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.

It was June 12, 2000, and Lance Morris, a volunteer firefighter for the small town of Justin, north of Fort Worth, was in a ditch, 8 or 10 feet below road level. He remembers six or seven firefighters handling the backboard with him, bringing out one of the 19 men who'd flipped a van down the middle of the highway near Texas Motor Speedway where they worked. Bodies were everywhere.

"We go to take this guy out of the ditch; we're going up the ditch and my back just went out. I had to let go," he says today.

Morris went for some medical treatment and then went back to work. In his bill-paying life, he variously worked for Peterbilt Motors and a hazardous-materials firm, and after he married in February 2003, he moved to Houston, which is where his back suddenly got worse.

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.
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.

In March 2003, Morris went to the emergency room with severe back pain. He was referred to a doctor who said he needed emergency surgery for a herniated disc. "He couldn't feel his legs; he couldn't urinate," his wife, Karen, says. Morris called his workers' comp carrier, Texas Mutual Insurance Co., and it issued its approval of the surgery in writing.

Morris had the back surgery and was discharged, but had to return to the hospital when he developed a dangerous staph infection from the operation. His wife says the hospital called her down to its financial office, where she was told Texas Mutual had denied her husband's claim. A new adjuster had been assigned to his case, and this one thought Morris' claim was bogus after a brief conversation with the Justin fire chief about the injury in 2000. The adjuster never spoke to Morris or his doctor before disputing the claim, which she did on the same day she first looked at Morris' file. In later trial testimony, the fire chief said he never would have told her Morris returned to work with no problems in 2000.

Doctors Hospital sent Morris home, where for six weeks he gave himself IVs twice a day and the drugs his doctor was able to get donated for him. Bill collectors started calling. Morris couldn't pay the medical bills on his own, and his personal insurance did not cover his back surgery.

Morris appealed, working his way through the state's workers' comp complaints process. He went to two benefit reviews and a contested case hearing, and he won every time. Texas Mutual finally paid his medical bills in August 2004 after the contested case hearing, but that was no longer enough for Morris.

Houston attorney Mike Doyle filed a bad-faith lawsuit on Morris' behalf, seeking damages, saying that Texas Mutual had no reason to deny his client coverage to begin with and that its so-called "investigation" failed to meet anything approaching industry standards. It failed to settle when its liability had become reasonably clear. It had treated his client badly and should be punished.

Morris won his case—repeatedly. In fact, on August 26 of this year, more than five years since Morris' emergency back surgery, the 14th Court of Appeals rejected Texas Mutual's claims once again and ruled that a 2006 jury had been right when it found that "TMI engaged in unfair and deceptive acts or practices in violation of the Texas Insurance Code." In addition, the appeals court agreed that Texas Mutual had done this knowingly. The court affirmed the award of $75,000 for mental anguish and $250,000 for its knowing violation of the insurance code. The only thing reversed was an award of $75,000 for loss of credit reputation.

As far as Texas Mutual and its lead in-house attorney Mary Nichols are concerned, what is outrageous is that this case has gone as far as it has. She believes the courts have gotten it completely wrong, and in October filed a motion for rehearing to the 14th Appeals Court. If it is denied, the company will appeal to the Texas Supreme Court.

She points to the fact that Morris did not mention a previous injury he had from 1998, something Texas Mutual didn't discover until it was sued for bad faith. Nichols says Morris clearly lied in testimony; he and his attorney say he forgot, and anyway Morris wasn't really hiding it because it was on the medical records he gave TMI. Besides, Doyle says, however much Texas Mutual might wish it otherwise, coverage for workers' comp does not bar pre-existing conditions unless they were the sole cause of the current complaint. If an accident on the job aggravates a prior condition, it's covered.

Doyle wants to know why Texas Mutual repeatedly failed to forward a key part of Morris' records to the TMI medical expert testifying in the case. The documents, which eventually surfaced in 2006, showed him receiving 25 to 30 treatments for his back between the 2000 injury and the 2003 flare-up—the connect-the-dots evidence linking the events. Nichols says the records were merely wrongly coded and thereby misplaced. She also contends they showed sporadic treatment at best and actually undermined Morris' argument.

To say there's no love lost here would be putting it mildly. Nichols says Doyle is just looking for a way to make money. Doyle says Nichols and TMI are looking for excuses to deny benefits rather than finding ways to pay.

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.

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.

----

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.

Insurance carriers can elect to carry their appeal to a civil court, which generally means the worker must hire a lawyer. Even if the worker wins in civil court, insurance companies can continue to appeal the case up to the Texas Supreme Court.

At issue in all these cases is whether the insurance carrier should pay lost wages and medical benefits.

Bad-faith cases take it to the next level. In those cases, the worker has finally gotten his benefits but is arguing that because his coverage was delayed so long he has been made to unfairly suffer additional damage. In some cases, attorneys argue, delayed medical treatment has meant a permanent worsening of the injured worker's condition. In others, he and his family have had to go through the grief of not being able to pay their bills and suffered mental anguish.

Nichols hates being in this arena and calls it unfair. Texas Mutual has the right and responsibility to defend itself against fraud and should not be punished for raising reasonable questions, she says. An adjuster can make a wrong decision, she acknowledges, but that doesn't mean his actions rise to the legal test of committing a knowing wrong with damages assessed.

"Even if an adjuster does a less than hall-of-fame job on the adjusting, there's lots of ways to rectify it, and the Texas Supreme Court doesn't want that to be open field running for the plaintiff's bar."

One danger of juries in bad-faith cases is that instead of sticking to the facts of the bad-faith case, they may look back into the original benefits case and award some more money for that, Nichols says.

"If we get popped for a big extra-contractual amount, a big payday for additional damages every time an adjuster gets it wrong, that's really not good for the employers of Texas or, in the long run, the employees of Texas, either one," she says. Employers can just decide not to provide coverage, or it will be as it was in the late 1980s, when many workers' comp carriers left the state, Nichols says.

According to Doyle, who sees things differently from Nichols, Texas Mutual coverage is fine as long as it's a minor, low-cost injury. "But if it costs serious money...bad head injuries or somebody is killed so there's a lot of money at stake, all of a sudden the number of denials and refusals to pay just multiplies."

Nichols vehemently denies this.

"The vast majority of claims are simply paid here. We have people who've been burned over their bodies who are going to be million-dollar claims. We have paraplegics, people get really badly hurt out there, and we're taught to be good stewards of the reserves we have because we do have to pay many, many injuries, and we have a lifetime medical obligation to people, so everybody has to be careful in this system."

This isn't the first time the matter of bad-faith cases has been challenged. In fact, in Aranda v. Insurance Co. of North America, the original 1988 Texas Supreme Court decision allowing bad-faith cases in Texas, then-Chief Justice Tom Phillips wrote a dissenting opinion, saying that he thought that any disputes should remain within the workers' comp system. Workers' comp is so heavily governed by statutes that the "negotiation" between parties in other types of insurance doesn't occur here, he wrote. Allowing additional civil remedy just "invites the proliferation of lawsuits and the possibility of double recoveries and inconsistent findings of fact," Phillips said.

State Representative Burt Solomons, a Republican from Carrollton, has been engaged with workers' compensation issues in the Legislature and doesn't want to see the bad-faith avenue closed to workers. "If a carrier is unreasonably or illegally denying care, then not only should the Texas Department of Insurance hold the carrier accountable, but the employee should also have an avenue to address the issue in a court of law."

Doyle calls any discussion of insurance company "immunity" preposterous. If a carrier has unfairly denied coverage to an injured worker, the idea that there would be no further punishment even when misconduct was committed knowingly or intentionally by an insurer or its agents is not fair to injured employees, he says.

"I think lack of accountability for anyone is a terrible idea, and for these folks, it's a really terrible idea."

----

Timothy J. Ruttiger was a man whose previous biggest distinction probably was washing out of the Galveston Police Department when he T-boned another vehicle while driving a patrol car during his probationary period. At 10 mph, no less.

By June 21, 2004, after a series of jobs, he found himself working at A&H Electric Co. in Galveston, on the job almost a year when he tripped over a 2-by-4 on the ground while carrying a bundle of metal conduit, fell and ended up needing hernia surgery.

In his deposition, Ruttiger explained that his wife took him to the University of Texas Medical Branch in Galveston; he called A&H Electric owner April Beall from the doctor's office and asked her if he needed to file under workers' comp or insurance. According to court testimony, Beall told him to file it on workers' comp. Ruttiger filled out a comp form at A&H on his way home that day, and Beall signed it.

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.

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."

He's echoed in this by Brian White, deputy counsel of the Office of Injured Employee Counsel, which is dedicated to helping injured workers. "It's not very intuitive. Some employees are not English speakers, which just complicates things. Compensability doesn't translate into other languages very well. Even in English, it's confusing."

Nichols says dispute resolutions go quickly. "If you're worried that there's a delay that's going to hurt you, you can even ask for an expedited hearing and you're going to be in there on a very level playing field and a very fast resolution."

This doesn't match the reality Doyle and other attorneys say they've encountered. They say it can take weeks or months to get to a benefit review conference or contested case hearing and that expedited hearings aren't easily granted.

Nichols says that's not the system's fault. "What happens is, people don't bother to ask for a resolution," she says.

"Our adjusters really try to do the right thing," she says, adding, "we don't have shareholders breathing down our necks trying to squeeze every penny."

While Texas Mutual makes frequent references to all the oversight it has that keeps it on the straight and narrow, it would like to ditch at least part of that—the governor's appointees to its board.

It plans to lobby in the upcoming 2009 legislative session that it should become even more of a private company. Several nearby states have rules that forbid an employer buying a workers' comp policy from a company that in whole or part is controlled by another state. This, of course, has a discouraging effect on Texas Mutual's business.

But even without the governor's appointees, Nichols says, Texas Mutual works in such a heavily regulated industry that workers' rights will always be protected.

----

Lawyers who practice workers' comp generally aren't thought to occupy the more prestigious, loftier realms of the attorney hierarchy.

Cases tend to have a low return on investment, and all sides are dealing with a system that legislators periodically "tweak" to rid it of its newest, latest excesses.

Most of Mike Doyle's work has been in offshore and overseas injury cases. According to him, it was actually Texas Mutual that got him started filing bad-faith workers' comp cases.

It all started with a sandblaster with lung disease working for a company in Alice. Doyle was looking into it as a pro bono case. After 23 years doing "sandblasting without protection," Lucas Lopez, 52, had a condition that was like chronic bronchitis, Doyle says. But Doyle's firm was only accepting cases of silicosis—a progressive, usually fatal lung disease from breathing in silica—and Doyle told him he was sorry but it was a no-go. Lopez handed him a workers' comp form; Doyle figured it was the least he could do and helped him fill it out. Case closed.

The workers' comp claim was denied almost immediately on the grounds it was not work-related. That was in 1996.

"I say, 'I'll sort this out.' So for free, I went all the way through the comp system," Doyle says. Lopez kept losing because whenever Texas Mutual sent him to one doctor after another to be evaluated, each physician would issue a report saying the fault was due to the patient's history of smoking, Doyle says.

Except, as Doyle tells the story, it was a "total lie," or close enough. His client's "only experience with smoking was limited experimentation between the ages of 15 and 17, over 30 years ago," Doyle wrote in a 1998 letter to the then-president of the then-Texas Workers' Compensation Insurance Fund.

Doyle filed a case, appealing to state district court. He subpoenaed the doctors' records. "I find out that a Texas Mutual adjuster had been sending secret notes to each of the doctors before he showed up and saying that 'Mr. Lopez will deny this, it's not in his medical records but I confirm that he's a longtime smoker.' "

"The jury said yes, he's injured. So we win the trial...I wrote a demand letter. I'm waiving all of my fees. I had to spend three hours researching the law, so pay me $3,000 to write this letter and do the research and pay him $90,000 because you delayed him for 18 months wrongfully. He was not getting his medicine." At the time, Lopez was the sole support of his wife and 11-year-old disabled daughter, Doyle wrote in the 1998 letter. "No money. No medicine. Lived in a shack with no air conditioning," he sums up today.

Their response: Texas Mutual sued his client, asking an Austin state district court for a declaratory judgment that they didn't have to pay Lopez anything.

Doyle won again. Texas Mutual appealed, and that's when Doyle filed his first bad-faith case in 1998. During all this time, Lopez received no payments for medical care until the Texas Supreme Court rejected TMI's last appeal in the workers' comp case in October 2000, Doyle says.

As for the bad faith case, in April 2001, Texas Mutual settled with Doyle right before trial, he says. According to Doyle, he had a new mission. "Let me talk to the five guys in town who do comp, tell me your worst cases. That's how I started."

----

Rogers, who does a lot of workers' comp cases both as a witness for insurance companies and injured workers and as an attorney representing injured workers and health care providers, won't touch bad-faith cases.

It's not because he's against them; he says he can't afford them. "The amount of money we would have to put into them is just too much; we don't have it." He says proving damages in such cases, such as loss of credit reputation, can be very costly, with expert witnesses sometimes clocking in at $300 an hour.

Jeff Raizner, Doyle's law partner, says these cases take a long time to try, which discourages most people. If you get to the point where you can explain what happened before a jury, you have a chance, he says.

"I can't sue for the benefits, that's what you have to win over in the commission first before I can even take your case," Doyle explains. "What I can sue for is the difference between where you should have been if they'd done it when they should have, and where they left you."

Rogers, who is also the chairman of the committee that advises the State Board of Legal Specialization on the workers' comp specialty, also disagrees with Nichols that civil court judges and juries just aren't equipped to hear cases involving alleged damages from workers' comp disputes.

"Well, go tell that to the judge, that you don't really understand this," Rogers says. "There are so many more things that go to court that are far more complicated than workers' compensation. Good lord, I've been listening to all this stuff about financial instruments. I mean, who understands that? Courts are expected to. That's the job of the advocate, to break it all down into terms the court can understand."

But according Texas Mutual's argument, a misunderstanding of the law is exactly what happened in the Morris case. According to TMI, the appeals court didn't understand workers' comp law and got the case exactly backward.

Texas Mutual argues that it was well within its rights to contest the claim initially because Morris had left out the 1998 injury. The fact that TMI didn't discover the 1998 incident until years after it denied him coverage makes no difference as a point of law, Nichols says.

"The law is that you can consider everything. That it doesn't have to be what you know at the time of the denial."

Also, Doyle's argument to the contrary, that it is an "industry standard" to have a three-point contact of employer, employee and treating doctor before denying a claim, Nichols says there is no such thing legally. Adjusters have to meet regulatory deadlines just as injured employees do in workers' comp claims. They can issue a denial and resolve it later while they continue their investigations, she says. A pre-authorization is only agreeing that surgery is needed; it's not saying Texas Mutual should have to pay for that surgery, she maintains.

And, once the lost medical records were located, their own medical expert, who'd given Morris the benefit of the doubt when he had no records to go by, instead concluded that the 2003 herniations were not connected in any way with the injury in 2000, Nichols says.

There was never any testimony in trial proving that the insurer was "actually aware" that its claims-handling was "false, deceptive or unfair," TMI says.

Nichols calls bad-faith cases "recent accusations. I think they're completely unjustified." She says she has "every confidence in our adjusters" and identifies Texas Mutual as a "high-integrity company." So why is Mike Doyle filing these cases against them? "Because he wants to make some money," she says.

"The number of bad-faith claims we have against us is very, very tiny in comparison to the number of claims," she adds. "At the moment we probably have pending maybe 15 or 16 bad-faith claims...Some will just go away because they haven't exhausted their remedies or they were just attempts to get some fast money maybe. That's not just this year. We handle probably 30,000 claims a year. Say 15 cases cover conservatively three years, that would be 15 cases out of 90,000 claims."

----

Some people would say it could only happen in Texas or in a country song. But in 1979, Lance Morris' 18-year-old sister broke her neck in a cheerleading accident and died. Only 10, "fixing to be 11," Morris decided that maybe something had gone wrong. "Maybe she was mishandled. Maybe she was mispackaged," he says now. He decided to become a firefighter himself someday to make sure things went right, and when his family later moved to Justin, with its junior firefighter program for teenagers, he joined up.

"I worked for free for 19 years daylight to dark, rain, snow, heat. It didn't matter, whenever the fire alarm went off I went to work."

Unusual among small-town volunteer fire departments, Justin got workers' comp coverage for its firefighters. This was important to Morris and the other firefighters, he says; it was acknowledgment that what they did was appreciated, and they were protected even if they weren't "big city."

Morris is a man stalled in life just before his 40th birthday, and it's hard to say when that's going to change. Texas Mutual continues to appeal his case, so nothing is settled there.

As a result of his back problems, he says he can't do any of the work he's trained for, can't lift anything heavy. His dream was to become a Houston firefighter after he moved to the area. But because he was still recovering from the surgery, he lost the opportunity to take a civil service exam before his 36th birthday, he says, and now he's too old to qualify to work for them. It's hard to understand how he could physically do the job either.

He goes over to his wife's store—she runs a small pet grooming and boarding facility—and helps out at the front desk.

"I've been on one of the biggest tower fires in the state of Texas. I've been on one of the biggest chlorine derailments in the United States," he says, mixing pride and pain. "I've done all these high-profile things. Here come the firefighters. They're here to save the day, riding in on a white horse.

"Now I count the beans and do customer service."

Doyle continues to allege that if it's a significant case involving a lot of money, Texas Mutual escalates its denials. "They'll deny on this reason. They'll deny on that reason. They'll deny each and every prescription. It's an exhaustion-of-remedies deal. You are going to be exhausted before you ever think about filing a lawsuit against these guys.

"The most severe injuries, they basically give you a lifetime of denials instead of a lifetime of benefits until you go away."

Attorney Rogers takes a somewhat more temperate approach. He says that on the whole, Texas Mutual does OK—some of the claims adjusters are very good, and most of the people there do a good job.

But things do go wrong, and Texas Mutual won't admit it, Rogers says. "When they don't do OK, they ought to recognize it and mediate the case out." Other insurance companies probably have more bad-faith claims filed against them because they are more likely to settle—there's a better chance of fighting them and winning.

Texas Mutual, on the other hand, fights whenever it thinks it is right, however otherwise expedient it might be to just let it go, Rogers says.

"They make you go to court on each and every claim. People have to be very serious and have to have a very good case before they ever file a lawsuit against Texas Mutual. If you file one, you're into a great big battle.

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