Hon. 0. P, Lockhart          Opinion No. O-4619
Chairman                     Re:   Under the facts submitted are
Board of Insurance           the ben2fits  offered by the Dallas
Commissioners                Medical Plan, Insurance benefits   and
Austin, Texas                If so, should the Plan come under the
                             supervision  of the State Insurance
Dear Sir:                    Department?
          Your letter of May 26, 1942, requesting        our opinion
on the above stated question reads as followsz
           “The above named organization  Is represented to
     be a non-profit  medical care plan for low Income
     groups and 1s sponsored by the Dallas County Medical
     Society.   The Dallas County Medical Plan was Issued
     special Charter Number 78184 by the Secretary of
     State on June 18 1940. The purpose clause of the
     Charter Is as fo 1lows:
           “‘The purposes for which this corporation        Is
     formed is to collect     statistics,   to compile reports
     and to assist In the promotion of scientific,         experl-
     mental, educational    and preventive medicine for re-
     lief,   and other activities     to the best Interest   of the
     community In relation     to the health and welfare of
     the people. t
           “At the present time the Plan Is subscribed to by
     only three firms, Ford Motor Company, Neuhoff Packing
     Company, and the Group Hospital Service,   Incorporated.
     The plan Is to assist the residents  of Dallas County
     of the low income group to obtain the services    of phy-
     sicians by providing funds to pay for medical services
     after they have been furnished In return for a $2.00
     monthly subscription  payment.  The Plan does not at-
     tempt to furnish physicians.   The subscribers   may select
     a physician of his choice who Is a member of the Dallas
     County Medical Society who has registered   with the Plan
     to render authorized services.
           eSubscrlbers    are accepted only In groups.   Al.1 ln-
     divlduals   In a group must be employed persons of.a single
     organization.      Groups must number t>:enty or more and to
     be eligible   for membership sixty percent of the entire
     group must be enrolled.       Subscribers must be under the
     age of sixty-five,     with an annual income not in excess
     of $2,000.00.
                                                                         .-   ._




Hon. 0. P. Lockhart,        page 2    (o-4619)


            When the applicant     Is accepted as a subscriber,                   .
     he Is-given   an identification      card and a certificate
     which explains the services       and benefits   he~~is,en-
     titled  to receive.    The subscriber’s      employerremits              ”
     the monthly subscription      fee to the Plan as a payroll
     deduction   and the physician’s       oharges for services
     rendered io a subscriber      are-billed   and paid by the
     Plan on an ~agreed basis.
            “The certificate      given to the subscriber     provides
     for   the following     services:
            “‘1. Medical and surgical care from doctors of
     medicine, of their own choice, who are registered ~wlth
     the Dallas County Medical Plan, at home, office   or hos-
     pital.
           “2.  Consultation  services  and special medical
     services  such as x-ray, laboratory,   and anesthesia per-
     formed by doctors of medicine.       ’
            “3.       Obst etrlcal services, after membership. for   a
     perlod’of        twelve consecutive    months.
           “4.    Medical services necessary to establish   a
     diagnosis of tuberculosis,    gonorrhea, syphilis   and
     nervous and mental diseases,    but ser’vlces will not be
     rendered under these benefits     for the treatment of
     tuberculosis,    gonorrhea, syphilis  and mental disorders
     after the diagnosis has been established.
          “5.  An Individual   subscriber shall be entitled,
     in any one subscription   year, to a maximum of $325.00
     worth of medical service.’
            “We request your opinion as to whether or not the
     benefits   offered by the Dallas County Medical Plan are
     insurance benefits   and If so, whether or not the Plan
     should come under the supervision   of this Department.
            “For your Information        we are enclosing   the following:
            ::(${      Identification     Certificate
                       A brochure de~scrlblng the Plan
            ai )       Subscriber’s     Identlflcatl,on Card
            ‘J( rl1    Dallas County Medical Plan Initial      Service
                       Report         -
            I’( 5)     Application    for Registration   with Dallas
                       County Medical Plan
            ‘r(6j      Application    for Enr’ollment w1t.h The Dallas
                       County Medical Plan
Hon. 0. P. Lockhart,     page 3   (o-4619)


            “(7)   Monthly Service   Report

           ‘*&I1 you please return the above enclosures   to
      us when you shave rendered an opinion on this mestlon?e
                                                             .
          The purpose clause of the above mentioned corporation
Is set out In your letter. heretofore quoted and Sections 6 and
7 of the Charter of said corporation  read as follows:
            “6.  The corporation shall have no capital   stock
      and shall not be operated for profit.   Its support
      shall be provided by endowment, donations,   devises
      and bequests,  and from such fees as may be collected
      by It from members or subscribers.
            “7.    This shall be a non-profit,    charitable,
      scientific    and benevolent corporation,    and shall    have
      no capital    stock and owns non assets.”
            House Bill No. 191, Acts of the Forty-sixth        Leglsla-
ture, ‘1939 Regular Session,       (Articles  4590a and Subdlvisi.on
104 oft 1303, ‘Vernon’s Annotated Civil Statutes)       authorize the
organization     and Incorporation   of non-profit  corporations    for
group hospital     service.   The Act further provides In part I’. *.
thatsuch     corporations   organized and operated under the provl-
slons .of this Act shall not be required by any department of
this State to post bond, or place deposits with any department
of this State to begin and/or operate under this Act and the
provisions    of Title 78 of the Revised Civil Statutes of Texas of
1925, are hereby declared to be Inapplicable        to corporations
organized and/or operated under this Act.”
            However, such corporations   are subject to certain
supervision   of the Insurance Department of thisstate.      Under
the facts stated In your letter,     It is apparent, that the above
mentioned corporation    Is not lnc~orporated under Article  459Oa,
supra, or attempting to operate under such statute.
            The word r’~insurancel’ Is defined    in Corpus Jurls,     Vol.
32,   page 975, as follows:
             “Broadly defined,     Insurance Is a contract by whi,ch
       one party, for a compensation called the premium, assumes
       particular    risks of the .other party and promises to pay
       to him or his nominee a certain or ascertainable       sum of
       money on a specified      contingency.  As regards property
       and liability     Insurance5 It is a contract by which one
       party promises on a consideration      to compensate or relm-
       burse the other If he shall suffer loss from a specified
       cause, or~to guarantee or Indemnify or secure him against
Hon. O. P. Lockhart,    page 4       Co*46191


     loss from that cause.    With some exceptions,   par-
     ticularly  In the case of life lnsuranae, Insurance
     Is a contract of Indemnity.     The term insurance de-
     notes also the act of Insuring by the contract here
     defined,  as well as the system of business of which
     such contracts   are the characteristic  and vital ele-
     ment . v
          Couch on Insurance, Vol.         I,   Sect Ion 2, page 3, defines
the word “lnsurancel’ as follows:
            .
             II
                . . Strictly defined,  Insurance, . . , Is a
     contract whereby one for a consideration     agrees to
     Indemnify another for llabillty,     damage, or loss by
     perils   to which the subject insured may be ,exposed.
     In . . . accident Insurance It Is the . . . health of
     the person that is the subject to the aontract.       . . .
     It also has been said that the word 1insurance’ In
     common speech and with propriety     is used quite-as
     often In the sense of contract of Insurance, or act of
     insuring,    as In that expressing the abstract   Idea of
     Indemnity or security against loss.      . .
           II      In this connection   It should be remembered
     that the’character   of Insurance Is not to be determined
     by the character of the company writing It; the nomen-
     clature used, or the manner or mode of affording     lnsur-
     ante but by the nature of the contract actually      en-
     tere B Into or Issued.   In other words, the true charac-
     ter of an alleged contract of Insurance cannot be con-
     cealed or changed by the use or absence of words, it
     being immaterial whether or not the contract on Its face
     purports to be one of Insurance, since the courts will
     look behind the terminology     to ascertain what the parties
     intended to accomplish.”
             Cooley’s Brief on Insurance,        Second Edit Ion,   Vol.   1,
page6,     defines olnsurance” as follows:
           “Insurance has been def~lned in general terms as a
     contract by which one party undertakes to Indemnify an-
     other against loss, damage, or llabillty    arising from an
     unknown or contingent  event. . . A contract of Insurance
     Is an agreement by which one party-for   a consideration
     promises to pay money or Its equivalent   or do some act of
     value to the assured upon the destruction    or injury of
     something in which the other party has an Interest.      . .‘I
             The word ‘llnsurancen     is defined   In Texas Jurisprudence,
Vol. 24,    page 650, as follows:
Hon. 0. P. Lockhart,   Page 5   (O-4619)


            ftInsurance Is a word of comprehensive and varied
     meanlng . In a general sense the term signifies       an
     agreement, for a consideration,      to pay a sum of money
     upon the happening of a particular      event or contingency,
     or Indemnify for loss in respect of a specified       subject
     by specified    perils;  in other words, an undertaking by
     one party, usually called the Insurer, to protect the
     other party, generally     designated as the Insured or the
     assured, from loss arising from named risks, for the
     consideration     and upon the terms and under the conditions
     recited.”
           In view of the foregoing,     It Is our opinion,  that the
benefits  offered   by the above named corporation    are Insurance
benefits  and that such corporation     Is not authorized to Issue any
form of insurance contracts    or policies.    As said corporation   has
no authority to enter Into the contracts      above mentioned or Issue
Insurance policies,    It would not come under the supervision     of the
State Insurance Department.
           We do not hold that the Insurance Department of this
State Is without authority to make investigation     to determine
whether the insurance laws are being violated    and to see that no
company does an Insurance business without authority of law.      The
Insurance Department can make such Investigation     as Is proper and
take such steps and make such recommendations as may be necessary
pertaining  to the enforcement of the Insurance laws and requiring
a compliance therewith.    (See Art. 4682, V.A.C.A.)
          In compliance with your request we are returning         here-
with the enclosures  accompanying your request.
                                  Yours very truly
APPROVED  JUN 12, 1942
/s/ Gerald C. Mann                ATTORNEY
                                         GENERAL
                                               OF TEXAS
ATTORNEY  GENERAL OF TEXAS
                                  By /s/   Ardell killliams
APPROVED:OPINION dOMMITTEE        Ardell   ~llliams,   Assistant
BY:     BWB, CHAIRMAN
AW:LM:wb
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