MARCH 18, 2004—A Travis County grand jury indicted Minerva Davila today for workers’ compensation fraud-related charges. If convicted, Davila could face fines, restitution, and time in prison.

While working at Comal County Child Emergency, Davila allegedly hurt her head, neck, shoulder and back in an on-the-job accident. Texas Mutual Insurance Company began paying Davila approximately $158 per week in temporary income benefits (TIBs) after her doctor placed her in an off-work status in August 2002.

A Texas Mutual_SM investigation uncovered evidence alleging that Davila had worked as a housekeeper at a New Braunfels conference center beginning September 9, 2002, less than one month after her alleged injury. The investigation found that Davila performed her duties at the center without any indication or complaint of pain or physical limitation.

Meanwhile, Davila continued to tell Texas Mutual Insurance Company that she could not work, and she continued to collect TIBs.

State law allows injured workers to receive TIBs only while they are unable to work. The law also requires injured workers to notify the workers’ compensation insurance company when they begin working again.

Davila received over $4,500 in TIBs, according to Texas Mutual Insurance Company.

Investigators call this sort of scam “double-dipping” because the claimant is getting paid by her new employer for working and, in effect, getting paid by her previous employer’s insurance company for being too hurt to work.

Double-dipping scams, if allowed to continue, can lead to a higher workers’ comp insurance premium for the first employer when the company renews its coverage.

With every TIBs check, Texas Mutual Insurance Company includes a statement reminding the claimant to contact the adjuster if he or she returns to full-time or part-time work. Additionally, Texas Mutual_SM adjusters often contact claimants directly to determine their work status.

The Davila investigation was part of the Texas Mutual_SM “Zero Tolerance for Fraud” policy. Texas Mutual Insurance Company maintains three teams of investigators permanently assigned to investigate every report of suspected fraud.

Note: A grand jury indictment is a formal accusation--not a conviction--of criminal conduct.

MARCH 5, 2004 – Texas Mutual Insurance Company reported today that Roger Gilbreth pleaded guilty to workers’ compensation fraud-related charges.

The 390th District Court sentenced Gilbreth to two years deferred probation and 120 hours of community service. The court also ordered Gilbreth to pay a $200 fine and pay back the $8,974.68 in benefits he fraudulently obtained from Texas Mutual Insurance Company.

Gilbreth allegedly suffered an on-the-job injury while working for Fabstar, Inc. Texas Mutual Insurance Company began paying him supplemental income benefits (SIBs) because he claimed the injury prevented him from returning to work.

The Texas Workers’ Compensation Commission requires injured workers applying for SIBs to complete and sign form TWCC-52 attesting that they are earning less than 80 percent of the wages they earned before their injuries. Gilbreth signed the form upon his initial application for SIBs, and then once a quarter thereafter, as the law requires. Each time, he claimed he was earning no wages.

Meanwhile, Texas Mutual Insurance Company received information that Gilbreth accepted a job in Arkansas. He did not notify Texas Mutual Insurance Company of the change in his employment status, as state law requires. He continued to sign the TWCC-52 and collect SIBs.

The Texas Mutual_SM fraud division presented the signed TWCC-52 forms, along with other evidence, to the Travis County District Attorney office, which prosecuted the case. Texas Mutual Insurance Company estimates that Gilbreth could have fraudulently obtained around $68,000 in benefits had he gotten away with his scam.

The Gilbreth investigation was part of the Texas Mutual_SM Zero Tolerance for Fraud policy. The company maintains three teams of investigators permanently assigned to investigate every report of suspected fraud.

February 13, 2004 — Texas Mutual Insurance Company reports that Dr. Catherine Delaney, a Ph.D. therapist from Houston, entered a corporate plea agreement (Delaney and Associates) with the Travis County District Attorney’s office related to charges of workers’ compensation insurance fraud. Dr. Delaney pleaded guilty on January 20 and paid $9,652 in restitution to Texas Mutual Insurance Company.

The plea agreement followed a months-long joint investigation by the Travis County District Attorney office and Texas Mutual Insurance Company, including some unplanned surveillance work by Texas Mutual_SM investigator Kathleen Kennedy.

In her spare time, Ms. Kennedy works as a volunteer with substance abusers in the Houston area. While attending an alcohol education seminar presented by the Houston Council on Alcohol and Drug Abuse, Ms. Kennedy noticed that Dr. Delaney was seated directly in front of her.

Dr. Delaney had filed for workers’ compensation temporary income benefits (TIBs) when she claimed she was unable to work after allegedly injuring her left knee in her employer’s parking lot. She continued to collect TIBs even after going to work for another employer, Alief Independent School District, a few months later.

State law allows injured workers to receive TIBs only while they are unable to return to work. The law also requires injured workers to notify their workers’ compensation carriers when they return to work.

Delaney failed to notify Texas Mutual Insurance Company that she had returned to work. She also repeatedly told Texas Mutual_SM staff that she was still unable to work so she could continue to receive TIBs of $508 per week.

Investigators call this sort of scam “double-dipping” because the claimant is getting paid by her employer for working and, in effect, getting paid by the insurance company for being too injured to work.

At the seminar, Ms. Kennedy observed that Dr. Delaney “moved freely and without obvious pain” and that her movements did not match the complaints of physical pain and restrictions she had told her health care providers. Ms. Kennedy contacted Assistant District Attorney Donna Crosby, who prosecuted the case on behalf of the Travis County District Attorney office.

The Delaney investigation was part of Texas Mutual Insurance Company’s “Zero Tolerance for Fraud” program. The company maintains three teams of investigators permanently assigned to investigate every report of suspected fraud.

February 4, 2004 — Texas Mutual Insurance Company, the state’s leading provider of workers’ compensation insurance, announced yesterday that it has enhanced its Internet Quoting (IQ) system for agents. Now, IQ will help agents by:

• Automatically placing qualifying accounts into its interim payroll reporting system,
• Quoting over 57 percent of available class codes,
• Asking fewer policyholder-specific questions, and
• Cutting almost in half the number of “clicks” needed to complete an online application.

JANUARY 29, 2004 — Elliott Flood, vice president of special investigations for Texas Mutual Insurance Company, addressed the Texas Committee on Insurance Fraud (TCIF) yesterday. Flood discussed workers’ compensation fraud, one of several types of insurance fraud covered at the meeting.

“Of course, we need to strengthen existing laws, but we also need the means to enforce the law,” said Flood. “To do that, we need three things: money, resources and expertise.”

Flood noted that one of the biggest stumbling blocks to enforcement is that some district attorneys are reluctant to prosecute insurance fraud. This is especially true when the case involves health care provider fraud or premium fraud, the two most costly types of fraud in the workers’ compensation system.

“To be fair to these district attorneys, they often don’t have the technical knowledge to handle white-collar crimes,” said Flood. “Unlike so-called regular crimes, prosecuting insurance fraud, especially premium fraud or health care provider fraud, may require intensive record reviews and an in-depth understanding of [Texas Workers’ Compensation] Commission fee guidelines and rules. We need prosecutors who are dedicated to fighting insurance fraud.”

Reps. Jack Stick and Larry Taylor also attended the meeting. Both men said they supported TCIF’s efforts.

“The continuation of insurance reform will be a critical element in the next session,” said Stick. “Insurance fraud is a priority.”

Taylor agreed with Stick and added that a big part of TCIF’s mission will be educating the public and his fellow legislators on the high cost of insurance fraud. TCIF Chairman Craig Sparks said insurance fraud costs an estimated $120 billion per year, nationally.

Other TCIF speakers included Insurance Commissioner José Montemayor, Dennis Pompa of the Texas Department of Insurance, Dave Hennings of the National Health Care Anti-Fraud Association, Beverly Boone of the Automobile Insurance Agents of Texas, Thomas Dixon of the National Insurance Crime Bureau, Howard Goldblatt of the Coalition Against Insurance Fraud, Jay Thompson of the Association of Fire & Casualty Companies of Texas, and Mark Hanna of the Insurance Council of Texas.

TCIF began as an informal discussion between the Insurance Council of Texas and the fraud unit of the Texas Department of Insurance. The committee hopes to lead a more coordinated assault on insurance fraud at every level by working with insurance carriers, state and county agencies, and national organizations.

TCIF will meet again on April 21 at the Texas Department of Insurance in Austin.

JANUARY 27, 2004 - Texas Mutual Insurance Company has partnered with Argonaut Insurance to offer workers’ compensation coverage for Texas-based businesses that have operations in other states. The agreement will apply to February 1, 2004 policy renewals and new policies.

Texas Mutual Insurance Company is licensed to provide workers’ compensation coverage in Texas. Under the agreement, Argonaut will cover the non-Texas exposure for accounts written by Texas Mutual Insurance Company.

“This partnership gives us the flexibility to help a broader range of Texas employers who may be having difficulty finding workers’ compensation coverage for their employees who work outside the state,” said Russ Oliver, president of Texas Mutual Insurance Company. “In essence, we can now provide one-stop shopping for those businesses.”

Texas Mutual Insurance Company is the largest provider of workers’ compensation insurance in Texas.