Hon. Robert S. Calvert                     Opinion No. M- 1109
Comptroller of Public Accounts
Austin, Texas                               Re:   Construction of Articles 3.50
                                                  and 3.51 of the Texas Insurance
                                                  Code with reference to the
                                                  meaning and applicability of
                                                  “group” to permit payroll
                                                  deductions for insurance pre-
Dear Mr. Calvert:                                 miums for state employees.

      Reference is made to your letter of February 15, 1972 (as
clarified by your letter of February 29, 1972) which requested an
opinion from this office as to the above captioned matter.  The following
questions were asked:

           “(1) Under the provisions of Article 3.50 of the
           Insurance Code, what is the definition of a ‘group’
           which will allow payroll deductions and also’ the
           State paying a portion of the premium for a State
           employee?

           “(2) Under the provisions ‘of Article 3.51 of the
           Insurance Code, what is the definition of a ‘group’
           which will allow payroll deductions and also the
           State paying a portion of the premium for a State
           employee?

           “(3) Under the provisions of Article 3.50 of the
           Insurance Code, could a payroll deduction be legally
           made for or the State contribute premiums for an
           employee on a policy of wholesale, franchise,  or
           employee life insurance?



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Honorable   Robert S. Calvert,   page 2            (M-l 109)


             “(4) Under the provisions of either Article 3.50
             or Article 3.51 of the Insurance Code, could a
             payroll deduction be legally made for or the State
             contribute premiums for an employee on a policy
             contracted for by the employee and issued to that
             employee under permission of the Department Head?

             “(5) Under the provisions of Article 3.50 of the
             Insurance Code, Section 1, Subsection (3) and also
             Sections 2 and 3 seem to be all of the provisions
             that would apply to group insurance for State em-
             ployees which authorize payment by the State for an
             employee for group life insurance,   is this correct,
             or would other provisions apply, and if so, what
             provisions7

             “(6) Under the provisions of Article 3.51 of the
             Insurance Code, does Section 2 of this Article make
             the provisions of Article 3.50 of the Insurance Code,
             as set out in Question No. 5 above, applicable to
             insurance policies contracted for under Article 3.51
             of the Insurance Code?”

     Question No. 1 asks for the definition of a group under Article 3.50 of
the Texas Insurance Code so as to allow payroll deductions and also the
state paying a portion of the premium for a state employee.    A group, for
the purpose of group life insurance under Subsection (3), Section I of Article
3.50 of the Texas Insurance Code, is a class of designated employees, of
not less than 10 nor less than 75% of the eligible employees (excluding any
employee as to whom evidence of individual insurability is not satisfactory
to the insurer) of any association of state employees or employees of any
department or agency of the state.

     Question No. 2 asks for the definition of a group under Article 3.51 of
the Texas Insurance Code so as to allow payroll deductions and also the
State paying a portion of the premiums for a state employee.     Under the
provisions of Article 3.51 there is no definition of a group as can be found
in Article 3.50 and the provisions of Article 3.50 may not be used in this
connection.   See Attorney General’s Opinion No. V-1374 (1951). For the




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Honorable   Robert S. Calvert,   page 3                  (M-1109)



purposes of Article 3.51, a group may consist of any number of employees
in excess of one, as determined by the contract between the department
head and the insurer,  this being a matter of discretion with the department
head. See Attorney General’s Opinion No. M-394 (1967).

     Question No. 3 asks whether a payroll deduction can be legally made
for or the State cant ribute premiums for an employee on a policy of
wholesale,   franchise,  or employee life insurance.    Your questions appears
to assume that ,a policy of wholesale, franchise,    or employee life insurance
can be issued to a group of state employees.      Under the provisions of
Subsection (3), Section 1 of Article 3.50, the department head of the state
government or the association     is deemed to be the policyholder for purposes
of group life insurance.    Subsection (6), Section 1 of Article 3.50 states that:

             “(b) Wholesale,   franchise,  or employee life
             insurance may be issued to (1) the employees of
             a common employer or employers,       covering at
             date of issue not less than five employees;.   . .”

      Thus, Subsection (6) does not provide for issuance of a wholesale,
franchise,   or employee life insurance policy to a department head or
association as the policyholder but rather directly to the employees.      It
is the opinion of this office that policies of wholesale, franchise, or employee
life insurance cannot be issued to state employees under Article 3.50 of
the Texas Insurance Code and payroll deductions cannot be legally made
for such premium payments nor can the state contribute premiums for a
state employee insured under wholesale, franchise        or employee life insurance
policies.

     Question No. 4 asks whether, under the provisions of either Article
3.50 or Article 3.51 of the Texas Insurance Code, a payroll deduction can
be made or the State contribute premiums for an employee on a policy
contracted for by the employee and issued to that employee under permission
of the department head;

      Subsection (3), Section 1, Article    3.50   of the Texas     Insurance   Code
states, in part, as follows:




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             “(3) A policy issued to. . . any association of
             state employees.   . . and any department of
             the state government which employer or asso-
             ciation shall be deemed the policyholder.   . .”

      Subsection (2), Section    1 of Article   3.51 of the Texas    Insurance   Code,
states, in part, as follows:

             “Sec. 1. (a) The State of Texas and each of its
             political, government, and administrative     sub-
             divisions, departments,   agencies,  associations
             of public employees, . . . are authorized to pro-
             cure contracts with any insurance company doing
             business in this state insuring their respective
             employees,.    . .”

     In light of the above quoted statutory language, your question must
be answered in the negative.    Under the provisions of Article 3.50, the
insurance policy must be issued to the department and under the provisions
of Article 3.51, only the department head has the authority to procure the
contracts of insurance.

      Question No. 5 asks whether the provisions of Article 3.50 of the
Texas Insurance Code, Section 1, Subsection (3) and also Sections 2 and 3,
are the only provisions that apply to group insurance for state employees
which authorize payroll deductions and premium payments by the State for
an employee for group life insurance.    Your question is answered in the
affirmative.

     Question No. 6 asks whether the provisions of Subsection 2 of Article
3.51 of the Texas Insurance Code makes the provisions of Article 3.50
of the Texas Insurance Code, as set out in Question No. 5, applicable to
insurance policies contracted for under Article 3.51. Question No. 6 is
answered in the negative.   See Attorney General’s Opinion No. V-1374
(1951).




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Honorable   Robert S. Calvert,   page 5             (M-1109)



                           SUMMARY

             Under the provisions of Subsection (3), Section 1
    of Article 3.50 of the Texas Insurance Code, a group is
    a class of designated employees,     of not less than 10 nor
    less than 75% of the eligible employees (excluding any
    employee as to whom evidence of individual insurability
    is not satisfactory  to the insurer) of any association of
    state employees or employees of any department or
    agency of the state.

            For the purposes of Article 3.51 of the Texas
    Insurance Code, a group may consist of any number of
    employees in excess of one, as determined by the con-
    tract between the department head and the insurer.

             Policies of wholesale, franchise, or employee
    life insurance cannot be, issued to state employees so
    as to authorize payroll deductions or the State to contri-
    bute premiums.

            Neither a payroll deduction or a state contribu-
    tion for premium payments can be made under Article
    3.50 or Article 3.51 where an employee contracts for
    an insurance policy and the policy is issued to that employee.

            Section 1, Subsection (3) and Sections 2 and 3 of
    Article 3.50 of the Texas Insurance Code are the only pro-
    visions that apply to group insurance for state employees
    which authorize payroll deductions and premium payments
    by the State for an employee for group life insurance.

            The provisions of Subsection 2 of Article 3.51 of
    the Texas Insurance Code do not make the provisions of




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Honorable    Robert S. Calvert,     page 6               (M-1109)



     Article 3.50 applicable      to insurance   for public employees
     procured under Article       3.51.




                                                    D C. MARTIN
                                                    eneral of Texas

Prepared    by James Hackney
Assistant   Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
W. E. Allen, Co-Chairman

Jack Goodman
James Quick
Jim Swearingen
Bill Flanary

SAMUEL D. MCDANIEL
Staff Legal Assistant

ALFRED WALKER
Executive Assistant

NOLA WHITE
First Assistant




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