[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/
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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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