All the “Justice” Money Can Buy
Texas Mutual Insurance Company was created amidst a crisis. 25 years later, the company is creating a crisis all its own.
Local and state officials are now reviewing the legality and appropriateness of an exclusive deal in which the private insurance company Texas Mutual pays the salaries and expenses of Travis County district attorneys in exchange for prosecution of the company’s fraud cases.
The troubling arrangement was revealed earlier this month in a joint Texas Tribune and Austin American Statesmen investigation, which has since sparked editorials about the district attorney’s partiality in pursuing Texas Mutual’s fraud cases in the Dallas Morning News and the Austin American Statesmen.
The investigation revealed some worrying aspects of the decades old arrangement. The deal lacks written safeguards preventing the private organization from influencing these public cases. Despite paying the salaries of government officials, Texas Mutual is an entirely private company without government oversight or audits. The Travis County DA has never prosecuted a fraud case against Texas Mutual while directing complaints against the company to the Texas Department of Insurance.
Most importantly, the injured workers prosecuted by the Travis County District Attorney do not enjoy this privilege. The employers and health care providers accused of fraud by Texas Mutual do not enjoy this privilege. No other insurance company enjoys this privilege. Yet, the insurer and prosecutors argue that the deal cuts down on fraud and keeps premiums low.
While fraud prevention is a laudable goal, Senator Kirk Watson and Representative Eddie Rodriguez have both said that the arrangement is an inherent conflict of interest that needs a full legal investigation.
“This is problematic in that it creates at the least an appearance that a governmental entity is prosecuting people at the behest of what is in essence a client,” Watson said. “There need to be an in-depth analysis of why it’s even needed.”
Watson worries that the deal could become “a means and a tool for the insurance company to intimidate so that people might not want to make claims for fear that they might be prosecuted.”
Policyholders with valid claims are likely to be under attack in the 2017 legislative session as Texas Mutual attempts to hold on to its form of special justice and insurance lobbyists struggle to revive the Insurance Immunity Act. SB1628, or the Insurance Immunity Act, attempted to roll back 40+ years of important policyholder protections. SB1628 failed to pass the House last session, but is likely to return in 2017.
In the meantime, Watson, local officials, and other legislators are fighting for the protection of policyholders in a system seemingly stacked against them.