“He who pays the fiddler sets the tune,” said Aviva Abramovsky, a law professor at Syracuse University and former chair of the Association of American Law Schools’ insurance law section. “What makes it problematic, particularly in an insurance case like this, is it’s only for this company. They’re the only ones who get private justice. And that’s unfair.”

Kyees, who started working at age 13 and went into the oil fields of the Permian Basin before he could finish high school, isn’t shy in describing his feelings about the deal between the insurer and local prosecutors.

After engaging in the fight of his life to clear his name and healing from the humiliation of an arrest, Kyees prevailed in his criminal case and ultimately obtained a settlement in a malicious prosecution lawsuit. But he remains embittered.

Travis County prosecutors “just take whatever Texas Mutual hands them,” he said in an emotional June interview. “I don’t think an insurance company should have that much power to do people like that — just treat them however they want to and then have district attorneys just taking their word for it.”

Unique arrangement, even as trend grows

Funding deals allowing insurance companies to finance the costs of fraud investigations have blossomed around the nation in recent decades as lawmakers look for ways to help cash-strapped prosecutors pursue complex crimes that ultimately cause premiums to rise for everyone.

But typically those financing schemes rely on pooled or industrywide assessments — with multiple insurance companies paying taxes or fees into a government fund. A public agency then disburses the money to state or local prosecutors.

Such arrangements in Massachusetts, California and other states have drawn criticism from defense lawyers and legal scholars who say the prosecutions lean too heavily in favor of insurer interests while offering too few protections for defendants.

Colorado’s government-run workers’ compensation provider once had a similar arrangement with the state attorney general’s office, but it was replaced in 2012 with pooled funding from all insurers, officials say.

None of the myriad public-private partnerships examined by the Tribune and the Statesman are as direct and intimate as the one in the Texas capital. In Travis County, the arrangement is singularly focused on one company: Texas Mutual makes the referrals, provides the investigators and directly pays all the bills. At one time the company even provided office space for the lead prosecutor. The Travis County DA has statewide authority over such cases because Texas Mutual is headquartered in Austin.

Prosecutors say Texas Mutual gets special treatment because of its history as a state-created entity, but the Legislature turned it into a regulated mutual insurance company — owned by policyholders — in 2001, and it’s no longer a state entity “for any purpose.”

Still, in exchange for guaranteed payments from Texas Mutual of more than $400,000 a year, the Travis County district attorney’s office prosecutes alleged “crimes committed against the company,” according to their contract.

Contract provision goes unread

Signed more than a decade ago by then-Travis County District Attorney Ronnie Earle, the contract as written seems to establish parameters for the privately funded unit’s use of state prosecutorial power.

“Special emphasis will be given to major fraud, i.e., large premium and health care fraud cases,” the contract says. Not included in the “major fraud” category are the low-dollar worker cases, which often bring in less than $5,000 in restitution.

The assistant DA in charge of the unit and the head of investigations at Texas Mutual both acknowledged in interviews that they’d never read the entire contract. Both of them were surprised to see a copy of the contract presented to them by the Tribune and the Statesman, and each said they don’t operate under those tenets.

They simply prosecute every viable case.

“I’m not aware of that provision in the contract. A 2004 contract? No,” Riley said. “We’re reporting 100 percent appropriate emphasis in every area.”

“Is that within the agreement? I’ve never seen it,” echoed Assistant District Attorney Donna Crosby, head of the Texas Mutual-funded unit. “That not how I focus on it. I just do everything they bring over here that’s a case.”

In a written statement issued after Riley’s interview, Texas Mutual General Counsel Mary Nichols pointed out that the contract gives prosecutors the discretion to “prosecute when warranted any alleged criminal violations” against the company.

Repeated phone calls placed to Earle, the former district attorney who struck the funding deal with Texas Mutual, were not returned.

The company’s prosecutor

The joint Tribune/Statesman investigation found that the overwhelming majority of cases referred to the division, called the Travis County Workers’ Compensation Fraud Unit, involve allegations of fraud by individual workers known as “claimants.” In a 2006 annual report, Texas Mutual estimated that 88 percent of its fraud cases involved claimants, some of them paying only a few thousand dollars in restitution, and nearly 80 percent of the pending indictments as of this spring involved alleged fraud by workers.

Both the company and the DA’s office point to an exceptionally high rate of success. The review by the Tribune and the Statesman found one dismissal (the Kyees case), two not-guilty verdicts, six guilty verdicts and a large number of plea agreements.

Under the terms of the contract, the unit does not pursue complaints that don’t involve fraud against Texas Mutual, nor has the district attorney’s office ever prosecuted Texas Mutual Insurance.

To critics, this unique relationship gives Texas Mutual a hammer it can hold over the heads of the people it insures or hires — one no other insurance company in Texas has. Given the complexity of the workers’ compensation system, a plea deal is often the only way out, they argue.

Betty Blackwell, who represented a Southeast Texas trucking company prosecuted by the Texas Mutual-funded unit, accused the giant insurer of using the criminal justice system to collect debts it couldn’t get in the normal dispute resolution process or in state civil court.

“It doesn’t pass the stink test. It just feels bad,” she said. “It smells bad that a particular corporation can have a special arrangement with the DA’s office. Instead of seeking a civil arrangement, they get the DA to get their money for them.”

Both Texas Mutual and the Travis County DA’s office say the funding agreement has nothing to do with gaining a financial advantage and everything to do with policing fraud, whether it’s perpetrated by workers, doctors or employers.

“They do not go into the Texas Mutual justice system,” Riley, the Texas Mutual official, said. “They go before a Travis County grand jury like everyone else. They go before Travis County judges like everyone else. … So there’s no conflict of interest, because we have no control when it goes into the criminal justice system.”

That’s not how Roy Kyees and his lawyers see it.

Conflicting doctors, confused patient

A lifelong West Texan, 52-year-old Kyees (pronounced “keys”) has been in manual labor jobs most of his life. He began cleaning out laundromats when he was 13, then graduated to grocery sacker when he got old enough.

“As soon as I turned 18, I quit school and went into the oil field,” he said.

In January 2006, while working for the Midland-based oil field services company Selman & Associates, Kyees was in New Mexico installing a satellite dish that allows drillers to keep tabs on well activity in remote locations.

His foot twisted on the sandy earth and he felt a pull in his back, then fell down.

When Kyees told his chiropractor he’d hurt himself at work, the chiropractor directed him to file a workers’ compensation claim. Kyees had made workers’ compensation claims previously in his quarter-century in the oil patch, but generally when he got hurt at work he said he paid his own medical bills to avoid the hassle.

Often in workers’ compensation cases, multiple doctors are brought in to settle disputes – and what they decide can dramatically increase or decrease a worker’s benefits.

Over 15 months, four doctors who evaluated Kyees disagreed on the exact diagnosis of his lower back injury and whether more treatment would improve his condition. Kyees said he received confusing instructions about what benefits he would receive.

In an email to his lawyer on Nov. 8, 2006, 10 months after the original accident, Kyees confessed that the conflicting advice was flat-out befuddling.

“I am really confused with all of this and would like for you to explain what will happen next,” Kyees wrote. “All I ever do is what they tell me and go see one doctor after another and they all say something different. So please explain the process to me.”

While Kyees was wrangling with Texas Mutual over his diagnosis and benefits, he got a new job, making lower pay but performing less strenuous work, as one doctor had recommended.

That’s where the trouble started.

Texas Mutual contended Kyees never told the company he returned to work and improperly cashed benefit checks the company never should have sent him. Kyees and his lawyers say they notified the company both in writing and on the telephone that he had gone back to work and that the amount he was owed kept fluctuating as the different doctors weighed in.

Unbeknownst to Kyees, Texas Mutual, which claimed in court filings that it didn’t have the letter, turned his case over to its internal fraud investigators as a suspicious claim.

More than a year lapsed before Kyees learned — through certified mail from Austin, a city he says he he’d never stepped foot in — that there was a warrant for his arrest in faraway Travis County.

“I wanted to whup somebody,” Kyees said. “I wanted to find out why they did this.”

It quickly became apparent to his attorneys that Texas Mutual and the prosecutors it funds believed Kyees was concealing his employment to steal workers’ compensation benefits from the insurer.

Once Kyees’ attorney, Mark Cevallos, gave the Travis County district attorney’s office a copy of a November 2006 letter notifying Texas Mutual of Kyees’ new job, prosecutors dismissed the criminal case.

Questions, resentment linger

Today, Crosby, head of the privately funded prosecutorial unit, contends that a subordinate dismissed the case against her wishes. She still questions the authenticity of the letter.

“It was done against my instructions,” Crosby said. “I mean, I just wouldn’t have bought it. That’s just me. I’m a more of a cynical prosecutor.”

Texas Mutual also continues to question whether the letter was ever really sent, though in court records a company representative said he had not searched the claim file for it.

Riley, the head of fraud investigations at Texas Mutual, said Kyees went through the same process other defendants face when they are charged with a crime in Travis County. And he said the outcome of the Kyees investigation proved his point — even though a worker got thrown in jail over it.

“It got all the way through grand jury, and then evidence comes up for the first time that causes the assistant district attorney to doubt his case and he dismisses it,” Riley said. “That’s the way it’s supposed to work.”

Kyees looks at what happened to him through a very different lens.

He recalls bitterly the stigma of his arrest, how he was fingerprinted and handcuffed and put in leg chains. The only time he’d been to the jailhouse before was to visit a childhood friend who had become a deputy sheriff, he said.

“He saw me being carted in … my feet and hands cuffed,” Kyees said. “He told me he nearly passed out when he saw me being carried in there.”

Because he was charged with a felony, Kyees lost his concealed handgun permit. He had to check in with the bail bondsman every Sunday for over a year and had to inform them anytime he left town.

“They can make people’s lives a living hell, basically,” Kyees said, his voice cracking. “It turns you upside down is what it does.”

Looking back, Kyees said it seemed to him the whole time that the prosecutors were in Texas Mutual’s “back pockets.”

“Why is a district attorney getting paid by the private insurance company?” he asked. “They just take whatever Texas Mutual hands them, bits and pieces of any basic case, and they can word it, say it however they want to make people look guilty.”

‘Make them think twice’

Kyees eventually sued for malicious prosecution and Texas Mutual paid him a settlement of just under $10,000, court records show. Kyees said the company sought to impose a non-disclosure agreement on Kyees, but he refused.

He was lucky that he filed his civil lawsuit against Texas Mutual before February 2015, when the Texas Supreme Court ruled that workers’ compensation carriers can no longer be sued for malicious prosecution. The only remedy available now to someone in Kyees’ shoes is to file a complaint with the state’s Division of Workers’ Compensation — a process that doesn’t produce a dime for the defendant even if the agency substantiates the complaint and fines the company.

It still bothers Kyees that he has an arrest record, that he lost his weapons permit and that he still has to explain all of this to friends, family members and, above all, to future employers. Even though the case was dismissed, he still has to disclose his scrape with the long arm of the Travis County DA on job applications.

But he’s proud that he fought back and that Texas Mutual, as he put it, “bit off more than they could chew” when the insurer turned him in to its paid government prosecutors.

“I was in for the long haul. I was going to fight them tooth and nail,” he said. “I figured if they can do this to me, they’ll do it to anybody they can. I figured I’m going to try to put a stop to it now, or make them think twice before they do this to somebody else.”

Liz Crampton contributed to this report.

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