True, you're probably right Roy, as usual. First, they'd settle anything out of court. Second, any sort of medical negligence is tough to prove. Third, an injury need not be career ending for insurance to pay for it - see Theo Ratliff. Fourth, I'm sure the insurer decides whether to pay the salary only after it has its own doctors conduct an examination and doesn't go on what the NBA says - the "career-ending" part wasn't related to the tendering of insurance but rather to the Blazers' claims to the NBA for salary cap relief; any fraud by the Blazers was on the league not the insurance companies. Fifth, I'm sure when the insurer agreed to the payments, there was a clause saying if Miles does come back, the Blazers start paying the old salary.
I'll admit, it was a shrewd move by the Blazers. Last year, when they unloaded Randolph for Francis' contract and Frye, a lot of people mentioned that now, Portland just had to unload Miles to a) clear cap room and b) get a headcase/cancer out of their locker room. Well, they found this way to do it. I think it's BS because it sort of came out of nowhere, but it was one of those good business decisions. Normally, it wouldn't work to claim that an injured player had suffered a "career-ending" injury then just cut him, since another team could roll the dice. But in Miles' case, he has such a bad reputation that the combination of reputation and the injury seemed to be (and may be) enough to scare any team away from signing him to any sort of deal. I hope it backfires, because I think it's enormously unfair (every team would like to get out from under bad draft picks and signings) but it still may work.