February 20, 1975
The Honorable Henry Wade Opinion No. H- 535
Criminal District Attorney
Dallas County Courthouse Re: Payment by Dallas County
Dallas, Texas 75202 of group health and life insurance
premiums for retirees.
Dear Mr. Wade:
You have requested our opinion as to whether or not Dallas County
may “legally pay premiums on a health and life groupinsurance policy for
persons who have retired from the county and are eligible for benefits
under the County and District Retirement System, ” and if the answer to
this question “is in the negative, and if the qualified retirees pay their
own premiums, ” whether Dallas County may “legally pay the group
insurance premiums for persons employed by the county when the group
rate for employed persons would reflect and partially be based uponlosses
sustained by persons in the retired category. ”
Our answer to both questions is in the negative.
Article 3. 51-2(a) of the Texas Insurance Code empowers a county
“to procure contracts insuring its officials and employees” for, inter alia,
group life and group health insurance and to pay all or a portion of the
premiums of such policies.
“Employees” is not defined in article 3. 51-2. Section 1 of article
3.50 dealing in general with the requirements for group life insurance’
policies, in its subsection (3) (d) which is applicable to policies issued to
employees of governmental units, defines “employees” “in addition to its
usual meaning [to] include elective and appointive officials of the state. ”
Section l(2) of article 3. 51, dealing with group health insurance policies
issued to employees of governmental units, defines “employees” to
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The Honorable Henry Wade page 2 (H-535)
“include elective and appointive officials of the state” as well as its
“usual meaning. ”
It would appear, then, that the question of whether to include
“retirees” within the scope “employees” should be determined by the
“usual meaning” of the term “employees. ” The judicial decisions most
pertinent to this inquiry are not Texas cases, but they provide some
illumination.
The U.S. Supreme Court recently ruled that the term “employee”
as used in the National Labor Relations Act is to be taken in its ordinary
meaning, and, as such, excludes retirees. Allied Chemical & Alkali
Workers of America Local Union No. 1 v. Pittsburgh Plate Glass Co.,
404 U.S. 157 (1971). Youngstown Sheet & Tube Co. v. Review Board,
191 N. E. 2d 32 (Ind. 1963) interpreted the meaning of “employee” for purposes
of a collective bargsining agreement, and quoting an earlier Indiana deci-
sion, Koch v. Wix, 25 N. E. 2d 277 (Ind. 1940), held that its “common,
well-established meaning” is “one who is in the present service of another
for pay at a particular time ” and “does not embrace one who has at some
time been, but no longer is, in the employment of another. ” Youngstown,
supra, at 36.
The Texa’s ca s e s which have ~considered the definition of
“employee” do not deal with persons who have left the service of their
employers, but the definitions the courts accept would seem to preclude
the subsuming of “retiree” under the umbrella of “employee. ”
In Riverbend Country Club v. Patterson, 399 S. W. 2d 382 (Tex. Civ.
APP. --Eastland 1965, ref. n. r. e.), the Court quoted the definition of an
“employee” as one whose “employer has the power or right to control and
direct the employee in the material details of how the work is to be per-
formed.” Id. at 383. In Northwestern National Life Ins. Co. v. Black,
383 S. W. 2dsO6 (Tex. Civ. App. --Texarkana 1964, ref. n. r. e. ), the
Court held that an “employee” is “one who works for an employer: a
person working for a salary or a wage. ” g, at 809.
Neither definition seems capable of including the retiree. On the
one hand, the employer has no “power or right to control or direct the
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The Honorable Henry Wade page 3 (H-535)
employee” and on the other, the retiree is no longer “working for a salary
or a wage. ” Thus, if the term “employee” is restricted to its “usual
nxmiirg” it would seem to exclude the retiree.
There are other statutory provisions which argue on behalf of
exclusion. Article 3. 51-4 of the Insurance Code authorizes the State
of Texas to pay the group life and group health premiums for “retirees
of the Central Education Agency, the Texas Rehabilitation Commission,
and the Coordinating Board, Texas College and University System!’ If
“retirees” are included within the general definition of “employees, ”
there would seem to be no~need to create a special category to provide
for these particular retirees.
The only statutory authority which even apparently contradicts the
proposition that a retiree is not an employee is found in section l(1) (a) of
article 3.50 of the Insurance Code, which states that a policy “may pro-
vide that the term ‘employees’ shall include retired employees. ” As has
been pointed out, supra, section 1 of article 3. 50 is concerned in general
terms with the requirements for group life insurance policies. This
office has previously ruled, in Attoiney General Opinion M-1109 (1972))
that section 1, subsection (3) and sections 2 and 3 of article 3.50 are the
only provisions of article 3. 50 that apply to group insurance for state
employees. Since subsection 3 of article 3. 50 includes employees of all
governmental units, itis reasonable to presume that the provisions of
article 3. 50 which have been interpreted as inapplicable to state employees,
and in particular section 1, subsection l(a), are inapplicable to employees
of all governmental units. We conclude, therefore, that Dallas County
may not legally pay premiums on a health and life group insurance policy
for persons who have retired from the county and are eligible for benefits
under the County and District Retirement System.
Your second question is a corollary to the first. The statute
authorizing a county to provide group health and life insurance for its
employees, article 3. 51-2, empowers the county “to procure contracts. ”
Payment of all or part of the premiums is left to the county’s discretion.
The basic right conferred is that of initiating the program. Even if a retiree
pays his own premiums. Dallas County has not been authorized to include the
retiree within its group insurance plans.
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The Honorable Henry Wade page 4 (H-535)
SUMMARY
Dallas County may not legally pay premiums on
a health and life group insurance policy for persons
who have retired from the county and are eligible for
benefits under the County and District Retirement
System; even if the qualified retirees pay their own
premiums, Dallas County may not legally pay the
group insurance premium for persons employed by
the county when the group rate for employed persons
would reflect and partially be based upon losses
sustained by persons in the retired category.
Very truly yours,
Attorney General of Texas
APPROVED:
DAVID M. KENDALL, First Assistant
Opinion Committee
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