Gathers Had Insurance Policy : Aftermath: Loyola Marymount star might have been eligible to collect $1 million.

Hank Gathers may have been eligible to collect on a $1-million insurance policy in December, when he was diagnosed as having an irregular heartbeat, if he had quit playing basketball at that time.

Gathers, the Loyola Marymount star who collapsed and died Sunday during a West Coast Conference tournament game, purchased a $1-million policy from Lloyd’s of London last May to guard against career-ending injury or illness during his senior season at Loyola.

The policy, which ran until May of this year, can no longer be cashed because it does not contain a provision for death. But, had Gathers quit basketball when his heart condition was first noted, he might have been able to collect on the policy, according to sources familiar with the matter.

“We don’t yet know exactly what Hank’s condition was,” said Mike Petersen, vice president of Petersen Marketing and Management Corp., the L.A. correspondent for Lloyd’s of London who handled Gathers’ policy. “But this is a good example of a situation where a policy might have paid off. If the doctors state that he can never play basketball again because of his condition, that would qualify (for a payoff) under the definition of the policy.”

As it is, Lloyd’s of London has agreed to return the $6,600 premium that Gathers paid to obtain the policy, according to Petersen--a move that industry sources believe may be unprecedented for the company. Lloyd’s underwrites most of the disability insurance policies purchased by athletes.

It is common for high-profile football and basketball players who anticipate having professional careers to protect themselves by purchasing disability insurance while still in college. For instance, Louisiana State basketball star Chris Jackson, a sophomore, said earlier this season that he had purchased a $1-million policy from Lloyd’s of London.

Marty Blake, the NBA’s director of scouting, has said that Gathers, a 6-foot-7 center who was projected as a forward in the NBA, most likely would have been a middle to late first-round pick in this year’s draft.

According to Petersen, Gathers’ policy covered him for any kind of career-ending disability, on or off the court, which is standard practice for such policies.

Gathers momentarily lost consciousness during Loyola’s Dec. 9 game against UC Santa Barbara. After undergoing a battery of tests, he was diagnosed as having a cardiac arrhythmia, a condition in which the heart beats irregularly. He was put on medication, Inderal, that is often prescribed in such cases. He returned to the Lions’ lineup Dec. 30.

Among the questions raised by Gathers’ death is whether or not he should have been allowed to continue playing. School officials have cited a letter, dated Dec. 21, 1989 and signed by Dr. Michael Mellman, a Los Angeles internist, that cleared Gathers to return to competition. However, a cardiologist familiar with the case has told The Times that Gathers was advised not to play after his initial fainting episode.

Had Gathers followed such advice, he would have, according to Petersen and others, stood a good chance of cashing in on his policy.

“He would have had a decent claim, as far as I can tell, because he had no history of anything (medical problems),” said Dana Morck, the insurance broker who sold Gathers the policy. “The only thing he was concerned about, I think, was a twisted ankle he had toward the end of last season.”

According to Morck, president of Morck Financial and Insurance Services in Torrance, Gathers showed no signs of heart or other medical problems when he underwent a physical that was required to obtain the policy. Morck said the physical was given by a Loyola team physician whose name he could not recall.

Morck said he did not sell Gathers a life insurance policy and does not believe the player took one out.

“It was not a concern with him,” Morck said. “Unfortunately, a 22-year-old male in great physical shape--at least when he took out the (disability insurance) policy--doesn’t consider himself mortal. He’s worried about blowing out a knee.”

Gathers came up with the $6,600 he needed to purchase the disability insurance by obtaining a bank loan, Petersen said.

Under NCAA rules, a college athlete can obtain disability insurance by borrowing against his future earnings from an accredited commercial lending institution as long as neither a school representative nor a sports agent is involved in the transaction.

With Gathers’ death, Petersen said, Lloyd’s of London has agreed to refund the entire premium, although the company is under no obligation to do so. “The tremendous shock and sympathy factor caused them (Lloyd’s of London) to consider this case as a flat cancellation,” he said.

Lloyd’s of London refunded only a portion of the premium used to purchase a similar policy for the late Len Bias, the University of Maryland basketball player who died of cocaine intoxication shortly after being drafted by the Boston Celtics in 1986, according to William Sutton, whose Toronto firm set up Bias’ policy.

Said Dennis Burns, executive vice president of an Arlington Heights, Ill., firm that also arranges policies for athletes with Lloyd’s of London: “That thing (Gathers’ policy) runs almost a year. The majority of the premium burns out during the playing season. . . . If Hank had called up at some point and said, ‘I want to cancel,’ they (Lloyd’s of London) would have kept it (the premium). But, because of the way things happened, they’re not keeping anything.”

David Spencer, who as a USC assistant coach recruited Gathers to that school in 1985, said he urged Gathers to purchase the insurance policy when the player was considering making himself eligible for the NBA draft last spring.