak. But if you are riding, you would be more
    sensitive to a lapse of a policy.
        Mr. Colton. Yes. But when you are riding, it was 7 days a
    week, 8-10 hours a day. And that was definitely a fault of mine
    personally--I can't speak on behalf of the other Board
    members--failure of my fiduciary responsibility.
        Mr. Stupak. When did you realize that that had expired?
        Mr. Colton. Sometime when I actually saw a letter that
    Albert Fiss had been given was, I believe, when I had started
    working for the Guild.
        Mr. Stupak. When was that?
        Mr. Colton. Would have been in January 2003.
        Mr. Stupak. So you saw it in your capacity as working for
    the Guild? You never saw it as a jockey?
        Mr. Colton. No, I was never notified.
        Mr. Stupak. Do you know if any the jockeys ever received
    notice of expiration?
        Mr. Colton. To my knowledge, no written was ever--no
    knowledge that I know of.
        Mr. Stupak. Mr. Bailey, could you explain a little bit
    about the sequence of your discussions with Dr. Gertmenian
    about the on-track insurance policy?
        Mr. Bailey. Yes.
        In May--actually, it was June; it was right around the
    Belmont Stakes of 2002. The Guild management team traditionally
    comes to town, whatever major race is running, and it was the
    Belmont Stakes that week and they were in town for more than 1
    day.
        And it had come to my attention that week that there was a
    rider in Louisiana who had been injured, had gone over the
    $100,000 mark and was on the hook for the bills himself. And I
    thought that very strange; in fact, I didn't think it could be
    true because I was sure that we still had an on-track accident
    insurance in place.
        So as soon as I saw Dr. Gertmenian, I asked him about it,
    and he said, Of course, it's in place. So I thought about it
    that night and I asked him the next day in a way that suggested
    that I had made a phone call and knew differently; and he said,
    No, no, no, you're right, I checked on it, and it's not in
    place. He said, John Giovanni canceled it.
        Well, I came to find out much later that John Giovanni
    couldn't have canceled it because he wasn't even in power for
    the Guild at that time.
        He also told me, he said, after he told me that Giovanni
    had canceled it, he was working on getting it restored. Those
    were his words; he said, ``We're working on it.''
        Mr. Stupak. Does anyone on this panel--I know some of you
    are jockeys, some of you are not. Were any of you ever given
    notice of the expiration of this on-track insurance policy?
        Mr. Bailey. I wasn't. And I was at a higher level than most
    when this regime took over, and I wasn't notified, either
    officially or unofficially.
        Mr. Stupak. Anyone else care to comment?
        Mr. Shepherd.
        Mr. Shepherd. At the time it was about to come to a close--
    it would have been in March--we knew.
        Mr. Stupak. March of 2002?
        Mr. Shepherd. I was aware of what it was because I had been
    a senator for just a few months, I really wasn't in a position
    where I should have known anything other than ask a lot of
    questions.
        But the first person to tell me that it was going to
    expire, and that it was not a good policy, and that we would be
    much better served by spending the money--the money would be
    much better spent if we got health insurance for our families
    as opposed to getting the catastrophic on-track insurance was
    Robert Colton in a phone call. And that was the first official
    person that mentioned we were gonna lose it.
        I mean, but I knew it. And that was all the talk of the
    assembly when we was in Austin was everybody was saying, We've
    got this policy. But everybody--the ones that were interested
    enough to show up at the assembly, everybody--I never heard a
    single person make a single stand or a single argument for
    keeping the on-track accident. We all knew that we were taking
    a risk----
        Mr. Stupak. When was the assembly?
        Mr. Shepherd. In 2001, in December.
        Mr. Stupak. And your policy was still in effect until----
        Mr. Shepherd. Well, we lost our health insurance the end of
    March, so this had been put in place in the first part of
    April, it was a 1-year policy. So when we lost our health
    insurance, we were going to lose--the catastrophic insurance
    was going to be due in 1 year.
        Mr. Stupak. I'm sure you and others expected your Board to
    keep the policy alive.
        Mr. Shepherd. Well, you had a choice to make. You had X
    amount of dollars. We're here to talk about all the money that
    was available in the Guild, but when you go back and look at
    the books, a lot of the money that they're claiming were assets
    were accounts receivable, as in the money that was owed by
    Mountaineer Park, about a half of $1 million at that point in
    time for our media rights that we never received. So you've got
    to compare apples to apples.
        Mr. Stupak. I heard Mr. Giovanni say, on behalf of the
    earlier questions from the chairman here, that there was about
    $2.2 million from the TV and then $2.2 million from cash from
    the jockeys, so I would not call that accounts receivable. It
    sounds like about $4 million a year was going into this Guild.
        Mr. Shepherd. How much money was billed out to each one of
    these tracks? And then how there is a bunch of tracks that
    don't pay that money. Check the amount of money that
    Mountaineer has ever paid to the Jockeys' Guild is zero.
        Mr. Stupak. Mr. Giovanni, you look like you want to expand
    on that point.
        Mr. Giovanni. That's correct, there are some racetracks
    that do not pay. Mountaineer Park was one of them. But the
    figure of $2.2 million is actual cash that came into the
    Jockeys' Guild from the racing associations that did pay.
        We also used the fact that Mountaineer Park did not pay the
    media rights fees to go and lobby before the legislature in
    West Virginia and got $250,000 earmarked specifically for the
    jockeys, for health and welfare, none of which was ever
    collected when I left.
        Mr. Stupak. My time is up, but the point being that you all
    knew this thing was going to expire, and from what I'm taking
    from this panel and the testimony that's been given today, no
    one really knew it was expired. Assumptions were sort of made,
    and I guess when we assume, that's when problems occur.
        Mr. Whitfield. Thank you, Mr. Stupak.
        At this time, I recognize the chairman of the full
    committee, Mr. Barton of Texas.
        Chairman Barton. Thank you, Mr. Chairman. I want to say at
    the outset that I appreciate what you're doing and what
    Congressman Stupak is doing on the minority side to bring this
    before the Congress and the American people. It's a travesty
    that we even have to have this hearing.
        I'm not as familiar with particulars as those two
    gentlemen. I chair the full committee, and I've been working on
    energy policy and health care policy and telecommunications
    policy, but I have followed it and I have been briefed. But
    just for the record, I'm going to ask a few basic questions to
    help me and maybe help anybody who is watching this on
    television. And I'm going to ask these questions to Mr.
    Giovanni because you were the former manager.
        My first question is, what is your current occupation, if
    any?
        Mr. Giovanni. Right now I work for an agency in Cocoa
    Beach, Florida. I sell life insurance, health insurance, Blue
    Cross and Blue Shield of Florida.
        Chairman Barton. So you're not directly associated with the
    racing industry at this point in time.
        Mr. Giovanni. No, sir, I'm not. When I was ousted, I sort
    of left under a cloud, and it made it very difficult for me to
    find any type of employment in the industry.
        Chairman Barton. I'm not casting aspersions----
        Mr. Giovanni. No, sir. You asked me, I'm telling you what
    it is.
        Chairman Barton. What entity, if any, gives the Jockeys'
    Guild its authority to collect fees and to provide insurance
    and other benefits for the jockeys? Who empowers them?
        Is there national thoroughbred racing association that has
    a collective bargaining agreement, or do they certify State by
    State? What gives that entity the legal authority to do what
    they do?
        Mr. Giovanni. That's a good question. We are not a union,
    we are a social welfare organization, and recently--well,
    several years ago the IRS awarded us 505 status. We are a labor
    organization, but we're not a union.
        We negotiated on behalf of our members with the different
    organizations involved with racing. We met with the TRA every
    year or 2 years and negotiated a contract with the TRA. We
    traded--when a jockey would join the Jockeys' Guild, he would
    sign over his media rights to the Guild. We would, in turn,
    trade them to the racing associations so they could simulcast,
    whatever, and we would receive dollars in return for that.
        As far as safety standards and all are concerned, we had to
    deal with 38 different States and 38 different racing
    commissions. My first step in doing anything like that would
    have been to first approach Racing Commissions International,
    which is an association of the different racing commissions
    around the country--in fact, the world--get them to adopt
    something, and then have to go State by State to get the States
    to adopt it.
        Chairman Barton. Of course, I'm 56 years old and I'm 6 feet
    tall and I weigh over 250 pounds so there is no way I could
    ever be a jockey. But let's assume I was 5'2'' and weighed 100
    pounds and was 18 years old and born on a ranch and it is just
    as natural as breathing for me to ride a horse, and so I want
    to be a jockey.
        Do I have to join the Guild to get to be a jockey?
        Mr. Giovanni. No, sir. You have to be licensed. And the
    process----
        Chairman Barton. Does the Guild do that licensing?
        Mr. Giovanni. No, sir, that's done by the State Racing
    Commission. Every State has their own commission; they are
    appointed by the Governor.
        Chairman Barton. So the State Racing Commission licenses me
    to be a jockey.
        I then realize that I can't afford any benefits on my own,
    so if I'm willing to join--what do I have to do to join the
    Jockeys' Guild?
        Mr. Giovanni. You have to be licensed. And to maintain
    licenseship you have to ride 100 horses a year, unless you're
    injured, and then that's forgiven.
        If you fail to ride 100 a year for 2 consecutive years--
    when I ran it, I don't know what the situation is now. I don't
    know what they have to do to maintain membership now, but they
    had to be licensed, in good standing----
        Chairman Barton. I've got that. But now let's assume I do
    all that and I want to be a member of the Jockeys' Guild, I
    assume I have to pay some money to do that?
        Mr. Giovanni. Yes, sir.
        Chairman Barton. And when I come to you or the track
    representative or the--however you're organized, the Guild is
    organized, they say, Mr. Barton, let's see your license to ride
    in Texas. And I show them that.
        And let's see the record, and I show them that.
        And let's see your checkbook, and I show them that.
        And let's make sure your check is good, so you call and
    it's good.
        What do you tell me I get for paying that? Am I told that
    I've got a catastrophic insurance policy if I join the Guild?
        Mr. Giovanni. I don't know what it is now, but when I was
    there, yes.
        Chairman Barton. So when you were there, you were told
    that?
        Mr. Giovanni. Yes.
        Chairman Barton. Now, the Guild gets its dues and its
    standing because jockeys that are licensed collectively decide
    they need a representational body and they join. They think
    they're going to get some benefits, one of which historically
    has been a catastrophic health benefit.
        In turn, the Guild goes to the various State racing
    associations and different tracks and says, We are the Jockeys'
    Guild, we represent all these jockeys; we want you to sign some
    sort of an agreement with us. Is that correct?
        Mr. Giovanni. Yes, sir.
        Chairman Barton. And part of that agreement has been,
    historically, if you pay us this money and you pay us these
    media fees, we will provide a catastrophic health insurance
    policy; is that correct?
        Mr. Giovanni. Well, the money is earmarked specifically for
    health insurance which is contained in the clause that would
    cover them on track.
        Chairman Barton. So I now kind of understand the basic
    premise.
        Now, what happened is in the murky past, either while you
    were still the national manager or right after, the money that
    was going to provide the premiums for the catastrophic health
    insurance stopped being paid; is that a fact?
        I mean, have we----
        Mr. Giovanni. We received an increase in premium when it
    came time to renew of 43 percent; we received a premium
    increase the year before for 23 percent; and I think it was 17
    or 18 percent the year before that. So in the last 3 years
    previous to the 2001 renewal we had about an 80 percent
    increase in premium, and that was because of all of the claims
    and some of the injuries that went over $100,000 dollars.
        Chairman Barton. So while you were still the national
    manager, it was your understanding and your direction that the
    policy remain in effect; is that correct?
        Mr. Giovanni. Yes.
        Chairman Barton. Okay. But you left under bad
    circumstances?
        Mr. Giovanni. Yes, sir.
        Chairman Barton. Okay. And this new management team that--
    Dr. Gertmenian came in, and while it's in dispute, they
    apparently let that policy lapse; is that correct?
        Mr. Giovanni. Yes, sir.
        Chairman Barton. But the jockeys didn't know that?
        Mr. Giovanni. That's correct.
        Chairman Barton. So we have a situation now that there is
    no catastrophic health insurance policy; is that correct?
        Mr. Giovanni. Yes.
        Chairman Barton. And when we get the next panel, we're
    going to find out what they say about that.
        Mr. Whitfield. Mr. Chairman, we do have three members of
    the Board of Directors that were serving on the Board at the
    time the decision was made to allow the policy to lapse or not
    renew it; and all three of them said that they did not
    recollect any specifically called meeting to discuss that, nor
    did any one of the three of them vote on it.
        Chairman Barton. Okay. All right.
        Well, my last question--and again, I'm only going to Mr.
    Giovanni because he's no longer associated and so he can, to
    some extent, be a neutral observer here--is it--in your
    opinion, if we have a jockey, and we've got several that have
    been injured, do you feel like if they've got a bona fide case,
    as long as they can prove that they were dues-paying members,
    that the Jockeys' Guild should reimburse them and should
    provide them health insurance and disability insurance?
        Mr. Giovanni. Yes, sir.
        Chairman Barton. Mr. Chairman, with that, I'm going to
    reserve the balance of my questions for the next panel.
        Mr. Whitfield. Thank you, Mr. Chairman.
        I recognize the gentleman from Oregon, Mr. Walden.
        Mr. Walden. Thank you very much. And I apologize, Mr.
    Chairman; I had to take another brief meeting but I was trying
    to listen with one ear to these proceedings.
        Mr. Shepherd, I believe in your testimony you indicated
    that when you--when Mr. Giovanni was relieved of command, that
    basically your organization was near bankruptcy, I think was
    your term--``nearly bankrupt,'' I think you said.
        Mr. Shepherd. The end of last year we were in Vegas at the
    assembly, that was all the talk, we are losing money, we are
    losing money in racing. And when you look at the financials, a
    lot of the money that we had was in the accounts receivable.
        Now, the amount of money that was going out and being spent
    was exceeding the amount of money that was coming in. And we--
    even in Vegas, when Mr. Giovanni was in there, we were told
    within a year and a half at this rate we would be bankrupt.
    Now----
        Mr. Walden. Let me switch to Mr. Giovanni. I had a
    financial statement here, but I've--oh, here it is; lost track
    of it--dated--I guess it's under tab 20 in the book.
        I don't know if you've got this book down there, but if you
    will turn to tab 20--I believe you do--it's RC0286. And then
    there is a balance sheet, it looks like it's the second page,
    actually. There is the filings page, and then the second, which
    shows $190,000 in checks and savings and another $442,000 in
    receivables.
        Would that have been a snapshot of the Jockeys' Guild's
    position about the time you left?
        Mr. Giovanni. Yes, sir.
        Mr. Walden. Would you characterize your finances as nearly
    bankrupt?
        Mr. Giovanni. No, sir.
        Mr. Walden. How would you characterize the finances?
        Mr. Giovanni. We were in fairly decent financial shape. I
    mean, what we had done, we could no longer afford the health
    insurance. We had $2 million coming in from the members, and
    that was cash coming in; and we had $2.2 million coming in from
    the racing associations. And we were no longer paying--we
    couldn't afford the health insurance, so that was like $3.5
    million, I believe, is what the policy was.
        So we had $4 million, and getting rid of $3.5 million worth
    of debt. So we weren't in bad shape financially.
        Mr. Walden. I see. And were there financial audits
    conducted every year?
        Mr. Giovanni. We gave an audited statement to the Board of
    Directors every year. We sent the financials out months in--a
    week, 2 weeks in advance of the Board meeting so they could
    review it.
        We gave them an audited statement from the Jockeys' Guild,
    from Guild Products, Inc., which was a for-profit corporation
    that we formed. We gave them an audited financial statement
    from the Disabled Jockey Fund. That statement also included,
    from the Disabled Jockey Fund, every dime that came in and
    every name of everybody who had donated the money; and it also
    showed where the money went. Every disabled or permanently
    disabled member who received money from it, that was noted.
        Mr. Walden. Out of the disabled fund as well?
        Mr. Giovanni. Yes, sir.
        Mr. Walden. Okay. Have you ever had a chance to review the
    independent auditors report that came out, I think it was
    November of--I want to say November 2003--that covers the years
    December 31, 2002 and 2001?
        Did you ever have a chance--if you would turn to Tab 13,
    you will, if you haven't, and I'm aware you would have been
    gone by then, but in their notes they say--let's see, they say
    in the second paragraph, ``Except as discussed in the following
    paragraph, we conduct our audits in accordance with the
    auditing standards generally accepted in the United States of
    America. Those standards require that we plan and perform the
    audits to obtain reasonable assurance about whether the
    financial statements are free of material misstatement. An
    audit includes examining''--blah, blah, blah.
        ``for the fiscal''--the next graph, I guess--``for the year
    end of December 31, 2001, we were unable to obtain sufficient
    evidential matter in connection with member mount fees,
    assessments in revenues from tracks necessary to obtain
    reasonable assurance about whether the statement of activities
    and net assets and cash-flows are free of material
    misstatements. We, therefore, do not express an opinion on the
    accompanying statements of activities and net assets and cash-
    flows for the year end of December 31, 2001.''
        Now, you were only there for half of that year?
        Mr. Giovanni. I was there for 6 months, yes, sir.
        Mr. Walden. And when you left, do you feel like the data
    were there in the same condition they had been in prior----
        Mr. Giovanni. Yes, sir.
        Mr. Walden. Had you ever had a statement like this on an
    audit during your tenure?
        Mr. Giovanni. No, sir.
        Mr. Walden. And who conducted your audits?
        Mr. Giovanni. Arthur Andersen.
        Mr. Walden. Okay. So the Board changed auditors after you
    left?
        Mr. Giovanni. Yes.
        Mr. Walden. Ms. Swan, were you part of the decision to
    change auditors? You're chairman of the board.
        Ms. Swan. Yes, we did.
        Mr. Walden. You know, I spent 5 years on a community bank
    Board and served on the audit Board before coming to Congress
    on a committee, and so I'm interested in these sorts of issues.
        What possessed the Board to change auditors, and how did
    you explain this notion of the statement here to your board?
        Ms. Swan. I think a lot of things were in turmoil at the
    takeover. There was trouble with the new staff getting all of
    the material that was left in the office.
        One thing I do want to say, if I may interject here. I've
    been wanting to say it. Is this okay to say it right now?
        Mr. Walden. Sure. I've got a few more questions, but I have
    limited time.
        Ms. Swan. Okay, that's fine.
        Okay, one of the things on the catastrophic policy is we
    were under the understanding that it did not cover all jockeys;
    that's one thing I think Mr. Colton was trying to explain a
    while ago is that riders are out riding every day, and we were
    expecting that it was going to expire. But the majority of the
    riders were more concerned with the everyday health care of
    their families; that was something they could see face to face.
        Admittedly, we live in kind of a dream world that it's not
    going to happen to us, but the health insurance problem needed
    to be resolved first.
        Mr. Walden. Okay. I want to go back to this audit issue.
    Are you aware of whether or not the auditor involved here was a
    friend of Dr. Gertmenian's?
        Ms. Swan. I think he was an associate. Whether that meant a
    friend, too, I don't know.
        Mr. Walden. Would he have maybe been a college roommate?
        Ms. Swan. I wouldn't know that, no, sir.
        Mr. Walden. Do you suppose you ought to find that out,
    maybe? And I mean that in all seriousness. I don't mean to be
    rude about it, but there is a--did you vote on that change?
        Ms. Swan. We hired a new team to take over, and went along
    with their suggestions on who they hired. We didn't tell Mr.
    Giovanni who to hire on the previous one.
        Mr. Walden. Okay. The new team you took over included Dr.
    Gertmenian, right? Is that who you're referring to as the ``new
    team''?
        Ms. Swan. Yes, sir.
        Mr. Walden. So you're saying he's the one that made the
    decision on who to hire as an auditor?
        Ms. Swan. Yes, sir. We wouldn't have any idea who to hire
    as an auditor. We don't have those connections, sir.
        Mr. Walden. And he didn't bring that to your Board for
    approval? He just independently hired----
        Ms. Swan. No, I believe he did ask us. But we don't know
    who to hire as an auditor. We trust the people that we put into
    place to do their job.
        Mr. Walden. As I've said, I've been on couple of community
    boards, and these are decisions usually the boards vote on, and
    then it's reflected in the minutes. I'm assuming you have
    minutes of your various Board meetings?
        Ms. Swan. Yes, sir. I believe we do. I don't have them, no,
    but our staff----
        Mr. Walden. Who has them? Are they not kept?
        Ms. Swan. I would assume that our staff does.
        Mr. Walden. Don't you review and vote on them at every
    meeting?
        Ms. Swan. Yes, sir.
        Mr. Walden. You do. So there is a minute book somewhere?
        Ms. Swan. I know we have voted on the minutes, yes, sir.
        Mr. Walden. So every Board meeting you review the minutes
    of the prior Board meeting and you vote on them, correct?
        Ms. Swan. I don't know if it's at every meeting, but most
    meetings we have, yes, sir.
        Mr. Walden. And those minutes are available to any of your
    jockeys for review, correct? Any Guild members?
        Ms. Swan. I guess so, yes, sir.
        Mr. Walden. Are they available to this committee? Because
    we've been trying to get those for months.
        Ms. Swan. Part of the thing is, I don't know why Dr.
    Gertmenian and his staff aren't being asked these questions. He
    would know that. I don't know where they keep the minutes.
    They're not with me.
        Mr. Walden. Right. I understand. But are you chairman of
    the board, co-chair of the board?
        Ms. Swan. Co-chair, yes, sir.
        Mr. Walden. Co-chair, okay. And former chairman, all right.
        What about financial statements? Mr. Donahue talked about
    his desire as--you were running the fund for the disabled----
        Mr. Donahue. I was co-chairperson for the Riders Fund.
        Mr. Walden. And did that mean you were also a Board member
    of the Guild?
        Mr. Donahue. No, sir.
        Mr. Walden. But you were co-chairman of the fund?
        Mr. Donahue. Yes.
        Mr. Walden. And you couldn't get financial statements?
        Mr. Donahue. No, I couldn't.
        Mr. Walden. And who did you ask for those, again?
        Mr. Donahue. Albert Fiss and Dr. Gertmenian.
        Mr. Walden. And they refused to give you financial
    statements?
        Mr. Donahue. I should not be concerned with this matter, he
    said.
        Mr. Walden. Did anybody else who was on the Board at the
    time--and all of you gentlemen at one time or another were--
    some of you left immediately, I understand.
        Have any of you reviewed financial statements for this
    fund?
        Mr. Shepherd? Mr. Shepherd, have you reviewed the financial
    statements in this fund?
        Mr. Shepherd. Yes. And understanding--and you've got to
    remember my point of view going in on this was, I had a broken
    neck when we started discussing what we should do with the
    fund. And keep in mind the majority of the payments that went
    to the temporary and permanently disabled riders, most of the
    money came out of the general account, not necessarily the
    fund. The fund was used for special needs. During----
        Mr. Walden. I'm getting a different view from Mr. Giovanni.
        Mr. Shepherd. During Mr. Giovanni's tenure, the Disabled
    Jockey's Fund was used for special needs.
        Mr. Walden. We've been trying to get, so we fully
    understand what you all are telling us, how this money was
    expended. Other members, it sounds like, of your Board or
    people who have run this fund are trying to get that same data
    and haven't been allowed to see that.
        Are you going to share that data with us?
        Mr. Shepherd. Yes.
        Mr. Walden. And how do we get that and when?
        Mr. Shepherd. You will get it.
        Mr. Walden. Because we have subpoenaed that and we have not
    been able to get it. And what we see are big numbers and big
    transfers.
        We have people, like Mr. Donahue, who I think have raised
    very valid questions about transfers or proposed transfers of
    huge amounts of money. I mean, $1 million or even $250,000 is
    nothing to shake a stick at. And I've got to tell you, I have
    been in shoes like some of you are wearing on a board; I hope
    your D&O insurance is paid up because I think you're sitting on
    a pile of liability here if this money has been misspent.
        And I'm no attorney--- Mr. Donahue. Mr. Walden, may I make
    a comment?
        When John Giovanni was the national manager, he is correct,
    it was only used for special needs. But when Gertmenian and
    Matrix Capital came in, it was never voted on, but for some
    reason they started dipping into the Disabled Riders Fund with
    the temporary disabled riders and not reimbursing the fund
    back.
        Mr. Walden. Mr. Shepard, was there a change in policy when
    Dr. Gertmenian came in and it was voted on?
        Mr. Shepherd. It wasn't just when he came in.
        Mr. Walden. When did the change occur?
        Mr. Shepherd. We had been trying to solicit contributions
    to help, because the money was not going to keep up with the
    expenditures. The money that was coming in wasn't matching the
    money that was going out, and it had been doing that for years.
        Mr. Walden. All right. I'm trying to follow a process here.
        When did the vote occur to change how the money----
        Mr. Shepherd. That I can't remember exactly.
        Mr. Walden. But it would be reflected in your minutes?
        Mr. Shepherd. One would think so.
        Mr. Walden. The vote never took place.
        Mr. Shepherd. I don't remember exactly that, but I do know
    that I was the one with the broken neck when David Gillery, the
    rider from Louisiana, myself and Terry Hatton had catastrophic
    injuries.
        Mr. Walden. And I'm sympathetic, and I understand.
        Mr. Shepherd. But we needed to get the money coming in, and
    it just kept going out. And the only way we could do it----
        Mr. Walden. I'm going to have to cut you off because I'm
    out of my time, and the chairman is being generous.
        Mr. Colton, were you on the Board when this change was
    made?
        Mr. Colton. Yes, sir.
        Mr. Walden. And was there a vote?
        Mr. Colton. No, sir.
        Mr. Walden. Mr. McCarron, were you on the Board when this
    change was made?
        Mr. McCarron. Yes, sir, I was.
        Mr. Walden. And was there a vote?
        Mr. McCarron. No, sir, not to my recollection.
        Mr. Walden. Were either of you aware of the transfer of the
    money or the proposed transfer of money or Mr. Donahue's
    concern about not knowing how the money was being transferred
    or where it was going?
        Mr. Colton.
        Mr. Colton. Yes, Congressman, if I could comment on that.
        I know a lot of you have got a lot of sore necks from
    shaking your head in disbelief, and I won't use a word like
    ``cult,'' but we were trying to focus on the big picture and a
    lot of the decisions were obviously not made by the board.
        But concerning that, my understanding was that the majority
    or all of the money inside the Disabled Jockey's Fund was to be
    transferred into the Endowment. That's when I was on the board.
        Mr. Walden. Into the Endowment.
        Mr. Colton. Into the Disabled Jockey's Endowment. And that
    he was going to go and state to the public that the Disabled
    Jockey's Fund was going bankrupt and try and solicit donations
    into the Endowment.
        Mr. Walden. Interesting process.
        Yes, sir, Mr. King.
        Mr. King. That million dollars wasn't removed until 2002 at
    the time I was a chairman--I mean, treasurer--and received a
    call from Dr. Gertmenian about getting my approval for this
    million dollars. And that was my pursuit.
        Mr. Walden. I read your testimony on this.
        Mr. King. I was trying to find out where this money had
    gone or where it was spent.
        Mr. Walden. You have never been able to find out?
        Mr. King. No. I was given partial information on the
    account, but like I said, it was only partial. And you cannot
    make heads or tails of what these financial statements were
    telling me, other than some riders were being paid from
    Delaware and California from this fund, when they actually had
    their own funds those payments should have been paid from.
        Mr. Walden. I want to ask one more question--and the
    chairman is being most generous--and that is this: Do your by-
    laws allow you as the treasurer to authorize that kind of
    change of funds without Board approval?
        Mr. King. I have to plead ignorance, because I really can't
    say----
        Mr. Walden. Does anyone know that's on the board, or been
    on the board, or Mr. Giovanni, do any of you know, would your
    by-laws allow a phone call from the president to the treasurer
    to say, I want to move a million bucks over here?
        Mr. Giovanni.
        Mr. Giovanni. Not when I was there, sir, no. Anything that
    was moved out of the Disabled Jockey Fund was done by three
    letters. First of all, if somebody called and they had asked
    for some assistance, whatever it may have been, I contacted Mr.
    Bailey, Mr. Gary Stevens, Mr. Day and explained what the
    request was. If they approved it, I called the custodian for
    the fund and----
        Mr. Walden. Then these three men were all Board members,
    right? So it was like a small committee? Did you have like a
    subcommittee of the board, then, that would approve----
        Mr. Giovanni. Yes, sir. And these were the members on the
    subcommittee; they would approve all allocations.
        Mr. Walden. Thank you.
        Mr. Giovanni. There were three letters documenting every
    request.
        Mr. Whitfield. Mr. Burgess, you are recognized.
        Mr. Burgess. Thank you.
        What can I say? Well, let me start with Mr. Bailey.
        In your testimony, you've got the notation that you hired,
    or were interviewing, Dr. Gertmenian, but the references were
    confidential?
        Mr. Bailey. Yes, sir.
        Mr. Burgess. I have never encountered a situation like
    that.
        Mr. Bailey. Neither had I. And not to demean, I wasn't just
    an ordinary Guild member; I was on the executive board, so I
    thought my questions were well within my rights, and I thought
    I was due an answer. I thought I had the obligation to go back
    to the membership and to give this guy, Dr. Gertmenian, a yea
    or a nay vote, thus my reason for asking him.
        There was no middle ground. It was, no, they're
    confidential. And I asked him a second time and he said the
    same thing, no, you're not getting them; they're confidential.
        Mr. Burgess. Did anyone who was on the Board then, at that
    time, ever get to see the references on the resume that were
    labeled as confidential to Mr. Bailey? Did anyone ask to see
    them and was denied the ability to see them?
        Who pulled the chain on making the hire? Who would have
    been responsible for that, Mr. Bailey, do you know?
        Mr. Bailey. That would have been the executive Board at the
    time, of which I was a member. There was a nine-panel board, as
    I alluded to in my documentation there.
        There was a call, I believe it was June 15, 16--I'd have to
    refer to it, but it was a conference call for the Board
    members. And there was a lot of pressure put on us that we
    would be--as directors and officers, be liable if this Guild
    went bankrupt, and a lot of pressure put to bear to put it
    mildly for us to change over and remove Mr. Giovanni and hire
    Dr. Gertmenian.
        And five of us, or at least at the time of the end of the
    phone call, five of us said, no, we weren't going to do it yet,
    we needed more time to think about it. Pat Day, myself, Tony
    Black, Dean Koontz and Larry Malonson all said we--they wanted
    us to fax in our vote of ``yes'' for Dr. Gertmenian, and we
    refused to do it that night.
        Obviously, sometime during that night they got one of us--
    and it happened to have been Mr. Dean Koontz--to sign off and
    vote for Dr. Gertmenian; and thus they had a 5-4 majority. I
    say ``they,'' I say the board.
        Mr. Burgess. Who brought Dr. Gertmenian to your
    organization?
        Mr. Bailey. That would be Chris McCarron.
        Mr. Burgess. Mr. Giovanni, let me ask you, now the jockeys
    did not know that the catastrophic fund had lapsed; is that
    correct?
        Mr. Giovanni. That's what I understand.
        Mr. Burgess. So they couldn't be faulted if they were still
    making payments?
        Mr. Giovanni. No.
        Mr. Burgess. Did they still make payments?
        Mr. Giovanni. I don't know. I was out.
        Mr. Burgess. You were out at that point.
        Does anyone know the answer to that question? Were the
    jockeys still making payments after the catastrophic insurance
    was canceled?
        Mr. King. Yes. All members had to make--their mount piece
    had to be paid and their dues had to be paid, which was $100 a
    year.
        Mr. Burgess. And where would this money then go if there is
    no insurance?
        Mr. King. Most of the time it went to--at first, when I
    first went in there, it was going to the operating account.
        Mr. Burgess. The money that was supposed to go to the
    catastrophic insurance?
        Mr. King. Well, I'm not sure where they had earmarked it
    for, but it was actually going into the operating account.
        Mr. Burgess. Well, the young man who was injured, who
    testified first, said that he thought he was buying a
    catastrophic insurance policy. He writes a check for $100 a
    year and $10 for every ride.
        Where did that money go if there is no policy there to
    receive the money.
        Mr. King. Well, that goes for, basically, pay management,
    pay the people that are working for us in whatever services
    outside that we have.
        Mr. Burgess. Within the Guild itself?
        Mr. King. Yes.
        Mr. Burgess. Within the Guild itself.
        Mr. Donahue. Yes.
        Mr. Burgess. Okay. Well, now part of the catastrophic
    insurance--or maybe it was the health insurance--maybe I have
    it confused because I am easily confused, and this is a
    terribly complex story. This question I guess I would ask to
    Mr. Colton. The media rights purchased part of the insurance
    policy. Do I have that correct?
        Mr. Colton. Until I started working for the Guild I had a
    little bit of knowledge through John's education and I did go
    down to Kentucky with Mike McCarthy and review the financials
    for just a self-education. But when I started to work for
    Gertmenian everything was just going in one account and things
    were just getting paid out of there. Nothing was earmarked for
    any specific expense.
        Mr. Burgess. As of today, is there a catastrophic fund for
    a jockey who is injured this afternoon in a race? I don't even
    know if it's racing season, but if a jockey is injured this
    weekend, is there a catastrophic fund available for him?
        Mr. Colton. To my knowledge, there is not. I have not been
    a member since I've been expelled.
        Mr. Burgess. If a jockey's family member become ill tonight
    and needs regular insurance, is that insurance available to
    their family member?
        Mr. Colton. Correct.
        Mr. Donahue. If they've purchased the policy.
        Mr. Colton. Not every member who joins the Guild is in the
    health insurance policy. There are amounts for that a year and
    then an elective benefit you have to pay a monthly premium for.
    So it has nothing to do with the on-track policy we've been
    discussing.
        Mr. Burgess. Well, who owns the media rights today?
        Mr. Shepherd. Jockeys' Guild.
        Mr. Burgess. How much are the media rights worth today?
    What are they paying out?
        Mr. Shepherd. What are they worth or what are they paying
    out?
        Mr. Burgess. What is the dollar amount that is associated
    with the media rights? Presumably, there's some transfer of
    money for the media rights from one party to another. How much
    is that?
        Mr. Shepherd. Last year, they billed out $1.5 million and
    received $1.25, I think. Paid out about almost $1.3--a little
    bit less than $1.3 million in temporary and permanent member--
    --
        Mr. Whitfield. Excuse me, Dr. Burgess, if you wouldn't
    mind. You're saying that tracks for the media rights today are
    paying about $1.2, $1.3 million?
        Mr. Shepherd. Yes, sir.
        Mr. Whitfield. I think Mr. Giovanni said back in 2001 they
    were paying $2.2, $2.3 million, right?
        Mr. Giovanni. $2.2 million.
        Mr. Whitfield. So a $1 million reduction. How did that come
    about?
        Mr. Shepherd. I didn't see that kind of money coming in,
    and I wasn't really paying that much attention in years before.
    But I was an interested member, and I don't remember what was
    coming in, but don't seem like it was that much. Otherwise, we
    should have been able to keep up with our health insurance.
        Mr. Whitfield. But you're chairman of the Board now.
        Mr. Shepherd. At this point in time. What I've seen the
    financials and when I looked.
        Mr. Whitfield. $1.2 million coming in.
        Mr. Shepherd. $1.25 or something like that that came in
    last year.
        Mr. Whitfield. Thank you, Doctor.
        Mr. Burgess. You're reclaiming my time.
        Mr. McCarron, perhaps I should ask you, what has happened
    to the money, the money that was being paid in either by
    jockeys or by media rights that was supposed to be paying for
    catastrophic coverage. What happened to that money? Where did
    it go?
        Mr. McCarron. I have no idea, sir.
        Mr. Burgess. Does anyone have an opinion?
        Mr. McCarron. I have not been involved with the Jockeys'
    Guild since I retired June 23, 2002.
        Mr. Burgess. Does anyone have at least a notion of where
    that money is, where it has been going?
        Ms. Swan. This is Tomey Swan. Can you hear me?
        I understand that when jockeys pay their per mount fee, it
    is not paid to their catastrophic insurance. We understood that
    our catastrophic was going to expire, and it did. When we pay
    in per mounts, it covers a lot of things--covers the staff,
    helps supplement our health insurance. It just covers a lot of
    things. It's not particularly for catastrophic insurance. It
    never was.
        Mr. Shepherd. The contracts that I've ever read don't say--
    --
        Mr. Burgess. If I may, Mr. Birzer, who testified earlier,
    gave us the impression that it was his understanding that he
    had purchased that insurance--in fact, he made a rather
    plaintive statement that he would not have left his family
    exposed in that way. His intention all along was to be paying
    that money. So he didn't make that information up, I don't
    believe. Where would he have gotten the notion that that money
    was going to pay for his catastrophic insurance?
        Mr. Shepherd. I said that I understood for all the time
    since 1975 that the racetracks were paying for our catastrophic
    insurance and it wasn't until 2001 when I found out more about
    the accident in 2000 of Stacey Birden that I realized how
    everything over a hundred thousand was being paid for. The
    racetracks were only paying for the first hundred thousand. But
    we were always led to believe that the racetracks were paying
    for that--and, by rights, should.
        Mr. Burgess. Is that an opinion shared by anyone else?
        Mr. Bailey. It's kind of difficult to understand even
    though you're going through it. Traditionally, our health
    insurance as well covered our catastrophic. Everything over a
    hundred thousand, our health insurance picked up. When the
    health insurance was stopped, obviously, we had no health or
    catastrophic. So when Dr. Gertmenian reinstituted the health
    insurance, it's obvious that health insurance policy did not
    pick up the catastrophic end. Therefore, the need for a
    separate policy, which he did not--and if a member didn't know
    that, he would have thought, oh, I've got my health insurance
    back. I must have my catastrophic back. So it was incumbent
    upon the new board, especially Dr. Gertmenian, to tell the
    members the insurance wasn't the same.
        Mr. Burgess. Thank you for that clarification.
        Mr. Shepherd, let me just ask you then to wrap up. The
    Chairman has been kind with my time, even though he took some
    of it for his own use; and I appreciate the indulgence. Very
    complicated situation that we have in front of us today.
    Congressional hearing, I wager that's probably not something
    that you do very often. What would you like to see accomplished
    as a result of all of the effort and everything that everyone
    is putting forth today?
        Mr. Shepherd. I think a national work comp would probably
    be the most efficient way to do it, most bang for the buck.
    What I'd like to see accomplished is my children not to have to
    go through what we've gone through and be abused by the
    industry, by the racetracks, that they would get treated fairly
    as athletes, not have to pick up the crumbs like we've had to--
    and we literally have had to.
        Mr. King. What about the money that disappeared from the
    Guild? I'd like to have that back for the jocks.
        Mr. Shepherd. That will go to litigation there.
        Mr. King. One of the riders signed a petition requesting
    the search and audit to find this money, which has led to the
    lawsuit that I've filed against the Jockeys' Guild, and still
    no answers.
        Mr. Burgess. Mr. Chairman, I'll go on record as saying I
    don't favor the nationalization of the horse racing industry in
    this country. I guess we can refer to racetracks as Amtraks in
    the future if we did that, but it doesn't seem to be a
    particularly healthy way to go. But I have to wonder in my mind
    where Federal agencies such as OSHA were while all of this was
    going on. I don't know whether they have jurisdiction over
    racetracks, but it would seem to me logical that they would.
    But I will just--with that observation I'll end my testimony.
    Thank you for your indulgence.
        Mr. Whitfield. Thank you.
        Mrs. Blackburn, you're recognized.
        Mrs. Blackburn. Thank you, Mr. Chairman; and thank you all
    for your time.
        I'm beginning to feel like I need a chart to follow all of
    the different story lines. I think each and every one of you
    sitting at that table would say this is a great example of
    where hindsight is 20/20; and if you had the opportunity to go
    back and do it over, you would probably do it just a little bit
    differently.
        Mr. King, if I may start with you, please. Did the Guild
    ever use a CPA or an outside firm to manage their accounts?
        Mr. King. No, ma'am.
        Mrs. Blackburn. So you never had outside management of
    those funds.
        Mr. King. Unless you would call Matrix outside management.
        Mrs. Blackburn. Did you ever have anyone do an annual
    audit?
        Mr. King. The annual audit was always done through Dr.
    Gertmenian, Lacey, Marlette & Donnelly.
        Mrs. Blackburn. So he audited himself.
        Mr. King. It was an auditing firm, Lacey, Marlette &
    Donnelly.
        Mrs. Blackburn. Mr. Giovanni, do you have a response to
    that, sir?
        Mr. Giovanni. When I was national manager we did an audit
    every year.
        Mrs. Blackburn. Sir, who performed your audit?
        Mr. Giovanni. Arthur Andersen.
        Mrs. Blackburn. And you could produce those audits.
        Mr. Giovanni. No, ma'am, I could not. I was locked out in
    June 2001, and I do not have any--I had to negotiate to get my
    personal property back out of the offices. I was never allowed
    to set foot back in the office.
        Mrs. Blackburn. They should be--those audits should be a
    part of the Guild records.
        Mr. Giovanni. They should be part of the Guild record, yes,
    ma'am.
        Mrs. Blackburn. All right. Mr. Giovanni, I think I want to
    stay with you for a second. I'm having a little trouble
    following what we're saying on both insurance policies. If my
    notes are right, you all have said that having the catastrophic
    and the health insurance would have come to the $4.3 million
    and that could not be afforded.
        Mr. Giovanni. No, ma'am.
        Mrs. Blackburn. No. All right.
        Mr. Giovanni. There was actually only one policy. It was a
    health insurance policy that covered the jockeys when they were
    injured on track. If their expenses went beyond the hundred
    thousand which was provided by the racing associations, the
    health insurance would come in and pick up the difference. When
    we could no longer afford the health insurance, with the 43
    percent increase, and could no longer afford it, we decided to
    buy--the executive committee opted to buy a catastrophic policy
    that covered the jockeys when they got hurt on track for up to
    a million dollars.
        Mrs. Blackburn. Okay. All right. That has been confusing,
    and I'm sure it's confusing to you all as we try to follow what
    has happened with these policies.
        Let me ask you something else, Mr. Giovanni. I think that
    Dr. Gertmenian's salary is $167,000 a year. Is that correct?
        Mr. Giovanni. I heard that. I really don't know.
        Mrs. Blackburn. Any of you--let's see, Mr. Shepherd, you're
    chairman of the board. Can you confirm that?
        Mr. Shepherd. $165,000 is what I think it is.
        Mrs. Blackburn. $165,000. Okay. And, Mr. Giovanni, when you
    were there, what was your salary?
        Mr. Giovanni. $140,000.
        Mrs. Blackburn. $140,000. Okay. Okay. Mr. Giovanni, who
    were the Board members when you were removed from your
    position?
        Mr. Giovanni. Excuse me?
        Mrs. Blackburn. Who were the Board members?
        Mr. Giovanni. Who were the Board members?
        Mrs. Blackburn. Yes.
        Mr. Giovanni. There were 27 of them.
        Mrs. Blackburn. Twenty-seven Board members.
        Mr. Giovanni. There was an executive committee of nine that
    acted in the interim between Board meetings.
        Mrs. Blackburn. All right. Mr. Colton, you said that the
    assembly at the 2000 national convention passed a resolution to
    make the Guild a for-profit entity.
        Mr. Colton. I won't use the word ``for profit,'' just that
    we were no longer going to be allowed to run at an operating
    loss. We could not go into our assets anymore, if that's
    correct. That day, Mr. Giovanni, Jerry Bailey and Chris
    McCarthy were there. That's my recollection. It was basically
    the executive Board to balance our personal budget.
        Mrs. Blackburn. All right. At this point in time, right
    now, Mr. Shepherd, are you running at a profit or a loss?
        Mr. Shepherd. A loss.
        Mrs. Blackburn. At a loss. How much?
        Mr. Shepherd. I haven't seen the financials. Our treasurer
    keeps close watch on that; and he's a jockey that also has two
    college degrees, one in business and one in finance. He keeps
    close tabs with the financial--chief financial officer of the
    Guild. And then I talk to Jeff all the time about it, and he
    said we're pretty much where we had been but the money--there's
    a lot of racetracks that have quit paying us this past year and
    so--I'm sure we're running at a loss.
        Mrs. Blackburn. I want to be sure then that I'm following
    this. You were running at a loss, and so the board--the Guild
    gets rid of Mr. Giovanni. And we decide to become a for-
    profit--we're going to focus on profit. We're going to change
    our structure here.
        So our media rights were at $2.2 million and now $1.2
    million, and we no longer have the health and catastrophic
    insurance, and we are running at a loss. And back in 2002 we
    moved a million dollars from the Disabled Jockeys' Fund, and we
    still don't know what happened to that money, and all of our
    annual dues and our mount fees are going into an operating
    account, and today there is no fund for a jockey if he were to
    be injured today. Am I correct?
        Hold on a minute. Mr. Giovanni, you're shaking your head.
    Go ahead, sir.
        Mr. Giovanni. That's what I understand. That's what I
    understand, yes.
        Mrs. Blackburn. Okay.
        Mr. Giovanni. I'm no longer associated with the Jockeys'
    Guild.
        Mrs. Blackburn. Yes, sir. And I appreciate that. Let's see,
    and is it----
        Mr. Donahue. I'd like to make one comment to the salaries
    they were receiving. When John was national manager of the
    Guild, he wasn't paying his own company $40,000 a month for
    consulting. Although he had lobbyists, he was not paying his
    company that $40,000 a month.
        Mrs. Blackburn. So Dr. Gertmenian gets $165,000 a year,
    plus $40,000 a month goes to Matrix, his company, as a
    consulting fee.
        Mr. Shepherd. There's also--ma'am, there's not the expense
    of all the attorneys. One attorney that we had before with Mr.
    Giovanni, Mr. Kenney, was getting probably somewhere around a
    couple hundred thousand a year. There's a lot of----
        The bottom line--if you go look at the bottom line on the
    money that was spent, the money that was spent by the Jockeys'
    Guild 4 years prior to and 4 years after the change, the
    percent of the money that went to members' benefits and member
    welfare is a lot higher now than----
        Mrs. Blackburn. Mr. Shepherd, somewhere we're missing
    something and I guess----
        Mr. Shepherd. We're not a nonprofit now.
        Mrs. Blackburn. You say missing dollars somewhere along the
    way. If my understanding is right, you have got people paying
    separately for health insurance, you have the dues and the fees
    that are going in every year, but you don't have a fund that
    would meet the obligations that were there for individuals that
    were injured.
        I appreciate the fact that you all are here and are willing
    to talk with us and we're going to try to work through this
    issue and see if we can continue to focus on the three main
    issues that this hearing is to focus on: the accounting of the
    Guild's finances, notification of the jockeys of the
    cancellation of their health insurance and on-track insurance,
    and the removal of Mr. Giovanni and the replacement of Dr.
    Gertmenian. That is the focus of trying to work through this.
        With that, I'm going to yield back. My time is out. I thank
    you, Mr. Chairman, for the time; and I thank you all for your
    indulgence today.
        Mr. Whitfield. Thank you, Mrs. Blackburn.
        Let me go back to Mr. McCarron for just a minute.
        Mr. McCarron, how many Board members were there? We had
    talked earlier about an actual Board meeting in which the
    policy was allowed to lapse or the decision was made, and you
    were a Board member, Mr. Colton was a Board member, Ms. Swan
    was a Board member. Who else were Board members?
        Mr. McCarron. Well, total Board members--sir, are you
    referring to the full Board of 27 senators or the executive?
        Mr. Whitfield. The executive.
        Mr. McCarron. The executive board. I believe there are
    nine, and I'm afraid to say that I don't think I could name
    them all at this point.
        Mr. Whitfield. What about you, Mr. Colton?
        Mr. Colton. I think I can come close. There was the three
    of us at this meeting, Michael McCarthy, Robby Davis, Nicky
    Wilson, Ray Subill, Nicky Wilson, Larry Reynolds. What number
    am I up to?
        Mr. Whitfield. You have got Chris McCarron, Mr. Colton, Ms.
    Swan, McCarthy, Davis, Nicky Wilson, Larry Reynolds.
        Mr. Whitfield. Ms. Swan, do you know who the other member
    was of that executive committee?
        Ms. Swan. You didn't mention me, did you?
        Mr. Whitfield. Yeah, I mentioned you. McCarron, Colton,
    McCarthy, Davis, Swan, Wilson and Reynolds.
        Mr. McCarron. Mr. Chairman, I think it was Kent Desormeaux.
        Mr. Whitfield. The three of you, however, do not recall a
    specific Board meeting called to discuss this issue and none of
    you remember voting on it. That's correct, isn't it?
        Okay. Now, Mr. Colton, you worked for the Jockeys' Guild.
    Do you still work for the Jockeys' Guild?
        Mr. Colton. No, sir.
        Mr. Whitfield. Why did you leave?
        Mr. Colton. I left at the end of March 2003.
        I had been asked--it was the first time that I really had
    seen how the office worked, and if I was to say dismayed, that
    would be an understatement. I really in the past had believed--
    and I was--as I told you before, I didn't want to use the
    word--I believe we were moving positive, and I believed in Dr.
    Gertmenian, he was a positive, and----
        Mr. Whitfield. Did you resign or asked to leave?
        Mr. Colton. I resigned, quit, walked out of one meeting.
        Mr. Whitfield. Mr. Donahue, you worked for the Guild.
        Mr. Donahue. Not in his capacity, but I was the co-
    chairperson for the disabled riders funds.
        Mr. Colton. I want to make one clarification. I actually
    had to sue for my wages, but the wages did not come from the
    Guild, they did come from Matrix.
        Mr. Whitfield. So Matrix paid you.
        Mr. Colton. Yes, sir.
        Mr. Donahue. Mine was unpaid.
        Mr. Whitfield. You were chairman of the Disabled Jockeys'
    Fund.
        Mr. Donahue. Until December 2004.
        Mr. Whitfield. What happened?
        Mr. Donahue. I was relieved of my duties.
        Mr. Whitfield. Why?
        Mr. Donahue. I became very vocal about the finances, I'm
    sure. When David Shepherd took over, they formed a new
    committee, but a month prior to----
        Mr. Whitfield. There's been so much testimony today, but
    were you the one testifying about the $1 million request being
    made to transfer that money?
        Mr. Donahue. Eddie King.
        Mr. Whitfield. Did you work for the Guild?
        Mr. King. That was an unpaid position by our peers.
        Mr. Whitfield. What was your position?
        Mr. King. Director of the Guild from 2002.
        Mr. Whitfield. So how many different accounts were there at
    the Guild?
        Mr. King. At one time, I saw six.
        Mr. Whitfield. You had the Disabled Jockeys' Fund.
        Mr. King. That was the one that I focused on. But I also
    asked for their operating account, the expenses around all
    financial transactions from that. Basically, every account that
    they had, I asked for the financials.
        Mr. Whitfield. And you were responsible for the Disabled
    Jockeys' Fund?
        Mr. King. Well, when I gave my approval to remove $1
    million, yes, sir.
        Mr. Whitfield. Who asked you to move the million dollars?
        Mr. King. Dr. Gertmenian.
        Mr. Whitfield. Was that done?
        Mr. King. The main reason it was removed, it was removed
    before I received the call, some $300,000 was removed in
    December.
        Mr. Whitfield. Okay. Now let me go back to Mr. Bailey and
    Mr. Day and Mr. Colton and Mr. McCarron. All of you were still
    active jockeys in April 2002, is that correct?
        Mr. Donahue. That's correct.
        Mr. Whitfield. All were members of the Jockeys' Guild in
    2002, correct?
        Mr. Bailey. Correct.
        Mr. Colton. 2002 I was. I don't believe Pat Day was. I
    believe he had already resigned.
        Mr. Whitfield. Mr. Day.
        Mr. Day. What was the question? I'm sorry.
        Mr. Whitfield. You were still actively riding in April
    2002, weren't you?
        Mr. Day. I was still actively riding, but I was no longer a
    member of the Guild. I resigned the middle of June 2001.
        Mr. Whitfield. Okay. But, Mr. Bailey and Mr. Colton and Mr.
    McCarron, you were all acting members of the Guild. And I just
    want to bring this home once again. You three, none of you were
    aware that the policy had lapsed for the on-track catastrophic
    coverage, is that correct?
        Mr. Bailey. I wasn't aware of it until I approached Dr.
    Gertmenian.
        Mr. Whitfield. You had not received any notice, formal
    notice from the Guild, had you, Mr. Colton?
        Mr. Colton. No.
        Mr. Whitfield. Mr. McCarron, you had not.
        Mr. McCarron. That's correct, sir.
        Mr. Whitfield. Mr. Shepherd, you're currently the chairman
    of the Board of Directors.
        Mr. Shepherd. Yes, sir.
        Mr. Whitfield. Gary Birzer is a personal friend of yours.
        Mr. Shepherd. Yes, sir.
        Mr. Whitfield. You have known him for a long time. I
    suppose any jockey--almost any jockey is going to have some
    injuries. I guess that's part of the trade.
        Mr. Shepherd. Yes, sir.
        Mr. Whitfield. Gary Birzer testified that he did not know
    that the policy was not available anymore, that it had lapsed.
    And you, as chairman of the board, when did you first become
    aware that the policy was going to lapse?
        Mr. Shepherd. At that point in time I wasn't even on the
    board. But, like I stated, Robert Colton who said that he
    wasn't aware of it, he was the one that informed me of it, that
    it was going to lapse and that we shouldn't do it. We shouldn't
    renew it.
        Mr. Whitfield. How long have you been chairman of the
    board?
        Mr. Shepherd. Since December.
        Mr. Whitfield. December of?
        Mr. Shepherd. This past year, 2004.
        Mr. Whitfield. And how often does the Board meet?
        Mr. Shepherd. We've had four meetings so far this year,
    teleconference meetings.
        Mr. Whitfield. You made a comment awhile ago to Mrs.
    Blackburn or maybe Mr. Burgess that--I understand we all have
    different educational levels and so forth, but, as chairman of
    the board, you do have a responsibility to look at financial
    statements and so forth, but you made the comment that you
    really don't focus on that because there is someone else that's
    more qualified to do that. And who is that?
        Mr. Shepherd. Jeff Johnston is the treasurer, and we go
    over them. I talk to him real regular, and we go over them and
    discuss and things that don't make sense. I mean, he has the
    education and is a jockey. So I trust him a lot.
        Mr. Whitfield. Now, as chairman of the board, do you have
    access to the minutes of the Board meetings?
        Mr. Shepherd. Yes, Jeff's been keeping them since I've been
    in. He's been a lot more diligent.
        Mr. Whitfield. Would you provide the committee with minutes
    of the board? Would you provide us those minutes as chairman of
    the board?
        Mr. Shepherd. I think we should.
        Mr. Whitfield. Okay. Now we'd like to have those by next
    Friday.
        Mr. Shepherd. That's asking a lot.
        Mr. Whitfield. As chairman of the board, do you report to
    Dr. Gertmenian or he to you?
        Mr. Shepherd. He reports to us--us as a whole.
        Mr. Whitfield. All right.
        Okay. Mr. Stupak, any additional questions?
        Mr. Stupak. Mr. Chairman, just--if I may, I would move we
    not ask for documents, we subpoena them.
        No. 2, I would advise the Board members, being an attorney
    up here, I would suggest you get some legal counsel. Because
    this thing is really a hornets' nest and starting to unravel,
    and as it unravels there's some responsibilities you should
    have taken that you did not.
        Third, Mr. Chairman, I hope we would join together and I
    really think we have to do workers comp on a national level for
    jockeys and riders and the rest of these other people.
        I think the other thing we have to do is get ahold of the
    National Labor Relations Board and change the rules and allow
    these people to bargain collectively with whoever they want.
    Allow them collective bargaining.
        I think, also, we should have OSHA go through these cracks.
    I think if you and I join with maybe the chairman and Mr.
    Dingell and go to the Secretary of Health and Human Services
    and ask that the National Institute For Occupational Safety and
    Health undertake a study of racetracks and related sites
    Nationwide----
        And last but not least, we saw in the opening video clip
    here many of these people riding--and I see those clips all the
    time. I see them in ads for VISA and things like this. I think
    these individuals who are the riders are entitled to some
    compensation for that, more than what they've been receiving.
        I would hope we would explore together an opportunity to
    see how we can try to make this industry whole because it
    certainly hasn't been for a long, long time.
        I look forward to our next panel, but I want to thank
    everybody on this panel. We've learned a lot here today. Thank
    you.
        Mr. Whitfield. Mr. Stupak, thank you.
        I guess the U.S. Is about the only jurisdiction in the
    world that has a fragmented racing industry per se. I mean,
    there's British horse racing Board in Great Britain, and we
    could go on with France and whatever and whatever.
        One of the purposes of this hearing, of course, is to
    explore everything. Because we know there's a need. We're not
    sure the best way to get there, but, as it's already been
    mentioned, after this panel and the next panel we are going to
    have another hearing. We're going to have the racetrack people
    in and others from the industry and get their views and
    hopefully make some decision to move forward to improve this
    sport and to increase the safety and to make sure that people
    are not falling between the cracks. That's our goal here.
        Now I want to ask, without any objection I'm going to
    submit this entire binder, a hundred documents, for the record.
        I want to thank all of you members of the panel for being
    with us today.
        We're going to bring up the third panel now. Mr. Giovanni,
    I don't know if you have additional deadlines to meet or
    anything, but if you would like to stay, we might have some
    additional questions for you as a result of this next panel, if
    you have the time.
        Mr. Giovanni. Certainly, yes, sir.
        Mr. Whitfield. Anyone else that's interested?
        Mr. Donahue. I have one question. You asked Gary Birzer a
    question of whether he knew of any other disabled riders that
    weren't receiving benefits. Well, I can't speak for any other
    disabled riders, but I can speak for myself--I had surgery in
    February--that my hospital bills have not been paid yet.
    They've been paid by my private insurance but not the 20
    percent that the Guild's responsible for. I have not been
    reimbursed for prescription medicines since July. I don't know
    if there's any other disabled riders in the same position.
        Mr. Whitfield. When were you injured?
        Mr. Donahue. 1986.
        Mr. Whitfield. But you have not received any assistance
    since July.
        Mr. Donahue. For my prescription medicine, no.
        Mr. Whitfield. Well, thank you and thank you very much for
    your testimony. We genuinely appreciate it.
        I would at this time call the third panel. On the third
    panel, we have with us Dr. L. Wayne Gertmenian, who's the
    president and chief executive officer of the Jockeys' Guild; we
    have Mr. Albert Fiss, who's the vice president and chief
    operating officer; and then we have Mr. Lloyd Ownbey, who's the
    general counsel of the Jockeys' Guild.
        We welcome all three of you and thank you very much for
    your patience today. As you know, it's kind of a complicated
    issue and takes a while to go through it. I want to thank all
    of you for being with us today on this important hearing.
        As you are aware, the committee is holding an investigative
    hearing; and when doing so we have the practice of taking
    testimony under oath, as we did the two previous panels. Do any
    of you three gentlemen object to testifying under oath today?
        Mr. Gertmenian. No.
        Mr. Whitfield. Mr. Fiss.
        Mr. Fiss. No.
        Mr. Whitfield. Mr. Ownbey.
        Mr. Ownbey. No.
        Mr. Whitfield. The Chair advises you that, under the rules
    of the House and the rules of the committee, you are entitled
    to be advised by counsel. Do any of you desire to be advised by
    counsel during your testimony today?
        Mr. Gertmenian. Yes.
        Mr. Fiss. Yes.
        Mr. Whitfield. You are your own counsel, Mr. Ownbey.
        Mr. Fiss, who's representing you today?
        Mr. Fiss. Robert Trout.
        Mr. Minsk. Lawrence Mentz.
        Mr. Whitfield. Do you two gentlemen intend to testify
    today? In that case, if Dr. Gertmenian and Mr. Fiss and Mr.
    Ownbey would rise, I'd like to swear you in.
        [Witnesses sworn.]
        Mr. Whitfield. Each of you are now under oath.
        I would recognize Dr. Gertmenian for his 5-minute opening
    statement.

    TESTIMONY OF L. WAYNE GERTMENIAN, PRESIDENT AND CHIEF EXECUTIVE
    OFFICER, JOCKEYS' GUILD; ALBERT FISS, VICE PRESIDENT AND CHIEF
     OPERATING OFFICER, JOCKEYS' GUILD; AND LLOYD OWNBEY, GENERAL
                        COUNSEL, JOCKEYS' GUILD

        Mr. Gertmenian. I would like to use my time, Mr. Chairman,
    and thank you very much for allowing me to testify and thank
    all of you and particularly investigators that came and asked
    questions of me, and I do appreciate the fact that you were
    very polite to me.
        I'd like to spend my time if you allow me to just take an
    issue that has so concerned me since I was asked to come and
    help. It's a complicated subject, and so I'm going to ask you
    to please allow me to sound a little confused because it is
    confusing. It's called the scale of weights. Now it's a system,
    a process by which each jockey weighs in before every race.
    It's a system that, unfortunately, has got a built-in fraud to
    it that is impossible to fix it seems. As every time I try to
    address it I'm told by the people who are empowered to make
    these decisions that it's been this way for a hundred years and
    it's not going to change.
        Now if I can explain. When you go to a track, you get a
    program, and it's going to have a weight next to the jockey.
    The public is led to believe that that weight is the weight of
    the jockey and his gear. It's simply not true.
        We have two clerks in New York, as you know, who are under
    indictment for this because the only way for them to keep their
    job was for them to go ahead and put these numbers down.
    They're ordered to do it. The fact is that it's not weighing
    all the equipment.
        Now most people who are in the industry when I've asked--
    and I've asked many, many times--how much does the equipment
    weigh, all the gear, from the withers to the rump, they'll all
    tell you it's about six, six and a half pounds. I believed it
    because everybody said the same number. But when I took all of
    the gear and put it into a plastic basket and weighed it, it
    was ten pounds. So you start off with a four-pound fudge
    factor.
        In addition to that, the jockeys, who are required to
    maintain a weight of approximately 114 in the nude, maybe 113,
    can't get there. Maybe they could a hundred years ago in 1907
    or whenever the year was--I think that's the last year they
    made adjustments--but to get to that weight now there are just
    very few people born with those kinds of bone and structure. So
    the result is that probably 90 percent, maybe more, of the
    jockeys in this country go through extreme measures to make the
    weight.
        Now to a certain extent they make it because they don't
    count the four extra pounds I was telling you about, but to a
    great extent they make it by going to the sweat box every day,
    taking out 3 or 4 pounds each day when they go to work,
    dehydrating their bodies and putting them into great danger.
    The worst of it, Mr. Congressman, the worst of it is that
    probably 80 percent of them, and probably much more than that,
    taking different tests, are below the 5 percent mandatory body
    fat that all athletes have to maintain.
        Now in some sports that number required by their
    organizations is much more, 8 percent, 12 percent. Gymnasts and
    cyclists, who have the lowest number, it's 5 percent. They're
    allowed to compete. If they don't, they have to leave that day.
    They can't compete.
        In horse racing, the typical jockey is in the 4 and 3
    percent range, which means that they are permanently
    cannibalizing their liver and their kidneys. And we know since,
    we've already had one or more on a dialysis machine, that it's
    a problem now that's going to explode. It's going to be an
    enormous problem. They use drugs. Most jockeys try not to, but
    they have to use Lasix or some kind of diuretic. So they're
    doing horrible things to their body so they can keep their
    jobs.
        We have asked--we would like your help--it's not to raise
    the scale of weights, this system that's being used Nationwide,
    but rather change the system. That is, take the 10 pounds of
    gear, which is mostly there for their safety, and make it
    mandatory. Otherwise, what they do is they take their vests and
    they strip out the sponge, they take out their different
    equipment and they cheat on the equipment, take cardboard
    boots, everything they can to get rid of the equipment that
    weighs to make their weight.
        We would like to see 10 pounds of mandatory equipment on
    every jockey. Instead of him being weighed with his equipment,
    which--instead of making him try to cheat, we would like him to
    be weighed in the nude, required to have 5 percent of body fat
    on his system before he go to work any given day, and that he
    must have 10 pounds of safety gear on his horse. That is what
    I'm asking you.
        Thank you for listening.
        Mr. Whitfield. Mr. Fiss.

                        TESTIMONY OF ALBERT FISS

        Mr. Fiss. Thank you, Mr. Chairman.
        My name is Albert Fiss. I am vice president of the Jockeys'
    Guild, the national labor organization for professional
    thoroughbred and quarterhorse race riders. I'm also on the
    Board of Directors of the New York Jockey Workers Compensation
    Fund for New York jockeys and exercise riders.
        I started working for the Jockeys' Guild on Saturday, June
    16, 2001. At the time, it was my understanding that I would be
    working as a consultant to the Guild until the end of the
    calendar year. Then, on December 22, 2001, I received a phone
    call from the stewards at Beulah Park about a jockey, Arnold
    Ruiz, who had died from an on-track injury. I had already sent
    the office staff home for Christmas, so I drove to Grove City,
    Ohio, to meet with Arnold's family. It was this single event
    that made me realize that I had the opportunity to potentially
    improve the lives of a group of athletes who were in need of
    help.
        So on January 1, 2002, I started going to industry
    functions and trade association meetings. I quickly learned
    that the industry as a whole was very resistant to change, but
    probably more disturbing was the lack of cooperation, lack of
    accountability, lack of responsibility, lack of interest on
    issues pertaining to jockeys by the industry leaders and their
    associations.
        When I first returned home to Los Angeles after spending 2
    months in Lexington, Kentucky, I had occasion to meet with some
    of my friends. They asked me how was it going and what was the
    horse racing industry like. I explained to them that horse
    racing is not a single industry but rather there's 38 separate
    industries. Horse racing is driven by gambling, and gambling is
    a State-regulated industry. There are 38 active paramutual
    racing States, each of which have their own rules and their own
    regulations. Imagine dealing with 38 separate Paul Tagliabues,
    if you will.
        Twelve months later, I was once again home for a visit and
    met with some of my friends again. They asked me once again,
    what is the horse racing industry like? This time I explained
    to them that horse racing is not a single industry but rather
    there's six separate industries. Horse racing has six
    stakeholders, each of which has at least one trade association,
    most have two, and some have three. The fact that there are so
    many stakeholders and so many trade associations that protects
    these stakeholders is what festers the lack of cooperation,
    accountability and responsibility which is so pervasive in the
    industry. It also happens to be the environment which the
    racing associations cultivate.
        As an example, State racing commissions. One of the
    stakeholders is State racing commissions. By their
    administrative nature they're unwilling or unable to assist
    jockeys with the problems that have been identified. For
    example, the chairwoman of the Illinois racing Board at a
    meeting on April 12 of this year stated, regarding the lack of
    insurance coverage: Even the $1 million in coverage is nothing
    in the event of a catastrophic injury. If I had the power, I
    would order you, all parties, to sit down and negotiate this
    until it was settled.
        Imagine a commissioner of a horse racing State not having
    the power to do what is absolutely right and moral with regard
    to jockeys and exercise riders.
        One of the racetrack associations is TRA. Its executive
    director is Chris Scherf. I saw him in the audience earlier
    today. In an article in bloodhorse.com on March 14, 2001, in
    response to the Guild losing its family health insurance, he
    said, we're not responsible for paying the health insurance for
    independent contractors. The jockeys are not hired by the
    tracks; they are hired by the horsemen.
        We have always said we are not responsible for the Guild's
    health costs but in fact the health costs are what have driven
    the Guild's side of negotiation. We're always arguing over
    whether or not we're paying for health plans or not.
        On basic issues involving the jockeys, things like allowing
    jockeys to wear advertising on their pants so that they can
    raise additional money for the disabled jockeys endowment which
    will help to permanently create a financial function that can
    put money into the pockets of disabled riders, we have fought
    tooth and nail to the point where, in Kentucky, the Racing
    Commission changed the rule because they lost to a Federal
    lawsuit on this very issue 2 years ago at the Kentucky Derby.
        Other participants in the industry such as trainers, some
    of them are good, some of them are not so good, some of them
    are interested in jockey causes, others are not. But I'd like
    to read you a quote in an article published on July 28, 2005,
    entitled Jockeys Make a Stand by Dave Fairbanks regarding
    consecutive days of excessive heat at Colonial Downs in which
    Emanuel Sanchez died this year from heat exhaustion.
        Ferris Allen, horse trainer, said we could not have run--we
    would not have run our horses if we thought the heat was
    excessive. There's no question it was hot, but the risk to
    horses is when you get a change in temperature, not when it's
    been consistently hot for a few days.
        Complete and total disregard for the jockey. Of course he's
    going to say that if it's dangerous for the horses then I'm the
    most sympathetic person in the world, but when it's dangerous
    for the jockey, it just doesn't matter.
        Thank you.
        [The prepared statement of Albert Fiss follows:]

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        Mr. Whitfield. Thank you, Mr. Fiss.
        Mr. Ownbey, you're recognize for 5 minutes.

                       TESTIMONY OF LLOYD OWNBEY

        Mr. Ownbey. Thank you very much, Mr. Whitfield.
        I've been general counsel----
        Mr. Whitfield. Would you turn the microphone on.
        Mr. Ownbey. I have been general counsel to the Jockeys'
    Guild since June 2001. In that capacity, I've had the
    opportunity to develop various opinions about the industry.
        No. 1, jockeys have not been physically or economically
    protected against unsafe, unhealthful and unnecessary risks
    that permeate the industry.
        No. 2, acting alone, the Guild lacks sufficient resources
    or power to effectively deal with those conditions.
        No. 3, the gambling industry has received over $26 billion
    in horse racing revenues and are amassing fortunes using jockey
    talents, the use of which is inadequately compensated.
        No. 4, owners and operator of racetracks have the power,
    the ability and the resources to deal with these problems but
    haven't done so.
        Five, the Guild presented detailed, specific proposals 3
    years ago to the TRA. It has failed to act on any single health
    or safety issue in 3 years.
        No. 6, the Guild made similar proposals to all of the State
    regulatory bodies. Some progress has been made, but the
    progress is slow and spotty, while jockeys continue to be
    killed and disabled performing their craft. The State of
    California just put in a new law that they're going to be
    studying the problem.
        Whether the States or Federal Government decides to deal
    with these problems, the analysis of the action to be taken
    should follow these logical steps:
        Step No. 1, expeditiously identify the specific risk that
    exists at every racetrack in the country. We have frequently
    expressed that the Guild is prepared to identify those major
    problems to staff on this committee or the committee itself
    anywhere in this country, and those services are available
    today or any day forward.
        Step No. 3, determine which policies, procedures,
    regulations and laws that need to be changed or added and that
    that action takes place now.
        Step No. 4, establish industry-wide zero tolerance for
    unsafe, unhealthful and unnecessary risks to jockeys and other
    riders on tracks.
        No. 5, provide jockeys who are temporarily or permanently
    disabled immediate quality medical care and long-term financial
    assistance.
        Step No. 6, provide adequate funding for those needs.
        I urge the committee to take the following three separate
    actions:
        The first one is to establish a mechanism for a Statewide
    set of basic safety and health standards to apply to all who
    participate in this sport and their State regulators. We need
    some sort of a hand from the Federal Government in some way to
    urge it as they did in OSHA. OSHA, they put in minimum
    standards, and then the States followed and put in their place
    other standards.
        Provide uniformed minimal standards of workers compensation
    covering all of the track injuries administered under the State
    system. That is to say, we need to have a uniformed system so
    it doesn't depend on which track you're riding on how much comp
    you get. But let the States manage that particular thing.
        Now, third and final, how do we pay for it? Require that a
    percentage of all on-track or off-track wagers made on any
    track in the United States be set aside in a fund to pay for
    the costs associated with implementing a complete safety and
    health program for the sport of kings.
        Thank you very much.
        [The prepared statement of Lloyd Ownbey follows:]

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        Mr. Whitfield. Mr. Ownbey, thank you.
        Thank you all for your testimony.
        I might just make this comment about the racing industry.
    As I stated earlier, we do have a fragmented industry. We have
    different jurisdictions with different rules, and there is a
    lack of uniformity. In most nations of the world where there is
    organized racing there is some national standard. I appreciate
    you all raising those issues, and that's definitely something
    we want to look into.
        I want to ask Mr. Fiss one question to start with. I did
    look at the testimony that you had provided, that you had
    written a letter at some point to Mr. Tim Smith when he was the
    president of the National Thoroughbred Racing Association, and
    you had suggested the idea of a national workers comp program
    for jockeys. Did Mr. Smith ever respond to you, to that letter?
        Mr. Fiss. No, sir. In fact, just to inform the committee,
    on two separate occasions back in the 1990's the former general
    counsel of the Guild tried to engage Congress with national
    workers compensation programs, first in 1993 and then second in
    1997. Both times it was rejected.
        If you'd like copies of those documents, I can produce them
    right now.
        Mr. Whitfield. Well, I would like copies of it.
        might add that this is the committee that had the
    jurisdiction that passed the Interstate Horse Racing Act which
    provided the foundation for the simulcasting. I will say that
    this committee has not been involved in the racing industry
    issues in a long time for a lot of different reasons, but I do
    think that things are reaching the point where we all recognize
    that there are some needs that must be addressed. I want to--so
    I want to assure you that, on the macro issues of scale of
    weights, on-track safety, on compensation for health insurance,
    all those things, we definitely are going to be looking into
    that.
        But also I think that we definitely have the
    responsibility, and some of the hearing has focused on that
    today, and that relates to a fellow like Gary Birzer and his
    wife Amy whose life has been forever changed because of an
    accident at Mountaineer Park. And whoever's fault it was, I
    guess it doesn't make any difference right now, but the fact is
    he had paid the dues, he had paid the per mount fees, and he
    thought that he had insurance for catastrophic coverage.
        Mr. Fiss. The addition to that last comment was he
    wrongfully thought. I'm not here putting blame on him. I'm just
    saying he wrongfully thought.
        Mr. Whitfield. Now you heard yourself that three members of
    the Board said that they never had a meeting and never voted
    upon a decision to allow that policy to lapse for the on-track
    protection. Do you disagree with those statements made by those
    three individuals?
        Mr. Fiss. They're answering with poor information. It's
    much more complicated than that.
        Mr. Whitfield. Let me say that Dr. Gertmenian in his
    testimony in the interrogatory in the Keen lawsuit said that
    the Board of Directors made the decision to allow the policy to
    lapse.
        Mr. Fiss. When I read that testimony, I talked to Dr.
    Gertmenian; and I explain to him that he was incorrect in those
    comments. He instructed me----
        Mr. Whitfield. So Dr. Gertmenian made a mistake when he
    made that comment in the interrogatory?
        Mr. Fiss. That's correct. And I spoke----
        Mr. Whitfield. Let me talk to Dr. Gertmenian a minute.
        Dr. Gertmenian, you're saying that when you made the
    comment that the Board of Directors approved that, that that
    was incorrect.
        Mr. Gertmenian. Yes.
        Mr. Whitfield. Then who did approve the decision not to
    allow the policy to lapse?
        Mr. Gertmenian. I talked to two members of the board, the
    chairman and the secretary, Robert Colton. Colton--Mr. Colton
    had suggested to me that there was no way that both could be
    purchased.
        Mr. Whitfield. What was Mr. Colton's responsibility at that
    time? What was his position at that time?
        Mr. Gertmenian. He was the secretary of the board.
        Mr. Whitfield. He was secretary of the board. Who was the
    chairman of the board?
        Mr. Gertmenian. Tomey Jean Swan.
        Mr. Whitfield. You talked to both of them.
        Mr. Gertmenian. And Mr. Colton was the one who said there
    was no way we could do both. Because I was completely ignorant
    of what was going on. I couldn't possibly have known. It was a
    very complex question with the insurance.
        So I said, what do you think? And he said, pick one. And
    the overwhelming, overwhelming number of jockeys in the country
    wanted the off-track health insurance for their families. And I
    said, well, you're going to need the Board to support that; and
    he said that would be the case. And it was my understanding,
    whether I was misinformed or not, whether I'm misinformed now,
    but it was may belief then, it was my belief when I answered
    the interrogatories, that that Board had, in fact, made that
    decision. I am wrong.
        Mr. Whitfield. Now, Mr. Colton's still here with us; and
    he's been sworn in. Mr. Colton, would you come up here, over
    here on this side. We'd asked about this, and you never
    mentioned Dr. Gertmenian talked to you about this. Remember,
    you're under oath as well.
        Mr. Colton. Yes, sir. That's a total fabrication, Mr.
    Chairman. There's no way that, in terms of me knowing what the
    financial shape of the Guild was at that point--I was riding. I
    had not been to Kentucky or looked at their financials at any
    time, nor had any been provided to me.
        Mr. Fiss. May I make a comment on that please?
        Mr. Whitman. Sure.
        Mr. Fiss. I have a document here created by Mr. Colton sent
    in his e-mails to Nancy LaSalla, who is the wife of jockey
    Jerry LaSalla in Chicago, which will show you that he not only
    knew about it but he was the author of the documentation that
    was sent to all of the jockeys around the country that were
    interested in purchasing the family health insurance and that
    that documentation specifically states that on-track injuries
    were not covered.
        Mr. Whitfield. Let me just make this comment. We had worked
    with you all very closely trying to get documents of Board
    meetings and everything else and I must say that what was
    provided to us was quite sparse. The one thing that I have
    noticed about the Guild is whenever someone says something,
    someone says something else. There seems to be a coordinated
    effort to confuse everything. Even the notice to the jockeys,
    I've got a whole page here of five or six different answers to
    that question.
        But let's just focus on the fact that the policy lapsed and
    one----
        Mr. Fiss. Which policy?
        Mr. Whitfield. Talking about the on-track policy.
        Mr. Fiss. The one that was purchased for 1 year in April
    2001 to April of----
        Mr. Whitfield. That's correct--and not renewed.
        Mr. Colton, how long had you been with the Jockeys' Guild
    at the time we're talking about?
        Mr. Colton. I rejoined 1999, 2000.
        Mr. Whitfield. What was your position?
        Mr. Colton. Originally rejoined as a member and was elected
    to the Board of Directors, and I believe in 2000 I was elected
    to the executive committee.
        Mr. Whitfield. You're sticking by your testimony that the
    Board never met nor did they ever vote on allowing the lapse of
    this policy.
        Mr. Colton. That's correct, sir.
        Mr. Whitfield. You're also testifying that Dr. Gertmenian
    never came and talked to you as he testified to just a minute
    ago.
        Mr. Colton. There had been discussion at the 2001 assembly
    about possibly having to do it. They are talking about some
    health forms that went out that stated that the contract
    insurance would no longer be covered.
        Mr. Whitfield. That was in the assembly in Austin, Texas?
        Mr. Colton. Correct. At that time, the policy was 4 months
    from being canceled. We had faith in Dr. Gertmenian--I should
    say Dr. Gertmenian--that they were going to be able to
    eventually get this----
        Mr. Whitfield. One thing that's come through loud and clear
    today is that management of an organization like this is
    difficult because you have jockeys scattered all over the
    country focusing on riding; and you would think with something
    so important as insurance for covering a catastrophic injury on
    the track, recognizing the danger of the sport, that the Guild
    that is responsible for keeping the policy in place would
    notify the jockeys if the decision had been made to allow to
    lapse or that it was not going to be renewed. Because jockey
    after jockey after jockey has testified in writing to us and in
    person today that they knew nothing about it.
        Mr. Fiss. Again, you're making the assumption that the
    Guild had always purchased on-track accident insurance or some
    kind of supplemental coverage above the hundred thousand
    dollars that the tracks were purchasing, and that's just not
    the case.
        Mr. Whitfield. Mr. Giovanni, you're here; would you come up
    here?
        How many years were you the head of the Jockeys' Guild?
        Mr. Giovanni. I was the national manager for 14 years.
        Mr. Whitfield. And of those 14 years, how many years did
    the Jockeys' Guild provide on-track and off-track coverage?
        Mr. Giovanni. Every year. We provided a health insurance
    plan that covered the jockeys when they got hurt on track. If
    they got hurt on track----
        Mr. Whitfield. All 14 years?
        Mr. Giovanni. Yes, sir. When we could no longer afford the
    health insurance, we bought a $1 million catastrophic plan to
    put in place to make sure that the jockeys were covered. That's
    what he's referring to. We didn't always have a catastrophic
    plan; we had a health plan that picked up and was a
    catastrophic plan----
        Mr. Whitfield. You always had them covered on track.
        Mr. Giovanni. Yes, sir, they were always covered.
        Mr. Whitfield. And that 1 year you went to the catastrophic
    coverage because of unique circumstances----
        Mr. Barton. Mr. Chairman, would you yield?
        Mr. Whitfield. Yes, sir.  Mr. Barton. What do you mean by a
    million dollar policy; it paid out a million dollars? The
    premium was a million dollars?
        Mr. Giovanni. Yes. Covered the jockeys for $1 million, and
    the premium was $443,000.
        Mr. Barton. If they suffered a catastrophic injury while
    riding in their profession, they were paid a $1 million----
        Mr. Giovanni. It was $1 million worth of medical coverage.
    It would pay their medical expenses.
        Mr. Barton. It provided $1 million worth of medical
    coverage.
        Mr. Giovanni. Yes, sir.
        Mr. Barton. Thank you.
        Mr. Whitfield. My time is expired. Mr. Stupak.
        Mr. Stupak. Did the Board ever take Board action, a vote,
    to allow or not renew the on-track policy, Mr. Fiss?
        Mr. Fiss. No.
        Mr. Stupak. So it never came before the board?
        Mr. Fiss. No.
        Mr. Stupak. So it lapsed.
        Mr. Fiss. Yes.
        Mr. Stupak. Did you notify--did the Board notify the
    jockeys that it had lapsed?
        Mr. Fiss. No, because it was our understanding that, quite
    frankly, the jockeys didn't even know it existed. There is no
    documentation to suggest that they knew it existed.
        Mr. Stupak. The point being there was a policy, it expired,
    and no one notified anyone that it expired. Whether they knew
    or not knew isn't relevant to the question.
        Mr. Fiss. But remember that they were notified in December
    2001 that we could no longer afford to purchase that policy.
        Mr. Stupak. And how were they notified?
        Mr. Fiss. Through the mailing of applications for family
    health insurance.
        Mr. Stupak. Is that in Tab 29 of the big book? Is that the
    health plan enrollment instructions for the Jockeys' Guild?
        Mr. Fiss. I don't have that in front of me.
        Mr. Stupak. It's coming right down to you right now.
        Mr. Fiss. Yes, that's correct.
        Mr. Stupak. Where does it say that your plan is about to
    expire in this? In the packet it says you have health--right on
    the top, enclosed in this packet, Health Plan Enrollment
    Instructions, welcome to PHCS Member Health Plan 202, health
    plan benefits, health plan enrollment, change, coordination of
    benefits. I don't see anything in here that says they're about
    to expire.
        Mr. Fiss. No. The jockeys had always been under the
    mistaken impression that the ULLICO plan, the family health
    insurance plan that Mr. Giovanni talks about that has been in
    place for a number of years, also covered the jockeys for on-
    track injuries if they were injured above $100,000 limits.
        Mr. Stupak. Well, the last panel of jockeys here had it
    pretty well nailed down, they weren't mistaken; they understood
    they had to make some choices, but all they wanted was some
    notice when they were on track one expired, because that is the
    one that is going to put them in bankruptcy in a minute.
        Mr. Fiss. If I could use an analogy; if I buy car
    insurance, I can't use it if I get injured on a motorcycle. The
    insurance that was purchased was family health insurance, it
    was not Workers' Compensation or work-related injury insurance.
    And the fact that it was used for that purpose I think is a
    purpose that the old management of the Guild, quite frankly, is
    avoiding.
        Mr. Stupak. Well, we started this hearing out with Mr.
    Birzer who was tragically injured, and it wasn't the health
    insurance he was worried about, it was his on-track insurance.
        Mr. Fiss. Yes.
        Mr. Stupak. So you can sit here and blame former
    management, but this happened on your watch, not on Mr.
    Giovanni's. On your watch, and therefore the responsibility and
    the culpability lies with the current board, not with Mr.
    Giovanni's board. That's my concern here.
        Dr. Gertmenian, how did--the last panel said that you were
    proposed to take over for Mr. Giovanni, it was 5-4 not in favor
    of replacing Mr. Giovanni. How was it that you were--he was
    replaced by you? When you have a Board meeting, isn't there a
    beginning and an end to the Board meeting, or do you have a
    rolling Board meeting where people can change their mind and
    not do it in the presence of the rest of the board?
        Mr. Gertmenian. The Board met in executive session.
        Mr. Stupak. Sure. Nine Board members, right?
        Mr. Gertmenian. Right. Mr. Colton was on the phone with me
    at the end, and I think maybe once or twice in between, as a
    matter of fact, to tell me that they were having their meeting.
    At that time he said that they had voted 9-0 to remove John
    Giovanni. I said that's hard to believe because I know at least
    2 or 3 members of that board--the executive committee it was
    called then--would probably support him. He said no, it was 9-
    0. And I said until I can see it in a fax from at least five of
    them, I'm not going to buy in, I'm not going to believe that
    it's true until I see it. So in a matter of an hour or so, five
    such faxes did, in fact, come to my home. At that point, even
    if it were not nine--and I believe that it was--that at least
    it was a majority.
        Mr. Stupak. The testimony we had earlier, there was a Board
    meeting, and at the end of that Board meeting it was 5-4 not to
    hire you, and then later a fax came in later. Now as the
    chairman of a board, isn't it unusual to have a Board meeting,
    the Board meeting ends, and then another document appears? Did
    you reconvene the board, or was it just----
        Mr. Gertmenian. No. Let me tell you what I know, and if I
    don't know it all, at least I know what I was told. The Board
    voted 9-0 to remove Mr. Giovanni. I said I wanted evidence of
    that.
        Mr. Stupak. And you had five faxes, I got all of this.
        You're the head of this organization, right? When you hold
    a Board meeting, is there a beginning date and an ending date
    to that Board meeting?
        Mr. Gertmenian. There was a beginning time and ending time
    on June 15, which was a Friday night.
        Mr. Stupak. Well, even in a Board meeting, if you had one
    yesterday, is there a beginning date and an ending time?
        Mr. Gertmenian. Of course.
        Mr. Stupak. Okay. Well, being a professor, and you know all
    this stuff about boards and all of that, isn't it a highly
    unusual procedure to have a meeting begin and end, and then
    suddenly faxes come and suddenly someone else is hired after a
    Board meeting?
        Mr. Gertmenian. I felt there was so much consternation, so
    much disruption, I said I really need to see this in writing.
        Mr. Stupak. Okay. Let me ask you this question. There has
    been a lot of discussion here today about getting your Board
    minutes. Can you get them to this committee by next Friday?
        Mr. Gertmenian. Well, the problem is that Mr. Colton was
    the secretary, and for many of those meetings, it turned out,
    he did not take the notes. And so we can give you the more
    recent ones, but we can't give you those.
        Mr. Stupak. Well, it's our understanding you haven't given
    us any.
        Mr. Gertmenian. Well, I will tell you what we will do, with
    all embarrassment on my part, if you have not received those--
    everything that we have will in fact be sent to you.
        Mr. Stupak. Okay. I want even notice of Board meetings,
    even if no minutes were taken, so we know when Board meetings
    were, okay?
        Mr. Gertmenian. Please. We will do the best we can to give
    you everything that we have in that regard.
        Mr. Stupak. This Permanent Jockey Endowment is something
    your new Board has established?
        Mr. Gertmenian. If you will allow me to explain.
        Mr. Stupak. Sure. Just so long as you don't filibuster, I
    don't have much time.
        Mr. Gertmenian. I believed that the Disabled Jockeys' Fund
    was being paid out at a rate that would eventually bankrupt it.
    And that was the term that I used, and the fund that I've been
    talking about, it wasn't the Guild, it was the fund.
        Mr. Stupak. Sure.
        Mr. Gertmenian. In my experience, people were much more
    willing to give money to a permanent endowment than they were
    to a fund that got spent down. That I thought we could raise
    the amount of money required to take care of disabled jockeys,
    that we created a permanent endowment, which is what we did.
        Mr. Stupak. So when Mr. Giovanni's administration ended,
    there was, like, $1.3 million in the Disabled Jockeys' Fund.
        Mr. Gertmenian. My memory of that is correct.
        Mr. Stupak. And you changed the name, if you will.
        Mr. Gertmenian. No, we did not change the name. We kept the
    fund intact. We created it outside of the Guild.
        Mr. Stupak. This Permanent Jockey Endowment.
        Mr. Gertmenian. Permanent Jockey Endowment, and asked for
    donations to go to the Permanent Disabled Jockeys' Endowment.
    And in some locations around the country, like the State of
    California, they do now make contributions to that endowment. I
    also made a $50,000 donation myself to the endowment.
        Mr. Stupak. Great. What happened to the $1.3 million in the
    Disabled Jockey Endowment?
        Mr. Gertmenian. You were informed by someone at the table
    before that money was taken from the fund and put into the
    endowment. I would like to clarify that.
        Mr. Stupak. Okay.
        Mr. Gertmenian. I did, indeed, suggest to the board, and to
    the treasurer specifically, that that would be wise. It was
    certainly my suggestion that the money would be much better
    served going over----
        Mr. Stupak. Did it go to the endowment fund or not?
        Mr. Gertmenian. Not a penny.
        Mr. Stupak. Okay. So there should be $1.3 million in the
    endowment fund, minus any expenditures----
        Mr. Gertmenian. Hold it a minute, something went wrong. Not
    a single penny from the fund ever went to the endowment.
        Mr. Stupak. I know, that's what you said; I agree with you.
    So there is $1.3 million when you take over this fund.
        Mr. Gertmenian. Correct.
        Mr. Stupak. And do you need 2 or 3 Board members to approve
    any transfer of funds out of the Disabled Jockey Fund? Who
    makes that decision whether to approve and expenditure----
        Mr. Gertmenian. It would take the whole Board and a
    meeting. And they did in fact have a meeting and they did in
    fact give me that approval, and we never used the approval
    because it turned out that it was not wise for a pretty simple
    reason actually. The trustee of the fund wanted us to get a
    court order for the transfer, and we simply decided that to pay
    the $10- or $15,000 for legal fees to transfer the money just
    didn't make sense, so we never did.
        Mr. Stupak. I'm not asking about transferring the money.
    I'm saying if I'm a disabled jockey, I have a need, I can apply
    to this Disabled Jockey Fund. Under Mr. Giovanni, 2 or 3 Board
    members had to agree. If they agreed, they paid the money. Like
    Mr. Bailey was one of those people on that fund, he testified.
    Under your administration, did you follow the same procedure?
        Mr. Gertmenian. Yes. The committee was continued. The
    chairman--Tomey-Jean Swan selected the chairman. I purposely
    and deliberately never attended meetings, I never approved a
    payment, I never suggested a payment. In other words----
        Mr. Stupak. What happened to the funding----
        Mr. Gertmenian. I never allowed myself to get involved in
    that particular thing because----
        Mr. Stupak. Do you know what happened to the fund?
        Mr. Gertmenian. They spent it.
        Mr. Stupak. All for disabled jockey needs.
        Mr. Gertmenian. That's correct. And the treasurer had to
    approve----
        Mr. Stupak. When you bring in those minutes for us, would
    you please bring those minutes of this Disabled Jockey Fund
    too, so we can see those?
        Mr. Gertmenian. We will bring you--in fact, I've sent to
    Mr. King all of the checks. All $1.3 million--every single
    piece of it.
        Mr. Fiss. If I may, I may be able to clarify a little bit
    here with regards to this money that was in the Disabled
    Jockeys' Fund. In December 2001 at the Austin meeting, it was
    recommended--but again, I don't know if any minutes were ever
    taken to approve it--but it was recommended that the Disabled
    Jockeys' Fund should--because the general philosophy was that
    jockeys should not be paying themselves for injuries sustained
    on the racetracks or anything associated with injuries
    sustained on the racetracks, that the fund could be used not
    only to pay permanently disabled jockeys and their medical
    expenses and their premiums for health insurance, but also the
    permanently--the temporarily disabled jockeys that received
    money while they were out of work.
        And so when you see the accounting of this money, what you
    will see is that the money predominantly went to temporarily
    disabled jockeys in the form of $100 and $200 checks on a
    weekly basis.
        Mr. Stupak. So you're saying under oath that the $1.3
    million didn't go into the general fund to pay for the general
    operating expenses?
        Mr. Fiss. Say that again.
        Mr. Stupak. So you're saying today, under oath, that the
    $1.3 Disabled Jockey Fund did not go into the general fund to
    pay for the general operating expenses of the Guild?
        Mr. Fiss. That's correct. What we did do is we wrote checks
    out of the general operating fund for the--because it was a
    checking mechanism. The Disabled Jockeys' Fund never had the
    ability to write 40 or 50 or 60 checks a week, so the general
    operating fund would write those checks and then get reimbursed
    by the Disabled Jockeys' Fund.
        Mr. Stupak. And that's what the accounting will show?
        Mr. Fiss. Yes.
        Mr. Stupak. Thank you, Mr. Chairman.
        Mr. Whitfield. And you never took money from the Disabled
    Jockeys' Fund to put it into the endowment; is that what you're
    saying?
        Mr. Fiss. That's correct.
        Mr. Whitfield. But you did take deposits that were
    designated for the Disabled Jockeys' Fund and deposit those
    into the endowment.
        Mr. Gertmenian. That's not correct.
        Mr. Whitfield. Now the reason I'm asking is we talked to
    Steven Rice, who I believe was your treasurer----
        Mr. Gertmenian. Yes.
        Mr. Whitfield. And we asked him during an interview about
    that, and he said that they withheld from depositing $196,000
    worth of checks written to the Disabled Jockeys' Fund and
    instead deposited into the Disabled Jockey's Endowment, and you
    gave us a copy of that deposit.
        Mr. Gertmenian. So I'm misinformed, sir, and I'm sorry.
        Mr. Whitfield. I recognize the Chairman of the full
    committee.
        Chairman Barton. Thank you, Mr. Chairman.
        Dr. Gertmenian, I understand that you're testifying
    voluntarily; is that correct?
        Mr. Gertmenian. Yes, sir.
        Chairman Barton. And I understand also that you stood up
    and raised your right hand and swore to tell the truth, the
    whole truth, and nothing but the truth; is that correct?
        Mr. Gertmenian. Yes.
        Chairman Barton. So you're going to try to answer my
    questions honestly.
        Mr. Gertmenian. Of course.
        Chairman Barton. All right. Is there a catastrophic health
    care policy in existence today for members of the Jockeys'
    Guild who are paying their dues on a sufficient basis to be
    members in good standing, yes or no?
        Mr. Gertmenian. No, unless you are in one of four States.
        Chairman Barton. All right. And it's my understanding that
    Mr. Fiss and some other people here testified earlier that,
    however that happened, it definitely happened once you assumed
    your duties managing the Guild; and it's your contention or
    your association's contention, with the notification was this
    document where you sent out a solicitation for members to join
    a generic health care plan that would cover themselves and
    their family for non-track-related injuries; is that correct?
        Mr. Gertmenian. Yes.
        Chairman Barton. All right. Do you think that that stands
    up as an adequate notification, that a generic mailing is
    sufficient notice to tell members that they no longer have this
    catastrophic coverage? It doesn't meet any requirement of
    notification that I'm aware of, but you think it does.
        Mr. Gertmenian. The attention being paid to the issue of
    off-track insurance for their families----
        Chairman Barton. Well, I've got the document, it's before
    us. And page 1 simply says if you want to sign up, here's what
    it costs and here's what the premiums are. And on page 2, on
    the back, it does say that this plan doesn't cover non-
    catastrophic injuries. And then three bullets down it says the
    Guild can't afford it, the million dollar policy. So that's one
    bullet on a two-page form on the back of the form.
        And we have witness after witness that's testified to the
    staff and to answer questions today that they were under--they
    thought they were still being covered until we had an injury in
    which it was proven that they weren't covered.
        Now, for whatever reason you've been--you're the man in
    charge for the last 3 or 4 years--why in the heck don't we have
    a policy in effect today, once we found out we don't? Why
    haven't you done that?
        Mr. Gertmenian. We have no money to pay for that.
        Chairman Barton. You can't go out--now you're getting $2
    million a year.
        Mr. Gertmenian. No, we're not.
        Chairman Barton. Well, then everybody else is lying.
        Mr. Gertmenian. Okay. But we're not getting $2 million a
    year. You mean from all sources?
        Chairman Barton. Well, why wouldn't you, as the man in
    charge, if the No. 1 thing that most of these people think
    their dues are going for--at least one of the most important
    things--is to provide them a catastrophic coverage in case
    they're injured while they're doing their profession, why
    wouldn't you make it the No. 1 priority to raise the money to
    get that coverage in effect? You have done nothing. You've done
    not a darn thing except delay and go as far as you could go not
    to obey the subpoenas of this committee.
        Mr. Gertmenian. Sir, we were pressured in every track that
    I went to with the same story: You must get us off-track health
    insurance for our families. That was the No. 1 concern.
        Chairman Barton. So why haven't you done it?
        Mr. Gertmenian. We did it.
        Chairman Barton. It's not in effect today.
        Mr. Gertmenian. Yes, it is. The off-track is in effect
    today. We did exactly what they asked us to do. It was the
    overwhelming comment in every track I went to, and we did it.
        Chairman Barton. So you're saying you have off-track, if
    they're in a car accident, but if they're injured on the track
    it's every man for himself. And they accept that. In spite of
    everything we've heard, that's--if we polled jockey membership,
    that's what they would say----
        Mr. Gertmenian. If they get cancer or they're pregnant or
    that kind of an issue, then that's taken care of.
        Chairman Barton. Well, that's what this plan that you sent
    out the form for is all about;that's generic health insurance.
        Mr. Gertmenian. But most of them, we were told, could not
    get it on their own because of their physical state.
        Chairman Barton. Well, I just find that very difficult to
    believe.
        But I just want to switch to something else, switch to
    page--the Tab here that talks about your resume. I think it's
    Tab 58. Do you have that before you? In my binder, in my folder
    it's Tab 58. Have you got that?
        Mr. Gertmenian. Yes, sir.
        Chairman Barton. Now I'm going to read a sentence, and you
    tell me whether this is directly from your resume or if this is
    a staff--committee staff summary:
        Dr. Gertmenian served the Nixon and Ford administrations as
    the chief detente negotiator in Moscow for the Chairman of the
    National Security Council, as an emissary to Tehran for the
    Secretary of Commerce, and as a special assistant to the
    Secretary of Housing and Urban Development.
        To your knowledge is that a true statement?
        Mr. Gertmenian. Yes, sir.
        Chairman Barton. And that comes from your resume, or that
    is your resume.
        Mr. Gertmenian. I don't know where it came from, but it's a
    true statement.
        Chairman Barton. All right. What would you say if we were
    to inform you that we contacted the Nixon Library and the Ford
    Library, and there is absolutely no record to back that up?
        Mr. Gertmenian. I have no way to respond. I just know what
    I did.
        Chairman Barton. All right. Can you get a notarized
    statement from anybody that you worked under that will verify
    that? We think it's a complete fabrication.
        Mr. Gertmenian. Okay, but it's not. I was a special
    assistant; I'm sure you can find the records on this.
        Chairman Barton. No, I don't have to find the records.
    We've contacted the Nixon and Ford Library and they can't
    document it. It's your name, it comes off your resume, you
    provide the documents. Who was the Chairman of the National
    Security Council that you served under?
        Mr. Gertmenian. Dr. Kissinger.
        Chairman Barton. Dr. Kissinger. And he'll send us a letter
    that you----
        Mr. Gertmenian. I doubt it.
        Chairman Barton. You doubt it.
        Mr. Gertmenian. I don't know if he will remember.
        Chairman Barton. It says you're a chief detente negotiator.
        Mr. Gertmenian. I tried to explain.
        Mr. Whitfield. Mr. Chairman, may I interrupt just 1 minute?
    Mr. Peter Rodman, who is Assistant Secretary of Defense for
    International Security Affairs today at the Defense Department,
    who worked with Henry Kissinger for 20 years, was at the
    National Security Council from 1969 to 1982 and served on the
    staff at the National Security Council, served as the Assistant
    to the President for National Security Affairs, served as
    Deputy Assistant to the President for National Security
    Affairs, and we sent Dr. Gertmenian's resume and asked him if
    he had ever heard of Dr. Gertmenian, and he said no.
        Chairman Barton. Well, you need to provide--I don't know if
    we need to subpoena this, but you need to provide some
    documentation for that if it's possible.
        Mr. Gertmenian. Let me----
        Chairman Barton. Because that appears to be a pure
    fabrication because we can't document it.
        Mr. Gertmenian. In the government documents of the
    different jobs, you will find me listed as a special assistant
    to the Secretary of the Department of Housing and Urban
    Development during that period. And my specific responsibility
    was the director of the Office of International Affairs.
        Chairman Barton. Well, you need to document that.
        Mr. Gertmenian. And in that position I was asked to do
    exactly what my resume says.
        Chairman Barton. The next sentence says: Today he is a
    distinguished professor at two universities in China.
        What two universities are those?
        Mr. Gertmenian. Toufu University and Shandong University.
        Chairman Barton. All right. And can you document that?
        Mr. Gertmenian. I have some certificates in Chinese; I will
    dig them out.
        Chairman Barton. Well, we can interpret Chinese.
        Mr. Gertmenian. I don't know where they are, but I'll look
    at them. It takes time.
        Chairman Barton. I want to next go to expenses. We asked
    the Guild to provide a list of their expenses under your
    leadership, and we finally did get a very sparse summary. So
    these, the numbers that I'm going to refer to, come from that.
    But in that expense report we show that a company called Matrix
    got consulting fees of $335,000. Who is Matrix?
        Mr. Gertmenian. It's a consulting firm that I am the
    principal of.
        Chairman Barton. Principal? Are you the only employee?
        Mr. Gertmenian. I'm the owner.
        Chairman Barton. All right. I'm led to believe that you're
    the only employee; is that correct?
        Mr. Gertmenian. Well, I don't get paid, so----
        Chairman Barton. Well, you got $335,000.
        Mr. Gertmenian. Okay.
        Chairman Barton. Do you accept that that is a number from
    the Guild reports--and you do admit that Matrix, you own it.
        Mr. Gertmenian. Yes, sir.
        Chairman Barton. Now, of that $335,000 that the Guild dues
    went to, $46,000 of that went to something called Scoop,
    Incorporated. Who owns Scoop?
        Mr. Gertmenian. My daughter Farah.
        Chairman Barton. Your daughter.
        Mr. Gertmenian. Who was a full-time employee of the Guild--
    --
        Chairman Barton. In addition to that, your daughter got
    $4,326. What is Chestnut 140E?
        Mr. Gertmenian. Rental.
        Chairman Barton. And who owns that?
        Mr. Gertmenian. My----
        Chairman Barton. Don't you own that?
        Mr. Gertmenian. No, sir.
        Chairman Barton. Does your daughter own it?
        Mr. Gertmenian. No, sir. Her name is Ruth Fascia. She's the
    landlord.
        Chairman Barton. Do you have a lease on that?
        Mr. Gertmenian. No.
        Chairman Barton. Okay. Fiss Consulting, I assume, is this
    gentleman right here, who is also associated with the Guild; is
    that correct?
        Mr. Fiss. Correct.
        Chairman Barton. What is Ridgemar Consulting?
        Mr. Gertmenian. Mr. Martin Cohen.
        Chairman Barton. And what is their association, what did
    they do for you?
        Mr. Gertmenian. Well, whenever these people provided work
    for the Guild, in the case of Farah, for example, she worked
    full time at the Guild, and only after I had permission from
    the chairman to do so, and the board, I presented to the Board
    can I hire my own daughter, and because she had an MBA and
    because she was quite enthusiastic----
        Chairman Barton. I'm not questioning your daughter's
    qualifications yet. What I am doing is, you're hired by the
    Guild, they pay you a salary plus expenses, you contract to
    consult with Matrix for $335,000--which you own and you're the
    only employee that we can find records of--that $335,000, then,
    Matrix pays expenses to Scoop, to Farah Gertmenian, who is your
    daughter, to an address for rent that you have--we think maybe
    you have some controlling interest in--to a consultant who's
    also a Guild employee. When you add all those up, they total
    $151,000 of the $335,000, so there is $183,000 that is
    unaccounted for. What happened to that money?
        Mr. Gertmenian. General expenses for the corporation.
        Chairman Barton. General expenses. But you're the only
    employee. What general expenses are there? What did you do with
    it? There's no--I mean, it sure looks to me like you got in
    control of the Guild, you put all your cronies on the board,
    you did everything you can to keep the Guild members in the
    dark about the lack of an insurance policy for on-track
    injuries until it was obvious that you had to say something.
    You went out and started these front operations to put even
    more money in your pocket.
        You know, I don't know if we have any Guild members here, I
    don't know what it takes to make a change in management under
    the by-laws--and apparently we've had trouble getting the
    bylaws--but if I were a dues-paying member of the Jockeys'
    Guild I would want new management.
        And with that, Mr. Chairman, I'm going to yield back to
    you. But this is the beginning of the process. And at a
    minimum, we want to see some catastrophic insurance in place as
    soon as possible for on-track injuries. And then we want to go
    from there to start cleaning up this. In my opinion, this is an
    absolute disgrace to all the men and women who work in the
    industry who really try to do the right thing, who try to do an
    honest day's work and to provide entertainment and an
    experience, a positive experience for the racing public of
    America. And with that, I yield back.
        Mr. Whitfield. At this time I recognize Mr. Walden.
        Mr. Walden. Thank you very much, Mr. Chairman.
        Dr. Gertmenian, I had to step out for a moment, and I know
    the Chairman touched on--and that is this Notice of Member
    Health Plan, the Jockeys' Guild. Was this sent to every jockey?
        Mr. Gertmenian. You would have to ask Mr. Fiss.
        Mr. Fiss. Yes, it was.
        Mr. Walden. How was it sent, regular mail?
        Mr. Fiss. Regular mail.
        Mr. Walden. Do you think that this--Mr. Fiss, do you
    believe that this satisfies whatever requirements might be
    under ERISA for notification and change of policy?
        Mr. Fiss. I am not an ERISA expert, sir, I can't answer
    that question.
        Mr. Walden. Mr. Ownbey, are you counsel?
        Mr. Ownbey. I provide legal advice when requested.
        Mr. Walden. Are you familiar with ERISA and the
    requirements under ERISA?
        Mr. Ownbey. No, I am not familiar with ERISA.
        Mr. Walden. Mr. Fiss, did you seek any counsel to know if
    you properly notified under ERISA?
        Mr. Fiss. No, I did not.
        Mr. Walden. So now you know whether that's done right.
        Dr. Gertmenian, you run the operation, right? You're the
    CEO, president of the Guild?
        Mr. Gertmenian. Yes.
        Mr. Walden. Okay. So you're the main man. In this notice, I
    think the Chairman pointed out it says are on-track injuries
    covered, and it says they're not by this new health plan; but
    it says the Guild can no longer afford the additional million
    dollars in coverage.
        Now, Mr. Fiss, you earlier were saying how it's sort of the
    jockeys' fault that they didn't understand their own health
    plan before, because it never covered that level of on-track
    injury, right?
        Mr. Fiss. I'm not putting the blame on the jockeys, no. If
    they were misinformed by the previous management of the Guild
    that you could use it for on-track accident, then they were
    misinformed.
        Mr. Walden. Then why is it in this statement you say the
    Guild can no longer afford the additional million dollars in
    coverage under the category ``are on-track injuries covered?''
        Mr. Fiss. Because you're talking about a different policy.
    You're talking about three separate policies. You're talking
    about the original ULLICO plan, which was canceled by the old
    management and executive committee of the Board of Directors in
    March 2001.
        Mr. Walden. And then they did the annual policy----
        Mr. Fiss. The excess policy, which covered 457 jockeys at a
    cost of $969 a year. And let me just give you an example. You
    had Chris McCarron here--earlier up here testifying. He was not
    covered under that plan. Chris McCarron is a jockey who
    regularly rides in the Kentucky Derby----
        Mr. Walden. Why was he not covered?
        Mr. Fiss. Because he was a $2 member of the Guild at the
    time, which meant that he was not covered under the written
    documents of the policy.
        Mr. Walden. But that's his choice.
        Mr. Fiss. But was he informed? Did he know that he was not
    covered while he was riding in the Kentucky Derby----
        Mr. Walden. Well, no, I'm more concerned about what you
    were saying earlier, that they were misinformed about were they
    ever covered.
        Let me go back to Mr. Giovanni. Can you help me on this
    one?
        Mr. Giovanni. Yes, sir. It didn't cover the jockeys who
    qualified in California or Delaware because the State was
    providing funding----
        Mr. Walden. Covered by Workers' Comp.
        Mr. Giovanni. And they were covered by ULLICO. It made no
    sense to pay two premiums for the same coverage.
        Mr. Fiss. It also didn't cover jockeys in New Hampshire,
    Massachusetts. So I don't know about were those jockeys
    informed that they were not covered under the excess policy.
        Mr. Walden. Can you hold, Mr. Giovanni?
        Mr. Giovanni. It covered every jockey that needed to be
    covered who wasn't covered for at least a million dollars by
    some other plan. In Massachusetts and New Hampshire there was a
    plan that covered them. The idea was, the object was to make
    sure that every member was covered. Now, we had to deal with
    the patchwork, because there were 38 different jurisdictions,
    as they alluded to earlier, so it couldn't be just one plan.
    The plan we put in place covered everybody. If it didn't cover
    them, then something else was there in place to take its place
    to cover them.
        Mr. Walden. You were there for 14 years, you said?
        Mr. Giovanni. Yes, sir. I was the national manager for 14
    years, and I was a manager for 6. Twenty years----
        Mr. Walden. At the time you were there running the
    organization, was there ever a time when the jockeys weren't
    covered for on-track injuries?
        Mr. Giovanni. No, sir.
        Mr. Walden. Or didn't have the ability to get coverage if
    they signed up for it?
        Mr. Giovanni. Yes, they were covered. Any member who signed
    up for it was covered, yes.
        Mr. Walden. So the only time jockeys weren't covered by the
    plan would have been during this period after you left.
        Mr. Giovanni. Yes, sir.
        Mr. Walden. And this plan expired, the million dollar----
        Mr. Giovanni. When they failed to renew the catastrophic
    plan, the million dollar plan, Mr. Fiss I believe wrote a
    letter to the President of the TRA, he alluded to him earlier,
    and----
        Mr. Walden. What is the TRA?
        Mr. Giovanni. The Thoroughbred Racing Association. Chris
    Scherf--wrote a letter to him and to the general managers of
    racetracks around the United States, telling the racing
    associations and telling the TRA that they were not going to
    renew this plan. But they did not afford the members the same
    courtesy, sir.
        Mr. Walden. When you changed health plans--I assume that
    occurred occasionally, or did it?
        Mr. Giovanni. Yes, it did.
        Mr. Walden. How did you notify the jockeys?
        Mr. Giovanni. Mass mailings. And it took a long time. We
    would send them a letter following up, and oftentimes jockeys
    would travel. So it was difficult for us to get to them, so we
    mass mailed on more than one occasion. And oftentimes, it
    happened quite often, a rider would call and say this insurance
    plan is no good. I said, you're right, it's been expired. We've
    sent you letters and you haven't--but here is your new card.
    But they were always notified. And we did follow the ERISA
    rules and made sure they were notified.
        Mr. Walden. And how much did this million dollar policy
    cost?
        Mr. Giovanni. $443,000.
        Mr. Walden. Or about what's being spent on Matrix now?
        Mr. Fiss. Sir, it was actually done at $969 per----
        Mr. Walden. And how many participants were there?
        Mr. Fiss. 457.
        Mr. Walden. So the amount was?
        Mr. Fiss. So my question is, what about the other 1,500
    licensed jockeys in the country, why weren't they covered?
        Mr. Walden. Did they choose not to sign up for coverage?
        Mr. Fiss. No.
        Mr. Walden. Did they have to choose?
        Mr. Giovanni. Mr. Walden, if I may, I can cite you some
    examples, and they're here in this room. Jerry Bailey rode
    mainly in New York. He was covered by Workers' Compensation.
    When he left New York and went to Florida for the winter to
    ride, he was covered by the catastrophic plan.
        Pat Day rode in Kentucky. He was covered by the
    catastrophic plan. When he would go to Saratoga in New York in
    the summertime, he was covered by Workers' Compensation.
        Chris McCarron rode mainly in California. He was covered by
    Workers' Compensation. When he left California and went to
    Kentucky or to Florida or wherever he went to ride, he was
    covered by the ULLICO plan, which was paid for by the State of
    California.
        There was always something in place to cover these people.
    They're just throwing up a smoke screen here, trying to throw
    numbers at you to tell you that the plan only paid for certain
    people. But everybody was covered either by that plan or
    another plan that was in place. They were all covered.
        Mr. Walden. Okay. Dr. Gertmenian, I believe it was Mr.
    Colton who--you were overseeing the fund, right, for the--do I
    have the right person there? Who was overseeing the--Mr.
    Donahue, who had sought information, financial--and maybe you
    could come up, Mr. Donahue, because I'm finding it takes two
    here to get this down. You said that you had asked for
    financial information, an accounting of how the money was being
    spent out of the Injured Jockeys' Fund, right?
        Mr. Donahue. Yes. And what was sent to me was a statement
    of how much money on a monthly basis the permanently disabled
    riders were getting, and I learned on that same statement they
    were paying--tapping into that fund for temporary disabled
    riders, which disturbed me greatly.
        Mr. Walden. All right. And when you were asked for an
    accounting of that you were denied that, correct?
        Mr. Donahue. I got it eventually, about 4 months later.
        Mr. Walden. All right. Why did it take 4 months, Dr.
    Gertmenian?
        Mr. Gertmenian. I don't know.
        Mr. Walden. Why don't you? Don't you run--did he ask you
    for it?
        Mr. Gertmenian. Not that I remember.
        Mr. Walden. Mr. Donahue, who did you ask?
        Mr. Donahue. I asked Albert Fiss and Wayne Gertmenian.
        Mr. Walden. Mr. Fiss, did he ask you for that information?
        Mr. Fiss. I do not recall, but I'm not going to sit here
    and deny that he did. I suspect that he probably did.
        Mr. Walden. What is the process today, who has Mr.
    Donahue's position?
        Mr. Fiss. Actually, we have a committee set up. Two of the
    members of the committee are here, in fact, Jackie Fires and
    Rudy Baez.
        Mr. Walden. Now when the Board meets, does it keep minutes?
        Mr. Fiss. Yes, they do.
        Mr. Walden. Why can't you share those with some of the
    people that have asked for them? Are they not available to the
    members of the Guild, the jockeys?
        Mr. Fiss. No, that's not true.
        Mr. Walden. Are they available to this committee?
        Mr. Fiss. Yes, of course.
        Mr. Walden. Have they been supplied?
        Mr. Fiss. I have not gone through all the supplies.
        Mr. Walden. Aren't you the COO?
        Mr. Fiss. Yes. But the nature of the organization and the
    limited amount of money that we get requires that I'm on the
    road about 20 to 25 days out of every month, so I'm not----
        Mr. Walden. Dr. Gertmenian, how often are you on the road?
    Do you know where the minutes are? You know, the chairman of
    the Board didn't know where the minutes were kept. Do you know
    where the records are kept?
        Mr. Gertmenian. Specifically in the office? The answer is
    no, I do not. Are they kept in the office? Yes.
        Mr. Walden. Okay. They're on a shelf somewhere in a book?
        Mr. Gertmenian. I suspect.
        Mr. Walden. Have you submitted those to us for review? I
    mean, a lot of this goes back to--you all know what I'm talking
    about here--he said, she said, and the Board does things. And
    then I asked the chairman of the Board about it and now Al, we
    think we voted on it. I don't know. Well, is it in the minutes?
    Yeah, it's probably in the minutes. I don't know where the
    minutes are. We hire staff to do that. Staff tells me I'm on
    the road, sorry I'm just COO, I don't know.
        Mr. Gertmenian. Please, Mr. Congressman.
        Mr. Walden. Yes, Doctor.
        Mr. Gertmenian. We are so incredibly overwhelmed in terms
    of trying to serve their needs. The phones ring 60 hours----
        Mr. Walden. I can appreciate that even though I'm not in
    your shoes.
        Mr. Gertmenian. Sometimes when people make a request we
    have to postpone it, we have to make a decision between
    answering the phone to a jockey that just got injured or
    serving----
        Mr. Walden. Well, we heard from a jockey that just got
    injured who had no coverage when he thought he had it. And he
    kept calling. He and his wife said nobody would call them back.
    They said they tried to call you. You know, you sat here and
    heard the testimony; all of you did, I think. Did you have time
    to return their calls? We hadn't subpoenaed anything at that
    point.
        Mr. Gertmenian. To my knowledge, my wife indeed did call--
    --
        Mr. Walden. Why your wife? Does she work for the Guild?
        Mr. Gertmenian. No, but she is contributing her time as so
    many other people have. Everybody is trying to help.
        Mr. Walden. But you're the CEO, you're the head.
        Mr. Gertmenian. I understand.
        Mr. Walden. How often do you have a quadriplegic----
        Mr. Gertmenian. I got on an airplane and flew to him
    immediately, as they told you earlier. And I gave them my
    bedside telephone number and told Gary and his wife to call me
    anytime. If they called my home, there would not have been an
    answering machine; it would have been live, and I would have
    heard it and I would have answered it.
        Mr. Walden. So tell me what happens when they call the
    Guild office? Is there an answering machine when you're not
    there?
        Mr. Gertmenian. Probably 9 out of 10 calls are taken
    personally, and only 1 out of 10 when they're just overwhelmed.
        Mr. Walden. All right. Help me understand this because I
    don't live in your world. Where is your office located?
        Mr. Gertmenian. Monrovia on Chestnut.
        Mr. Walden. And that is the Guild office?
        Mr. Gertmenian. That is correct.
        Mr. Walden. And how much time do you spend on a given day
    in that office?
        Mr. Gertmenian. It varies from day to day. I'm probably
    there 30 to 50 hours a week, it sort of depends. I'm on the
    road, sometimes I'm working out of my home.
        Mr. Walden. What about Matrix, how much time do you put in
    there?
        Mr. Gertmenian. Almost none now.
        Mr. Walden. And you're the only employee of Matrix?
        Mr. Gertmenian. Well, I'm not an employee of Matrix.
        Mr. Walden. Are you an owner of Matrix?
        Mr. Gertmenian. Owner.
        Mr. Walden. How many employees are at Matrix?
        Mr. Gertmenian. There are no employees.
        Mr. Walden. Where does the money go that goes to Matrix
    then? How is it spent and where is its office? Where is the
    Matrix office, Dr. Gertmenian?
        Mr. Gertmenian. It's in the same location.
        Mr. Walden. Same location as----
        Mr. Gertmenian. The Guild.
        Mr. Walden. I mean, literally the same location?
        Mr. Gertmenian. Literally.
        Mr. Walden. Is that correct, Mr. Fiss?
        Mr. Fiss. Yes.
        Mr. Walden. Do you have a home office too, then, Dr.
    Gertmenian?
        Mr. Gertmenian. I have a home office, too. We moved the
    Guild's offices into my office is what we did.
        Mr. Walden. Okay. So the Guild office and the Matrix office
    are the same office. Is that the same as your home office?
        Mr. Gertmenian. No.
        Mr. Walden. Okay. So you are either in the Matrix office or
    the Guild office whenever you're in either office because it's
    the same. And you're the owner of Matrix, which has no
    employees; am I right?
        Mr. Gertmenian. Correct.
        Mr. Walden. Are there any other owners of Matrix?
        Mr. Gertmenian. No.
        Mr. Walden. How much goes to Matrix each year? Or last
    year, pick a year.
        Mr. Gertmenian. Somewhere around the numbers you've been
    given, I think $300,000, something like that, maybe 4, I don't'
    know the exact numbers. They change.
        Mr. Walden. $335,000, I think. So how does that money get
    spent, who ends up with the money?
        Mr. Gertmenian. Some of it is paid out as direct expenses
    to people that provide direct services.
        Mr. Walden. There's no employees. Do you contract it out?
        Mr. Gertmenian. Right.
        Mr. Walden. How many employees----
        Mr. Gertmenian. It's a consulting----
        Mr. Walden. Okay. The committee says that--well, we asked
    you for expenses, and it's up here for Matrix. What is Scoop,
    Inc.?
        Mr. Gertmenian. That is my daughter and her consulting
    company, which she worked full time for the Guild.
        Mr. Walden. Doing what?
        Mr. Gertmenian. Worked in the office answering phones and
    doing whatever she could to help. She had an MBA, she has her
    MBA, she worked in the industry for 2 years, and I asked for
    permission of the chairman of the Board and of the committee to
    hire her and pay her through Matrix, and they agreed to that.
        Mr. Walden. And in the minutes it will show approval to
    hire her to work for the board?
        Mr. Gertmenian. I don't know if those were--I think that
    was during the time when the minutes weren't being kept.
        Mr. Walden. I thought you said the minutes were kept. I've
    been told there were minutes kept at every meeting----
        Mr. Gertmenian. But that was a long time ago.
        Mr. Walden. This shows expenses 2004--oh, you mean when the
    decision was made. So long ago couldn't be more than 4 years
    ago because----
        Mr. Gertmenian. I don't know if there is any minutes for
    that, Mr. Congressman; I really don't know.
        Mr. Walden. This would have occurred after the new
    management team was hired, right?
        Mr. Gertmenian. Yes. I'm sure that if you asked the
    chairman of the board, Tomey-Jean Swan, and any member that was
    there will tell you that I asked for permission before I did
    it, and they were quite satisfied with her service.
        Mr. Walden. But did they approve it?
        Mr. Gertmenian. Oh, absolutely.
        Mr. Walden. Wouldn't it make sense, I mean, you're a
    professor; I mean, I didn't do that well in economics, I
    confess, and I have my degree--not in economics, but you must
    teach sort of basic business. Your daughter is an MBA, right?
        Mr. Gertmenian. Uh-hum.
        Mr. Walden. I mean, I've been on some small boards. I mean,
    you do minutes, there is no question about keeping minutes
    every meeting, especially a transaction that involved a related
    party. My time is expired.
        Mr. Whitfield. Mr. Walden, thank you very much.
        At this time I recognize Ms. Blackburn.
        Mrs. Blackburn. Thank you, Mr. Chairman.
        I am beginning to feel like this is part of a Dr. Seuss
    novel in which we talk about events that never happened in a
    town that doesn't exist. And I am very, very sorry that we are
    having to go through this today, that this has occurred, and
    that the individuals feel their lives are greatly impacted by
    this.
        Dr. Gertmenian, are you on staff at Pepperdine?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. You are on staff at Pepperdine. Okay.
    Pepperdine University. Do you believe in the university? Do you
    believe in the university? Do you follow its mission statement?
        Mr. Gertmenian. Of course.
        Mrs. Blackburn. Good. I'm going to read from the mission
    statement and I would like for you to respond, please sir, if
    you do not mind. I know it's a fine institution, I have a niece
    that attended that institution, so I'm familiar with it. I'm
    familiar with the mission of that university.
        I'm going to just take part of it. In the Pepperdine
    mission statement it says that the student, as a person of
    infinite dignity, is the heart of the educational enterprise.
    And I want to paraphrase a little bit of this with you, sir.
        Would you agree with that statement, that the student, as a
    person of infinite dignity, is the heart of the educational
    enterprise? Do you believe that to be true?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Then if we were to rewrite that for the
    racing industry, would you agree with this statement, sir ?That
    a jockey, as a person of infinite dignity, is at the heart of
    the racing profession? Do you agree with that statement?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Do you feel like that your actions have
    carried that out?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. You do. So you're proud of your actions?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. And you are proud of the way that you have
    represented the Jockeys' Guild?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. And you feel like you can account for every
    penny of that nearly half million dollars that you and Matrix
    have seen from the Jockeys' Guild each year? Yes or no? Yes or
    no, sir? Simple answer, my time is rolling, the clock is going,
    I would like an answer.
        Mr. Gertmenian. I can't answer that yes or no.
        Mrs. Blackburn. Oh, you can't answer that. So you don't
    know if you're proud.
        Okay, let's go on. That the quality of the student life is
    a valid concern of the university; do you agree with that
    statement?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Then can we say that the quality of the
    jockey life is a valid concern of the Jockeys' Guild; would you
    agree with that statement?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Do you feel like your actions have
    represented you well on behalf of the jockeys?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. You do, okay. Continuing. The spiritual
    continual commitment, tolerating no excuse for mediocrity,
    demands the highest standards for academic excellence; do you
    agree with that?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Okay. Then knowing that you're committed to
    this university, that spiritual commitment, tolerating no
    excuse for mediocrity, demands the highest individual standards
    for accountability, would you agree with that?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Okay. So then you are proud of the way
    you've conducted?
        Mr. Gertmenian. Yes.
        Mrs. Blackburn. Dr. Gertmenian, I'm going to tell you what.
    You have been paid a lot of money to come in here--or to
    represent those folks, and then what I have heard you say
    countless times today--I have lost count--was that people
    wrongfully thought, that they were misinformed, or you were
    misinformed, or somebody misunderstood, or you guess you just
    didn't know. And sir, I will tell you what; we don't have
    hearings like this unless it gets to the point that the
    industry is not tending to itself, and then we end up doing
    that, and for that I am very, very sorry today, I truly am.
        Mr. Ownbey, if I could come to you please, sir. Going to
    your written testimony, page 1 of this testimony, third
    paragraph about halfway down: As a reasonable precaution, the
    Guild's Board of Directors in June 2001 terminated all of the
    staff and the Matrix team secured access to the Guild's Office.
        Would you please define for me who was the Matrix team at
    that point in time?
        Mr. Ownbey. Those would have been independent contractors
    that worked with Dr. Gertmenian.
        Mrs. Blackburn. Would you please list those for me?
        Mr. Ownbey. I wasn't there, I don't know who they were.
    Albert was one of them, I know.
        Mrs. Blackburn. Who was one of them?
        Mr. Ownbey. Albert Fiss.
        Mrs. Blackburn. Okay. Mr. Fiss was one. Who else comprised
    the Matrix team that secured access to the Guild's office in
    2001? Dr. Gertmenian, could you please answer? Mr. Fiss?
        Mr. Fiss. Nick Chuvakin.
        Mrs. Blackburn. Okay. Now, we seem to have lost track of
    where all this money went, and Mr. Giovanni said that Arthur
    Anderson had conducted the accounting of all of the--the audit
    each year. Did you all take control of those records at that
    point in time?
        Mr. Fiss. No, because Arthur Anderson would not hand them
    over.
        Mrs. Blackburn. Okay. All righty. So you didn't know what
    the audit had shown and Arthur Anderson would not give you all
    the audit and so you have no record of that; is that what
    you're telling us?
        Mr. Fiss. It's our understanding that the documents were
    destroyed by Arthur Anderson.
        Mrs. Blackburn. That they were destroyed.
        Mr. Gertmenian. Yeah. We filed a lawsuit against Arthur
    Anderson because they would not turn over the records to us,
    and that lawsuit was settled by them--of course, by that time
    they were out of business and bankrupt, and the insurance sent
    us a check for $20,000. We couldn't get----
        Mrs. Blackburn. Okay. I'm going to move on with this.
        Okay. Continuing in this same paragraph, Mr. Ownbey, the
    long and short of it, the new leadership had to assume the
    current work while at the same time reconstructing the
    accounting system.
        Why don't you describe to me the old and new accounting
    system, since the old one didn't work? It says that it hadn't
    been successfully operated and the records and the books were
    in bad shape. So why don't you tell me about the accounting
    system? What was the old one and what was the new one and who
    was in charge of it?
        Mr. Ownbey. Well, let me start out and say that my
    knowledge in the accounting field is limited, and this is a
    summary of information I obtained from others.
        Mrs. Blackburn. From who, who were the others?
        Mr. Ownbey. Well, it would be Albert, Wayne and Steven
    Rice.
        Mrs. Blackburn. Okay. So we would need to contact them for
    information on why the accounting system didn't work.
        Let me move on. Those offices were moved from Kentucky to
    California. Who decided to do that and how much did it cost to
    move those offices? Do we know that?
        Mr. Ownbey. I did not make the decision to move to
    California. That was made, I assume, by the Board of Directors
    of the Guild.
        Mrs. Blackburn. Mr. Fiss, was it made by the board?
        Mr. Fiss. It was approved by the board.
        Mrs. Blackburn. And do we have records of that Board
    meeting?
        Mr. Fiss. I do not know.
        Mrs. Blackburn. Okay. All right.
        Mr. Fiss. I do know that I spent 2 days in a U-Haul,
    hauling part of the office from Kentucky to Los Angeles.
        Mrs. Blackburn. And continuing, Mr. Ownbey, in your
    testimony you say that the CFO, a gentleman--I cannot pronounce
    his last name, is it Gevork Asatryan? Okay--has a huge workload
    without the assistance of a full-charge bookkeeper, and he is
    overworked and there are only two administrative staff members
    and they have an incredible workload.
        Well, what I can't figure out is if between you've got
    Matrix getting 300-and-something, $400,000 a year, why do we
    not have a bookkeeper? We've got money. It's amazing; it seems
    like everybody says everybody else is making all this money in
    the racing industry and everybody wants to pass the buck to
    somebody else, and Dr. Gertmenian is making nearly a half
    million dollars a year, and the jockeys have no insurance and
    they thought they had insurance. And we've got a million
    dollars that I still am not certain that you all know what
    happened with the money when it was moved from the Disabled
    Jockey Fund into the general accounting fund--general
    accounting of the company. So why do we not have----
        Mr. Ownbey. Why don't we stop right there because you're
    misstating the facts.
        What I understand to be the case, which is supported by the
    checks that went out of the Disabled Jockeys' Fund, is that all
    those checks were made payable to jockeys who were disabled
    pursuant to a trust fund that----
        Mrs. Blackburn. Sir, that is not the question I asked. I
    asked why do we not have a full time bookkeeper if that is
    something that is needed. Why do we not have a bookkeeper who
    is looking over the books?
        Mr. Ownbey. I am just describing what I understood to the
    be facts. But I just wanted to go on record, once again, that
    that was not--the million dollars, or whatever amount of money
    it is floating around here that just automatically disappeared,
    that is not the case.
        Mrs. Blackburn. Thank you, Mr. Chairman. And I yield back.
        Mr. Whitfield. Thank you, Ms. Blackburn.
        And Mr. Colton, there has been this discussion about the
    Disabled Jockeys' Fund being used to provide payments to
    stabled jockeys at particular times as they needed it. But it
    was my understanding at that one time the Disabled Jockeys'
    Fund, a check would be sent directly to the jockey, but since
    Dr. Gertmenian and his team took over, that at some point they
    started making the checks payable to the general operations
    fund of the Jockeys' Guild, and then the Jockeys' Guild would
    write the check; is that correct or is that incorrect?
        Mr. Fiss. No. It's incorrect in the timing. The checks were
    written first, and then a reimbursement was made. But since--
    for the past 2 years, the checks have been just written
    directly out of the Guild operating account.
        Mr. Whitfield. All right. I'm going to come back to this,
    but I did see Mr. Burgess and he hasn't had an opportunity to
    ask questions. So, Dr. Burgess, you are recognized for 10
    minutes.
        Mr. Burgess. I thank the Chairman. Again, you are being
    unduly kind.
        I hardly know where to start. In fact, let me even back up
    a panel and ask Mr. Giovanni, since he's still here, are you
    familiar with the group called the Delaware Jockeys' Health
    Fund?
        Mr. Colton. Are you addressing John or myself?
        Mr. Burgess. Yes.
        Mr. Colton. Yes, I am, sir.
        Mr. Burgess. And during your tenure your relationship with
    them was good?
        Mr. Colton. The Disabled Jockeys' Fund was money that the
    Guild lobbied for that set out a slot revenue in addition to
    purse revenue to take care of--not disabled jockeys, but just
    jockeys in Delaware. You ride 50 mounts, you become eligible.
    So yes, I'm fully aware of this program.
        Mr. Burgess. And Mr. Giovanni, you're familiar with them as
    well?
        Mr. Giovanni. Yes, sir.
        Mr. Burgess. Would you describe it as a good relationship
    you had with them?
        Mr. Giovanni. We had a very good relationship. We used to
    give them an audited statement every 6 months.
        Mr. Burgess. Is that still a good relationship, to your
    knowledge?
        Mr. Giovanni. I don't think so, no. I think there has been
    some problems in regard to accounting.
        Mr. Burgess. Were they ever late on making payments under
    your tenure?
        Mr. Giovanni. No, sir.
        Mr. Burgess. We have, I guess, as part of our work that we
    have been given today, just the concerns of the Delaware
    Jockeys' Health Fund; and I am not going to read them all,
    because there is too many of them. But I guess some of the
    things that stand out, that you were running an unregulated
    health plan, ineligible individuals, nonpayment, drop of track
    coverage for permanent disability, failure to properly return
    members' money, and then the last, fraudulent retirement
    accounts. Those are all fairly serious charges.
        Dr. Gertmenian, are you aware of these concerns the
    Delaware Jockeys' Fund had with the Guild?
        Mr. Gertmenian. Not directly.
        Mr. Burgess. May I ask why not? We had a good partnership
    at one point, and they have got concerns here that strike me as
    rather severe.
        Mr. Fiss. Can I answer that?
        Mr. Burgess. Please, I wish someone would.
        Mr. Fiss. All right. Their concern is a concern due to the
    lack of a contractual agreement between the Jockeys' Guild and
    the Delaware Board, and the fact that there is no agreement
    between the Jockeys' Guild and the Delaware Board keeps me from
    advancing money on health insurance payments for jockeys
    without knowing that I am going to get that money reimbursed
    from the Delaware jockey account.
        Mr. Burgess. We might come back to that, but I want to be
    careful about my time. I don't know if it was asked when I was
    out of the room, but if it was, I apologize. But it has been a
    long day, so it won't hurt to cover some of these things twice.
        Dr. Gertmenian, the company described as Matrix, have we
    been provided with the tax filings from this company to Matrix,
    I presume? Let me ask you, is it an incorporation, a Subchapter
    S, an LLC? What kind of company is this?
        Mr. Gertmenian. A corporation.
        Mr. Burgess. Okay. And I have just been handed the tax
    returns, so we apparently do have those.
        A significant amount of money seemed to flow through that.
    Mr. Walden was asking the question about how that money was
    disbursed; and, to the best of my recollection, the answer that
    you gave was a non-response. Is that your answer and you are
    sticking with it? Or is there a place--was there, in fact, a
    money trail? Was that money disbursed to an individual?
        Mr. Gertmenian. About a third of it was paid to people that
    worked--whose service was 100 percent for the Guild. The other
    two-thirds were paid for general operating expenses; and, to a
    great extent, those people who were paid for those expenses or
    reimbursement or whatever were serving the Guild.
        Mr. Burgess. I get all that. Are there other clients that
    Matrix services?
        Mr. Gertmenian. Not anymore. Not now.
        Mr. Burgess. Not now. Are there any that in the past that
    you would care to remember?
        Mr. Gertmenian. Well, we certainly don't have any clients
    anymore, except the Guild.
        Mr. Burgess. How long has Matrix been in business, in
    operation?
        Mr. Gertmenian. 1982. This has become a complete,
    passionate project, sir.
        Mr. Burgess. How long has that been? How long has the Guild
    been the only project of Matrix?
        Mr. Gertmenian. I think since June of----
        Mr. Burgess. Perhaps if you find the answers to those
    questions and supply us in writing, because there are some
    other things that I want to get to.
        Mr. Burgess. I don't know if the three of you were in the
    room earlier today. We had earlier testimony from Amy and Gary
    Birzer, pretty moving testimony, pretty startling testimony;
    and, you know, they don't get a chance to cross-examine, so I
    thought maybe I would ask a few of the questions that came up
    during their testimony and see if I could perhaps get answers
    for them.
        We have the point, Mr. Fiss, where Gary has been placed in
    Squirrel Hill; his rehabilitation is ongoing. Amy Birzer says
    he tried to call you on several occasions and could not get a
    call returned. Do you think that was an accurate statement? Do
    you recall getting calls or voice mail messages from Amy Birzer
    that you didn't find time to return?
        Mr. Fiss. I think I missed one of her phone calls.
        Mr. Burgess. You missed one phone call. Okay.
        When Gary reached you, apparently he asked about, gee, can
    I have 4 more weeks of rehab, I am making some good progress
    here, and you agreed to take care of that.
        Mr. Fiss. No, that is not an accurate characterization. I
    spoke with the hospital where he was at, the rehab center that
    he was at. They told me that, at a minimum, he needed 6 weeks
    of additional rehab; and, quite frankly, they thought 3 months
    would be better. In looking at what we could afford to offer
    Gary----
        Mr. Burgess. Let me just interrupt you here for a minute.
    Did you speak with Joyce Watson from admissions at Squirrel
    Hill?
        Mr. Fiss. I don't recall the name. I recall a person by the
    name of Sue.
        Mr. Burgess. In Mrs. Birzer's testimony she said that you
    had asked Gary who you needed to call in admissions to make
    this next 4 weeks happen, and you were given the name of Joyce
    Watson from admissions. Did that conversation take place?
        Mr. Fiss. It is very possible it did, yes.
        Mr. Burgess. Why would Ms. Watson come into Gary's room all
    smiles saying you agreed that the Guild would pay for him to
    stay there and take care of any of his needs? Do you think she
    fantasized that or made it up?
        Mr. Fiss. No, I don't.
        Mr. Burgess. I don't either.
        Mr. Fiss. Would you like me to answer the question?
        Mr. Burgess. I would be interested in your answer.
        Mr. Fiss. Okay. As I was saying, we had about $15,000 that
    we had available at the time to help out Gary at that facility.
    The cost, as I recall, for an additional 6 weeks was going to
    run $30,000. What I had told----
        Mr. Burgess. Let me interrupt you. I think we have gotten
    that point. The reality was--Mrs. Birzer stated it so well. She
    really thought she was getting the runaround, to the point
    where she said, why won't you help my husband? I mean, it is a
    fairly direct question.
        Mr. Fiss. The answer was that I was talking to Nancy Kelly
    over at the Jockey Club, which provides charitable money for
    injured jockeys as well as other injuries and for people in
    need in the industry.
        Mr. Burgess. No, sir. According to Mrs. Birzer's sworn
    testimony, your answer was you were going to use her husband as
    a guinea pig to make a statement. Did you say that?
        Mr. Fiss. Yes, I did.
        Mr. Burgess. I would like to explore that more, but there
    are some other things I need to get to.
        Mr. Fiss. There are only three people that I need to
    apologize for that particular statement about.
        Mr. Burgess. I wish you would.
        Mr. Fiss. Thank you. I already did. Thank you.
        Mr. Burgess. Dr. Gertmenian, your hospital visit or
    rehabilitation center visit with Gary and his wife, the
    statement that you know people in high places from time to time
    would send them money, what in the world did you mean by that?
        Mr. Gertmenian. I am sorry----
        Mr. Burgess. Let me ask you first, did you make the
    statement that Mrs. Birzer has testified that he knows people
    in high places and from time to time he would be sending me
    money?
        Mr. Gertmenian. I do not remember using that phraseology.
    It doesn't sound comfortable to me.
        Did I say that I would do what I could to help? Certainly.
    Did I tell her that we would from time to time try to send her
    money from the Guild whenever we could?
        Mr. Burgess. How much money have you sent?
        Mr. Gertmenian. I am sorry, I don't know the total. Mr.
    Fiss would know that.
        Mr. Burgess. How much money has been sent from the Guild to
    the Birzer family?
        Mr. Fiss. In terms of dollars?
        Mr. Burgess. Since that comment was made at the Squirrel
    Hill Rehabilitation Center.
        Mr. Fiss. A minimum of $26,000.
        Mr. Burgess. Dr. Gertmenian, let me stay with you just a
    minute. The Birzer family seems to have gotten the impression
    that you were wanting them to consider filing a lawsuit against
    the racetrack. Is that correct?
        Mr. Gertmenian. Yes.
        Mr. Burgess. Why don't you file a lawsuit against the
    racetrack? You are the Guild. You represent them. Don't you
    have a duty--if the racetrack is negligent in providing kitty
    litter for the horses to race on, do you not have a duty to
    file that lawsuit on their behalf?
        Mr. Gertmenian. That is the very core of our problem. We
    have no standing to do it. If the jockeys do it, they will be
    ruled off that track, and they will not able to work again.
    That is our problem.
        Mr. Burgess. You would be doing them a favor if they never
    worked on that track again.
        Let me just make one last statement. You used the word
    ``overwhelmed'' in referring to your business dealings with the
    Guild, that you couldn't keep up, that you were overwhelmed.
    No, sir, I will submit you were not overwhelmed. Gary Birzer,
    he is overwhelmed. Amy Birzer, she is overwhelmed. I spent last
    weekend down in New Orleans. Those people are overwhelmed. You,
    sir, are only overwhelmed to the extent that you don't know how
    to spend all of the money that you have taken from the Jockeys'
    Guild.
        I will yield back, Mr. Chairman.
        Mr. Whitfield. Thank you, Dr. Burgess. I think all of us
    after listening to this testimony are quite really--I am not
    sure frustrated is the right word, but taken aback, really.
        I have read so much testimony, Dr. Gertmenian, about a
    comment you have made to people--and we know that you have your
    MBA. We know you have your Ph.D. We know you are well educated.
    As Mr. Donahue said, Dr. Gertmenian stated to me that, being
    higher educated and more intelligent, to simply trust him on
    these issues. So a lot of people have trusted you.
        Then you have a guy like Mr. Fiss there, who at a time when
    a jockey has been paralyzed, with his wife, he comes and says,
    we are treating you as a guinea pig.
        And then I don't know what Mr. Ownbey is doing. He is
    supposed to be the general counsel, and he didn't even know
    about ERISA.
        So I would ask the question, do you all have a directors
    and officers liability policy in effect at the Jockeys' Guild
    for liability for the actions of the officers and directors?
        Mr. Gertmenian. Yes.
        Mr. Whitfield. You do. Well, that is good to hear.
        Then we think about looking at these jockeys. Many of these
    jockeys, some of them are immigrants, some of them come to this
    country to pursue a dream, an ambition, a goal, people like
    Gary Birzer who loved riding horses, and so they are paying
    this $100 a year fee and they are paying these per mount fees,
    hoping, expecting, with the expectation that they are going to
    be taken care of.
        Now, Dr. Gertmenian, so you are sitting there, and we have
    been reading through all of this material, you have got your
    life insurance premiums being paid for by the Guild. You have
    got your health insurance being paid for by the Guild. You have
    got your pension that is out there, too.
        Mr. Gertmenian. I am sorry, sir, I don't have a pension;
    and I don't have my health insurance paid for by the Guild.
        Mr. Whitfield. Well, it says life insurance premiums.
        Mr. Gertmenian. I had the life insurance but not the other
    two.
        Mr. Whitfield. Family health premiums----
        Mr. Fiss. And the $5 million that is in the pension plan is
    for the former employees.
        Mr. Whitfield. You have a car lease that is being paid for.
    You have got total compensation, $173,000, and that doesn't
    include the money paid to Matrix, which is another $335,000,
    and we have already gone over it. Not only that, but the Guild
    is even paying Matrix for its real estate lease, and you are
    paying your daughter through Scoup and you are paying Farrell
    Gertmenian, you are paying Chestnut 140. And even after paying
    that, there is still $183,000 not accounted for, and that is
    just last year.
        Then, on top of that, you all have dismantled the Disabled
    Jockeys' Fund, which was being used to provide payments for
    disabled jockeys, and you are saying, well, we are going to
    establish an endowment fund, but we can't spend any of that
    money until we have $10 million in there.
        So now you and all of your friends, you are getting plenty
    of money, and the jockeys do not have on-track catastrophic
    coverage, and the Disabled Jockeys' Fund is depleted. So the
    disabled jockeys are not receiving any benefit, except what you
    all decide to pay them through the operations account at the
    Guild.
        Then the lack of minutes at the directors meetings, the
    lack of approvals, the lack of notice--I mean, it really is the
    height of irresponsibility, and it appears to be a calculated
    effort to mislead people for personal monetary gain. That is
    the only way I can walk away from this hearing.
        Now, having said that, I recognize that there are serious
    issues out there that should be addressed for the jockeys. Mr.
    Stupak mentioned some of them and others, but I will yield to
    Mr. Stupak.
        Mr. Stupak. Thank you, Mr. Chairman.
        Well, we have certainly spent some time today talking about
    the Birzers and Gary's serious industry.
        Can anyone tell me how many jockeys suffer catastrophic
    injuries each year? Can anyone tell me that?
        Mr. Fiss. How many jockeys? Well, there is no real
    average--three, four.
        Mr. Stupak. Okay. And how many permanently disabled riders
    are there?
        Mr. Fiss. That are helped by the Guild? The total is 55.
    Per year, one and a half.
        Mr. Stupak. And of those, how many are like Mr. Birzer,
    with no help, no insurance coverage? How many are like Mr. Gary
    Birzer?
        Mr. Fiss. I don't understand the question.
        Mr. Stupak. Well, Mr. Birzer really doesn't have any
    coverage from the Guild, or very limited coverage from the
    Guild, because the insurance policy wasn't there. Do you have
    other jockeys like him who have been injured catastrophically
    and are not covered by the Guild's insurance policy?
        Mr. Fiss. Yes, Remi Gunn, for example, injured at Ellis
    Park in August 2003, almost a year before Gary Birzer, in Mr.
    Whitfield's district. She did not have catastrophic accident
    insurance. She is currently suing Churchill Downs. That is one
    example.
        Shannon Campbell----
        Mr. Stupak. Did she think she had insurance coverage
    through the Guild?
        Mr. Fiss. No.
        Mr. Stupak. Did she ever have insurance coverage through
    the Guild?
        Mr. Fiss. Excuse me?
        Mr. Stupak. Did she ever have on-track insurance coverage
    from the Guild?
        Mr. Fiss. I suppose she did. I don't know what her
    membership date is, but I suppose she did, if she was a member
    of the Guild during that 2001--April 2001-April 2002 period.
        Mr. Stupak. You believe, don't you, Mr. Fiss and Dr.
    Gertmenian, that jockeys are concerned about catastrophic
    injuries?
        Mr. Fiss. Oh, definitely.
        Mr. Stupak. And you believe that jockeys are concerned
    about lifetime disability?
        Mr. Fiss. Absolutely.
        Mr. Stupak. Okay. Dr. Gertmenian----
        Mr. Fiss. But it is all jockeys, not just the 500 or 600
    allowed to be in the Guild under the old management. It is the
    1,300 jockeys that are currently in the Guild that we help
    recruit. It is the Hispanic jockeys that were disallowed in the
    Guild under the previous management.
        Mr. Stupak. Mr. Giovanni, you want to say something?
        Mr. Giovanni. I resent that. There was nobody that was
    barred from the Jockeys' Guild. I don't understand what he is
    talking about. He is trying to say that I am prejudiced.
        Mr. Stupak. I am trying to let it go because it is not
    relevant to the point I am trying to get to.
        Dr. Gertmenian, did you tell a reporter or did you tell Amy
    Birzer that you would personally provide financial assistance
    to the Birzers? There is an article in a----
        Mr. Gertmenian. Yes, I--no. It is a question of the
    wording.
        Mr. Stupak. Did you make a representation that if things
    got bad, I would personally help them out?
        Mr. Gertmenian. I said I would do personally what I could
    to help.
        Mr. Stupak. Did you do anything for them personally?
        Mr. Gertmenian. No.
        Mr. Stupak. Did you tell Amy if you do provide her with any
    personal money, she would have to keep it quiet, that she
    should not publicly disclose how much you gave her, however you
    want to phrase it?
        Mr. Gertmenian. I don't remember saying that.
        Mr. Stupak. Okay, did you state on a radio show, At the
    Races and Beyond, that the Guild was taking care of Gary
    Birzer's medical bills?
        Mr. Gertmenian. That is a very absolute and complete
    statement, so we would have to get everything that I said to
    make sense out of that. But I certainly never said that all of
    their bills were going to get paid for. Did I say that I
    thought the Guild was----
        Mr. Stupak. Did you say the Guild was taking care of his
    medical bills? Let's leave the word ``all'' out.
        Mr. Gertmenian. I have no memory of having said it just
    that way: Did I say that the Guild was going to help. I don't
    remember the reference, and I don't remember the radio show,
    but it is certainly said more than once.
        Mr. Stupak. The radio people indicate that you said that.
        Mr. Gertmenian. Said what?
        Mr. Stupak. That the Guild was taking care of his medical
    bills.
        Mr. Chairman, I will yield back the remainder of my time.
    There is not much further we can go. I said my statements
    earlier, and I look forward to working with you on this matter.
        Mr. Whitfield. Thank you, Mr. Stupak.
        I would just say as we conclude today that--oh, Mr. Walden.
    Just a minute. I am going to yield to Mr. Walden.
        Mr. Walden. Thank you, Mr. Chairman. I appreciate that. I
    had some other information I wanted to pursue.
        Mr. Ownbey, I want to follow up. In your September 30
    letter to the committee, you go through and respond to the
    subpoena. You are familiar with that letter?
        Mr. Ownbey. Yes.
        Mr. Walden. It is the one to Mr. Feddo. You go through and
    you kind of take each point and then you answer it.
        Mr. Ownbey. Yes.
        Mr. Walden. You talk about the different things that have
    been raised. It was the cover letter to the records that were
    produced. So you understand what I am working off of, right?
        Mr. Ownbey. Yes.
        Mr. Walden. On number 5, it says, ``That the Guild and Dr.
    Gertmenian were under investigation for wrongdoing by the
    Department of Labor, DOL, and States that provided money to be
    used for jockeys' health.''
        Then it says, ``A,'' and this I assume is your answer to
    that allegation, ``The DOL made an audit and found no problems
    and they did not make a written report, which apparently is its
    practice.''
        Then, ``B, Delaware and California both investigated
    complaints and audited the Guild and both found no problems.
    They also did not make a written report, which apparently is
    their practice as well.''
        ``C, I have not been told the committee sought any
    confirming informing from those entities.''
        I am just reading what is here.
        Can you talk to me about those audits from Delaware,
    California and the Department of Labor?
        Mr. Ownbey. Well----
        Mr. Walden. What did they show?
        Mr. Ownbey. What they did is they came in--I think the
    Department of Labor was there a couple of days, California has
    been in a few times.
        Mr. Welden. Delaware?
        Mr. Ownbey. Delaware, I believe, also. Is that right,
    Albert?
        Mr. Fiss. I don't think they came physically to the Guild
    office, no.
        Mr. Ownbey. No. But they asked information that was given
    to them in Delaware, and I think there were hearings in
    Delaware, were there not?
        Mr. Fiss. No.
        Mr. Ownbey. Well, anyhow, the process was, apparently these
    people, if they are dissatisfied, they proceed further. If they
    are satisfied that we have properly answered their questions
    and we made everybody available to them, then they don't give a
    report. Now I don't know why that is the practice, but that
    appears to be the practice.
        Mr. Walden. But what you are saying in this letter is that
    the Guild was audited by Delaware, California and the
    Department of Labor.
        Mr. Ownbey. I would expect administrative agencies to do
    that.
        Mr. Walden. I understand that. But I am just trying to
    clarify what your letter says.
        Mr. Ownbey. That is what it said.
        Mr. Walden. Okay, that they were audited.
        Can you turn to Tab 64 in our book? Because, you see, we
    followed up with those folks. You will see to Delaware
    Thoroughbred Racing Commission. It says, electronic mail from
    Mr. Tom Feddo regarding request for information regarding
    Jockeys' Guild response to recent Subcommittee on Oversight and
    Investigations' subpoena for records and the Guild's counsel's
    response claiming that Delaware and California both
    investigated complaints and audited the Guild and both found no
    problems.
        Our request also included whether or not the State of
    Delaware since the year 2000 ever itself audited the Guild in
    respect to the funds provided, the state of the Guild or in any
    other respect.
        I shared this e-mail transmission with the chairman of the
    Delaware Thoroughbred Racing Commission, Dr. Bernard Daney, who
    also serves as ex-officio member of the Delaware Jockeys'
    Health and Welfare Benefit. He comments as follows: ``as you
    know, we have never examined any documents nor have we had any
    accounting firm or law firm examine any documents of the
    Guild.''
        That is Delaware. You can read the rest of his comments
    there.
        Tab 65, I believe, is the response that we received from
    the Department of Labor, from Sheila Greenwood, dated October
    17: ``the Department of Labor has never audited the Jockeys'
    Guild, and no report of an audit has ever been issued. In May
    2005 DOL concluded the Guild is not a labor organization for
    purposes of the LMRDA because it is composed of independent
    contractors and therefore the Jockeys' Guild is not subject to
    DOL enforcement.''
        Tab 66--no, I am sorry, Tab 64. Tab 64 is from Richard--I
    am sorry, Tabs 63, 64 and 65, Richard Shapiro in the same
    response. ``Tom, I have checked with our staff. To my personal
    knowledge, California Horse Racing Board has never conducted
    any audit of the Jockeys' Guild.''
        Now, Mr. Ownbey, you just testified that audits were done.
    In your letter to us, you say audits were done.
        Mr. Ownbey. Well----
        Mr. Walden. Were audits done or weren't they?
        Mr. Ownbey. I have been with the California Horse Racing
    Board. We have talked about audits. They have wanted to take
    audits. They have come to the office and spent time. It sounded
    like a duck to me.
        Mr. Walden. ``Delaware and California both investigated
    complaints and audited the Guild and both found no problems.''
    That is your letter to us.
        Mr. Ownbey. That is my letter.
        Mr. Walden. Delaware, California and the Department of
    Labor----
        Mr. Ownbey. Delaware, I was mistaken.
        Mr. Walden. What about the Department of Labor?
        Mr. Ownbey. Now, the Department of Labor is an interesting
    situation. The Department of Labor has been accepting our LM-2
    reports since--what--1998 or 1997, before we were a part of it.
    They did conduct an audit.
        Mr. Walden. Can you provide that for the committee?
        Mr. Ownbey. They conducted an audit, but they did not
    provide us with any. We have asked for it, and they gave us no
    response.
        Mr. Walden. Who did you ask?
        Mr. Ownbey. Whoever was conducting it at the time they
    left. I wasn't the person who asked the question.
        Mr. Walden. Would your records reflect who you talked to at
    the Department of Labor?
        Mr. Ownbey. Well, I wasn't the individual who talked to the
    Department of Labor.
        Mr. Walden. I thought you just said you were.
        Mr. Ownbey. No.
        Mr. Walden. I am sorry.
        Mr. Ownbey. Let me back up. The Department of Labor has
    jurisdiction, accepted jurisdiction as long as 1998. They have
    been accepting LM-2 reports. On one occasion, we were late.
    They fined us. We paid the fine. They at some point in time
    sent people to California that spent time looking at our books.
    That would seem to me----
        Mr. Walden. When did that occur?
        Mr. Ownbey. Was it a year ago?
        Mr. Walden. Mr. Fiss, Dr. Gertmenian, when were you audited
    by the Department of Labor?
        Mr. Ownbey. Somebody came out here. Gevork is the man who
    would know that. He is the one who spends time with them.
        Mr. Walden. Mr. Ownbey, with all due respect--Dr.
    Gertmenian----
        Mr. Gertmenian. I don't know the date.
        Mr. Walden. Do you remember them doing it?
        Mr. Gertmenian. Oh, yes, and twice.
        Mr. Walden. Twice. And they produced an audit?
        Mr. Gertmenian. Well, the definition of an audit is my
    problem.
        Mr. Walden. All right. Well, let me move on.
        Mr. Ownbey. The point being there they were there. They
    were looking at the books. I call that an audit. They do not
    make a practice of giving it.
        Mr. Walden. You told us Delaware and California
    investigated----
        Mr. Ownbey. I was wrong about Delaware. I was right about
    California, and I was right about the Department of Labor.
        Mr. Walden. Well, that is not what California tells us.
        Mr. Gertmenian. In California, the executive director of
    the California Horse Racing Board actually made a public
    statement which was in fact reported in the publications.
        Mr. Walden. Do you have copies of these, of their audits?
        Mr. Gertmenian. I don't. But I remember----
        Mr. Walden. Because your counsel is telling us that you
    were investigated, you were audited, and there were no problems
    found.
        Mr. Gertmenian. That is right.
        Mr. Ownbey. And no paper given. That is the problem.
        Mr. Gertmenian. But there was a public statement made that
    was quoted in the newspaper.
        Mr. Walden. All right. Let me move on, because I am about
    out of time. I want to go to the issue of the Matrix board. Do
    you have a Board for Matrix?
        Mr. Gertmenian. No.
        Mr. Walden. Is it a C corp or an LLC?
        Mr. Gertmenian. Yes.  Mr. Walden. So are you President,
    Secretary, Treasurer?
        Mr. Gertmenian. Yes.
        Mr. Walden . You are everything. Okay. And there are no
    employees?
        Mr. Gertmenian. That is correct.
        Mr. Walden. In your tax--I assume I can talk about this,
    right? In the binder is the tax return from 2004 that shows an
    income for Matrix of $509,669; and when it talks about business
    activity, it lists the business activity as investments and
    product or service as investment counseling.
        Then on the Federal statement for Matrix Capital
    Associates, Inc., it talks about deductions in auto and truck
    for $36,933; legal and professional, $245,722. It is Tab 56.
    There is officer life insurance premiums.
        I assume you are familiar with this. Did you sign these tax
    returns?
        Mr. Gertmenian. Yes.
        Mr. Walden. So let's go back to what Matrix does. What does
    Matrix really do?
        Mr. Gertmenian. Primarily we are now committed to helping
    the jockeys.
        Mr. Walden. What were you committed to do in 2004 when--the
    year this tax return was filed?
        Mr. Gertmenian. Primarily to help the jockeys.
        Mr. Walden. And what was that help? What did Matrix do to
    help the jockeys during that period?
        Mr. Gertmenian. We conducted nationwide teleconferencing
    and committee leadership to identify the problems of jockeys.
    We wrote up rather, we think, clear descriptions of these
    problems. We presented them to various State boards and to the
    TRA, to the national regulators, to everyone who would listen.
        I can tell you, track managers, that the only thing and
    what I said to everyone that I talked to about this was, look,
    here is a list of problems. Pick some and let's get started
    with the improvement. The TRA's only----
        Mr. Walden. Okay, but is that investment counseling?
        Mr. Gertmenian. The only thing they were willing to do was
    to agree that the jockeys could have a bulletin board.
    Everything else that we listed, they simply said no.
        Mr. Walden. I understand there are all these problems with
    the industry, and I have learned a lot today about those and
    feel there are certainly problems.
        Mr. Gertmenian. Well, you asked me what we did, and we were
    primarily concerned with making sure we were clear,
    Congressman, on what all these problems were.
        Mr. Walden. Is that all the revenue that came in to Matrix
    from the jockeys?
        Mr. Gertmenian. Most of it.
        Mr. Walden. ``Most of it'' being what?
        Mr. Gertmenian. Most of it is from the jockeys.
        Mr. Walden. The $509,000?
        Mr. Gertmenian. It probably was less than that.
        Mr. Walden. What would the other money come in from?
        Mr. Gertmenian. Any other project that anybody who works--
    like a consultant might pay to the Guild, pay to Matrix.
        Mr. Walden. Did you have other clients in 2004?
        Can he answer that question, Mr. Chairman?
        Mr. Gertmenian. Yeah, I am just trying--I don't want to
    sound ignorant to you.
        Mr. Whitfield. He testified that he had no other clients.
        Mr. Gertmenian. I think that I have misspoken. There were 2
    or 3 others that have paid, and they were such--they were so
    unimportant in terms of my concerns, Mr. Chairman, and I really
    wasn't focusing on that. But when you mentioned the figure 500,
    when in fact the payments were less, then clearly there were
    other incomes, and I wasn't focusing on those.
        Mr. Walden. What about the assets that were placed in
    service during 2004 with a class life of 40 years and 12 years?
    It says on the tax return, section C, assets placed in service
    during 2004 tax year using alternative depreciation system, 12
    years, 4 years. Was there any of that? Maybe not.
        You had rental property, right, in Matrix, inside Matrix?
        Mr. Gertmenian. No.
        Mr. Walden. No. Maybe I am just reading it wrong.
        Mr. Whitfield. I thought that the Guild was paying Matrix
    for rental property. You testified earlier--what is Chestnut
    140?
        Mr. Gertmenian. We pay rent for the rental property, and
    the Guild pays us. So we are the----
        Mr. Whitfield. So the Guild pays you, and you pay that?
        Mr. Gertmenian. Correct.
        Mr. Whitfield. Who owns that property?
        Mr. Gertmenian. The lady's name is Ruth Fascia.
        Mr. Whitfield. Who is Jamie Hall?
        Mr. Gertmenian. Jamie Hall works at the Guild.
        Mr. Whitfield. Does she live in one of those apartments?
        Mr. Gertmenian. The apartment is made available for people
    who are coming from out of town, the jockeys.
        Mr. Whitfield. Is she from out of town?
        Mr. Gertmenian. Well, she came from Kentucky, yes; and
    sometimes she is there and sometimes she isn't. Sometimes they
    will come in from out of town. They will need a place for them
    to stay.
        Mr. Whitfield. But the Guild rents that from Matrix, and
    Matrix----
        Mr. Gertmenian. No, it does not. It rents it directly from
    the provider of that.
        Mr. Walden. There is a line 16 here on deductions of
    $47,265 for rent that Matrix paid, or at least claimed the
    deduction. Who did you pay rent to? Did you pay rent to the
    Jockeys' Guild? You have told us that Matrix was collocated
    with the Guild, so did you pay the Jockeys' Guild the rent? Who
    got this $47,265?
        Mr. Gertmenian. Congressman, I am sorry. I really don't
    understand that. I signed it.
        Mr. Walden. Do you have a sub-lease?
        Mr. Gertmenian. We have no lease.
        Mr. Walden. This is like the 2004 tax year. This is last
    year. You don't know who you paid rent to out of the company
    you are the sole owner of for which you have no employees and
    you show $47,000 in rent payments? And you don't know who you
    were renting from?
        Mr. Stupak. Mr. Walden, if I may, we wrestled with this,
    too; and the only thing we can come up with is it looks like
    the 47, whatever you have listed there, was almost $48,000. But
    the Jockeys' Guild paid them $96,000, and therefore that big
    difference is almost a profit that you are quoting there. The
    Jockeys' Guild paid you rent, $96,000--I'm sorry, an allocation
    for rent of $96,000?
        Mr. Gertmenian. Give me a second.
        Oh, that is the rent on the Chestnut property. Excuse me.
    Let's just do the math. I didn't do it. I should have done the
    math.
        Mr. Stupak. We did. I am not even a professor of economics.
    Thanks.
        Mr. Walden. So let me understand it then. Who pays who rent
    then? The Guild? The Guild pays Matrix rent?
        Mr. Gertmenian. Correct.
        Mr. Walden. And then you pay the Guild rent? Matrix pays
    the Guild?
        Mr. Gertmenian. The Guild pays Matrix, and Matrix pays the
    landlord.
        Mr. Walden. I see. I see.
        Mr. Whitfield. But Matrix holds the lease.
        Mr. Gertmenian. There is no lease.
        Mr. Walden. I thought I read somewhere there was like up to
    a 10-year lease agreement you have for up to $97,000 a year.
    What is that for?
        Mr. Gertmenian. Correct.
        Mr. Walden. Is that the Guild?
        Mr. Gertmenian. Please allow me, Mr. Congressman, to
    explain.
        Mr. Walden. Sure. Help me out here.
        Mr. Gertmenian. When we first went aboard to help, we
    didn't see how they could ever afford us or any of the people
    we were bringing. We asked them, and we tried to find ways to
    be creative so that, in the long run, if we were successful,
    there would be some way to compensate all of the people that
    were going to help.
        One of the things that was put into place was that, if it
    all worked out, that they would sign a 10-year agreement on a
    building that I would buy and lease back. But after a year or
    2, we agreed, and it could have been 3 years----
        Mr. Walden. That would have been part of your compensation
    package when you came in.
        Mr. Gertmenian. Yes. After 2 or 3 years we agreed that it
    was no longer necessary, and so that piece of the agreement was
    never put into place.
        Again, the Board and I--I suggested it and the Board
    accepted the idea that this was no longer necessary, that we
    were being adequately compensated. So that end result, that
    long-term way to help, was simply not needed nor enforced.
        Mr. Walden. Okay.
        Mr. Gertmenian. I think this is the reason people keep
    talking about a lease. It is because in the original agreement
    we had that in there. It is just that it never was actuated, if
    you will allow me to use that word.
        Mr. Walden. One final question, and that is, because a lot
    of this gets back to what happens at the Board level, who do
    you charge with keeping the minutes of the Board meetings?
        Mr. Gertmenian. The Secretary.
        Mr. Walden. And who is that person?
        Mr. Gertmenian. Today?
        Mr. Walden. Who has it been? Is there some multiples?
        Mr. Gertmenian. Yes. It changes every year.
        Mr. Walden. It changes every year?
        Mr. Gertmenian. Whoever they elect.
        Mr. Walden. So a member of the Board keeps the minutes? Not
    a staff person?
        Mr. Gertmenian. We do assist them when they do
    teleconferencing. We try to assist them and make sure that
    somebody from an official--what do you call it--from a
    professional note-taking body helps them.
        Mr. Walden. Who is that person? Was that person ever your
    daughter with the MBA?
        Mr. Gertmenian. No.
        Mr. Walden. Okay. So she didn't keep the minutes. So it
    wouldn't be an employee of the Guild that keeps minutes?
        Mr. Gertmenian. No.
        Mr. Walden. Did you have a comment you wanted to make on
    this issue?
        Mr. Colton. I was the Secretary.
        Mr. Walden. Did you keep the minutes then?
        Mr. Colton. For me to try to keep minutes as I am
    participating in the meeting and need to speak, there is no way
    I can do it. I asked repeatedly to have the meetings
    mechanically recorded; and, you know, that was time, effort and
    money that we didn't have.
        Mr. Walden. Mr. Giovanni, how were minutes kept when you
    were running it?
        Mr. Giovanni. We used to record everything, and then we
    would have the minutes drafted from the recording.
        Mr. Walden. That is sort of a standard procedure?
        Mr. Giovanni. Yes, sir.
        Mr. Walden. Thank you, Mr. Chairman.
        Mr. Whitfield. Maybe it is better for people not to know
    what is going on sometimes.
        Anyway, we are going to bring this hearing to a conclusion.
    We have a vote on the floor.
        It has been quite enlightening, and I dare say I have
    serious doubts and do not believe that jockeys today are any
    better off under this leadership. All the mechanisms that you
    all have going of compensating various people, with minutes not
    being recorded accurately, without notices being given, it is
    pretty discouraging. But we are going to have another hearing,
    and we are going to bring in some other groups. We are going to
    pursue this matter.
        With that, the hearing is adjourned.
        [Whereupon, at 5:45 p.m., the subcommittee was adjourned.]
        [Additional material submitted for the record follows:]

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