                                 February    20,   1975


The Honorable Henry Wade                             Opinion   No. H-   535
Criminal District Attorney
Dallas County Courthouse                             Re: Payment by Dallas County
Dallas, Texas 75202                                  of group health and life insurance
                                                     premiums   for retirees.

Dear Mr.    Wade:

         You have requested our opinion as to whether or not Dallas County
may “legally pay premiums      on a health and life groupinsurance   policy for
persons who have retired from the county and are eligible for benefits
under the County and District Retirement      System, ” and if the answer to
this question “is in the negative,  and if the qualified retirees  pay their
own premiums,    ” whether Dallas County may “legally pay the group
insurance premiums     for persons employed by the county when the group
rate for employed persons would reflect and partially be based uponlosses
sustained by persons in the retired category. ”

        Our answer     to both questions    is in the negative.

        Article  3. 51-2(a) of the Texas Insurance Code empowers              a county
“to procure contracts insuring its officials and employees”  for,             inter alia,
group life and group health insurance and to pay all or a portion             of the
premiums    of such policies.

          “Employees”    is not defined in article 3. 51-2.    Section 1 of article
3.50 dealing in general with the requirements          for group life insurance’
policies,   in its subsection   (3) (d) which is applicable to policies issued to
employees     of governmental    units, defines “employees”      “in addition to its
usual meaning [to] include elective and appointive officials of the state. ”
Section l(2) of article 3. 51, dealing with group health insurance policies
issued to employees      of governmental     units, defines “employees”     to




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The Honorable      Henry   Wade    page 2     (H-535)




“include elective and appointive      officials    of the state” as well as its
“usual meaning. ”

         It would appear,   then, that the question of whether to include
“retirees”    within the scope “employees”    should be determined by the
“usual meaning” of the term “employees.        ” The judicial decisions most
pertinent to this inquiry are not Texas cases,      but they provide some
illumination.

         The U.S. Supreme Court recently ruled that the term “employee”
as used in the National Labor Relations Act is to be taken in its ordinary
meaning,     and, as such, excludes retirees.    Allied Chemical & Alkali
Workers of America       Local Union No. 1 v. Pittsburgh Plate Glass Co.,
404 U.S. 157 (1971).      Youngstown Sheet & Tube Co. v. Review Board,
191 N. E. 2d 32 (Ind. 1963) interpreted   the meaning of “employee”     for purposes
of a collective   bargsining agreement,   and quoting   an earlier Indiana  deci-
sion, Koch v. Wix, 25 N. E. 2d 277 (Ind. 1940), held that its “common,
well-established    meaning” is “one who is in the present service of another
for pay at a particular    time ” and “does not embrace one who has at some
time been, but no longer is, in the employment        of another. ” Youngstown,
supra, at 36.

        The Texa’s     ca s e s which have ~considered   the definition of
“employee”   do not deal with persons who have left the service of their
employers,   but the definitions the courts accept would seem to preclude
the subsuming of “retiree”     under the umbrella of “employee.   ”

         In Riverbend Country Club v. Patterson,        399 S. W. 2d 382 (Tex. Civ.
APP.  --Eastland    1965, ref. n. r. e.), the  Court  quoted  the definition of an
“employee”     as one whose “employer     has the power or right to control and
direct the employee in the material details of how the work is to be per-
formed.”     Id. at 383.  In Northwestern     National Life Ins. Co. v. Black,
383 S. W. 2dsO6 (Tex. Civ. App. --Texarkana           1964, ref. n. r. e. ), the
Court held that an “employee”      is “one who works for an employer:        a
person   working    for a salary   or a wage. ” g,       at 809.

       Neither definition seems capable of including the retiree. On the
one hand, the employer has no “power or right to control or direct the




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    The Honorable    Henry   Wade     page 3     (H-535)




    employee” and on the other, the retiree is no longer “working for a salary
    or a wage. ” Thus, if the term “employee”     is restricted to its “usual
    nxmiirg” it would seem to exclude the retiree.

             There are other statutory provisions   which argue on behalf of
    exclusion.   Article 3. 51-4 of the Insurance Code authorizes    the State
    of Texas to pay the group life and group health premiums      for “retirees
    of the Central Education Agency,     the Texas Rehabilitation  Commission,
    and the Coordinating   Board,   Texas College and University    System!’ If
    “retirees”  are included within the general definition of “employees,     ”
    there would seem to be no~need to create a special category to provide
    for these particular  retirees.

             The only statutory authority which even apparently contradicts            the
    proposition  that a retiree is not an employee is found in section l(1) (a) of
    article 3.50 of the Insurance Code, which states that a policy “may pro-
    vide that the term ‘employees’       shall include retired employees.      ” As has
    been pointed out, supra, section 1 of article 3. 50 is concerned in general
    terms with the requirements       for group life insurance policies.        This
    office has previously    ruled, in Attoiney     General Opinion M-1109 (1972))
    that section 1, subsection    (3) and sections 2 and 3 of article 3.50 are the
    only provisions   of article 3. 50 that apply to group insurance for state
    employees.     Since subsection    3 of article 3. 50 includes employees       of all
    governmental    units, itis reasonable     to presume that the provisions      of
    article 3. 50 which have been interpreted        as inapplicable   to state employees,
    and in particular   section 1, subsection     l(a), are inapplicable    to employees
    of all governmental    units.   We conclude,      therefore,  that Dallas County
    may not legally pay premiums        on a health and life group insurance policy
    for persons who have retired from the county and are eligible for benefits
    under the County and District Retirement           System.

             Your second question is a corollary    to the first.  The statute
    authorizing  a county to provide group health and life insurance for its
     employees,   article 3. 51-2, empowers   the county “to procure contracts.     ”
     Payment of all or part of the premiums     is left to the county’s discretion.
     The basic right conferred is that of initiating the program.      Even if a retiree
     pays his own premiums.      Dallas County has not been authorized to include the
     retiree within its group insurance plans.




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The Honorable   Henry   Wade     page 4      (H-535)




                                 SUMMARY

                    Dallas County may not legally pay premiums     on
                a health and life group insurance policy for persons
                who have retired from the county and are eligible for
                benefits under the County and District Retirement
                System; even if the qualified retirees pay their own
                premiums,    Dallas County may not legally pay the
                group insurance premium for persons employed by
                the county when the group rate for employed persons
                would reflect and partially be based upon losses
                sustained by persons in the retired category.

                                                       Very   truly yours,




                                                       Attorney   General    of Texas

APPROVED:




DAVID   M.   KENDALL,    First   Assistant




Opinion Committee


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