QBffiteof the SIttornep 4Benerat
Watt of QtexaS
DAN MORALES
.4rrORSEx
GENERAL Decrmba 17.1993
Mr. David U. Flares OpinionNo. DM-276
Wilhmson County Auditor
P.O. Box 506 Be: wlletller a camtfs singl~loya
Cieorgetom, Texas 78627 self4mded medical benefit plan is subject to
certain provisions of the Insurance Code,
and related questions (RQ-508)
Dear Mr. Plores:
Youbeginbyaskiogwhetheftbe~smedicalbene6tplallissubjeutocutain
~~oftheTarasInnvanceCode~ifw,~~~provisioruue
pampted by tile federal Bmployee Retkma Income security AL% 29 U.S.C.
Qp 1001 - 1461 (“BRISK”). Fii we address whether article 1.24C, tide 3.51-g. and
artide 21.53 of the Inswnce Code apply to singleunployer, self%mded plans.
Artide124C(a)statesthatthetbeofthisatticleis
toassuredlatadeqwtelledth iworwccandbene6tscovaageis
avaWletotbecitkuofthisrtate,torssuntbatadequatehealtb
p. 1444
Mr. David Rores - Page 2 m-2791
care is available to protect the public health and salty, -and to
ascMaintheco~effactofHIvandAlDsonhealthinslJrance
coverage and health benefits CoyeraBeavailability and adequacy in
this state for purposes of meeting the public%health coverage needs.
Subsections (c) through (i) of the article require the State Board of Insuranw (the
“board”) to gather and compile data on the efkct of HIV and AIDS on health insurance
coverage, and authorize the board to submit written recommendations for legislation to
resolve prob1em.saswdated with the impact of HIV and AIDS on the availabiity health
insurww coverage. ln article 1.24C. “health insursnce coverage”is de&d to mean “any
group policy, contmct, or ccrtiticate of health insurance or be&its deliied, issued for
delivay.orrarewedinthisstatebyaoiDsurancecompany..., a group hospital service
corporation. . _, a health maintenanceorganization. . . , and q~ sel@wmmce bust or
mechanismproviding kalfh care benefirs Ins. Code art. 1.24C(b)(2) (citation omitted)
(qhasis added).
‘You ask whether the italidz.ed language would indude a singlaanploya sdf-
fundedpknruch~Stbeswithiatheambitofthe~de. Yousuggestthatbecause
th8Inwrwcecod8gulemny8ppliesonlyto inwrwc8compwieqgroup~service
.
~alldheabhmaintenanceorgaainrtionrandtbatthe~oflasunnces
regulataya+nityis~limitedtoth&eindusGes,thekgislaWcarldnothave
intended for artide L24C to apply to singl&employer,seMmded plans. As will be seen
below,tbelegislahveonammrbaofoccesioruhas~~p~~.oftht
lnsumnw Code appkable to self-funded plans. For this reason, and because a single
employq aeX%mdekplan is dearly a “mech&m p&ding @alth care beM%s,” we
condude that article 124C applies to aingku@oyer’&fimded ~plaassuch as the
COUllt+.=
Next, you sddder article 3.51-g appIies to single-employer,self-fbnded plans.
Artide 3.51-g re@ires various entities, induding “all employer, trustee, or other serf-
fMderl or seSnsud plans or anangements WanwAg health insurance or providing
ofher healfh coverage cr services” to provide ,%ene&s for the necessuy care and
tmtment of chemical dependency that are not less favorable than fbr physical illness
generally.” Id. art. 3.51-g. 8 2A(a) (emphasis added). Although this provision expressly
p. 1445
Mr. David Flares - Page 3 (DM-276)
refers to seKiimded plans, you suggest that it may only be designed to -applyto multiple
employer we&e arrangements (“MEWA’s”)“which,while being a collection of employee
-plans,= insuranceintheKnsethatriskisspreadwasmralunrelatedentities.”
Taaaiicizedknguage~howeva,makesd~thatthisprovisionappliesnotonlyto
iremake plans but also to self4mded plans that provide “other health coverage or
services.” Therefore, we conclude that article 3.51-g applies to single-anployer, self-
fimded plans such as the counQ+s.
In addition, you ask whether article 21.53. which governs dentsl care benefits in
catain w appks to a singbempbyer, sdf%mded PIED.Article 2 1.S3 applies
to a “health insumxe policy” or “employee bcneiit plan” as de&d by section 1.
subsdons (a) and (b). Tbe term “employee benefit plan” means “any plan, fund or
program heretofore or hereafter established or maintained by an employer or by an
employee organization, or by both, to the extent that such plan. fimd, or program was
estabIish8d or is maintained for the purpose of providing for its participants.. . through
tbepurdUscofimlmmcc orothawise,dmtalcarebenefitsinthceventofaccidentor
d~“Thed~~of”~~beaefitpkn”isbrosd~isdearlyootiimitedto
.
tndibmdbealthburanceplans. Wecondudethatartide21.53appliestoasingle-
the evas of&dent or sickness.”
You also ask whether ELBA preempt able 1% tide 3.51-9, and &de
21.53 of the Inwranw Code. YouatatetbatyoutmdaSid “thatERISApmempts
t~lprovidonr . ..utheyrpp~tomoddaglaanployer.#Il-fimdedplans.”J~Asyou
aote,howevqERISAdoesnotapplyto “govanmmtalP~k~establishedby
gov8wmaItaI elltltk. see 29 U.S.C. 80 1-2) (definhg the tam “govamaa phll”
toindudeaplancstablished”foritsanployees”by”thc -0fanyStateor
pow& sIhbision thuwf”), 1003@)(t) (“The plwisions ofthis subdlapt8r ahall ‘lot
@Y to my amployee bet@ plan if...such plan is a w plan”).
~~younrggedthatERISA~these~~oftheInsuranceCodeas
theyapplyt0singleunp1oyel. t?eHimdedg-plans.
ERlSA’s preemption provision generally states that an employee benefit plan is not
“~insunacecompMyorothaiasura,~tnutcompany.oriwestmentcomp~
or . ..algagedinthebUinessofinsumMz orbankingforpurposesofanylawofany
Statepurpohgtoregulateinsurmx companies. --,banks.trust
companie or illvamm wmpani8s.” Id. 5 1144(b). This preen@on provision
p. 1446
Mr. David Florcs - Page 4 (DM-276)
expre& exdudes, however, employee benefit plans which are exenqt under section
1003(b). w&h includes govamnanal plans. See id. In short, ERISA exempts
gowmmntd plans &m~ its requiremen& id. 0 NJO3@),and expressly provides that it
does not preempt state laws which govern such plans, ti. 8 1144(b). Therefo~ we
conclude that WSA does not preempt artide 1.24C. article 3.51-9, and artide 21.53 of
the Insurance code to the extent they apply to a single-employer, self-funded plan of a
governmental enthy such as the county.4
Next you ask us to “co&m [yourl understanding”that article 3.51-6, section 3A
and article 3.51-14s of the Texas Insurance Code “which arguably apply to single-
employer, selfXimdedplans do not require employers to provide certain be&fits.” You
suggest that these provisions “do not require employers to provide cutain benefits, but
rather require imrers, MEWA’sand other seUers of employee benefit plans to offer to
provide certain coverage, and the employer may or may not elect to provide this coverage
to its anploye8s.”
S§ion (a) ofaection 3A ofartide 3.51-6 reqGres vmious hlSW8lSMdplMStO
“@randmakeawilabk...cowagefor sewicesandbenefitsonanexpenreiuxred,
savice,orprcpaidbasisfbrout-pati~expawsthatrnayarisefrominvitrofert%a&n~
ploccdurrs”iftll8plicyorplan”othendwplovideP pregMwy-rdatal beae6ts.
Subsectioa@)rtatesthat”[a]no~madeundasUbsectioa(a)~afthir~~
to this section” Subsection (c) provides that a “rejection of an offer to provide ooverage
ikr services or bendits proviaed by Subsection (a) ofthis se&on must be in writing.”
Section 3A of article 3.51-6 states that covaage must be ofGred to “ea& group
policyholder, contrau holder, empkym, multiple-employer, union, aswdation, or
p. 1447
Mr. David Florcs - Page 5 W-276)
trustee.” Ins. Code art. 3.516, 8 3A(a) (anphasis added). It does. not require that
covaage be off&reddirectly to an empbyee, Tbcrefore, we wndude that section 3A
requires a. singlcunployer, self-tided plan to offer coverage for in vitro f-on
procedures to the employec6
Article 3.5-14, which is similarto article 3.51-6, provides as follows:
Each insurer, nonprofit hospital service plan corpora-
tion . . . , health maintenam organization. . . , employer, multiple
employer, union, association, trustee, or other seHmded or se%
insured welhre or benefit plan, program. or arrangement that issues
group health insurance policies, enters into health care service
contracts or plans, or provides for group health benefits, coverage, or
services in this state for hospital, medical, or surgical expenses
inamd as a result of accident or sickness shall o@r and make
4wa&bk lo each graup pdiqvholder, cmt?acl ho&r, employer.
muMp& emplqwr, unit amciaticw or bvslce under a group
policy, contraq pkn. program or =‘=w”- that provides
hos&aw~cr2alld~m8dic81bw~uweragefor-and
~scrviccorprepaidbasisforexpcnxs
balrredflirihe~can,diagJl0sis,andEregtment of serious
mentaliuMsws.
Id. art. 3.51-14, 5 2(a) (anpb&.s added). As with section 3A of article 3.Sl-6, this
grovkhn does not myair that the offa for ,coverage of expacxa inwnd in the
tmtmwt of serious mental iUncss be made to the employee. Bather, article 3.51-14
rqtires a singbmployer, tdf4imded plan to offa coverage to the employer.
p. 1448
Mr. David Horns - Page 6 (N-276)
Finally. you also ask whether article 20.12 of the Insurance Code*sections 3.3701
through 3.3705 of title 28 of the Texas Admh&ak Code, and section 161.091 ofthe
Health and Safety Code apply to “an employer-controlledentity which has arranged for a
sdcct group of providers at preferred rates to be availableto cormacting employers.”
Artide 20.12 of the lnsurancs Code prohiits group hospital service corporations
subject to chapter 20 from engaging in certain autkities. Article 20.01, which dcscrii
the corporations which are subject to chapter 20, provides that
[a]ny seven (7) or more persons, a majority of whom arc
superinteudentsof hospitals or physiciansor surgeons lkensed by the
State Board of Medical Examiners,upon application to the Secretary
of State of the State of Texas for a corporate charter may be
incnrporated for the purpose of establi&ng __. a nonprofit hospital
service plan, whereby hospital care may be provided by said
corporation through an establishedhospital. . . .
Thesrtitywhichyou~isrubjecttoptide20.12oftheInsurance codeordyifitis
comprised of aeven or mornperson& the majority of whom are buspitd sqaimendatts,
physiCisnsoraurganns”inc0rpomtedfbrtbepurposeofprovidinghosphalcareata
hoopitrl.
sections 3.3701 through 3.3705 of title 28 of the Texas AdnrinistrativeCode apply
to prekrd provider phms. Section 3.3701 expressly providus that “[t&e sections of this
mrbchaptado~tapplytoeordotheyranctionanyplaaarrangedarprovided~byany
providp,,employa,~~~-partyadity~~MypaJw~aditlothatbanMhwrnr
aukmzedtoengageintheb&nessofbealtb insurance in this state.” 28 T.A.C.
83.3701. Th~anerltityiswbjwttotheseregulmionsoldyifitisalliwurer
.
autkaed to engage in the business of health insummx in Texas.
!Sect.ion161.091 of the Health and Safbty Code was recently Mlcnded by the 73rd
initind,toor~m~yptrson,6rm,aJsociationofpasons,partnaJhp,~~corporationfbr
secmingorsokitingpatientsorpMonagefororfromaperxmli~cutitied,or
mgkkred by a state health care regulatory agency.” Health & Safety Code 8 161.091(a).
rrramendedbyAc& 1993,73dLeg..ch. 573, ~S.Ol,at2171c8dch. 706, gl,at2772.
The term “person” in section 161.091 of the Health and Safety Code indudes a
“wrpomtio4 tLugddo4 govemment or gowmmemd alhdivision or agemy, business
trust, estate, trust, partnership, association, and any other legal entity.” Attomey General
Opinion DM-138 (1992) at 1 nl (citing Gov’t Code 8 311.005(2)). Subsection (t) of
section161.091oftheHeaithandSafetyCodeprovidesthatitdoesnotapplytoavariay
p. 1449
Mr. David Hores - Page 7 (DMy276)
of entities. including governmental entities, which reimburse, provide. offer to provide, or
administer medical benefits under a health benefits plan for which ‘it is the payor.
Therefore, ifthe entity you de&i is a governmental entity which rdmbwes. provides,
offers to provide, or adminkters medical beneSts under a health benefits plan for which it
istbepayor,itisnotsubjecttosection161.091.
SUMMARY
Artide 1.24C. article 3.51-9, and article 21.53 of the Insurance
Code apply to single-employer,seKfunded plans. These. prmrisiom
are not preempted by the federal Employee Retirement Income
Security Act, 29 U.S.C. $5 1001 - 1461, (“ERISA”) as they apply to
“govemmentd plans”as defined by title 29, section 1002(32) of the
United States Code.
Under article 3.516, section 3A of the Insmawe Cod4 a single-
employer, seWmded plan must make the offer of coventge for in
vitro f-on procedures to the employer. Artide 3.51-14
fquires a single-employer, aelf%mded plan to offer coverage of
cxpemeshamedinthetre#mwt ofseriousmentdillnesstothe
eznploya.
An entity is subject to article 20.12 of the Insurance Code only if
itiscomprisedofsevcnormoreperso~tbemajorityofwhomare
hospital supaintardents, physidans or surg- incorporated for the
purposeofprovidinghospitalcareatahospii. Anentityissubject
to sections 3.3701 through 3.3705 of title 28 of the Texas
. .
AdmmstdveCodeonlyifitisanhurerauthorizedtoeagagein
thebusinemofhealthiwrance in Texas. A govemmemd entity
which reimburses, provides, offers to provide, or adminkters medical
bareMsrmdaahealthbenefitspknforwtrichitisthepayorisnot
aubjeet to section 161.091 of the Health and Safety Code.
DAN MORALES
Attorney General of Texas
Mr.DavidFlores - Page 8 (DM-276)
WEL PRYOR
Fnst Ass&ant Attorney General
MARYKELLER
Deputy Attorney General for Litigation
RENEAHIcKs
State Solicitor
MADELElNE B. JOHNSON
Chair, opinion Comtnhtee
Prepared by h4ary R Grouter
Assistant Attorney General
p. 1451