DA Suspends Funding Agreement with Workers’ Comp Insurer, Texas Mutual

The Travis County, Texas District Attorney’s office said it is suspending an agreement with Texas Mutual Insurance Co. under which the company provides funds for prosecutors to pursue the workers’ compensation insurers’ fraud cases.

District Attorney Rosemary Lehmberg said in a statement that an agreement between her office and Texas Mutual had been up for renewal Oct. 1.

In the release issued by the DA’s office, Lehmberg said the agreement between Texas Mutual and her office “is expressly authorized by the Texas Insurance Code and is, therefore, a legal contract.”

Still, the two parties “have agreed to postpone the automatic annual renewal of the agreement that is scheduled for October 1st,” Lehmberg’s announcement said. “Instead, TMI (Texas Mutual) will pay the operating expenses of the Workers’ Compensation Fraud unit through the end of the year, providing time to explore alternatives.”

Lehmberg said her office is exploring “how to continue our important work in the area of workers’ compensation insurance fraud.”

A joint series by the Austin American Statesman and Texas Tribune detailed the unusual agreement between Lehmberg’s office and Texas Mutual. The series raised questions about whether it is appropriate for the company to fund the prosecutors who investigate fraud cases allegedly committed against it. State lawmakers apparently took heed and voiced concerns of their own to the DA’s office.

“Texas Mutual is the insurer of last resort in Texas and has a statutory mandate to identify and investigate fraud.The long-standing agreement with TMI has ensured that the TCDA has adequate resources to prosecute fraud cases,” Lehmberg said.

The Texas Tribune reported that the funding agreement between the insurer and the TCDA has been in place since at least 2000 and was established by Lehmberg’s predecessor, Ronnie Earle.

Texas Mutual was created as the Texas Workers’ Compensation Insurance Fund by the Legislature in 1991 in response to the workers’ compensation insurance crisis that developed in the late 1980s. The company converted to a domestic mutual insurance company in 2001 and is no longer under direct control of the state. Five of its nine board members, including the board chair, continue to be appointed by the governor and affirmed by the Senate.

An Associated Press report contributed to this story.

Topics Mergers & Acquisitions Carriers Texas Fraud Workers' Compensation