             THE       ATTORSEY          GENERAL
                           OF   TEXAS

                           August 2, 1988




Honorable Chet Brooks                   Opinion No.   JM-937
Chairman
Committee on Health and                 Re: Insurance coverage for
   Human Services                       in vitro fertilization
Texas State Senate                      (RQ-1334)
P. 0. Box 12068
Austin, Texas 78711-2068

Dear Senator Brooks:

     You ask our opinion on a number of questions concerning
a requirement imposed by the legislature that certain group
health insurance policies provide coverage    for in vitro
fertilization procedures,1  or reproduction  through   ferti-
lization of an ovum by a sperm outside of the body.     Annas
and Elias, In Vitro Fertilization     and Embrvo Transfer:
Medicoleaal Asvects of a New Technioue to Create a Familv
17 Family L.J. 199 at n. 1 (1983).     After describing   th;?
legislation, we will answer each of your questions in turn.

     The 70th Legislature   amended the Insurance   Code to
mandate health insurance coverage for in vitro    fertiliza-
tion procedures in certain circumstances.  Acts 1987, 70th
Leg., ch. 526, at 2135. The legislation was effective     on
September 1, 1987, and applies to all policies and other
evidence of coverage delivered, issued for delivery,      or
renewed after January 1, 1988. Id. The text of the statute
follows.

             [In vitro fertilization ~procedure]

           Sec. 3A. (a) All insurers,     nonprofit
        hospital and medical service plan corpora-
        tions subject to Chapter 20 of this code,



     1. The statute also applies to entities such as health
maintenance organizations and employer self-insurance plans.
See aenerallv Chapter 20 of the Insurance Code. Our discus-
sion of the law applies to all such entities.




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Honorable Chet Brooks - Page 2   (JM-937)




       health maintenance   organizations subject to
       the Texas Health Maintenance Organization Act
       (Chapter ZOA, Vernon's Texas Insurance Code),
       and all employer, multiple-employer,      union,
       association, trustee, or other self-funded or
       self-insured welfare or benefit plans, pro-
       grams, or arrangements     that either     issue
       group health insurance policies, enter into
       health care service contracts     or plans,   or
       provide for group health benefits,     coverage,
       or services    in this state for hospital,
       medical or surgical expenses     incurred as a
       result of accident or sickness shall offer
       and make available to each group policy-
       holder, contract holder, employer,     multiple-
       employer,  union, association,     or    trustee
       under a group policy, contract, plan, pro-
       gram, or arrangement that provides     hospital,
       surgical, and medical benefits, coverage     for
       services and benefits on an expense incurred,
       service, or prepaid basis for out-patient
       expenses that may arise from in vitro     ferti-
       lization procedures, if the group insurance
       policy, contract, plan, program, or arrange-
       ment otherwise provides      pregnancy-related
       benefits for the insureds, enrollees,       sub-
       scribers,   employees,   members,     or   other
       persons covered under the policy       contract,
       plan, program, or arrangement.

           (b) An offer made under Subsection (a) of
        this section is subject to this section.

           (c) A rejection of an offer to provide
       the coverage    for services  or   benefits
       provided by Subsection (a) of this section
       must be in writing.

           (d) Benefits for in vitro fertilization
       procedures   must be provided to the same
       extent as the benefits provided    for other
       pregnancy-related   procedures   under   the
       policy, contract, plan, program, or arrange-
       ment.

           (e) The offer to make the coverage avail-
        able is required only under the following
        conditions:




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Honorable Chet Brooks - Page 3      (JM-937)




           (1) the patient for the in vitro fertili-
        zation procedure  is an insured, enrollee,
        subscriber, member, or otherwise      covered
        employee or, person under the policy, con-
        tract, plan, program, or arrangement:

           (2) the fertilization    or attempt    at
       fertilization of the patient's    oocytes  is
       made only with the patient's spouse's sperm:

            (3) the patient and the patient's  spouse
        have a history of infertility of at least
        five continuous   years'   duration or    the
        infertility is associated with one or more of
        the following conditions:

           (A)   endometriosis;

            (B) exposure   in     utero   to   diethylstil-
        bestrol (DES):

           (C) blockage of or surgical          removal   of
        one or both fallopian tubes: or

           (D)   oligospermia;

            (4) the patient has been unable to attain
        a successful pregnancy    through any    less
        costly applicable infertility treatments  for
        which coverage is available under the policy,
        contract, plan, program, or arrangement: and

            (5) the in vitro fertilization procedures
        are performed  at a medical    facility that
        conforms to the American College of Obstetric
        and Gynecology guidelines for in vitro ferti-
        lization clinics or to the American Fertility
        Society minimal standards for programs of in
        vitro fertilization.

           (f) An    insurer,   health    maintenance
        organization, or self-insuring employer that
        is owned by or that is part of an entity,
        group, or order that is directly affiliated
        with a bona fide religious denomination that
        includes as an integral part of its beliefs
        and practices that in vitro fertilization   is
        contrary to    moral principles    that    the
        religious denomination  considers  to be an
        essential part of its beliefs is exempt   from



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Honorable Chet Brooks - Page 4   (JM-937)




        this section's requirement to offer    coverage
        for in vitro fertilization.

Ins. Code art. 3.51-6, 5 3A.

     Several salient points should be noted in this statute.
First, coverage    for in vitro     fertilization    procedures
is mandated only if the insurance policy also provides
pregnancy-related benefits.   Art. 3.51-6, 5 3A(a).     Second,
coverage in such instances need be made available only to
the same extent that coverage is provided for pregnancy-
related procedures.   Id. § 3A(d). Third, benefits for in
vitro fertilization procedures may be limited to persons who
have specified pre-existing medical conditions. Id. 5 3A(e).
Finally, benefit providers      and policyholders     "directly
affiliated with a bona fide religious denomination         that
includes as an integral part of its beliefs and practices
that in vitro     fertilization   is contrary to the moral
principles that the religious denomination considers to be
an essential part of its beliefs"       are exempt    from the
requirement to offer coverage for in vitro       fertilization.
Id. § 3A(f).

     Thus, a group ,policyholder may avoid the requirement to
provide coverage for in vitro    fertilization procedures   by
either ending u       coverage   for any    pregnancy-related
condition m meeting the test for a religious exemption.2

     We caution that the federal Pregnancy    Discrimination
Act of 1978, 42 U.S.C. section ZOOOe(k),      requires   that
employees or their insured spouses disabled due to pregancy-
related medical   conditions must be provided     the    same
benefits as those furnished to other workers      and their
spouses  for "all employment-related    purposes,  including
receipt of benefits under fringe benefit programs . . . .I'
Id. See also Newnort News Shivbuildina and Drvdock Co. v.
EEOC 462 U.S. 669
-,                     (1983) and Attorney  General Opinion



     2. We note that a policyholder    who is entitled to an
exemption on religious   grounds   from the requirement    to
provide coverage for in vitro fertilization procedures    may
continue to provide coverage    for pregnancy-related  condi-
tions, while a policyholder      unable .to obtain such an
exemption on religious grounds must terminate coverage    for
all pregancy-related  conditions before    lawfully refusing
coverage for in vitro fertilization procedures.    We express
no opinion on the constitutionality of this provision.




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Honorable Chet Brooks - Page 5      (JM-937)




JM-337 (1985). Thus, if an employer subject to the federal
law terminates   fringe   benefit payments   applicable    to
pregnancy-related conditions to avoid coverage for in vitro
fertilization procedures, then the employer   also must end
u   fringe benefit plans covering other medical conditions.

                              I.

      You first ask:

            Under article 3.51-6, section   3A of the
         Insurance Code, does the group policyholder
         or the individual employee covered under the
         group policy have the right to reject cover-
         age for in vitro fertilization?

The Insurance Code requires that group accident and health
insurance policies be issued to those who are denominated by
the code as the l'policyholder.l' Ins. Code art. 3.51-6,
0 l(a) (l)-(6). See, e.a., art. 3.51-6, 5 l(a)(l)    ("policy
issued to an employer . . . who shall be deemed the policy-
holder, insuring employees of such employer for the benefit
of persons other than the employer.").  Beneficiaries   under
group insurance policies are issued a "certificate of insur-
ance," and not a "policy." Ins. Code art. 3.51-6, 9 l(a)(c).

     Likewise, section 3A of the code which mandates   cover-
age for in vitro      fertilization clearly  identifies   the
policyholder as the entity to which an offer for coverage
for in vitro  fertilization must be made.    Ins. Code art.
3.51-6, § 3a(a), (b). The policyholder may reject the offer
of coverage and such rejection must be in writing.   L     at
§ 3A(c). Nowhere is it provided that individuals who are
merely the beneficiaries under a policy of insurance   issued
to their employer have any right to reject such element    of
the group insurance coverage.

                              II.

      You next ask:

            If an insurer issues a group policy to a
         company whose headquarters    are   domiciled
         outside Texas but the group policy covers
         Texas-based   employees,    '   the    insurer
         required to offer covera::     for in vitro
         fertilization to [the] Texas employees?
and




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Honorable Chet Brooks - Page 6   (JM-937)




           If the group policyholder has the right to
        reject coverage under section 3.51-6, g 3A of
        the Insurance  Code, does the company whose
        headquarters are domiciled  outside of Texas
        have the right to reject coverage     for in
        vitro fertilization  on behalf of its Texas
        employees?

     Article 21.42 of the Insurance Code provides that:

           Any contract of insurance payable to any
        citizen or inhabitant of this State by an
        insurance company         corporation    doing
        business within this g:ate shall be held to
        be a contract made and entered into under and
        by virtue of the laws of this State relating
        to insurance, and governed thereby,   notwith-
        standing such policy or contract of insurance
        may provide that the contract was executed
        and the premiums   and policy    (in case it
        becomes a demand)   should be made payable
        without this State, or at the home office of
        the company or corporation issuing the same.

Ins. Code art. 21.42.

     Article 1.14-1 of the Insurance Code sets forth the
transactions which constitute  "doing an insurance business
in this state."  Ins. Code art. 1.14-1, § 2(a). Whether  an
insurance company is doing business  in Texas is a question
of fact. &

     If an insurance company doina business in Texas   issues
a group insurance policy to an out-of-state employer for the
benefit of its employees in Texas, article 21.42 applies,
and the provisions in article 3.51-6 relating to mandatory
coverage for in vitro fertilization   procedures govern the
policy. John Hancock Mutual Life Ins. Co. v. Schroeder, 349
F.2d 406 (5th Cir. 1965); General American Life Ins. Co. v.
Rodriauez, 641 S.W.Zd 264 (Tex. App. - Houston [14th Dist.]
1982, no writ); Locomotive Ena. & Cond. Mut. Prot. Ass'n v.
Bush, 576 S.W.Zd 887 (Tex. Civ. App. - Tyler 1979, no writ).
Cf. Howell v. American  Live Stock Ins. Co., 483 F.Zd 1354
(5th Cir. 1973) and Austin Buildina Comvanv          National
Union Fire Ins. co., 432 S.W.Zd 697       (Tex. T968).    See
aenerallv Cox, Grouv Insurance Contracts for Emvlovees,    38
Tex. L. Rev., 211, 230 (1959).

     But the courts have held that group insurance policies
issued to an employer domiciled outside the state for the



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     Honorable Chet Brooks - Page 7   (JM-937)




      benefit of its employees in Texas by insurers not otherwise
      "doina business" in the state are governed by the law of the
      place where the policy is issued, and not by the Insurance
      Code. Boseman v. Connecticut    General Life Ins. co., 301
     U.S. 196 (1937) (interpreting former article 5054, V.T.C.S.,
     now article 21.42 of the Insurance Code); Schroeder,   SUE?Z,
      Metrovolitan Life Insurance Co. v. Wann, 109 S.W.Zd 470
      (Tex. 1937).

          However, ruling case law in Texas on the choice-of-law
     issues implicit in your queries has changed completely since
     the decision in Boseman and the various Texas cases which
     rely on it, including decisions issued as recently as 1982.

          In Roseman,  the United States Supreme Court applied
     what now might best be considered      as the "traditional"
     choice of law rule for determining       the applicable   law
     governing  the contract performance     questions -- the so-
     called "lex loci contractus/place     of performance"   rule.
     Boseman, 301 U.S. at 201.    See aenerallv   Stoles and Hay,
     Conflict  of Laws 55 18.14-18.15     (1984) and Multum non
     multa -- Festschrift fur Kurt Livstein,   251, 256 (P. Feur-
     stein and C. Perry eds. 1980). See also Restatement    First,
.-   Conflict of Laws, 8 331 (1934).

          In 1984' in a seminal shift in the choice of law
     regime, theTexas   Supreme Court announced that the "lex loci
     contractusNq doctrine, including the "place of performance"
     rule would no longer be followed. Instead, the law of the
     state with the most significant relationship to a particular
     substantive issue concerning the performance of a contract
     obligation is to be applied, absent a valid choice of law
     clause in the contract dictating otherwise. Duncan v. Cessna
     Aircraft Co., 665 S.W.2d 414 (Tex. 1984).

          The rule announced for the resolution of choice-of-law
     in Duncan   follows that in the current version      of the
     Restatement of Laws published by the American Law Institute:

                (1) A court, subject to constitutional
             restrictions, will follow a statutory direc-
             tive of its own state on choice of law.

                (2)~ When there is no such directive, the
             factors relevant to the choice of the appli-
             cable rule of law include:

                (a) the needs of      the   interstate   and
             international systems,




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Honorable Chet Brooks - Page 8     (JM-937)




           (b)    the relevant policies of the forum:

           (c) the relevant policies of other in-
        terested states and the relative interests of
        those states in the determination     of the
        particular issue,

            (d)   the protection of justified   expecta-
        tions,

           (e) the basic policies        underlying   the
        particular field of law,

            (f) certainty,     predictability         and
        uniformity of result, and

           (g) ease in determination and application
        of the law to be applied.

Restatement (Second) of Conflict of Law, 5 6 (1971). m      665
S.W.Zd at 426.

     In light of the adoption of the restatement test by the
Texas Supreme Court in Duncan, we think that even in the
case of an insurance company not doina business in Texas
which issues policies to out-of-state employees for coverage
of their Texas employees, a court would probably apply the
substantive provisions of Texas insurance law to the con-
tract, thus subjecting  such contract requirements  relating
to coverage for in vitro fertilization procedures set out in
article 3.51-6, section 3A of the Insurance Code.

                         SUMMARY

           An employer    furnishing a group health
        insurance policy    for the benefit of its
        employees   in Texas is the "policyholde??
        within the meaning    of a provision     of the
        Insurance   Code which grants to        VVpolicy-
        holders"   the right    to reject     insurance
        coverage   for in vitro     fertilization   pro-
        cedures. Ins. Code art. 3.51-6, § 3A.        The
        Insurance Code does not extend to employee
        beneficiaries of group health insurance plans
        the right to reject coverage for in vitro
        fertilization   procedures.     Under    current
        choice of law rules, a court would probably
        hold that article 3.51-6, section 3A, of the
        Insurance Code applies to contracts for group




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Honorable Chet Brooks - Page 9     (JM-937)




        health insurance entered into by employers
        located outside of the state for the benefit
        of employees within the state, whether or not
        the insurance company is otherwise     "doing
        business" in Texas.



                                    L/ ti
                                       Very truly yo   s

                                            A/;,
                                       JIM      MATTOX
                                       Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Don Bustion and
Susan L. Garrison
Assistant Attorneys General




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