Travis County Prosecutor-For-Hire Deal Postponed

A controversial agreement between the Travis County District Attorney's Office and Texas Mutual Insurance in which the company pays prosecutors to pursue its fraud cases will be suspended — at least for now, officials said Wednesday.

Editor's note: This story has been updated throughout.

A controversial agreement between the Travis County District Attorney's Office and Texas Mutual Insurance under which the company pays prosecutors to pursue its fraud cases will be suspended — at least for now, officials said Wednesday.

The decision comes after a joint Austin American-Statesman and Texas Tribune series exposed the unusual and cozy arrangement, which sparked concern and objections by some lawmakers and county leaders.

District Attorney Rosemary Lehmberg said in a statement that a contract between her office and the mega-insurer — set to be renewed Oct. 1 — will be placed on hold. The insurer will continue to fund the four-person fraud unit handling Texas Mutual's cases through the end of the year "to avoid unnecessary hardship" on the county, the company said.

While pointing out that the agreement is legal, "nonetheless, understanding the perception questions that have been raised, my office is exploring how to continue our important work in the area of worker's compensation insurance fraud," Lehmberg said.

"I intend to ask a group of public officials to work with me to evaluate funding options and work through the issues," she said in a statement.

In a letter to Lehmberg, Mary Nichols, Texas Mutual's general counsel, wrote that the annual contract was being postponed "to provide time to study the agreement and consider amendments to its terms." 

In an email, Texas Mutual Vice President for Public Affairs Terry Frakes, said "we welcome the opportunity to discuss the program with interested parties."

Texas Mutual, the largest provider of workers' compensation insurance in Texas by a long shot, has contracted with the Travis County district attorney's office since at least 2000. In the 2014 fiscal year, the company authorized payments of $430,000 to the Travis County district attorney's office to prosecute alleged “crimes committed against the company.”

As part of the arrangement, a team of 21 investigators employed by Texas Mutual — not sworn peace officers — conducts the investigations and gathers the information for direct referral to the Travis DA’s office.

Last week, Travis County commissioners considered providing more oversight of the agreement, but made no formal changes. Travis County Judge Sarah Eckhardt has expressed particular concerns about the agreement, calling it a "pay to play" set up by the Texas Legislature.

Disclosure: Texas Mutual Insurance is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.