Is it fair for a private company to have an exclusive contract with the government to prosecute its cases?
In Texas, there is one private insurance company that pays government lawyers to pursue what it suspects to be fraud. Critics say that it’s a classic conflict of interest.
In a series called “Paid to Prosecute,” The Texas Tribune and the Austin American Statesman covered the relationship between the office of the Travis County District Attorney’s office and Texas Mutual Insurance Company, the largest provider of workers’ compensation insurance in Texas.
“The difference that we found in this case is that they’re actually under contract and it’s only one company involved, and it’s only to fund prosecutions in which crimes are alleged to have occurred in which the company got defrauded, not where the company might have defrauded somebody,” he says.
Although Texas Mutual was created by the Texas Legislature in 1991 to solve a crisis in workers compensation insurance and the arrangement with Travis County was included as an anti-fraud provision, the Legislature then made Texas Mutual into a standalone mutual insurance company in 2001. The ability to enter into partnerships stayed in the even though it’s a privately held company.
“This year, it’s $430,000 that they’ve authorized to pay,” Root says.
Overall, Texas Mutual has paid close to $5 million for the Travis County District Attorney’s, funding a unit — two lawyers and two prosecutors— within the office to pursue alleged crimes against the company, commonly by workers accused of drawing benefits they’re not entitled to.
Since Texas Mutual has 40 percent of the market and serves as the “insurer of last resort” for workers’ compensation in Texas, the company and the prosecutors say it not only protects policyholders, but keeps premiums low for the industry as a whole.
Disclaimer: Texas Mutual is an underwriter of Texas Standard.