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Workers' Comp Insurer Fined Record $250,000

For years, Crystal Davis battled an insurance company for workers' compensation benefits after her husband was killed on the job. As a result of her struggles, the state has slapped ACE American Insurance Company with a $250,000 fine, apparently the largest ever levied.

By Neena Satija, The Texas Tribune and Reveal
Crystal Davis.

Correction appended

For years, Crystal Davis battled an insurance company for workers' compensation benefits after her husband, Wayne, was killed on the job in 2012. 

As a result of her struggles, the Texas Department of Insurance has slapped that insurer with what is believed to be the largest fine ever issued for workers' compensation violations in the state — $250,000. None of the money goes to Davis — a stay-at-home Tyler mom with two children — but the state is requiring that a large chunk of it be used to help children of injured or killed workers.

The fine levied against ACE American Insurance Company by the Division of Workers' Compensation is the largest several staffers say they can recall in the agency's history. It's also unique because $100,000 must be donated to the nonprofit organization Kids' Chance, a scholarship fund for the children of injured or killed workers. Normally, all money collected from fines goes straight to the state's general fund. 

"The money is being returned to the families who needed it," said department spokesman Ben Gonzalez. "In this particular case, to people that were left without their father."

For Davis, though, news of the fine was little solace. "Big companies feel like they can do whatever they want, and 250 seems like a drop in the bucket to me," she said. "They have you with your back up against the wall and they get this slap on the hand."

ACE American, whose parent company reported net income of close to $1 billion in the most recent financial quarter, declined to comment.  

The company initially refused to pay death benefits to Davis after her husband was killed in a car accident while on the job. When the state insurance regulator later ordered ACE American to pay, Davis received the money late. And it took more than a year for Davis to get the interest payments that ACE owed her. The cumulative violations accounted for the large fine, the state Division on Workers' Compensation wrote in its enforcement documents. 

The company has a long history of workers' compensation violations in Texas, state records show. From 2011 to May 2015, it paid a total of $462,579 in monetary penalties (including the $250,000 fine) — more than any other insurer in the same time frame, data from the workers' compensation division shows. The company wrote less than one percent of all workers' compensation policies in the state in 2014. 

Some of those fines involved issues similar to Davis', according to enforcement documents. Regulators cited ACE for failing to pay benefits to an injured worker or the worker's family when ordered to by the state, or for issuing payments months late. The state has also sent ACE dozens of warning letters for potential violations since 2005. 

Another $50,000 from the most recent fine must be invested in a "compliance plan" that the company submitted last month, which should ensure "that things like this won't happen again," Gonzalez said. The department would not provide a copy of the plan because ACE claims it is proprietary, and the Attorney General's office will rule on whether the plan should be public. 

ACE had also sued Davis and her two children in a last-ditch attempt to get its money back after losing the fight at every other level. The lawsuit isn't mentioned in the state's enforcement documents. 

Two days after The Texas Tribune featured Davis' story in a series about workers' compensation last year, ACE dropped its lawsuit, and she recovered her attorney's fees. But her lawyer, Frank Weedon, said Davis is entitled to more justice than that — especially since none of the money from the $250,000 fine will go directly to her family. 

"The person that was truly hurt the most … she had to pay back her loans with interest, and she was never compensated for that," Weedon said. "She borrowed money, and she cried many a nights to sleep wondering how she was going to pay her bills, and she doesn’t get a nickel.”

Davis said she's encouraged that at least some of the money would go toward families of other injured or killed workers. But her bigger concern is how stacked the system is in favor of insurance companies and against workers. 

“Even hearing about this fine. I still feel exactly the same way," she said. "It won’t make a difference for the other people. Something in the laws has to change, not just a little fine.”

Jay Root contributed to this report.

Correction: An earlier version of this story indicated that monetary penalties go into the agency's general fund. In fact, they go to the state's general fund. 

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