                         AIJ(~JTIN.TEXAS         7CW311


                                  October    15, 1973


Honorable R. T. Weber,  D. D. S.                   Opinion No. H-     128
Texas State Board of Dental Examiners                 :
Capital National Bank Building                     Re: May a California dental
Austin,  Texas 78701                                    service corporation    contract
                                                        in California with a Delaware
                                                        corporation   to provide dental
                                                        service to all of Delaware
                                                        corporation’s   employees,
Dear   Dr.   Weber:                                     including those in Texas?

      You have requested our opinion ooncerning the legality of a transaction
wherein California Dental Service (hereafter,    CDS), a California non-profit
corporation,  has contracted to provide dental services   for the employees    of
North American    Rockwell Corporation,   a Delaware corporation,    including
those employees   in North American   Rockwell’s  plant in Waco,   Texas.

       Your concern arises from the failure of CDS to comply with the pro-
visions of Article 1396-2. 01: V. T. C. S., a part of the Texas Non-Profit
Corporation  Act, which provides:

                      “(1).   Charitable   corporations   may be formed
              for the purpose of operating a Dental Health Service
              Corporation      which service corporation     will manage
              the relationship     between the contracting     dentist, who
              will perform the dental services,         and the patient who
              will receive such services       where such patient is a mem-’
              ber of a group which has contracted with the Dental
              Health Service Corporation        to provides dental care to
              members       of that group.   An application for a charter
              under this Section shall have attached as exhibits (1)
              an a.ffidavit by the applicants that not less than thirty
              percent (30%) of the dentists legally engaged in the
              practice of dentistry in this state together with their




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    The Honorable   R. T.   Weber,   page 2     (H-128)




                names and addresses        have signed contracts to per-
                form the required dental services         for a periodof   not
                less than one (1) year, after incorporation,         and (2) a
                certifidation    by the Texas State Board of Dental Exam-
                iners that the applicant incorporatbrs        are reputable
                citizens of the State of Texas and are of good moral
                character     and that the corporation     sought to be formed
                will be in the best interest of the public health.        A
                corporation     formed hereunder shall have not less than
                twelve (12) directors,      nine (9) of whom shall be dentists
                licensed by the Texas State Board of Dental Examiners
                to practice dentistry in this state and be actively engaged
                in the practice of dentistry in this state.;       A corporation
                formed hereunder shall maintain not less than thiry per-
                cent (30%) of the number of dentists actually engaged in
                the practice of dentistry in this state as participating br
                 contracting dentists,     and shall file with the Texas State
                Board of Dental Examiners         each September the names
                and addresses      of all contracting   or participating   dentists.   ”

          You have cited Attorney     General    Opinion MO.    M-1233   which hblds:

                        “Third parties,   except the State and its agencies,
                whether individuals,     associations,     or corporations,
                may legally contract for dental care to be rendered to
                citizens of the State only by complying with Article
                1396-Z. 01 of the Texas Non-Profit        Corporation   Act.
                The State Department      of Public Welfare and other State
                agencies,    can so contract pursuant to the Medical Assis-
                tance Act of 1967, (Article      695j-1,  V. C. S. ) and Article
                695c,   Section  4(12), Vernon’ s   Civil  Statutes. ”

           If CDS is providing dental services    in Texas without complying with
    Article 1396-Z. 01, it is probably in violation of Article 4551 (a)(4) which
    provides:

                         “(4) Any one who owns, maintains or operates any
                office   or place of business where he employs or engages,




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        The Honorable    R. T.   Weber,   page 3     (H-128)




                     under any kind of contract whatsoever,      any other
                     person or persons to practice dentistry as above
                     defined shall be deemed to be practicing     dentistry
                     himself,   and shall himself be required to be duly
                     licensed to practice dentistry as hereinabove      defined,
                     and shall be subject to all of the other provisions     of
                     this Chapter,   even though the person or persons so
                     employed or engaged by him shall be duly licensed
                     to practice dentistry as hereinabove    defined. ” (See
                     also Vernon’s   Annotated Penal Code, Article 753).

               We have been provided with a copy of the agreement         between North
        American     Rockwell Corporation    and CDS and with certain relevant facts.
        Our opinion is based on the assumption      that these facts are correct.       Other
        circumstances     might call for a different opinion.     We are advised CDS is
        a non-profit   corporation  organized and existing under the Corporations
        Code of the State of California and is composed of members           licensed to
        practice dentistry under the provisions      of the California Dental Practice
        Act.   On June 24, 1970, California     Dental Service entered into an agree-
        ment in California with North American        Rockwell Corporation      (hereinafter
        referred to as the “Company”),      a Delaware corporation      doing business     in
        California,   to provide prepaid dental care benefits for its employees         in
        California and elsewhere.      Under the agreement,      the Company pays stipu-
        lated monthly sums, for which CDS agrees to perform           services    not includ-
        ing the furnishing of dental care.     CDS also agrees to make payment of
        fees to dentists under some circumstances.

               CDS has agreed to provide a comprehensive      plan of dental care to
        residents   of California.  With respect to dental care rendered outside of
        California,   CDS agrees to provide “substantially”   the same services.    Under
        the terms of the agreement,     an employee can go to any dentist, whether such
        dentist is a “participating  dentist” or not.  Since a dentist who is not licensed
        in California   cannot be a member of CDS, any dentist outside the State of
        California will receive payment for services     rendered to an eligible patient.
        The dentist may decide the services     to be rendered and the amount of the bill,
        and can bill the patient directly if he chooses.




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        The Honorable    R. T.   Weber,   page    4    (H-128)




               Based upon these facts and the circumstances     of this transaction,
        we do not believe that CDS is engaged in the practice of dentistry in the
        state of Texas.   It does not interpose itself in any relationship   between
        a dentist and his patient since the patient is free to select any dentist,
        and no dentist is sent patients.   CDS has no list of “participating    dentists”
        in Texas and has no intention of establishing   any continuing contractual
        relationship  with any dentist in Texas for the provision    of dental services.
        Neither CDS nor the company owns, maintains or operates any office or
        place of business where any person is employed or engaged to practice
        dentistry in the State of Texas.

              We believe that our opinion is supported by the cases of Woodson
        v. Scott & White Hospital,  186 S, W. 2d 720 (Tex. Civ. App. , Austin,  1945,
        error ref’d, w. m. ); and Moseley v. Texas & New Orleans Railroad Com-
        pany, 346 S. W. 2d 636 (Tex. Civ. App.,  Waco, 1961, error ref’d: .ri, r. e. ).

               Moreoever,   since the agreement  in question was entered into in
        California  and all claims are processed  and accepted there, we do not
        believe that CDS is conducting affairs in the state of Texas as contemplated
        by Article 1396-8. 01 of the Texas Non-Profit   Corporation Act.

               Accordingly,   since neither CDS nor North American    Rockwell Cor-
        poration is engaged in the practice of dentistry in the state of Texas,  and
        CDS is not conducting any affairs in the state of Texas,   we see nothing
        illegal in this transaction.

                                           SUMMARY

                            A California non-profit     dental service cor-
                     poration is not providing dental service in the State
                     of Texas by entering into a contract to pay for den-
                     tal services  for employees     of a Delaware corpora-
                     tion, including those employees       in the Delaware
                     corporation’s  Texas facilities,    where the dentists
                     involved are not chosen by or employees         of ~the
                     dental service corporation;      nor is the dental ser-




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        The Honorable    R. T.   Weber.   page 5     (H-128)




                      vice corporation conducting affairs in the State of
                      Texas as contemplated  by Article 1396-8. 01


                                                  Very   truly yours,




        APPROVKD:




        Opinion   Committee




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