Untitled Texas Attorney General Opinion ( 1988 )

THE ATTORSEY GENERAL
OF TEXAS
August 2, 1988
Honorable Chet Brooks Opinion No. JM-937
Chairman
Committee on Health and Re: Insurance coverage for
Human Services in vitro fertilization
Texas State Senate (RQ-1334)
P. 0. Box 12068
Austin, Texas 78711-2068
Dear Senator Brooks:
You ask our opinion on a number of questions concerning
a requirement imposed by the legislature that certain group
health insurance policies provide coverage for in vitro
fertilization procedures,1 or reproduction through ferti-
lization of an ovum by a sperm outside of the body. Annas
and Elias, In Vitro Fertilization and Embrvo Transfer:
Medicoleaal Asvects of a New Technioue to Create a Familv
17 Family L.J. 199 at n. 1 (1983). After describing th;?
legislation, we will answer each of your questions in turn.
The 70th Legislature amended the Insurance Code to
mandate health insurance coverage for in vitro fertiliza-
tion procedures in certain circumstances. Acts 1987, 70th
Leg., ch. 526, at 2135. The legislation was effective on
September 1, 1987, and applies to all policies and other
evidence of coverage delivered, issued for delivery, or
renewed after January 1, 1988. Id. The text of the statute
follows.
[In vitro fertilization ~procedure]
Sec. 3A. (a) All insurers, nonprofit
hospital and medical service plan corpora-
tions subject to Chapter 20 of this code,
1. The statute also applies to entities such as health
maintenance organizations and employer self-insurance plans.
See aenerallv Chapter 20 of the Insurance Code. Our discus-
sion of the law applies to all such entities.
p. 4708
Honorable Chet Brooks - Page 2 (JM-937)
health maintenance organizations subject to
the Texas Health Maintenance Organization Act
(Chapter ZOA, Vernon's Texas Insurance Code),
and all employer, multiple-employer, union,
association, trustee, or other self-funded or
self-insured welfare or benefit plans, pro-
grams, or arrangements that either issue
group health insurance policies, enter into
health care service contracts or plans, or
provide for group health benefits, coverage,
or services in this state for hospital,
medical or surgical expenses incurred as a
result of accident or sickness shall offer
and make available to each group policy-
holder, contract holder, employer, multiple-
employer, union, association, or trustee
under a group policy, contract, plan, pro-
gram, or arrangement that provides hospital,
surgical, and medical benefits, coverage for
services and benefits on an expense incurred,
service, or prepaid basis for out-patient
expenses that may arise from in vitro ferti-
lization procedures, if the group insurance
policy, contract, plan, program, or arrange-
ment otherwise provides pregnancy-related
benefits for the insureds, enrollees, sub-
scribers, employees, members, or other
persons covered under the policy contract,
plan, program, or arrangement.
(b) An offer made under Subsection (a) of
this section is subject to this section.
(c) A rejection of an offer to provide
the coverage for services or benefits
provided by Subsection (a) of this section
must be in writing.
(d) Benefits for in vitro fertilization
procedures must be provided to the same
extent as the benefits provided for other
pregnancy-related procedures under the
policy, contract, plan, program, or arrange-
ment.
(e) The offer to make the coverage avail-
able is required only under the following
conditions:
p. 4709
Honorable Chet Brooks - Page 3 (JM-937)
(1) the patient for the in vitro fertili-
zation procedure is an insured, enrollee,
subscriber, member, or otherwise covered
employee or, person under the policy, con-
tract, plan, program, or arrangement:
(2) the fertilization or attempt at
fertilization of the patient's oocytes is
made only with the patient's spouse's sperm:
(3) the patient and the patient's spouse
have a history of infertility of at least
five continuous years' duration or the
infertility is associated with one or more of
the following conditions:
(A) endometriosis;
(B) exposure in utero to diethylstil-
bestrol (DES):
(C) blockage of or surgical removal of
one or both fallopian tubes: or
(D) oligospermia;
(4) the patient has been unable to attain
a successful pregnancy through any less
costly applicable infertility treatments for
which coverage is available under the policy,
contract, plan, program, or arrangement: and
(5) the in vitro fertilization procedures
are performed at a medical facility that
conforms to the American College of Obstetric
and Gynecology guidelines for in vitro ferti-
lization clinics or to the American Fertility
Society minimal standards for programs of in
vitro fertilization.
(f) An insurer, health maintenance
organization, or self-insuring employer that
is owned by or that is part of an entity,
group, or order that is directly affiliated
with a bona fide religious denomination that
includes as an integral part of its beliefs
and practices that in vitro fertilization is
contrary to moral principles that the
religious denomination considers to be an
essential part of its beliefs is exempt from
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Honorable Chet Brooks - Page 4 (JM-937)
this section's requirement to offer coverage
for in vitro fertilization.
Ins. Code art. 3.51-6, 5 3A.
Several salient points should be noted in this statute.
First, coverage for in vitro fertilization procedures
is mandated only if the insurance policy also provides
pregnancy-related benefits. Art. 3.51-6, 5 3A(a). Second,
coverage in such instances need be made available only to
the same extent that coverage is provided for pregnancy-
related procedures. Id. § 3A(d). Third, benefits for in
vitro fertilization procedures may be limited to persons who
have specified pre-existing medical conditions. Id. 5 3A(e).
Finally, benefit providers and policyholders "directly
affiliated with a bona fide religious denomination that
includes as an integral part of its beliefs and practices
that in vitro fertilization is contrary to the moral
principles that the religious denomination considers to be
an essential part of its beliefs" are exempt from the
requirement to offer coverage for in vitro fertilization.
Id. § 3A(f).
Thus, a group ,policyholder may avoid the requirement to
provide coverage for in vitro fertilization procedures by
either ending u coverage for any pregnancy-related
condition m meeting the test for a religious exemption.2
We caution that the federal Pregnancy Discrimination
Act of 1978, 42 U.S.C. section ZOOOe(k), requires that
employees or their insured spouses disabled due to pregancy-
related medical conditions must be provided the same
benefits as those furnished to other workers and their
spouses for "all employment-related purposes, including
receipt of benefits under fringe benefit programs . . . .I'
Id. See also Newnort News Shivbuildina and Drvdock Co. v.
EEOC 462 U.S. 669
-, (1983) and Attorney General Opinion
2. We note that a policyholder who is entitled to an
exemption on religious grounds from the requirement to
provide coverage for in vitro fertilization procedures may
continue to provide coverage for pregnancy-related condi-
tions, while a policyholder unable .to obtain such an
exemption on religious grounds must terminate coverage for
all pregancy-related conditions before lawfully refusing
coverage for in vitro fertilization procedures. We express
no opinion on the constitutionality of this provision.
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Honorable Chet Brooks - Page 5 (JM-937)
JM-337 (1985). Thus, if an employer subject to the federal
law terminates fringe benefit payments applicable to
pregnancy-related conditions to avoid coverage for in vitro
fertilization procedures, then the employer also must end
u fringe benefit plans covering other medical conditions.
I.
You first ask:
Under article 3.51-6, section 3A of the
Insurance Code, does the group policyholder
or the individual employee covered under the
group policy have the right to reject cover-
age for in vitro fertilization?
The Insurance Code requires that group accident and health
insurance policies be issued to those who are denominated by
the code as the l'policyholder.l' Ins. Code art. 3.51-6,
0 l(a) (l)-(6). See, e.a., art. 3.51-6, 5 l(a)(l) ("policy
issued to an employer . . . who shall be deemed the policy-
holder, insuring employees of such employer for the benefit
of persons other than the employer."). Beneficiaries under
group insurance policies are issued a "certificate of insur-
ance," and not a "policy." Ins. Code art. 3.51-6, 9 l(a)(c).
Likewise, section 3A of the code which mandates cover-
age for in vitro fertilization clearly identifies the
policyholder as the entity to which an offer for coverage
for in vitro fertilization must be made. Ins. Code art.
3.51-6, § 3a(a), (b). The policyholder may reject the offer
of coverage and such rejection must be in writing. L at
§ 3A(c). Nowhere is it provided that individuals who are
merely the beneficiaries under a policy of insurance issued
to their employer have any right to reject such element of
the group insurance coverage.
II.
You next ask:
If an insurer issues a group policy to a
company whose headquarters are domiciled
outside Texas but the group policy covers
Texas-based employees, ' the insurer
required to offer covera:: for in vitro
fertilization to [the] Texas employees?
and
p. 4712
Honorable Chet Brooks - Page 6 (JM-937)
If the group policyholder has the right to
reject coverage under section 3.51-6, g 3A of
the Insurance Code, does the company whose
headquarters are domiciled outside of Texas
have the right to reject coverage for in
vitro fertilization on behalf of its Texas
employees?
Article 21.42 of the Insurance Code provides that:
Any contract of insurance payable to any
citizen or inhabitant of this State by an
insurance company corporation doing
business within this g:ate shall be held to
be a contract made and entered into under and
by virtue of the laws of this State relating
to insurance, and governed thereby, notwith-
standing such policy or contract of insurance
may provide that the contract was executed
and the premiums and policy (in case it
becomes a demand) should be made payable
without this State, or at the home office of
the company or corporation issuing the same.
Ins. Code art. 21.42.
Article 1.14-1 of the Insurance Code sets forth the
transactions which constitute "doing an insurance business
in this state." Ins. Code art. 1.14-1, § 2(a). Whether an
insurance company is doing business in Texas is a question
of fact. &
If an insurance company doina business in Texas issues
a group insurance policy to an out-of-state employer for the
benefit of its employees in Texas, article 21.42 applies,
and the provisions in article 3.51-6 relating to mandatory
coverage for in vitro fertilization procedures govern the
policy. John Hancock Mutual Life Ins. Co. v. Schroeder, 349
F.2d 406 (5th Cir. 1965); General American Life Ins. Co. v.
Rodriauez, 641 S.W.Zd 264 (Tex. App. - Houston [14th Dist.]
1982, no writ); Locomotive Ena. & Cond. Mut. Prot. Ass'n v.
Bush, 576 S.W.Zd 887 (Tex. Civ. App. - Tyler 1979, no writ).
Cf. Howell v. American Live Stock Ins. Co., 483 F.Zd 1354
(5th Cir. 1973) and Austin Buildina Comvanv National
Union Fire Ins. co., 432 S.W.Zd 697 (Tex. T968). See
aenerallv Cox, Grouv Insurance Contracts for Emvlovees, 38
Tex. L. Rev., 211, 230 (1959).
But the courts have held that group insurance policies
issued to an employer domiciled outside the state for the
P. 4713
Honorable Chet Brooks - Page 7 (JM-937)
benefit of its employees in Texas by insurers not otherwise
"doina business" in the state are governed by the law of the
place where the policy is issued, and not by the Insurance
Code. Boseman v. Connecticut General Life Ins. co., 301
U.S. 196 (1937) (interpreting former article 5054, V.T.C.S.,
now article 21.42 of the Insurance Code); Schroeder, SUE?Z,
Metrovolitan Life Insurance Co. v. Wann, 109 S.W.Zd 470
(Tex. 1937).
However, ruling case law in Texas on the choice-of-law
issues implicit in your queries has changed completely since
the decision in Boseman and the various Texas cases which
rely on it, including decisions issued as recently as 1982.
In Roseman, the United States Supreme Court applied
what now might best be considered as the "traditional"
choice of law rule for determining the applicable law
governing the contract performance questions -- the so-
called "lex loci contractus/place of performance" rule.
Boseman, 301 U.S. at 201. See aenerallv Stoles and Hay,
Conflict of Laws 55 18.14-18.15 (1984) and Multum non
multa -- Festschrift fur Kurt Livstein, 251, 256 (P. Feur-
stein and C. Perry eds. 1980). See also Restatement First,
.- Conflict of Laws, 8 331 (1934).
In 1984' in a seminal shift in the choice of law
regime, theTexas Supreme Court announced that the "lex loci
contractusNq doctrine, including the "place of performance"
rule would no longer be followed. Instead, the law of the
state with the most significant relationship to a particular
substantive issue concerning the performance of a contract
obligation is to be applied, absent a valid choice of law
clause in the contract dictating otherwise. Duncan v. Cessna
Aircraft Co., 665 S.W.2d 414 (Tex. 1984).
The rule announced for the resolution of choice-of-law
in Duncan follows that in the current version of the
Restatement of Laws published by the American Law Institute:
(1) A court, subject to constitutional
restrictions, will follow a statutory direc-
tive of its own state on choice of law.
(2)~ When there is no such directive, the
factors relevant to the choice of the appli-
cable rule of law include:
(a) the needs of the interstate and
international systems,
p. 4714
Honorable Chet Brooks - Page 8 (JM-937)
(b) the relevant policies of the forum:
(c) the relevant policies of other in-
terested states and the relative interests of
those states in the determination of the
particular issue,
(d) the protection of justified expecta-
tions,
(e) the basic policies underlying the
particular field of law,
(f) certainty, predictability and
uniformity of result, and
(g) ease in determination and application
of the law to be applied.
Restatement (Second) of Conflict of Law, 5 6 (1971). m 665
S.W.Zd at 426.
In light of the adoption of the restatement test by the
Texas Supreme Court in Duncan, we think that even in the
case of an insurance company not doina business in Texas
which issues policies to out-of-state employees for coverage
of their Texas employees, a court would probably apply the
substantive provisions of Texas insurance law to the con-
tract, thus subjecting such contract requirements relating
to coverage for in vitro fertilization procedures set out in
article 3.51-6, section 3A of the Insurance Code.
SUMMARY
An employer furnishing a group health
insurance policy for the benefit of its
employees in Texas is the "policyholde??
within the meaning of a provision of the
Insurance Code which grants to VVpolicy-
holders" the right to reject insurance
coverage for in vitro fertilization pro-
cedures. Ins. Code art. 3.51-6, § 3A. The
Insurance Code does not extend to employee
beneficiaries of group health insurance plans
the right to reject coverage for in vitro
fertilization procedures. Under current
choice of law rules, a court would probably
hold that article 3.51-6, section 3A, of the
Insurance Code applies to contracts for group
P. 4715
Honorable Chet Brooks - Page 9 (JM-937)
health insurance entered into by employers
located outside of the state for the benefit
of employees within the state, whether or not
the insurance company is otherwise "doing
business" in Texas.
L/ ti
Very truly yo s
A/;,
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Don Bustion and
Susan L. Garrison
Assistant Attorneys General
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