Texas Mutual Says Thanks, But No Thanks, to State Oversight

Texas’ leading workers’ comp insurer says we don’t need courts and juries watching over them. Yeah, right.

There's another reason Nichols doesn't like Doyle very much. He keeps beating her and the battalion of lawyers her company hires in court.

Texas Mutual has lost only two bad-faith cases in its history. Both were to Mike Doyle. In the other bad-faith case, TMI withheld medical benefits from a Galveston man saying the employee was not injured at work but while playing softball (he wasn't). Texas Mutual based its denial on rumors passed on by the man's employer, with no independent verification.

Doyle has also battled Texas Mutual in some straight-up workers' comp cases, the most notable occurring in Dallas state District Judge Martin Hoffman's court on January 9.

Tim Ruttiger, injured on the job in Galveston, claims TexasMutual's insurance adjuster did only a cursory investigation before wrongly accusing Ruttiger of filing a false insurance claim.
Tim Ruttiger, injured on the job in Galveston, claims TexasMutual's insurance adjuster did only a cursory investigation before wrongly accusing Ruttiger of filing a false insurance claim.
Lawyer Mike Doyle, who represents Lance Morris, says the notion that workers' comp insurers should be immune from bad-faith lawsuits is preposterous.
Margaret Downing
Lawyer Mike Doyle, who represents Lance Morris, says the notion that workers' comp insurers should be immune from bad-faith lawsuits is preposterous.

Judge Hoffman ruled that TMI had committed fraud by falsifying a medical record in the case of a Dallas-area construction worker and was so displeased that he ordered Texas Mutual to post his ruling on its own Web site. [See sidebar, page 21.] Texas Mutual has not complied, arguing that the added notation on a hospital document was an innocent act and that the judge is abusing his authority. Meanwhile, Doyle was more than happy to put the reprimand on the Doyle Raizner LLP law firm's Web site.

Doyle has won two other bad-faith workers' comp cases against companies other than Texas Mutual, and he's been busy filing more cases, including against Texas Mutual.

But if Texas Mutual has its way, that's about to end. In October, as part of its appeal of the Galveston case to the Texas Supreme Court, TMI argued that, as in some other states, Texas shouldn't allow bad-faith cases to stem from workers' comp. Insurance carriers such as Texas Mutual would be immune from damage awards.

Juries, district court judges and even appellate courts in Texas, Nichols says, don't understand the intricacies of workers' compensation law and have no business deciding the bad-faith cases that arise out of delayed benefits.

The workers' comp system, Texas Mutual argues, should just handle itself.

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In 2001 and again in 2005, the Texas Legislature overtook reforms of the workers' comp system because it wasn't handling itself particularly well.

In 2001, it was House Bill 2600 that looked at what Amy Lee, director of the state's Workers' Compensation Research and Evaluation Group, calls "an over-utilization of medical care compared with other states."

With a goal of making the process more efficient and cheaper so that more employers would buy workers' comp insurance, spinal surgeries moved to a preauthorization process rather than a second medical opinion. Medical reimbursements were recalibrated to match Medicare fees with Medicare billing rules used to tighten things up, Lee says. Costs declined, and presumably more employers were encouraged to sign up.

In 2005, House Bill 7 introduced the concepts of networks and managed care to the workers' comp system to further handle costs. The Legislature also moved workers' comp to the jurisdiction of the Texas Department of Insurance, resulting in the cumbersomely named Texas Department of Insurance Division of Workers' Compensation.

Legislators also created the Office of Injured Employee Counsel, whose ombudsmen represent injured workers in administrative disputes and in developing legislation. A governor-appointed public counsel heads the office.

Texas is the only state that doesn't make workers' comp mandatory. A 2008 survey showed 33 percent of employers didn't buy workers' comp coverage, an improvement over the 44 percent who didn't buy it in the mid-'90s.

Texas Mutual is the carrier of last resort for workers' comp in Texas and its leading provider. The state chartered TMI in 1991 (after a near collapse of workers' comp in Texas in the late '80s) as the Texas Workers' Compensation Insurance Fund. It got a name change in 2001 when legislators authorized the not-for-profit to operate as a mutual insurance company, responsible to its policyholders, the employers who bought its policies. Five members of its nine-person board are appointed by the governor. On its Web site, it says it has "zero tolerance for fraud" and that its "three teams of investigators save millions in false claim payments."

TMI sets aside a reserve of money to handle claims. Profits pay employees, are returned to employers in the form of dividends and used to hand out performance bonuses to managers. A chunk also goes to paying lawyers' fees; Texas Mutual employs several prestigious firms from around the state.

Simply put, workers' comp is a deal between employer and employee. An employer who buys workers' comp protects himself with limits on liability and the threat of being sued for negligence with potentially huge jury awards. The trade-off is that workers' comp coverage is supposed to be for a lifetime if needed, and again, pre-existing conditions don't necessarily preclude coverage. The system is supposed to work toward returning the worker to a productive work life as soon as possible.

In most cases, workers' comp claims are filed in jobs requiring a lot of physical labor, such as truck driving, construction or in oil and gas field and plant work.

When an insurance carrier denies a claim, a worker has the right to be heard through the state's workers' comp complaint system, a progression of mediations and hearings that can last for months or years before and if a claimant ever emerges with a favorable ruling. But winning at this level can sometimes be a false victory.

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