- Associated Press - Saturday, December 19, 2015

AUSTIN, Texas (AP) - The Travis County District Attorney’s office has announced it is dramatically restructuring its workers’ compensation fraud unit and implementing new safeguards against potential abuse and conflicts of interest after the agency was highly criticized for an agreement with a private insurer that had allowed the company to pay prosecutors to pursue its fraud cases.

The changes will install important new oversight of prosecutors in the unit that Texas Mutual has funded for more than a decade, the Austin American-Statesman reported (http://atxne.ws/1Pd1Rug ) Saturday.

The changes comes after a series of reports by the newspaper and the Texas Tribune that detailed the unusual agreement between the district attorney’s office and Texas Mutual, the state’s largest provider of workers’ compensation policies. The agreement had authorized payments to the district attorney’s office of more than $4.7 million since 2001 to have Texas Mutual’s fraud cases prosecuted by the public prosecutors.

Critics of the financial agreement have said it’s a massive conflict of interest for a privately held company to finance government prosecutions.

“Even though this has always been a lawful contract, I understand there were perceptions of it, and this will provide a lot more transparency, obviously, and put another set of eyes on the cases,” Travis County District Attorney Rosemary Lehmberg said of the changes to the agreement.

State Sen. Kirk Watson, D-Austin, who spearheaded the changes to the agreement, said the way it had been originally set up created appearances he felt would degrade public confidence in how the justice system works.

Under the changes, Texas Mutual will keep reimbursing prosecutors for their expense but will lose its exclusive deal to have its cases pursued by the fraud unit. Any workers’ compensation insurance provider with a fraud complaint in Travis County can have its case referred to the unit starting next year, officials said.

Texas Mutual General Counsel Mary Nichols said the company believes workers’ compensation fraud has a “negative effect and corrosive effect” on the entire industry, and it is willing to cover the cost of prosecutions even if its own competitors benefit.

In addition, Texas Mutual investigators will no longer send the company’s fraud cases directly to the district attorney’s office. Instead, it will route them to the Texas Department of Insurance, which will then refer cases to prosecutors as appropriate.

A permanent fix for the issue will have to wait until lawmakers meet again at the next legislative session in early 2017.

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Information from: Austin American-Statesman, http://www.statesman.com

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