                                      Aun-ruw
                                            1s.
                                              -l%x~s
PRICE  DANIEL
ATTORNEYGEXERAL
                                              December   13, i9%

            Hon. Robert S. Calvert
            Comptroller    of Public Accounts
            Austin,   Texas
                                opinion NO. V-13?%

                        .,I                   Rer   Group insurance policias
                                                    for which the Comptroller
                                                    is authorized    to make pay-,
           : Dear Sir:                              roll deductions.

                          You.have requested    an opinion of this
            orfics    relating    to payroll  deduotions which you
            are required       to make in compllancr with the stats-
            atory provisions       dealing with group life,   health
            accident,     accidental    death and dfsmemberment, an A
            hospital,     surgical   and/op  medical expense lnsur-
            ante r0r State employees.

                              The statutory  provisions regulating
            grrpW;;re          insurance for Stats employees are                as


                         “Sea. 1.    rio policy 0r gsoup life
                  iasuranaa shall be delivered      in this
                  Stste’unless     It conforms to one of the
                  rollowing    descriptions:
                              I
                                  .   .   .


                              “(3)
                                 'A ollcy   Issued to an lnde-
                  igdent      schco P d%strfct,    incorporated
                            town or village    whfoh has assumed
                   aon g9rol or the puhlfc school system
                  vltbin     such munfcfpalfty,     Stato colleges
                   or unfversitlcs,      m    a5sociatkon    a
                  State ernu~            4~,&gT&&&!A
                  li!i3-          ~t$t.J&~:&$x!&Q&J&&&y-&p
                  m                   of I&&J&~          GCLVO~~"       vhfoh
                    employer or aesoclation    shall be deemed
                    the polfcyhoPdsr,   to fnaeare the employ-
                    ees of any ouch independent     schoo2 dis-
                    tpict  and 00 the public 5aheoX syst68 0r
            ‘i;/f-‘&iT           d.     --vrrFE~~~
                      Edp s s a &A th.rougi~ou~~


                                                                            0
                 Hon. Robert S.: Calvert , pag3 2 (V-1374)
:z. v-2   --           4. _ _ y-z- .- i- . --:==- _ ;..__
               --~ - -37’                                 __


                     any such mxiicipality,      of any such
                     State colleges   and universities,      of
                     any such 3epxtment      of the State
                     Government, members of &y assoola-                   .’
                     Mon. of State employees,       and members
                     at Any association     of’ State and
                     County employees for the benefit        of
                     persons other than the policyholder                  ..‘:
                     subject to the following       require-
                     ments:

                          ii I*(a’I The employees eligible     for
                     Insurance under the policy      shall be
                     iill of the employees of tha employer
                     or all of any clsss or classes        there-
                     qf determined by conditions       pertain-
                     ing to their     employment.

                           ‘l(b)  The premium for the policy
                     shall be paid by ‘the policy       holder
                     wholly from funds contributed        by the
                     insured employees;     provided,    however,~
                     that any moneys or credits       received
                     by or allowed to the policyholder          pur-
                     puant to any participation       agroement
                     contained, In or Issued in connection
                     with, ths policy shall be .applied to
                     the payment of ruture premiums nnd to
                     the prorate, abatement of the insured
                     lmplolr)eis* oontributions    therefor;     and
                     provUiod tither,      that the employer
                     8sy deduct from the .emplo~es’         salaries
                     tho required contributions       for the pn-
                     IEWM vhen authorized           la vtitlng   by the
                     respective      employees so to do.       Suob
                     pulley ms9 be placed tn r0r00only             it
                     at least ssvsnty-rive         (.75%) per oont
                     of the eligible        employees,   excluding
                     any as to whom evidence of lndlvidual
                     Insurability       is not satisfactory      to the
                     Insurer,     elect   to make the required      pre-
                     mlum contributions        and become insured
                     thereunder.

                            e(c)       The policy   must cover   at
                     ~fa~~s~enty-rivo          (25) employees    at dato
                                   .

                            “Cd)       The amounts of insurance     un-
                     der   tha poUcy,must       se based on


                                                                        0
    -


          BOA. Robert       ,$i, Calvert,   page
                                   3 (V-1374)
  w>--+ww.r t<--.~._I~-.-'--.~T;'-~c.-'-.~-
--yi.                               ..-   :
                 some plan precluding   Individual    se-
                 lection  either  by the employeesor
                 by the policyholder.”    Art. 3.50,In-
                 suranc6 Code (Acts 52Ad Leg.,     R.S,
                 195l,ch. 491, pe 868).
        _; _           .Thd provisions    relating to group health,
           accident,    accidental   death and dismemberment, and
           hospital,    surgical,   and/or medical expense insur-
           ance for    State employees are as follows:

                          “Sec. l.,    me State of Texas a
                    9 .”
                 &iic
                        admbistrative        subQ&gJons.       de-
                  partments.      aP;encIes. a soclatl       n of
                                   ve s and fhe gove&lng
                                  &teho&tles       of each State
                 ‘university,      college,     common and lnde-
                  pendent school districts           or of any
                  other agency or subdivision            of the pub-
                  llc   schooX%ystem pf the State of Texas
                  are author,ized       to procure contracts       ln-
                  &ring     their    respective     employees or
                  any class or classes          thereof   under a
                  policy or policies         of group health,
                  accident,     accidental      death and dlsmem-
                  berment, and hospital,           surgical,   and/or
                  medical expense Insurance.             The depend-
               ~. ents of any such employees may be ln-
               ..sured under group policies             which pro-
                  vide hospital,        surgical    and/or medical
                  expense lnsurancec          The employees’ con-
                  trlbatloAs      to the premiums for such in-
                  sur&&ce Issued to the employer or to en
                  assokiatlon       of public employees aa the
                  policyholder       may be deducted by the em-
                  ployer. from the employees’ salaries
                  when authorized         in writing’ by the re-
                   spective    employees so. to do.

                          “Sec.2. All group Insurance COA-
                 tracts  effected   pursuant hereto shall
                 conZorm and be subject to all the pro-
                 visions   of any existing   or future laws
                 concerning    group Insurance.”    Art. 3.51,
                 Insurance Code.

                      1~ light   of the abovb statutes  you wish to
           lrnow how to distinguish   among the various  pollc%es
          Eon. Robert     S. Calvert,
                              page 4 (V-1374)
                         --=-
                            .__
              -.: -y--z-.-s--
         I? 5s--              .-_.-,
                                  ~-._   _.

          issued to State     employere so that you will make
          only the payroll     deductions authorized by statute.

                     Group life    Insurance is closely     regu-
          lated by statute,    and a policy     Is not a “group life
    _.   -insurance!’ policy   unless issued in strict      compll-
          ante with the statutory      provisions*    Board of ‘In-
                 e Co
          gf-930 s
                     A group life   Insurance policy  for State
          employee,s as such must be issued to the head of a
          depar.$ment an association     of State employees,  or
          an assocla ? iOA of State and County employees.    .hrt.
          34% Seca1, a3azme Section 2 of Article 3.50
          provides in part;
                       ‘#No.policy of group life    IASUT-
                 ante shall be Issued or delivered       in
                 this State unless and until      a copy of
                 the formthereof    has been’filed    with
                 the Board of Insurance C+mmissioners
                 of the State of Texas and formally
                 approved by such Board . . .*

          Thus, IS a group life   Insurance policy   has been ls-
          sued to a proper, association   or a department head,
          and the same has been f lled with the Board of Insur-
          ance Commissioners and approved by it,     and the em-
         .ployee  has authorized  the deduction in writing,    you
          are required  to make the proper payroll    deductions.

                      The cases defining     an nassoclationt8    are al-
          most completely   in  agreement that it may be ‘Ia body
          of persons acting    together,   without a charter       but
          upon methods and forms used by corporations,          i or pro-     *’
          secution of some common enter rise.”          See 4 Words
          and phrases (Permanent Ed. 19t 0) 565. Of a~urse it may
          also be a formally    chartered    organization.     wplying
          these definitions    to State employees,      or to State and
          County employees, we find they are an nassociatlonH
          if they are a united group, with by-laws and officers,
          and are In the prosecution      of a common enterprise.
          Such an association    of employees Is authorized        by stat-
.         ute to be the policyholder      for such contraats      of group
          llf 8 insurance.

                        SeCtiOA 2 of Article     3.51,m        requires
          that   the   group health, accident,    accidental   death   and
Hon. Robert      S. Calvert,      page 5      (v-1374)



 dismemberment, ~&ndhospital,     suigioil,              l
                                                nd/o~~medi~
 oal expense Insurance “be subject to all the p?Ovi-
 sions of any existing    or future law8 concorning
 group 1nsurance.w    The .only statutes     at present  deal-
 ing with any type OS ngroup Insurance” are the group
~&&& Insurance. statutes     and Artlales    ?O*Ol-21 of
 the Insurance Code, which req3lre        AOAprOfit  group
                     corporations    to comply with cer-
 tain statutiry  provisions.

              It Is manifest          that nonproflt’corporatloas
organised-pursuant          to Article       20.01, m           aust corn-
ply with the provlslons              of Articles     20001 40 20.22
when contracting         for group hospital          service    lnsur-
ante covering        State employees.           In our opinion,       this
1s the only existing            law relating      to group Insurance
which is applicable           to any of the types of Insurance
mentioned In Article            3.5l.     We do not think that the
Legislature       Intended for the group life              insurance
provisions      In Article        3.50 to be applied        to insurance
for publld,employees            procured under Article          3.5l.      It
Is clear that many of the provlslons                  of Sections      2,
3, and 5 of Article           3.50 setting       out the requirements
for policies       of group life         Insurance are not approprl-
ate to other types of group Insurance polllcles;                      and
Articles     20.01 to 20a21 do not impose these requlre-
ments OA policies          issued by.corporations            operating     un-
der those statutes.             Moreover,      the provisions      of Sec-
tion 1 of Article          3.50, specifying         the number and per-
centage of employees which must be Insured and other
conditions      for the Issuance of group life                Insurance
policies,     are not applicable            to other types of group
Insurance policies           Issued on behalf of the employees
of a private        employer.        We are of the OPIAIOA that
the Legislature         did not Intend to make the aoqulrement,
of these group          olicles      more onerous for State employ-
ees than It wouEd be for a comparable group                      of private
employees.        IA our.oplnlon,          the purpose of Section          2
of Article’ 3. $il Is to provide              that as each o,f the spe-
cific    types of insurance Is put under statutory                    regu-
lation,     the provision.4         shall also apply to the same
types of polloies          on public employees.

             Section 1 of Article  3.53. authorizes   Sta.te
 departments    and agencies and associations    of public
 ~amployoesto procure the type8 of group insurance enum-
 erat cd therein.    We think it Is WithlA the discretion
 of each department ,head to dec4do whether and with. whom
                                                                                     .~ . ...
                                                                           )
.
:        ’




                   ,




                       :;,“ll’     contract for Insurance covering his amploy-
                                iuheil contracts have been made in accordance
                        witi   this section, either by the head of the depart-
                        ment or by an association       of public employees, the
                        employer is authorized to deduot the premiums from
                       -the emp10yee~s salary upon written authorization of
                        the as$loy ee ‘; Therefore, when payroLls have been
                        certified    to you showing deductions for an author-
                        ized group for any of these types of group insurance,
                        you are required to make the proper deductions from
                        the salary warrants,       If the contract is with a cor-
                        poratlon,.organized under Article 20.01 & w.         of the
    ?,
                        Insurzxma Code, the employer or association       must be
                        &atlsfied that ths corporation has the certificate
     ..’


                        requiredby      Article 20.02(d) before making deductions
                        and authorizing the lssuancr of warrants to the cor-
                        poration    covering   deductions for group hospital  sefv-
                       lee   insnranc%.

                                                      SUMMARY.
                                       The Comptroller is authorized by
                                 statute (A t. 3.50,Insurance Code) to
                                 make payro f 1 deductions for group life
                                 insurance premiums of State employees
                                 If a policy Issued to a dapartment,head
                                 or an association   of public employees
                                 has been approved by the Board of Insur-
                                 ance Commissioners.
                                       The ComptroUer Is authorized         by
                                 statute   (Art.   3.51,Insurance
                                                                Code) to
                                 make payroll deductions ior group health,
                                 aoizldent, accidental death and dlsmember-
                                 ment, and hospital,   surgloal; and/or med-
                                 ical expanse insurance policies    of Stat%
                                 employees if the policies    have beeti pro-
                                 cured by the head of a proper State unit
             .,:
                                 or by ofi aasoclation of public employee&
                       AF’PROVED:                             Yours yery truly,
                       C. X. Richards                            PRICE DANIEL
                       Trial & Appellate~ DiViSlOn            Attorney     Generti

                       E. Jacobson
                       Reviewing Assistant
                       Charles D. Mathews
                       First AssistaAt                                   Assistant
                       BWTrvb

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