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.

His operation was scheduled for July 12, but the day before, UTMB called and said the Texas Mutual adjuster had canceled Ruttiger's surgery. Ruttiger called the adjuster, Audie A. Culbert, who hung up on him after a brief conversation in which Culbert told him his claim was fraudulent, Ruttiger says.

Culbert denied the claim after talking to Beall, who told him other employees said Ruttiger had injured himself playing softball. Culbert made this determination without talking to Ruttiger or to Ruttiger's doctor.

As it turned out, while Ruttiger managed his daughter's softball team, he hadn't played in 15 years.

Lance Morris, here with wife Karen, keeps winning battles against workers' comp company Texas Mutual Insurance, but he's yet to win his war.
Margaret Downing
Lance Morris, here with wife Karen, keeps winning battles against workers' comp company Texas Mutual Insurance, but he's yet to win his war.
Karen and Lance Morris meet with lawyer Jeff Raizner, whose firm isrepresenting Lance, a former Justin volunteer firefighter, over a claim that Texas Mutual acted in bad faith in denying coverage for Morris' back injury.
Margaret Downing
Karen and Lance Morris meet with lawyer Jeff Raizner, whose firm isrepresenting Lance, a former Justin volunteer firefighter, over a claim that Texas Mutual acted in bad faith in denying coverage for Morris' back injury.

Six months later, after Ruttiger agreed to give up three months of workers' comp payments, Texas Mutual approved the surgery. "I was at the point where I was hurting so bad that it didn't matter," he said in the deposition. He was also having trouble paying his bills and had to borrow from his father.

Doyle filed a bad-faith case on Ruttiger's behalf in the 122nd State District Court in Galveston. Evidence in the case showed that although Beall had signed Ruttiger's comp form, she told Culbert that Ruttiger had not reported an on-the-job injury. She also said that Henry Beall, April's son and a co-owner, had said Ruttiger came to work limping that day and that Ruttiger's immediate supervisor was never told of any injury.

In his statement, Henry Beall contradicted himself about whether Ruttiger had reported an on-the-job injury. He said he didn't have any proof about the softball game and that Ruttiger could have been simply coaching his daughter. He also couldn't confirm the limp.

Culbert said he couldn't reach the doctor, even though his own notes on the case show that on July 12, he received "a call from Teresa @ UTMB and she wanted pre-auth for an [sic] hernia repair."

Jurors in district court awarded Ruttiger a total of $4,700 for physical impairment, pain and suffering, $100,000 for mental anguish and $20,000 additional damages on finding TMI's conduct was committed knowingly. It also awarded $103,000 in attorneys' fees and $13,579 in prejudgment interest. Its awards for damage to credit reputation were later reversed by the appeals court.

Texas Mutual appealed and lost.

The Court of Appeals for the 1st District of Houston affirmed the lower court and wrote: "A reasonable juror could have believed that Culbert made his decision to deny Ruttiger's claim after conducting an extremely limited, one-sided investigation that produced nothing more than highly suspicious rumors and speculation from two, related employer representatives."

The case is now being appealed to the Texas Supreme Court. Texas Mutual argues that it discovered during the bad-faith lawsuit that Ruttiger had hernias since 1998 and a roommate of his was saying Ruttiger was running a scam.

The appeals court held that because TMI first denied the claim for the wrong reasons, a jury could find that the carrier was seeking a pretext to uphold their refusal and the jury could disregard this. Attorneys for Texas Mutual argue the court got this completely wrong.

Also as part of this appeal, Texas Mutual argues that bad-faith damages should not be allowed in workers' comp.

"An adjuster can make a wrong decision," Nichols says. "The information about him getting hurt playing softball turns out not to have been correct. Adjusters are going to make mistakes once in a while. The bad-faith cause of action is supposed to be reserved for very egregious wrongs."

Bad-faith cases try to make a separate, punishable incident out of something that should be all of one piece, Nichols says. If they delay surgery so that a person's condition worsens and it ultimately takes longer to treat him, well, Texas Mutual has to pay the added costs. Why pile it on with damages?

"We're going to be paying for Mr. Ruttiger's injury," Nichols says. "We pay for unlimited lifetime medical. So if we delay your shoulder surgery and your shoulder gets worse, that's still our nickel. We're going to keep paying.

"That's not a separate and independent injury. That is the comp claim that we are taking care of. That's the shoulder that we bought."

----

Nichols, TMI senior vice president and general counsel, joined Texas Mutual in 1995 after practicing law for 10 years at Vinson & Elkins.

She maintains that there should be no confusion for denied workers seeking to navigate the workers' comp system. "They are informed on just about every piece of paper they get. If we dispute a claim, we have to send a standardized form saying that we don't agree that this is compensable or that this is warranted. And it tells them, 'So here's what you can do.'"

Pete Rogers, a Richardson attorney from the firm of Rogers, Booker & Lewis who does a lot of workers' comp work, reacts to Nichols' statement with a laugh.

"That's just crazy. Who do you think your average injured worker is? You think they're capable of doing it? You're injured, you're in pain, you don't know what to do. I don't have any clients that have had a clue as to any of this. It's a crazy system. It presupposes that your average everyday injured worker is an attorney or at least has a college education."

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