Los Angeles Chargers coach Jim Harbaugh is not happy with the Denver Broncos after a deadline trade for linebacker Daiyan Henley fell apart.

"The Broncos based a pass-fail on a medical grade, based on whether we would take less compensation. And we wouldn't. And we didn't," Harbaugh said Thursday. "And in my opinion it's one of those loopholes that the league should really look into because it sets a bad precedent."

Before Tuesday's deadline, the Chargers agreed to send Henley to their division rival for a 2027 fourth-round pick and a 2028 fifth-round pick. Denver said at the time the deal was pending a physical.

Late Wednesday night, the Broncos said the trade would not be finalized. Neither team gave an official reason. Reports said Denver found an issue with one of Henley's knees during his physical.

'Pass or fail'

General manager Joe Hortiz said the Broncos called after the physical and asked to change the terms.

"In our minds, the physical's a binary thing. It's pass or fail," Hortiz said. "And they wanted the player still. They wanted to change the terms."

Hortiz said the Chargers refused to accept less.

Hortiz would not confirm the problem was Henley's knee. He said the Chargers told Denver about Henley's health when the deal was made and that he was expected to practice and play this week.

Harbaugh said the Broncos would pass Henley for "a fourth and a fill-in-the-blank" but not for the picks both teams agreed on. He said he was confused how Henley could be healthy enough to play for Los Angeles but not for Denver.

Pushing the league for a fix

Hortiz said he "100 percent" agreed with his coach. He said other general managers called him about it Thursday and that he has been in touch with the NFL. He would not be surprised to see teams propose closing the loophole at the league meeting in March.

Henley was on the injury report with a knee issue in Week 6 and a shoulder issue last week, but he started both games. He had 10 tackles and an interception in Sunday's 44-22 loss to the Houston Texans.

Hortiz said he apologized to Henley for the awkward spot he is in. "It's the business," he said. "The reality of it is we love him."

Henley has started all eight games for the winless Chargers and leads the team with 51 tackles. He is in the last year of his rookie deal. He is expected to play Monday night against the Baltimore Ravens.