Untitled Texas Attorney General Opinion ( 1942 )

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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