The Attorney General of Texas
March 9. 1983
JIM MATTOX
Attorney General
Honorable Gibson D. Lewis Opinion No. JM-5
Supreme Court Building Chairman
P. 0. BOX 12548 Committee on Intergovernmental Re: Benefits for treatment
Austin. TX. 78711.2548
Affairs of alcohol and drug dependency
512/475-2501
Telex 919lS74.1367 Texas House of Representatives. under article 3.51-9 of the
Telecopier 5121475Q255 P. 0. Box 2910 Insurance Code
Austin, Texas 78769
1607 Main a.. suite 1400
Dear Representative Lewis:
Dallas. TX. 75201.4709
21,417428944
You have asked several questions regarding the construction of
the Availability of Alcohol and Other Drug.Dependency Coverage Act,
4824 Alberta Ave.. Suite 1SO article 3.51-9 of the Insurance Code. Section 2 of this act provides:
El Paso. TX. 799052793
915/533-3464
r
Insurers, nonprofit hospital sad medical
service plan corporations subject to Chapter 20 of
1220 Dallas Ave.. Suite 202 thls code, and health msintensnce organizations
Hous.~o”. TX. 770026986
transacting health insurance or providing other
7 131650-0666
health coverage In this state shall offer and make
available, under group policies. contrscts. and
808 Broadway. Suite 312 plans providing hospital and medical coverage on
Lubtwxk. TX. 79401.3479 an expense incurred, service or prepaid basis.
8061747.5238 benefits for the necessary care and treatment of
alcohol and other. drug dependency that are not
4309 N. Tenth. Suite S
leas : favorable than for physical illness
McAllsn. TX. 78501.1885 generally, subject to the same .durstional limits,
51218824547 dollar limits. deductibles, and coinsurance
factors. Such offer~of benefits shall be subject
to the right of the group policy or contract
2W Main Plaza. Suite 400
San Antonio. TX. 78205.2797 holder to reject the coverage or to select any
51212254191 alternative level ‘of benefits ~‘lf %uch right Is
offered :by :or ~~negotiated .with ‘such insurer,
-service plans. corporation. or health ,mainteaance
An Equal Oppdrtunityl
organization.~
Affirmative Action Employer
Any benefits ‘so provide@phall be determined as
if necessary care and treatment in en alcohol or
other drug dependency treatment center were care
and treatraent in a hospital.. For purposes of this
Act, the term ‘alcohol or other drug dependency
treatment center’ mesns a facility vhlch provides
p. 15
Honorable Gibson D. Lewis - Page 2 (JM-5)
a program for the treatment of alcohol or other
drug dependency pursuant to a written treatment
plan approved and monitored by a physician and
which facility is also (1) affiliated with s
hospital under a contractual agreement with an
established system for patient referral, or (2)
accredited 8s such a facility by the Joint
Commission on Accreditation of Hospitals. or (3)
licensed as an alcohol treatment program by the
Texas Conrmission on Alcoholism, or (4) certified
ss a drug dependency trestment program by the
Texas Department of Community Affairs in
accordance with such standards. if any, ss may be
adopted pursuant to Subsection (c) of Section 5.12
of the Texas Controlled Substances Act (Article
4476-15, Vernon's Texas Civil Statutes), by the
Executive Director of the Texas Department of
Community Affairs. or (5) licensed, certified, or
approved ss an alcohol or other dtig dependency
treatment program or center by any other state
agency having legal authority to so license,
certify, or approve.
The act is remedial and therefore should be liberally construed.
See Burch v. City of San Antonio. 518 S.W.Zd 540. 544 (Tex. 1975);
Board of Insurance Conrmissioners v. Great Southern Life Insurance
Company. 239 S.W.2d 803. 809 (Tex. 1951).
You first ask:
Can an insurer deny payment of benefits for the
necessary csre and treatment of alcohol and other
drug dependency to s provider meeting the
definition of.an !alcohol or other drug dependency
treatment center' in article 3.51-9. Insurance
Gode. on the basis that the provider Is not slso
included in the definition of a 'hospital.'
We,flrst note that benefits are provided to the insured. i.e., the
individual covered by the group insurance policy, not to thefacility
or doctor providing the treatment. Thus,. the question should be
whether an Insurer may deny benefits when the provider-is sn alcohol
or other drug dependency treatment center, but not a hospital. We
snsver in the negative. The act states that
-.
[a]ny benefits so provided shall be determined
as if necessary csre snd treatment in sn alcohol
or other drug dependency treatment center were
?
P. 16
Honorable Gibson D. Lewis - Page 3 (JM-5)
csre and treatment in a hospital. (Emphasis
added).
Ins. Code art. 3.51-9, 62. It is clear from the underscored language
that the legislature did not intend that “alcohol or other drug
dependency treatment center,” ss that item Is defined in section 2 of
the act, should be synonomous with “hospital.” The fact that the act
uses the word “shall” also shows that insurers sre not free to
discriminate against euthorised treatment centers. See Schepps .v.
Presbyterian Hospitsl. 638 S.W.2d 156, 157 (Tex. Civ.App. - Dallas
1982, writ ref’d n.r.e.).
Your second question is:
Are benefits for the necessary csre and
treatment of alcohol snd other drug dependency
payable under article 3.51-9 to all providers who
fit the definition of an ‘alcohol or other drug
dependency treatment center’ or only to those who
contract with the insurer providing such coverage?
For the reasons stated above. question two should be whether benefits
are payable if the insured goes to any alcohol or drug dependency
treatment ~center, or only to one that contrscts with the insurer to
provide such coverage. The act does not specifically address this
issue, but states only that benefits shall be not less favorable than
for physical illness generally. Therefore, if the insurer is able to
limit benefits for physical illness on the basis of the particular
providers, It would be equally able to limit benefits under the act.
Unless statute or public policy prohibits it. the parties to an
insursnce contrsct may agree to any- provisions they wish. Hatch v.
Turner, 193 S.W.2d 668. 669-70 (Tex. 1946); Boon v. Premier Insurance
Company, 519 S.W.2d 703. 704 (Tex. Clv. App. - Texarkana 1975, no
writ) ; Fruhman v. Nswcas Benevolent Auxiliary, 436 S.W.2d 912, 915
(Tex. Civ. App. - Dallas 1969, writ ref’d n.r.e.). .,Thus, unless other
statutes or the policy of the act prohibits it, an insurer may limit
provision of benefits under the act to certain providers.
The ‘act governs three different types of insurers: (1) group
health insurers subject to chapter 3 of the Insurance Code, (2)
nonprofit hospitsl and medical service plan corporations subject to
chapter 20 of the Insurance Code, and (3) heelth maintenance
organizations subject to chapter 20A of the.Insurance Code.
: .
Chapter 3 insurers sre prohibited from restricting coverage to
certain providers by article 3.51-6. section 3 of the Insurance Code.
which states, in pertinent part:
_. -7
I
p. 17
Honorable Gibson D. Lewis - Page 4 (JM-5)
The policy may provide that all or s portion of
any Indemnities provided by any such policy on
account of hospital. nursing, medical, or surgical
services may. at the option of the insurer and
unless the insured requests otherwise in 'writing
not later than the time of filing proofs of such
loss, be paid directly to the hospital or. person
rendering such services; but the policy may not
require that the service be rendered by a
Particular hospital or person. Payment so made
shall discharge the obligation of the insurer with
respect to the amount of insurance so paid.
(Emphasis added).
Therefore, a chapter 3 insurer must provide benefits if the insured
goes to any alcohol or drug dependency trest.ment center.
Nonprofit corporations for group hospital service governed by
chapter 20 of the Insurance Code are given statutory authority to
contract with specific providers. Such corporations-have the purpose
of operating nonprofit hospital service plans whereby care-is provided
through an established hospital or hospitals, and sanitariums with
which it has contracted for such csre. Ins. Code art. 20.01.
Article 20.11 further describes the right to‘contract. It states:
Such corporations shall have authority to
contract with health care providers, other than
physicians, in such manner as to sssure to each
person holding a policy or certificate of said
corporation the furnishing of such services and
supplies ss may be agreed upon In the policy, with
the right to said corporation to limit in the
policy the types of disease for which it shall
furnish benefits; provided that such corporations
shall not be required to contract with any
particular health care provider; and provided
further that this Article shall not be deemed to
authorize such corporation to contract with any
health csre provider in any manner which is
prohibited by any licensing law of this state
under which the health care provider operates.
Health csre provider means any person,
association. partnership. corporation, or other
entity furnishing or providing any services or
supplies for the purpose of preventing.
alleviating. curing, or healing human illness or
injury.
p. 18
Honorable Gibson D. Lewis - Page 5 (JM-5)
Thus, the corporation is free to contract with specific health
csre providers so long as the policyholder is assured services and
supplies ss may be 'agreed upon in the policy. Since article 20.11
authorizes the corporation to limit the types of disease for which it
shall furnish benefits, a corporation that offers only limited or
specified disease policies would not have to offer alcohol dependency
coverege. The set exempts such policies from its coverage. Ins. Code
art. 3.51-9. $3. Of course. chapter 20 corporations must treat
alcohol or drug treatment facilities like hospitals under their
policies.
Article 20.12 prohibits a corporation from contracting to furnish
to the member s physician or any medical services, from attempting to
control the relations existing between a member end his or her
physician. and from restricting the right of the patient to obtain the
services of any licensed doctor of medicine. Article 20.12. however,
does not give the insured the right to insist on a physician for the
treatment of alcohol or drug dependency who is not acceptable to the
provider, -, hospital or elcohoSl,etre&sent center, that has
contracted with the corporation. Hospital Service v.
~;~rcc~~:,f;l S.W.Zd 418. 423 (Tex.5. Appp - Amarillo 1951, writ
The interpretation is in harmony with the act because
,- the corporation must still make available benefits under the act and
because the insured likewise does not have full choice of physician
for physical illness generally.
A health meintenance organization [hereinafter "HMO"] governed by
chapter 20A of the Insurance Code is authorized to furnish medical
care services through physicians, providers, or groups of providers
who contrsct with the DMO. Ins. Code art. 20A.06(~)(3). Therefore,
HMO'S, like chspter 20 corporations, sre free to specify certain
providers or physicisns. ss long 8s benefits for alcohol or drug
dependency sre made available and alcohol or drug dependency treatment
centers are treated the same as hospitals.
Your third question is:
Does s group health Insurance policy or
contrsct subject to article 3.51-9 provide
coverage as s matter of law for the necessary care
and treatment of alcohol and other drug dependency
not less favorable than for physical illness
generally unless such coverage Is expressly
rejected (or an alternate level of benefits
expressly selected) by the group ‘.or contrsct
holder?
We snswer in the affirmative. The act dictates that group insurers
P
"shall offer and make available, under group policies, . . . benefits
,_
p. 19
Honorable Gibson D. Lewis - Page 6 (JM-5)
for the necessary care and treatment, of alcohol and other drug
dependency that are not less favorable than for physical illness
generally." (Emphasis added). ,Ins. Code art. 3.51-9, §2. This
offer, however. is subject to a right of rejection or selection of
alternative benefits. Id.
Statutes bearing on insurance contracts become part of the
contract as though they had been copied therein. Allstate Insurance
Company mm Bunt. 469 S.W.Zd 151, 155 (Tex. 1971); Harklns V. Indiana
Lumbermens Mutual Insurance Company. 234 S.W.Zd 430, 431 (Tex. Civ.
APP. - Galveston 1950, no writ). Therefore, eve" if a group policy is
silent, the insurer nevertheless "offers and makes available" benefits
for alcohol and other drug dependency that are not less favorable than
for physical illness generally, because the statute obligates it to do
so.
If the offer is read Into a silent policy, is an acceptance or
rejection by the policyholder implied? For three reasons we believe
acceptance of full benefits is implied. First, the act says that the
insurer "shall offer and make available" the benefits. (Emphasis
added). Ins. Code art. 3.51~412. Second, although, because the
statute is remedial in nature, It should be liberally construed to
achieve ,its purpose, see Board of Insurance Commissioners V. Great ?
Southern Life InsuranceCompang, supra. at 803. strict construction of
the rejectlo" provisions would best effectuate that purpose. See
Employers Casualty Company V. Sloan, 565 S.W.Zd 580, 583 '(Tern. Civ.
APP. - Austin 1978, writ ref'd n.r.e.); Guarantee Insurance Company of
Texas V. Boggs, 527 S.W.Zd 265. 268 (Tex. Civ. App. - Amarillo 1975.
writ dism'd). Third, the act makes the right to rejector select
alternative level of benefits possible only if the right is offered or
negotiated by the insurer. Ins. Code art. 3.51-9. 52. If alternative
benefits have not been explicitly offered, they cannot be chosen.
Therefore. when the offer is implied as a matter of law. acceptance is
also implied.
Your fourth question is:
Can an insurer assign a" alternate level of
benefits to 8. covered group without the express
rejection by the group of full benefits?
We answer in the negative. The act requires the insurer to offer full
benefits. That offer is subject to the right of the policyholder to
reject coverage or to select alternative benefits. If the insurer
were free to assign the alternative level, the-language regarding the
right of the policyholder to reject full coverage and requiring the
offer of benefits would be rendered meaningless. Statutes will not be
construed so as to render parts of them meaningless. Brow" V. ?
p. 20
.
Honorable Gibson D. Lewis - Page 7 (JM-5)
Memorial Villages Water Authority, 361 S.W.Zd 453, 455 (Tex. Civ. APp.
- Houston jl4th Dist.] 1962, writ ref'd n.r.e.).
Questions five and six are:
What evidence is required of such a rejection
or alternate selection of benefits?
Must there be written evidence of such s
rejection or alternate selection of benefits?
The act does not specify the means of rejection, nor has the State
Board of Insurance issued an administrative rule requiring written
rejection. Therefore, if there exists a requirement that such
rejection must be written that requirement must arise by implication.
Interpretation by implication, however, is permissible only to supply
obvious intent not expressly stated. not to add to a statute.
Commonwealth of Massachusetts v. United North and South Development
Company, 168 S.W.Zd 226, 229 (Tex. 1942).
Additional grounds exist for declining to imply legislative
intent that rejection be written. The legislature is presumed to have
known existing statutes and to have known the~construction placed upon
similar statutes~ by the appellate courts. Gamer v. Lumberton
Independent School District, 430 S.W.Zd 418. 423 (Tex. Civ. App. -
Austin 1968. no writ). Other insurance statutes deal with rejection
of coverage. The Personal Injury Protection Coverage Act, article
5.06-3 of the Insurance Code, provides that all automobile liability
insurance policies shall include personal injury protection coverage
unless rejected by the insured in writing. The Uninsured or
Underinsured Motorist Coverage Act, article 5.06-l of the Insurance
Code, provides that allautomoblle liability. insurance policies shall
include uninsured motorist coverage unless the insured rejects such
coverage in writing. Article 5.06-l'was amended in 1981 to add the
writing requirement, despite 'an appellate court holding that written
rejection was required by rule of the Insurance Board. See Employers
Casualty Company v. Sloan, s. Because the same legislature passed
article 3.51-9. the intent to alloyoral rejection in article 3.51-9
must be assumed.
Your seventh question Is:
Does the 'necessary care and treatment of
alcohol. dependency' as -that ~term is used in
article 3.51-9 encompass detoxificafion only, nor
the entire treatment provided under the treatment
plan envisioned in paragraph 2 of section 2 as
approved and monitored by a physician?
p. 21
Honorable Gibson D. Lewis - Page 8 (JM-5)
The act does not define "necessary care and treatment of alcohol
dependency." As you point out. however, part of the definition of
"alcohol or other drug dependency treatment center" is "a facility
which provides a program for the treatment of alcohol or other drug
dependency pursuant to a written treatment plan approved and monitored
by a physician." Ins. Code art. 3.51-9 12. An act should be
interpreted in a manner which gives effect to the entire act. Brow"
V. Memorial Villages Water Authority. supra. at 455. Thus, the
"necessary care and treatment of alcohol and other drug dependency"
should be construed as meaning treatment according to the written
plan.
Nevertheless, the act does not further describe the written
treatment plan. The act does state that benefits should be not less
favorable than for physical illness generally, but that language is
not helpful since drug dependency is fundamentally different from
illnesses which are not based on addiction. Because the language of
'the act leaves the act's intent obscure with respect to treatment,
extrinsic aids to construction, such as the purpose of the act, public
policy. and legislative history, may be examined. Harris V. city of
Fort Worth, 180 S.W.Zd 131, 133 (Tex. 1944). The act was sponsored
and prepared by the National Association of Insurance Commissioners
(C-l) Task Force on Alcoholism, Drug Addiction, and Insurance. A -,
report prepared by the Task Force dated May 26. 1981 is a valuable aid
to interpretation of the act. The legislature is assumed to have
adopted the legislation with the same intent evidenced by the
commission in its report unless the language of the statute
unambiguously indicates the contrary. 2A Sutherland Statutory
Construction 048.11 (4th ed. 1973 ti Supp. 1982).
The report includes Model State Legislation, which the act
follows almost verbatim, and a Model Benefit Structure. Both the
Model ,State Legislation and the Model Benefit Structure were adopted
by the Task Force. The benefits include a maximum of two year-long
benefit periods per lifetime. Each benefit period includes outpatient
care 88 well as inpatient care. Counseling and therapy are included.
The report does not contain any statement of intent, but the Model
Benefit Structure indicates that something more than mere
detoxification was required.
The only records of legislative discussion before passage of the
act support the interpretation that more than detoxification is
required. Although the Senate Committee on Economic Development did
not issue an official report, tapes of the committee hearing when the
bill was approved are available. Commit&e members' questions
regarding duration of treatment were answered by reference to the.
Model Benefit Structure. Official tape recording, August 3. 1981
meeting of the Texas Senate Economic Development Committee. -See
p. 22
Honorable Gibson D. Lewis - Page 9 (JM-5)
Sutherland, s, 548.10 (resort to statements at committee hearings
in construing statutes).
In keeping with the liberal construction of the act and its
legislative history, benefits should go beyond detoxification.
Detoxification is but a preliminary step in the care and treatment of
alcohol or other drug dependency. Thus, we do not believe the
legislature could have intended to limit the benefits to
detoxification. The extent of the benefits would depend on the
particular policy, including whether alternative level of benefits
were chosen, and considering the durational limits, dollar limits,
deductibles, and coinsurance factors applicable to physical illness
generally. -See Ins. Code art. 3.51-9. 52.
Your eighth question is:
Can an insurer require that each new member of a
covered group be medically underwritten prior to
coverage as a condition on the ability of the
group to select full benefit coverage?
The act is silent as to underwriting requirements. Since the
benefits can not be less favorable than for physical illness
generally, the insurer's underwriting method for alcohol or other drug
dependency coverage must be as liberal as for physical illness
generally. See Ins. Code art. 3.51-9, $2. Although conditioning full
coverage on individual underwriting may appear coercive on the part of
the insurer, it does not violate the act so long as full coverage for
other physical illnesses is conditioned on individual underwriting.
The act should be construed to be constitutional. State v. City
of Austin, 331 S.W.Zd 737 ,(Tex. 1960). If underwriting restrictions
were implied, insurers could argue that the act violates due process
or impairs the obligation of contracts. See Insurers' Action Council,
Inc. V. Markman. 490 F.Supp. 921 (D. Minn. 1980). aff'd 653 F.2d 344
(8th Cir. 1981). in which the court uuheld a Minnesota insurance law
mandating the offer of basic medical coverage because the law allowed
the insurer to apply its own underwriting standards in order to charge
a premium commensurate with the risk.
SUMMARY
An insurer may not deny benefits under the
Availability of Alcohol and Other.Drug Dependency
Coverage Act, art. 3.51-9. when the provider is an
alcohol or other drug dependency center. but is
not a hospital. All insurers subject to the act
must make available benefits under the act and
must treat alcohol or other drug dependency
>+. :7
p. 23
. ,I
Honorable Gibson D. Lewis - Page 10 (JM-5)
treatment centers like hospitals. A group health
insurer governed by chapter 3 of the Insurance
Code must provide benefits if the insured goes to
any alcohol or drug dependency treatment center.
Nonprofit corporations governed by chapter 20 of
the Insurance Code may both limit their benefits
to their contracted providers and may refuse to
provide benefits under the act at all in specific
disease policies. Health maintenance
organisations may restrict benefits to their
contracted providers. As a matter of law ~, if a
policy governed by the act is silent, it
automatically provides full benefits. An insurer
may not assign an alternate level of benefits
without express rejection of full benefits.
Rejection need not be in writing. "'Necessary care
and treatment of alcohol dependency" me&s an
entire treatment plan as set out in the act and
requires more than detoxification. An insurer may
require each new member to be medically
underwritten prior to coverage as a condition to
the group selecting full benefits, so long as this
is its underwriting policy for physical illness
generally. I
LLmb
Very
JIM
ruly
Attorney
.
your
MATTOX
General of Texas
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
Prepared by Deborah J. Hersberg
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Deborah J. Herzberg
Jim Moellinger
p. 24