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DAN MORALES February 25.1993
*l-rORSEI’
GENERAL
David Smith, M.D. OpinionNo. DM-205
Commissioner
Texas Department of Health Re: Whether section 142.005 of the Health and
1100 west 49th street Safety Code applies to nonprofit corporations
Austin, Texas 787563 199 and related questions (RQ-491)
Dear Dr. smith:
Your predecessor-in-office asked this office to construe section 142.005 of the
Health and Safety Code. Chapter 142 of the Health and Safety Code applies to home
health services, which are defined generally as “the provision, for pay or other
consideration, of a health service in a patient’s residence.“r Health & Safety Code
8 142.001(S); see also 25 T.AC. 8 115.2. Any person-which term is defined to include
an individual, corporation, or association, Health & Safety Code 3 142.001(6)-that
desires to engage in the business of offering home health services first must obtain a
license from the Department of Health (the “department”). Id. 5 142.002(a); see id.
8 11.001(3) (deiining “department”). An applicant for a license to offer home health
services must, among other things, complete an application as prescribed by the
department and pay a license fee. Id. 8 142.004(a)(l), (4); see id. 5 142.010 (specifying
ranges for various license fees that department must set and collect). Non-individual
applicants must comply with additional ~hcenseapplication requirements, which the
kgishture has articulated in section 142.005 of the Health and Safety Code. Section
142.005 provides in pertinent part as follows:
(a) Ifan applicant for a license, other than a renewal or branch
office license. proposes to operate a home health agency through a
partnership, corporation, or other business entity that includes
members that are not individuals,or through a corporation the shares
of which are owned by another wrporation, the applicant must:
(1) establish a corporation under the Lawsof this state if the
applicant is not a corporation organized under the laws of this state.
The legislature cod&xl the statutory predecessor to chapter 142 of the Health and
Safbty Code, V.T.C.S. article 4447u, in 1989. See Acts 1989, 71st Leg., ch. 678, 5 1, at
2370-71. The legislature expressly stated that the codification was nonsubstantive. See
1111the context of chapter 142 of the Health and Safety Code, “residence”refers to any place
where a peon t&&s, including a home, a nursing home, or a amdescmt home for the disabledor
aged. Health&Safety C&c 8 142.001(8);scc crlso25 T.A.C. 5 115.2.
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David Smith, M.D. - Page 2 (DM-205)
Aas 1989, 7lst Leg., ch. 678, 8 1 (caption to act). The legislature had enacted article
4447~ V.T.C.S., in 1979. See Acts 1979,66th Leg., ch. 642, at 1466. Article 4447~ did
not include a provision similar to section 142.005 of the Health and Safety Code,
however, until 1987, when the legislature added section 7A See Acts 1987, 70th Leg.,
ch. 1091, 8 5. at 3702.
Representative Barton proposed adding section 7A on the floor of the house
during the second reading of Senate Bii 1371. See Debate on S.B. 1371 on the Floor of
the House, 70th Leg. (May 29, 1987) (statement of Representatk Barton) (tape on Sk
with House Committee Coordinator); KJ. of Tex., 70th Leg., at 3899 (1987).
Representative Barton stated only that tha amendment he proposed would “strengthen
licensing procedure.” Debate on S.B. 1371 on the Floor of the House, 70th Leg. (May
29, 1987) (statement of Representative Barton) (tape on 6le with House Committee
Coordinator). We were unable to find any additional legislative history indicating the
intent of section 142.005’sstatutory predecessor.
Your predecessor-in-officeSrst asked whether the language in section 142.005(a)
regarding a business entity “that includes members that are not individuals”applies only to
a nonprofit wrporation. Your predecessor stated that the department believes that the
quoted language refers only to a nonprofit corporation because a nonprofit wrporation is
the only type of corporation that has members; a for-profit wrporation. on the other hand
has shareholders, not members. We disagree.
Based on our reading of section 142.005, we believe that the legislature intended
all non-individual appkants to comply with the additional license applicationrequirements
articulated in subsection (a), regardless of the business entity’s structure (e.g., limited
partnership, general partnership, corporation) or whether the business entity is for-profit
or nonprofit. While we agree that “business entity that includes members”descriis a
nonprofit wrporation, see V.T.C.S. art. 1396-1.02(A)(6) (defining “member” as “one
having membership rights in a [not-for-profit] corporation in accordance with the
provisions of its articles of incorporation or its by-Jaws”); see &o 15 TIX. JuR. 3D
Corporutions 5 502, at 644-45 (1981), we understand that it may descrii other business
entities as well. For example, we are advised that a limited iiabiity company is a recent
hybrid between a corporation and a partnership; the owners of a limited habiity company
are called members. We understand that the development of the limited liiihty company
postdates the enactment of section 142.005’spredecessor; however, in our opinion, the
legislature employed broad descriptive language in section 142.005(a) instead of a list of
specific types of business entities so that the section would apply to every business entity
that desires to operate a home health agency. We conclude, therefore, that “business
entity that includes members that are not individuals”in section 142.005(a) of the Health
and Safety Code enwmpasses not only nonprofit wrporations but also for-profit business
entities that include members that are not individuals.
Your predecessor-in-office next asked whether the language in section 142.005(a)
regarding a “corporation the shares of which are owned by another corporation” refers to
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David Smith, M.D. - Page 3 (DM-205)
a corporation in which another corporation owns mry of the shares, or whether it refers to
a ~rporation in which another corporation owns oil of the shares. In our opinion, the
language of the predecessor statute, V.T.C.S. article 4447~ section 74 is instructive.
Prior to codification in 1989, V.T.C.S. article 444711,section 7A(a) read in pertinent part
as follows: “If an applicant for a license. . . proposes to operate a home health
agency. . . through a corporation in which mry of the stock is owned by another
corporation. . . .” Acts 1987,7Oth Leg., ch. 1091,§ 5. at 3702 (emphasis added). when
a conflict exists between a former statute and a revision the legislature has made pursuant
to a proposal for nonsubstantive revisions from the Texas Legislative Council, the former
statute wig control. See Johnwn v. Cify of Fort Worth. 774 S.W.Zd 653. 654-55 (Tat.
1989). Consequently, we must read “any”into section 142.005 of the Health and Safety
Code. Thus, a “corporation the shares of which are owned by another corporation” in
section 142.005 refers to a corporation in which another corporation owns any of the
shares.
Fily, your predecessor-in-officeasked whether a foreign corporation registered
to do business in the State of Texas must establish a domestic wrporation to meet the
requirements of section 142.005(a)(l) of the Health and Safety Code. To the extent that
section 142.005(a)(l) is ambiguous, we believe that the language of V.T.C.S. article
4447~. section 7A is instructive. Prior to wditication, subsection (a)(l) required an
applicant to “establish a corporation under Texas law if the applicant is not a Texas
corporation.” Id. In our opinion, article 4447u, section 7A rewired a foreign corporation
to establish a Texas corporation to meet the requirements for licensing as a home health
agency. We construe section 142.005 of the Health and Safety Code wnsistently with its
statutory predecessor. See Johnson, 774 S.W.2d at 654-55.
Your predecessor-in-office pointed out that an interpretation of section
142.005(a)(l) that rewires a foreign corporation registered to do business in the State of
Texas to establish a domestic corporation may wntravenc article 8.02(A) of the Texas
Business Corporation Act. Article 8.02(A) provides that a foreign corporation that has
registered in accordance with the Business Corporation Act shag “enjoy tlte same, but no
greater, rights and privileges as a domestic corporation organ&d for” the same purposes.
Because article 8.02 of the Business Corporation Act wncerns foreign wrporations
generally, while section 142.005 of the Health and Safety Code wncems only foreign
corporations that desire to operate a home health agency in Texas, article 8.02(A) is a
more general statute than section 142.005. If a general statute and a speciaJ statute
conflict, the special statute prevails as an exception to the general statute. Goti Code
§ 311.026(b); Attorney General Opinions JM-1237 (1990) at 4; WW-482 (1958) at 2.
Accordingly, this interpretation of section 142.005(a)(l) of the Health and Safety Code
does not contravene article 8.02 of the Business Corporation Act2
2You do not ask, and Uwcfore we do not consider,whethersection 142.005(aXl) of the Health
and ssfety code is mllstihltional.
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David Smith, M.D. - Page 4 W-205)
In the wntexl of section 142.005(a) of the Health and Safety
Code. “business uttity that includes members that are not individuals”
enwmpasscs not only nonprofit wtporations but also for-profit
busincssentitiesthatin&demembersthatarenotindividuals. Again
in the context of section 142.005(a), “wrporation the shares of
which are owned by another corporation” dcscrii a corporation in
which another wtporatioll owns my of the skires. Section
142.005(a)(l) requires a foreign corporation to establish a Texas
corporation if the corporation desires to be kensed to operate a
home health agency in Texas.
DAN MORALES
Attorney General of Texas
WILL PRYOR
Fti Assistant Attorney General
MARYKELLER
Deputy Assistant Attorney General _
RENEAHlcKs
Special Assistant Attorney General
MADELJZINEB. JOHNSON
Chair, Opinion Committee
Prepared by Kyniberly K. Oltrogge
Ass&ant Attorney General
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