AIJ(~JTIN.TEXAS 7CW311
October 15, 1973
Honorable R. T. Weber, D. D. S. Opinion No. H- 128
Texas State Board of Dental Examiners :
Capital National Bank Building Re: May a California dental
Austin, Texas 78701 service corporation contract
in California with a Delaware
corporation to provide dental
service to all of Delaware
corporation’s employees,
Dear Dr. Weber: including those in Texas?
You have requested our opinion ooncerning the legality of a transaction
wherein California Dental Service (hereafter, CDS), a California non-profit
corporation, has contracted to provide dental services for the employees of
North American Rockwell Corporation, a Delaware corporation, including
those employees in North American Rockwell’s plant in Waco, Texas.
Your concern arises from the failure of CDS to comply with the pro-
visions of Article 1396-2. 01: V. T. C. S., a part of the Texas Non-Profit
Corporation Act, which provides:
“(1). Charitable corporations may be formed
for the purpose of operating a Dental Health Service
Corporation which service corporation will manage
the relationship between the contracting dentist, who
will perform the dental services, and the patient who
will receive such services where such patient is a mem-’
ber of a group which has contracted with the Dental
Health Service Corporation to provides dental care to
members of that group. An application for a charter
under this Section shall have attached as exhibits (1)
an a.ffidavit by the applicants that not less than thirty
percent (30%) of the dentists legally engaged in the
practice of dentistry in this state together with their
p. 618
.
The Honorable R. T. Weber, page 2 (H-128)
names and addresses have signed contracts to per-
form the required dental services for a periodof not
less than one (1) year, after incorporation, and (2) a
certifidation by the Texas State Board of Dental Exam-
iners that the applicant incorporatbrs are reputable
citizens of the State of Texas and are of good moral
character and that the corporation sought to be formed
will be in the best interest of the public health. A
corporation formed hereunder shall have not less than
twelve (12) directors, nine (9) of whom shall be dentists
licensed by the Texas State Board of Dental Examiners
to practice dentistry in this state and be actively engaged
in the practice of dentistry in this state.; A corporation
formed hereunder shall maintain not less than thiry per-
cent (30%) of the number of dentists actually engaged in
the practice of dentistry in this state as participating br
contracting dentists, and shall file with the Texas State
Board of Dental Examiners each September the names
and addresses of all contracting or participating dentists. ”
You have cited Attorney General Opinion MO. M-1233 which hblds:
“Third parties, except the State and its agencies,
whether individuals, associations, or corporations,
may legally contract for dental care to be rendered to
citizens of the State only by complying with Article
1396-Z. 01 of the Texas Non-Profit Corporation Act.
The State Department of Public Welfare and other State
agencies, can so contract pursuant to the Medical Assis-
tance Act of 1967, (Article 695j-1, V. C. S. ) and Article
695c, Section 4(12), Vernon’ s Civil Statutes. ”
If CDS is providing dental services in Texas without complying with
Article 1396-Z. 01, it is probably in violation of Article 4551 (a)(4) which
provides:
“(4) Any one who owns, maintains or operates any
office or place of business where he employs or engages,
p. 619
: -
The Honorable R. T. Weber, page 3 (H-128)
under any kind of contract whatsoever, any other
person or persons to practice dentistry as above
defined shall be deemed to be practicing dentistry
himself, and shall himself be required to be duly
licensed to practice dentistry as hereinabove defined,
and shall be subject to all of the other provisions of
this Chapter, even though the person or persons so
employed or engaged by him shall be duly licensed
to practice dentistry as hereinabove defined. ” (See
also Vernon’s Annotated Penal Code, Article 753).
We have been provided with a copy of the agreement between North
American Rockwell Corporation and CDS and with certain relevant facts.
Our opinion is based on the assumption that these facts are correct. Other
circumstances might call for a different opinion. We are advised CDS is
a non-profit corporation organized and existing under the Corporations
Code of the State of California and is composed of members licensed to
practice dentistry under the provisions of the California Dental Practice
Act. On June 24, 1970, California Dental Service entered into an agree-
ment in California with North American Rockwell Corporation (hereinafter
referred to as the “Company”), a Delaware corporation doing business in
California, to provide prepaid dental care benefits for its employees in
California and elsewhere. Under the agreement, the Company pays stipu-
lated monthly sums, for which CDS agrees to perform services not includ-
ing the furnishing of dental care. CDS also agrees to make payment of
fees to dentists under some circumstances.
CDS has agreed to provide a comprehensive plan of dental care to
residents of California. With respect to dental care rendered outside of
California, CDS agrees to provide “substantially” the same services. Under
the terms of the agreement, an employee can go to any dentist, whether such
dentist is a “participating dentist” or not. Since a dentist who is not licensed
in California cannot be a member of CDS, any dentist outside the State of
California will receive payment for services rendered to an eligible patient.
The dentist may decide the services to be rendered and the amount of the bill,
and can bill the patient directly if he chooses.
p. 620
. -
The Honorable R. T. Weber, page 4 (H-128)
Based upon these facts and the circumstances of this transaction,
we do not believe that CDS is engaged in the practice of dentistry in the
state of Texas. It does not interpose itself in any relationship between
a dentist and his patient since the patient is free to select any dentist,
and no dentist is sent patients. CDS has no list of “participating dentists”
in Texas and has no intention of establishing any continuing contractual
relationship with any dentist in Texas for the provision of dental services.
Neither CDS nor the company owns, maintains or operates any office or
place of business where any person is employed or engaged to practice
dentistry in the State of Texas.
We believe that our opinion is supported by the cases of Woodson
v. Scott & White Hospital, 186 S, W. 2d 720 (Tex. Civ. App. , Austin, 1945,
error ref’d, w. m. ); and Moseley v. Texas & New Orleans Railroad Com-
pany, 346 S. W. 2d 636 (Tex. Civ. App., Waco, 1961, error ref’d: .ri, r. e. ).
Moreoever, since the agreement in question was entered into in
California and all claims are processed and accepted there, we do not
believe that CDS is conducting affairs in the state of Texas as contemplated
by Article 1396-8. 01 of the Texas Non-Profit Corporation Act.
Accordingly, since neither CDS nor North American Rockwell Cor-
poration is engaged in the practice of dentistry in the state of Texas, and
CDS is not conducting any affairs in the state of Texas, we see nothing
illegal in this transaction.
SUMMARY
A California non-profit dental service cor-
poration is not providing dental service in the State
of Texas by entering into a contract to pay for den-
tal services for employees of a Delaware corpora-
tion, including those employees in the Delaware
corporation’s Texas facilities, where the dentists
involved are not chosen by or employees of ~the
dental service corporation; nor is the dental ser-
p. 621
. .
The Honorable R. T. Weber. page 5 (H-128)
vice corporation conducting affairs in the State of
Texas as contemplated by Article 1396-8. 01
Very truly yours,
APPROVKD:
Opinion Committee
p. 622