Case Information
*1 QBffite of the SIttornep 4Benerat
Watt of QtexaS
DAN MORALES Decrmba 17.1993 .4rrORSEx GENERAL
Mr. David U. Flares Opinion No. DM-276 Wilhmson County Auditor
P.O. Box 506 Be: wlletller a camtfs singl~loya Cieorgetom, Texas 78627 self4mded medical benefit plan is subject to
certain provisions of the Insurance Code, and related questions (RQ-508) Dear Mr. Plores:
Youbeginbyaskiogwhetheftbe~smedicalbene6tplallissubjeutocutain ~~oftheTarasInnvanceCode~ifw,~~~provisioruue
pampted by tile federal Bmployee Retkma Income security AL% 29 U.S.C. Qp 1001 - 1461 (“BRISK”). Fii we address whether article 1.24C, tide 3.51-g. and artide 21.53 of the Inswnce Code apply to singleunployer, self%mded plans.
Artide124C(a)statesthatthetbeofthisatticleis iworwccandbene6tscovaageis toassuredlatadeqwtelledth avaWletotbecitkuofthisrtate,torssuntbatadequatehealtb p. 1444
Mr. David Rores - Page 2 m-2791
care is available to protect the public health and salty, -and to ascMaintheco~effactofHIvandAlDsonhealthinslJrance coverage and health benefits CoyeraBe availability and adequacy in this state for purposes of meeting the public% health coverage needs.
Subsections (c) through (i) of the article require the State Board of Insuranw (the “board”) to gather and compile data on the efkct of HIV and AIDS on health insurance coverage, and authorize the board to submit written recommendations for legislation to resolve prob1em.s aswdated with the impact of HIV and AIDS on the availabiity health insurww coverage. ln article 1.24C. “health insursnce coverage” is de&d to mean “any group policy, contmct, or ccrtiticate of health insurance or be&its deliied, issued for delivay.orrarewedinthisstatebyaoiDsurancecompany..., a group hospital service corporation. . _ , a health maintenance organization. . . , and q~ sel@wmmce bust or mechanism providing kalfh care benefirs Ins. Code art. 1.24C(b)(2) (citation omitted) (qhasis added).
‘You ask whether the italidz.ed language would indude a singlaanploya sdf- fundedpknruch~Stbeswithiatheambitofthe~de. Yousuggestthatbecause th8Inwrwcecod8gulemny8ppliesonlyto inwrwc8compwieqgroup~service . ~alldheabhmaintenanceorgaainrtionrandtbatthe~oflasunnces regulataya+nityis~limitedtoth&eindusGes,thekgislaWcarldnothave intended for artide L24C to apply to singl&employer, seMmded plans. As will be seen below,tbelegislahveonammrbaofoccesioruhas~~p~~.oftht
lnsumnw Code appkable to self-funded plans. For this reason, and because a single employq aeX%mdekplan is dearly a “mech&m p&ding @alth care beM%s,” we condude that article 124C applies to aingku@oyer’&fimded ~plaas such as the COUllt+.=
Next, you sddder article 3.51-g appIies to single-employer, self-fbnded plans. Artide 3.51-g re@ires various entities, induding “all employer, trustee, or other serf- fMderl or seSnsud plans or anangements WanwAg health insurance or providing ofher healfh coverage cr services” to provide ,%ene&s for the necessuy care and tmtment of chemical dependency that are not less favorable than fbr physical illness generally.” Id. art. 3.51-g. 8 2A(a) (emphasis added). Although this provision expressly
p. 1445
Mr. David Flares - Page 3 (DM-276)
refers to seKiimded plans, you suggest that it may only be designed to -apply to multiple employer we&e arrangements (“MEWA’s”) “which, while being a collection of employee insuranceintheKnsethatriskisspreadwasmralunrelatedentities.” -plans,= Taaaiicizedknguage~howeva,makesd~thatthisprovisionappliesnotonlyto iremake plans but also to self4mded plans that provide “other health coverage or services.” Therefore, we conclude that article 3.51-g applies to single-anployer, self- fimded plans such as the counQ+s.
In addition, you ask whether article 21.53. which governs dentsl care benefits in catain w appks to a singbempbyer, sdf%mded PIED. Article 2 1 .S3 applies to a “health insumxe policy” or “employee bcneiit plan” as de&d by section 1. subsdons (a) and (b). Tbe term “employee benefit plan” means “any plan, fund or program heretofore or hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan. fimd, or program was estabIish8d or is maintained for the purpose of providing for its participants.. . through tbepurdUscofimlmmcc orothawise,dmtalcarebenefitsinthceventofaccidentor d~“Thed~~of”~~beaefitpkn”isbrosd~isdearlyootiimitedto . tndibmdbealthburanceplans. Wecondudethatartide21.53appliestoasingle- the evas of&dent or sickness.”
You also ask whether ELBA preempt able 1% tide 3.51-9, and &de 21.53 of the Inwranw Code. YouatatetbatyoutmdaSid “thatERISApmempts . ..utheyrpp~tomoddaglaanployer.#Il-fimdedplans.”J~Asyou t~lprovidonr aote,howevqERISAdoesnotapplyto “govanmmtalP~k~establishedby gov8wmaItaI elltltk. see 29 U.S.C. 80 1-2) (definhg the tam “govamaa phll” toindudeaplancstablished”foritsanployees”by”thc -0fanyStateor pow& sIhbision thuwf”), 1003@)(t) (“The plwisions ofthis subdlapt8r ahall ‘lot @Y to my amployee bet@ plan if...such plan is a w plan”). ~~younrggedthatERISA~these~~oftheInsuranceCodeas
theyapplyt0singleunp1oyel. t?eHimdedg-plans.
ERlSA’s preemption provision generally states that an employee benefit plan is not “~insunacecompMyorothaiasura,~tnutcompany.oriwestmentcomp~ or . ..algagedinthebUinessofinsumMz orbankingforpurposesofanylawofany Statepurpohgtoregulateinsurmx companies. --,banks.trust companie or illvamm wmpani8s.” Id. 5 1144(b). This preen@on provision
p. 1446
Mr. David Florcs - Page 4 (DM-276)
expre& exdudes, however, employee benefit plans which are exenqt under section 1003(b). w&h includes govamnanal plans. See id. In short, ERISA exempts gowmmntd plans &m~ its requiremen& id. 0 NJO3@), and expressly provides that it does not preempt state laws which govern such plans, ti. 8 1144(b). Therefo~ we conclude that WSA does not preempt artide 1.24C. article 3.51-9, and artide 21.53 of the Insurance code to the extent they apply to a single-employer, self-funded plan of a governmental enthy such as the county.4
Next you ask us to “co&m [yourl understanding” that article 3.51-6, section 3A and article 3.51-14s of the Texas Insurance Code “which arguably apply to single- employer, selfXimded plans do not require employers to provide certain be&fits.” You suggest that these provisions “do not require employers to provide cutain benefits, but rather require imrers, MEWA’s and other seUers of employee benefit plans to offer to provide certain coverage, and the employer may or may not elect to provide this coverage to its anploye8s.”
S§ion (a) ofaection 3A ofartide 3.51-6 reqGres vmious hlSW8lSMdplMStO “@randmakeawilabk...cowagefor sewicesandbenefitsonanexpenreiuxred, savice,orprcpaidbasisfbrout-pati~expawsthatrnayarisefrominvitrofert%a&n~ ploccdurrs”iftll8plicyorplan”othendwplovideP pregMwy-rdatal beae6ts. Subsectioa@)rtatesthat”[a]no~madeundasUbsectioa(a)~afthir~~ to this section” Subsection (c) provides that a “rejection of an offer to provide ooverage ikr services or bendits proviaed by Subsection (a) ofthis se&on must be in writing.”
Section 3A of article 3.51-6 states that covaage must be ofGred to “ea& group policyholder, contrau holder, empkym, multiple-employer, union, aswdation, or *5 Mr. David Florcs - Page 5 W-276)
trustee.” Ins. Code art. 3.516, 8 3A(a) (anphasis added). It does. not require that covaage be off&red directly to an empbyee, Tbcrefore, we wndude that section 3A requires a. singlcunployer, self-tided plan to offer coverage for in vitro f-on procedures to the employec6
Article 3.5-14, which is similar to article 3.51-6, provides as follows: Each insurer, nonprofit hospital service plan corpora- tion . . . , health maintenam organization. . . , employer, multiple employer, union, association, trustee, or other seHmded or se% insured welhre or benefit plan, program. or arrangement that issues group health insurance policies, enters into health care service contracts or plans, or provides for group health benefits, coverage, or services in this state for hospital, medical, or surgical expenses inamd as a result of accident or sickness shall o@r and make 4wa&bk lo each graup pdiqvholder, cmt?acl ho&r, employer. muMp& emplqwr, unit amciaticw or bvslce under a group policy, contraq pkn. program or =‘=w”- that provides hos&aw~cr2alld~m8dic81bw~uweragefor-and ~scrviccorprepaidbasisforexpcnxs balrredflirihe~can,diagJl0sis,andEregtment of serious mentaliuMsws.
Id. art. 3.51-14, 5 2(a) (anpb&.s added). As with section 3A of article 3.Sl-6, this grovkhn does not myair that the offa for ,coverage of expacxa inwnd in the tmtmwt of serious mental iUncss be made to the employee. Bather, article 3.51-14 rqtires a singbmployer, tdf4imded plan to offa coverage to the employer.
Mr. David Horns - Page 6 (N-276)
Finally. you also ask whether article 20.12 of the Insurance Code* sections 3.3701 through 3.3705 of title 28 of the Texas Admh&ak Code, and section 161.091 ofthe Health and Safety Code apply to “an employer-controlled entity which has arranged for a sdcct group of providers at preferred rates to be available to cormacting employers.”
Artide 20.12 of the lnsurancs Code prohiits group hospital service corporations subject to chapter 20 from engaging in certain autkities. Article 20.01, which dcscrii the corporations which are subject to chapter 20, provides that
[a]ny seven (7) or more persons, a majority of whom arc superinteudents of hospitals or physicians or surgeons lkensed by the State Board of Medical Examiners, upon application to the Secretary of State of the State of Texas for a corporate charter may be incnrporated for the purpose of establi&ng _ _ . a nonprofit hospital service plan, whereby hospital care may be provided by said corporation through an established hospital. . . .
Thesrtitywhichyou~isrubjecttoptide20.12oftheInsurance codeordyifitis comprised of aeven or mornperson& the majority of whom are buspitd sqaimendatts, physiCisnsoraurganns”inc0rpomtedfbrtbepurposeofprovidinghosphalcareata hoopitrl.
sections 3.3701 through 3.3705 of title 28 of the Texas Adnrinistrative Code apply to prekrd provider phms. Section 3.3701 expressly providus that “[t&e sections of this mrbchaptado~tapplytoeordotheyranctionanyplaaarrangedarprovided~byany providp,,employa,~~~-partyadity~~MypaJw~aditlothatbanMhwrnr aukmzedtoengageintheb&nessofbealtb insurance in this state.” 28 T.A.C. 83.3701. Th~anerltityiswbjwttotheseregulmionsoldyifitisalliwurer . autkaed to engage in the business of health insummx in Texas.
!Sect.ion 161.091 of the Health and Safbty Code was recently Mlcnded by the 73rd initind,toor~m~yptrson,6rm,aJsociationofpasons,partnaJhp,~~corporationfbr secmingorsokitingpatientsorpMonagefororfromaperxmli~cutitied,or mgkkred by a state health care regulatory agency.” Health & Safety Code 8 161.091(a). rrramendedbyAc& 1993,73dLeg..ch. 573, ~S.Ol,at2171c8dch. 706, gl,at2772. The term “person” in section 161.091 of the Health and Safety Code indudes a govemment or gowmmemd alhdivision or agemy, business “wrpomtio4 tLugddo4 trust, estate, trust, partnership, association, and any other legal entity.” Attomey General Opinion DM-138 (1992) at 1 nl (citing Gov’t Code 8 311.005(2)). Subsection (t) of section161.091oftheHeaithandSafetyCodeprovidesthatitdoesnotapplytoavariay *7 Mr. David Hores - Page 7 (DMy276)
of entities. including governmental entities, which reimburse, provide. offer to provide, or administer medical benefits under a health benefits plan for which ‘it is the payor. Therefore, ifthe entity you de&i is a governmental entity which rdmbwes. provides, offers to provide, or adminkters medical beneSts under a health benefits plan for which it istbepayor,itisnotsubjecttosection161.091.
SUMMARY Artide 1.24C. article 3.51-9, and article 21.53 of the Insurance Code apply to single-employer, seKfunded plans. These. prmrisiom are not preempted by the federal Employee Retirement Income Security Act, 29 U.S.C. $5 1001 - 1461, (“ERISA”) as they apply to “govemmentd plans” as defined by title 29, section 1002(32) of the United States Code.
Under article 3.516, section 3A of the Insmawe Cod4 a single- employer, seWmded plan must make the offer of coventge for in vitro f-on procedures to the employer. Artide 3.51-14 fquires a single-employer, aelf%mded plan to offer coverage of cxpemeshamedinthetre#mwt ofseriousmentdillnesstothe eznploya.
An entity is subject to article 20.12 of the Insurance Code only if itiscomprisedofsevcnormoreperso~tbemajorityofwhomare hospital supaintardents, physidans or surg- incorporated for the purposeofprovidinghospitalcareatahospii. Anentityissubject to sections 3.3701 through 3.3705 of title 28 of the Texas . . AdmmstdveCodeonlyifitisanhurerauthorizedtoeagagein
thebusinemofhealthiwrance in Texas. A govemmemd entity which reimburses, provides, offers to provide, or adminkters medical bareMsrmdaahealthbenefitspknforwtrichitisthepayorisnot aubjeet to section 161.091 of the Health and Safety Code.
DAN MORALES Attorney General of Texas *8 Mr.DavidFlores - Page 8 (DM-276)
WEL PRYOR
Fnst Ass&ant Attorney General
MARYKELLER
Deputy Attorney General for Litigation
RENEAHIcKs
State Solicitor
MADELElNE B. JOHNSON
Chair, opinion Comtnhtee
Prepared by h4ary R Grouter
Assistant Attorney General