                                         The Attorney          General of Texas
                                                         December 31, 1982

MARK WHITE
Attorney General


                                        Mr. Kenneth H. Ashworth                  Opinion No. NJ-592
Supreme      Court Building
I? 0. BOX 12546
                                        Coordinating Board
Austin,    TX. 76711. 2546              Texas College and University System      Re: Whether a public institu-
5121475-2501                            P. 0. Box 12788, Capitol Station         tion of higher education may,
Telex    9101674.1367                   Austin, Texas   78711                    consistent with article 3.50-3
Telecopier     5121475-0266                                                      of the Texas Insurance Code,
                                                                                 self-insure    its   employees
1607 Main St., Suite 1400                                                        without purchasing a group
Dallas, TX. 75201-4709                                                           insurance policy
2141742.6944
                                        Dear Mr. Ashworth:
4624 Alberta        Ave.. Suite   160
El Paso. TX.        79905.2793               You inquire as to the ability of a public senior college or
9151533.3464                            university to establish a self-insurance fund to provide life,
                                        accident, and health coverage to its employees.
1220 Dallas Ave., Suite 202
Houston,     TX. 77002-6966
                                             In 1977, the Texas State College and University Employees Uniform
7131650-0666                            Insurance Benefits Act was enacted to provide, inter alia, uniformity
                                        in the basic group life, accident, and health insurance coverages for
                                        all employees of Texas state colleges and universities. Tex. Ins.
606 Broadway.         Suite 312
                                        Code art. 3.50-3. A public senior college or university is an
Lubbock.     TX.     79401.3479
6061747-5236
                                        institution required by the act to provide basic insurance benefits
                                        for its employees. Tex. Ins. Code art. 3.50-3, 83(a)(B). Only
                                        "qualified carriers" are eligible to bid on the insurance coverage to
4309 N. Tenth, suite s                  be provided according to the act.       Tex. Ins. Code art. 3.50-3,
McNen,       TX. 76501-1665
                                        §4(b)(4)CD)(0.   Pursuant to section 3(a)(ll) of the act, a "qualified
5121662.4547
                                        carrier" is:

200 Main Plaza, Suite 400                           (A) any insurance company authorized to do
San Antonio.  TX. 76205-2797                     business in this state by the State Board of
5121225-4191
                                                 Insurance to provide any of the types of insurance
                                                 coverages. benefits, or services provided for in
 A” Equal OpportunityI                           this Act under any of the insurance laws of the
 Affirmative       Action   Employer             State of Texas, which has an adequate surplus, a
                                                 successful operating history, and which has had
                                                 successful experience in providing and servicing
                                                 any of the types of group coverage provided for in
                                                 this Act as determined by the State Board of
                                                 Insurance;




                                                                       p. 2201
Mr.   Kenneth H. Ashworth - Page 2 (Mw-592)




              (B) any corporation operating under Chapter 20
           of the Texas Insurance Code which provides any of
           the types of coverage, benefits, or services
           provided for in this Act, which has a successful
           operating history, and which has had successful
           experience in providing and servicing any of the
           types of group coverage provided for in this Act
           as determined by the State Board of Insurance; or

              (C) any combination of carriers as herein
           defined, upon such terms and conditions as may be
           prescribed by the administrative council.

The act further provides that an institution may select and contract
for services performed by health maintenance organizations that have
authorization to offer health care services to eligible employees in a
specific area of Texas. Tex. Ins. Code art. 3.50-3, §4(b)(4)(D)(iv).
A self-insured state college or university is not a qualified carrier
under the act nor a licensed H.M.O. Therefore, a self-insurance
arrangement as described in your request would be impermissible.

     Conditioned upon a negative response to your first inquiry, you
ask whether a public senior college or university may establish a
self-insurance fund in conjunction with the purchase of a stop-loss
insurance policy from an insurance company to provide its employees
and their dependents with the basic health, life, and accident
coverages. We interpret you as asking whether the stop-loss (or
excess) policy with a qualified carrier would, in combination with a
self-insurance program, assure employees and dependents of the
provision of required coverages.      In light of the act's clear
requirement that -the basic coverage be provided by a "qualified
carrier," our opinion is that a self-insurance program may not be used
to provide any or all of the minimum required coverage.

                              SUMMARY

              A self-insurance fund may not be used by a
                           -_
           state senior college or university to provide any
           or all of the uniform life and accident and health
           benefits required by article 3.50-3 of the Texas
           Insurance Code.

                                        z&&7




                                          Attorney General of Texas




                                   p. 2202
Mr. Kenneth H. Ashworth - Page 3    @lw-592)




JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

Prepared by Catherine B. Fryer
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison, Chairman
Jon Bible
Catherine B. Fryer
Rick Gilpin
Jim Moellinger




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