The Texas worker’s compensation system has been broken for many years, ever since the state passed a pack full of so-called reforms in the late 1980’s. Now, we learn that Texas Mutual Insurance Company, one of the largest providers of worker’s compensation insurance in the state, has a sweetheart deal with the Travis County District Attorney’s Office. Texas Mutual refers cases to the Travis County D.A. In return, Texas Mutual pays the salaries of prosecutors and investigators within the DA’s office. As Roy Kyees found out when he was prosecuted for alleged worker’s compensation fraud, the prosecutor and investigators essentially accept whatever cases Texas Mutual refers. Mr. Kyees won his criminal case for alleged fraud. He then sued Texas Mutual for malicious prosecution. He settled his case for less than $10,000. See Texas Tribune report.
According to the news report, many insurance companies enter into deals like that with District Attorneys in various states. But, in all other states, the insurance companies enter a pooled arrangement in which their funds are pooled and then contributed to the D.A. These units prosecute complicated fraud claims, for which the local D.A. lacks resources. When Ronnie Earle first signed the contract with Texas Mutual, the agreement was to prosecute major fraud cases, not low dollar cases like worker’s compensation claims. Typically, worker’s compensation claims may involve only some $5,000 in restitution. But, unaware of the contract terms, the Travis County D.A. unit prosecutes any and all claims referred by Texas Mutual. It truly is justice for hire. The unit is called the Travis County Worker’s Compensation Fraud Unit.
I have only infrequent first-hand contact with worker’s compensation claimants. But, when I do, I notice 1) it is extremely hard to find a lawyer who represents claimants and 2) the worker’s compensation rates are incredibly low. For someone injured in the cause of his/her employer, it is very difficult to live on half your former income. And, often the claimant has to fight with the doctor’s hired by the insurance company to obtain that one-half income.
The Worker’s Compensation Fraud unit has never taken a case against Texas Mutual itself. Nor has it ever prosecuted a case involving an insurance company other than Texas Mutual. Yes, that sounds a lot like justice for hire.
Mr. Kyees settled his claim with Texas Mutual for less than $10,000. He refused to agree to a provision that would have kept the agreement confidential. Today, Texas Mutual says the system worked the way it should have. The prosecutor dropped the case when Mr. Kyees’ lawyer produced a letter showing he had had indeed reported his income from a new job. But, the scary part is that the senior prosecutor says she would not have dropped the case. The senior prosecutor says she had actually told the junior prosecutor not to drop the case against Mr. Kyees.
In February, 2015, the Texas Supreme Court ruled that persons cannot sue worker’s compensation companies for malicious prosecution. See that decision in In Re Crawford and Co., No. 14-0256 (Tex. 2/27/15) here. The decision is per curiam, meaning it was not even assigned to an author. So, there will be no more lawsuits like Roy Kyees’ lawsuit. Texas Mutual can enjoy virtual immunity from future disregard of the facts of a case.