Case Information
*1 The Attorney General of Texas March 9. 1983 JIM MATTOX
Attorney General Opinion No. JM-5 Chairman
Supreme Court Building P. 0. BOX 12548 Committee on Intergovernmental Re: Benefits for Austin. TX. 78711.2548 and drug dependency Affairs 512/475-2501 Texas House of Representatives. under article Telex 919lS74.1367 P. 0. Box 2910 Insurance Code Telecopier 5121475Q255 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
the Availability of Alcohol and Other Drug.Dependency Coverage Act, 4824 Alberta Ave.. Suite 1SO 3.51-9 of the Insurance Code. article Section 2 of this act provides: El Paso. TX. 799052793 915/533-3464 Insurers, nonprofit hospital sad medical r 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 or providing other 7 131650-0666 health coverage In this state shall offer and make
available, under group policies. contrscts. and plans providing hospital and medical coverage on 808 Broadway. Suite 312 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 leas : favorable physical 4309 N. Tenth. Suite S generally, subject to the same .durstional limits, McAllsn. TX. 78501.1885 dollar deductibles, 51218824547 limits. coinsurance
factors. Such offer~of shall be subject right the group policy or contract 2W Main Plaza. Suite 400 holder to reject the coverage or to select any San Antonio. TX. 78205.2797 alternative level ‘of benefits ~‘lf %uch right Is 51212254191 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 care and treatment
if necessary in en alcohol other drug dependency center were care and treatraent in a hospital.. For purposes of this Act, the term ‘alcohol or other drug dependency center’ mesns a facility vhlch provides *2 a program the treatment or other drug dependency pursuant to a written treatment plan approved and monitored by a physician 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 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 Texas Department of Community Affairs in accordance with such standards. if any, ss may be adopted pursuant to Subsection (c) of Section 5.12 the Texas Controlled Substances Act (Article 4476-15, Vernon's Texas Civil Statutes), by the Executive Director the Texas Department Community Affairs. (5) licensed, certified, or approved ss an alcohol or other dtig dependency treatment program or center by any other state agency having legal authority 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 meeting dependency s provider drug definition of.an !alcohol or other drug dependency center' in article 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., individual covered by the group insurance policy, not to thefacility or doctor providing treatment. Thus,. the question should be whether an Insurer may deny benefits when the provider-is sn alcohol or other drug dependency center, but not a hospital. We snsver in the negative. The act states -.
[a]ny so provided shall be determined as if necessary csre snd treatment in sn alcohol or other drug dependency center were ? P. 16 *3 in a hospital. (Emphasis csre and added).
Ins. Code art. 3.51-9, 62. It is clear from the underscored language that 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 insurers sre not free to discriminate against euthorised 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 the necessary csre and snd other drug dependency payable under article 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 insured goes to any alcohol or drug dependency treatment ~center, or only to one that contrscts with insurer provide such coverage. The act does not specifically address this issue, but states only that benefits shall be not if the insurer is able to
for physical illness generally. limit benefits 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 Insurance Code, (2) nonprofit hospitsl and medical service plan corporations subject chapter 20 of Code, (3) heelth maintenance organizations subject to chapter 20A of the.Insurance Code. : .
Chapter 3 insurers sre prohibited from restricting
certain providers by article section 3 of the Insurance Code.
which states, in pertinent part:
_. -7 I *4 The policy may provide that all or s portion 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 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 so paid. (Emphasis added). a chapter 3 insurer must provide if insured
goes to any alcohol or drug dependency trest.ment center.
Nonprofit corporations for group hospital service governed chapter 20 of 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 contract with health care providers, other physicians, in such manner as to sssure to each person holding a policy or certificate of said corporation furnishing of such services supplies ss may be agreed upon In the policy, with right to said corporation limit in the policy the types of disease for which it shall furnish benefits; provided that such corporations shall not be required contract with any particular health 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 prohibited by any licensing law of this state under which the health care provider operates. Health csre provider means person, any association. partnership. corporation, or other entity furnishing or providing any services or supplies purpose preventing. alleviating. curing, or healing human illness injury. *5 the corporation is free to contract with specific health
Thus, csre providers so long as the policyholder is assured services 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 Ins. Code coverege. The set exempts such policies from its coverage.
art. $3. Of course. chapter 20 corporations must treat alcohol or drug 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 control relations existing between a member end his or her physician. and from restricting the right of the patient to obtain 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 in harmony with the act because the corporation must still make available benefits under the act and ,- because insured likewise does not have full choice of physician illness generally.
A health meintenance organization [hereinafter "HMO"] governed by chapter 20A of the Insurance Code is authorized furnish medical care services through physicians, providers, or groups of providers who contrsct with the DMO. Ins. Code art. 20A.06(~)(3).
HMO'S, sre free to specify certain like chspter 20 corporations, providers or physicisns. ss long 8s benefits for alcohol or drug dependency sre made available and alcohol or drug dependency centers are treated the same as hospitals.
Your third question is:
Does s group health policy contrsct subject article provide coverage as s matter of law for the necessary and and other drug dependency not physical generally unless such Is expressly rejected (or an alternate level expressly selected) 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 ,_ *6 the necessary treatment, of alcohol and other drug
dependency that are not 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 contracts become part of the contract as though they had been copied therein. Allstate 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). 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 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 Ins. Code art. added). 3.51~412. Second, although, because statute is remedial in nature, It should be liberally construed ? achieve ,its purpose, see Board of Insurance Commissioners V. Great Southern Life InsuranceCompang, supra. at 803. strict construction 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 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 implied as a matter of law. acceptance is also implied.
Your fourth question is:
Can an insurer assign a" alternate level 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 That offer is subject to the right of the policyholder benefits.
reject coverage or to select alternative benefits. If insurer were free to assign the alternative level, the-language regarding right of the policyholder to reject full and requiring offer of benefits would be rendered meaningless. Statutes will not be construed so as render parts them meaningless. Brow" V. ?
.
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 such s rejection or alternate selection of benefits?
The act does not specify the means of rejection, nor has the State Board of issued an administrative rule requiring written rejection. if there exists a requirement 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 imply legislative The legislature is presumed to have intent that rejection be written.
known existing statutes and to have known the~construction placed upon Gamer v. Lumberton similar statutes~ by the appellate courts. 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 policies shall include personal injury protection coverage The Uninsured unless rejected insured in writing.
Underinsured Motorist Coverage Act, article 5.06-l of the Insurance Code, provides that allautomoblle liability. insurance policies shall include uninsured motorist coverage unless insured rejects such 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 Because the same legislature passed Casualty Company v. Sloan, s.
article intent to alloyoral rejection in article 3.51-9 must be assumed.
Your seventh question Is:
Does 'necessary alcohol. dependency' as -that ~term is used in article 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?
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 center" is "a facility which provides a program the treatment of alcohol or other drug dependency pursuant to a written treatment plan approved and monitored by a physician." Ins. Code art. 12. An act should be Brow" interpreted in a manner which gives effect to the entire act.
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 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 generally, but that language is not helpful since drug dependency is fundamentally different from Because the language of illnesses which are not based on addiction.
'the act leaves the act's intent obscure with respect to treatment,
extrinsic aids to construction, such as the purpose of the act, public and legislative history, may be examined. Harris V. city of policy. 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, Insurance. A -, report prepared by the Task Force dated May 26. 1981 is a valuable aid interpretation of the act. The legislature is assumed to have the legislation with the adopted same intent evidenced the commission in its report unless language statute unambiguously indicates 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 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 something more than mere detoxification was required.
The only records of legislative discussion before passage of the act support interpretation that more than detoxification 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 treatment were answered by reference to the. Model Benefit Structure. Official tape recording, August 3. 1981 meeting the Texas Senate Economic Development Committee. See - *9 Sutherland, s, 548.10 (resort to statements at committee hearings in construing statutes).
In keeping with the liberal construction the act and its legislative history, benefits should go beyond detoxification. Detoxification is but a preliminary step in the care and treatment of Thus, we do not believe alcohol or other drug dependency. could intended limit benefits
legislature have detoxification. The extent 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. 52. -
Your eighth question is:
Can an insurer require that each new member of a covered group be medically underwritten prior coverage as a condition on the ability group to select full benefit coverage?
The act is silent as to underwriting requirements. Since benefits can not be for physical illness the insurer's underwriting method for alcohol or other drug generally, coverage must be as liberal as dependency See Ins. Code art. 3.51-9, $2. Although conditioning full
generally. coverage on individual underwriting may appear coercive on the part of the insurer, it does not violate the act so long as full
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 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 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 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 not a hospital. All insurers subject to the act must make available under the act and must treat alcohol or other drug dependency >+. :7 *10 . ,I centers like hospitals. A group health
insurer governed by chapter 3 of Code must provide benefits if the insured goes to any alcohol or drug dependency center. Nonprofit corporations governed by chapter 20 of the Insurance Code may both limit their benefits and may refuse to their contracted providers to provide benefits under the act at all in specific disease policies. Health maintenance restrict their organisations may contracted providers. As a matter of law ~, if a act is silent, it policy governed automatically provides full benefits. An insurer may not assign an alternate level of benefits rejection full benefits. without express Rejection need not be in writing. "'Necessary dependency" me&s an entire treatment plan as set out in the act and requires more than detoxification. An insurer may new member be medically require each underwritten prior to coverage as a condition the group selecting full benefits, so long as this its underwriting policy generally. I ruly your LLmb
Very .
JIM MATTOX Attorney 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