                ‘SHE      ATrOEzSEY                    GESEKAL
                                    OiF TEXAS




The State Board of Insurance                    Opinion    No. WW -3 56
International   Life   Building
Austin,   Texas                                 Re:      Does Article    3.50, Texas
                                                         Insurance   Code, authorize
                                                         the issuance    of a group life
                                                         insurance   policy to trustees
                                                         of a fund established    by a
                                                         labor union to insure thz
Gentlemen:                                               members     of such union?

         Your   request for an opinion of this department  on the questl’ons a:
are herein      stated has been received,  and we quote from your letter as
follows:

              “The trustees      of a welfare     fund are considering        the
        purchase     of a group life policy to cover union members.
        The welfare      fund is administered        pursuant to a declara-
        tion of trust executed       between two unions as one of the
        parties,   a contractors’      association     as a second party,
        and a group of trustees        as a third party.        The trust agree-
        ment recites      that the ‘employers’        (without otherwise       de-
        fining them) and the union have entered              into a bargaining
        agreement      requiring    periodical     payments     by the employers
        to the fund for the purpose         of providing     and maintaining
        certain welfare      benefits for duly qualified         and eligible
        employees      and designated      dependents      employed    by the em-
        ployers,    and such other employees           who may desire        to par-
        ticipate.”

        Your opinion     request     concerns    Article 3.50 of the Texas          Insurance
Code,   the relevant     portions    of which   are quoted as follows:

               “Section    l(1).   No policy of group life insurance  shall
        be delivered      in this State unless it conforms    to one of the
        following     descriptions:    . . .”

        Section    4 of this   Article   provides     in part   as follows:

             “Except  as may be provided   in this Article,              it shall
        be unlawful to make a contract   of life insurance               covering
        a group in this State. . .*

         Therefore,   unless the policy conforms            to one of the statutory      de-
 scriptions    set out in Article 3.50. it cannot         be legally  issued.
                                                                                               .




The   State   Board   of Insurance,    page 2 (WW-356)




       Subsection     (2) of Section   1 provides    as follows:

            “A policy issued to a labor union, which shall be deemed
       the employer   and policyholder,   to insure the members    of such
       union who are actively    engaged in the same occupation    and
       who shall be deemed     to be the employees   of such union with-
       in the meaning of this Article.”

        In the case of Board of Insurance          Commissioners        Y. Great Southern
Life Insurance      Company,     239 S. W. 2d 803, the Texas Bankers            Associa-
tion was attempting       to purchase    a group life insurance       policy from Sou-
thern Life Insurance        Company to insure the members            of ihe assocj.ation
pursuant to a trust agreement.           The Court stated that, “The real poir.t~
of departure    from the requirements          of the statute i,s thai wher.:z.:; rhe
statute prohibits     the writing    of group insurance      fo; r.rr;p:‘~yers v..;l.h
fewer than twenty-five        employees,     an effort is here made throu,n a
trade association      to write   group insurance      for a number of emp:r,:,-rz
with fewer than twenty-five         employees*      and then went on to strike dov.:ii
the plan as being violative       of the statute.     The facts that you havs~. out-
lined in your letter are analogous          to those in the Great Southern         &.ife
Insurance    Company in that, the plan under consideration               would mcXe it
possible   for an employer      with fewer than ten employees            to procure    group
life insurance     on such employees       in direct violation    of Article    3.50.

       To permit a number of employers            to establish    a welfare   fund Tvith
the union and to then permit       the trustees    of this welfare    fund to pu:c!~z~se
group life insurance      on the lives of the employees        of the employers      who
were parties to the welfare       fund, or to allow a number of labor ur~!.ons
to establish    a welfare   fund with a trustee to purchase        group life insur-.
ante on the lives of the employees        of the several     unions, wouid be an at-
tempt to circumvent       the statute and to make it possible        for one of the
employers     or labor unions having less than ten employees             or members,
to be provided     with group life insurance.       Any interpretation      that would
permit    such an arrangement       would clearly    nullify the legislative     re-
quirement     of Article   3.50 that the policy of group life insurance         must
cover at least ten (10) employees        at the date of issue.

        Subsection  (2) of Section 1 is explicit   in its requirements        tha? the
policy may insure “the members          of such union who are actively         engaged
in the same occupation.      . *” We hold that this restriction,       when read in
light of the holding in the Great Southern Life Insurance            Company case,
supra, prohibits   the issuance     of a group pohcy where the membership
of such group is derived      from more than one employer          or labor union,
except where expressly       permitted   in the case of affiliated     businesses
set forth in Subsection    (a) of Subsection   (1) of Section    1 of Article    3.50.

        The use of the singular      “employer”      in the phrase   -. . . estabbshed
by an employer.     . .n is significant.     It evidences   the intention   of the
Legislature    that a single employer       may, under the stated conditions,        have
a policy of group life insurance        issued to it, or the same employer         may
establish   a fund and have a;’@&y         of group life insurance     issued under
The   State   Board   of Insurance,     page   3 (WW-356)




 stated conditions   to the trustees      of that fund. The       only persons   eligi-
 ble for insurance    in either event     are the employees         of the employer,
,that is, a singular   employer.

                                      SUMh4AR     Y

              Article   3.50 of the Texas Insurance      Code does not
              authorize    the issuance   of a group life insurance
              policy to trustees    of a fund established   pursuant
              to a trust agreement      between   the members    of two
              labor unions as one party, a contractors’       assoria-
              tion as the second party, and a group of trustees
              as a third party.


                                                Yours    very   truly,

                                                WILL    WILSON
                                                Attorney   General        of Texas




                                                            Richard      A. Weils
                                                            Assistant

RAW:dac

APPROVED:

OPINION       COMMITTEE
George    P. Blackburn,      Chairman

Ralph Rash
Jack Goodman
J. Mark McLaughlin

REVIEWED        FOR    THE   ATTORNEY          GENERAL

By:   W. D. Geppert
