Jackson Show Insurance Excluded ‘Illicit’ Drug Use

By | August 10, 2009

A concert promoter’s insurance on Michael Jackson’s London shows has provisions that may deny a multimillion dollar payout if the pop star was found to have illegally possessed drugs or was involved in the “illicit taking of drugs.”

The policy, a copy of which was provided to The Associated Press, covers cancellations resulting from death, but its provisions will hinge on the results of an autopsy that has been delayed twice.

Jackson’s doctor administered multiple sedatives along with the powerful anesthetic propofol, a potentially lethal combination, hours before the singer died June 25, a law enforcement official who requested anonymity because the death investigation is ongoing told the AP.

It was not immediately clear whether any medications Jackson was taking would negate a payout up to $17.5 million, which would ultimately benefit his estate.

The insurance policy, covering the first 13 shows of the 50-show run, was taken out by Jackson and concert promoter AEG Live in April. Such a policy and its provisions are considered standard for events on the scale of the one for which Jackson was preparing.

A copy of the insurance policy also showed that it had several clauses that would prevent a payout, including if the singer concealed information or acted carelessly to increase the risk of a no-show.

A claim could take months to resolve through a settlement or in court, and either route could be delayed as police investigate a manslaughter charge.

A New York doctor with no connection to AEG Live conducted a medical exam of Jackson in Los Angeles in February. AEG Live Chief Executive Randy Phillips said he was told by the insurance underwriter that Jackson passed “with flying colors.” The exam results were shown to the insurers, but not to AEG Live.

AEG Live and the special administrators of Jackson’s estate have been moving quickly to cut business deals that will help the concert promoter recoup the more than $30 million it is currently owed by his estate. An insurance payout would go a long way to reducing the estate’s obligation to AEG Live.

The promoter is also in line to quickly cover its costs if a $60 million payment from Sony Corp.’s movie division to distribute a film based on rehearsal footage is approved by a court Monday.

Also in the works for court approval is a merchandising deal with Bravado, a unit of Vivendi SA’s Universal Music Group, which had signed a deal with AEG Live in July and has been selling Jackson goods online since then.

The estate is in line to receive 90 percent of the proceeds from the business deals after AEG Live’s initial costs have been covered, according to documents filed in court this week.

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