Untitled Texas Attorney General Opinion ( 1971 )

THE ATTORNEY GENERAL
OPI'EXAS
Dr. David Wade, Commissioner Opinion No. N- 919
Texas Department of Mental Health
and Mental Retardation Rc: Certain aspects of a group
Box 12668, Capitol Station insurance program which
Austin, Texaa 78711 a department may contem-
plate entering for its
employees, both regular
and retired.
Dear Dr. Wade:
We quote below the information and questions submitted to
this office in your recent request for a departmental opinion.
"Your attention is directed to that part of Section
10, Article V, of Senate Bill 11, Acts of the 62nd Legis-
lature, Regular Session, 1971, which reads as followm:
'State departments and agencies covered by this
Act (Articles I through VI) shall utilize funds
other than those for personal services, from any
item which includes operating expenses to pay
employee premiums on policies containing group
life, health, accident, accidental death and
dismemberment, disability income replacement and
hospital, surgical and/or medical expense insur-
ante. The dependents of such employees may be
ineured under group policies which provide accidental
death, accident, hospital, surgical and/or medical
expense insurance. Payment by the atate from the
designated funds on any policy or policies shall be lim-
ited to twelve dollars and fifty cents ($12.50) per
month per full-time employee. It is further provided
that agencies shall cooperate so that employees from
more than one agency may be combined under one group
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I
Dr. David Wade, page 2 (M-919)
policy and that said policy may be held jointly
by two or more agencies and paid from funds ap-
propriated to the agencies for payment of employee
insurance premiums as set out above.'
"This Department anticipates entering into a group
insurance program whereby its employees who work at least
twenty hours per week for the Department are eligible
for coverage. Besides full-time employees, this Depart-
ment employs persons on a permanent part-time basis who
are paid either by salary or by the hour. The Depart-
ment also hires individuals on a temporary or seasonal
basis, that is, such individuals are employed to work
only during a part of the year. During their employ-
ment such temporary/seasonal employees work either full-
time or part-time and are paid either by salary or by
the hours. Further. certain of this Department's em-
ployees are paid in whole or in part from grant funds
rece~ived by the Department from such sources as the
Federal government or private foundations.
"The above quoted portion of Senate Bill 11, Acts
of the 62nd Legislature, Regular Session, 1971. has
raised a number of questions regarding this Depart-
ment's contribution to employee group insurance premiums.
Wherefore, your opinion and advice with respect to the
following questions is respectfully requested:
"1 . Is this Department authorized to utilize
appropriated funds to spay premiums on
policies of group insurance for: (a) its
part-time employees: (b) its temporary/
seasonal employees?
"2 . Is this Department required to utilize
appropriated funds to pay premiums on
policies of group insurance for: (a) its
part-time employees: (b) its temporary/
seasonal employees?
"3 . If your answer to either part of question
No. 1 or question No. 2 is in the affirmative,
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Dr. David Wade, Page 3 (M-919)
then what formula should be used to determine
the proper amount of appropriated funds to
be expended on insurance premiums for such
employees?
“4. Is this Department required to pay the group
insurance premium up to a maximum of $12.50
per month for each full-time employee?
.I
5. If your answer to question No. 4 is in the
negative, then what formula should be used
to determine the proper amount of appropriated
funds to be expended on insurance premiums for
each such full-time employee?
“6. Is there an over-all total amount of appropriated
funds that this Department may expend for all em-
ployee premiums on group insurance?
“7 . If the answer to question No. 6 is in the af-
firmative, then in what manner is such over-all
total amount to be dalculated?
"8 . Are Department employees eligible to receive a
premium contribution from State appropriated
funds if: (al they are paid in whole from grant
funds: or (b) they are paid in part from grant
funds and in part from State appropriated funds.
"9. If one employee of this Department is covered
under the insurance policy of a second employee of
this Department, is the first employee entitled
to the appropriate premium contribution by thio
Department?
"10. If one employee of this Department is covered
under the group insurance policy of an employee
of another State department or agency, is the
employee of this Department entitled to the
appropriate premium contribution by this Depart-
ment?"
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Dr. David Wade, page 4 (M-919)
The paragraph that you have quoted from Section 10, Article V,
of Senate Bill No. 11 is a rider to the General Appropriation
Act. Attorney General's Opinion No. V-1254 (1951) in its
summary, makes the following statement of the law relating to
riders on appropriation bills:
"In so far as Section 35 of Article III of the
Texas Constitution is concerned, in addition to ap-
propriating money and stipulating the amount, manner,
and purpose of the various items of expenditure to
various departments and accounts, a general appropria-
tion bill may contain any provisions or riders which
detail, limit, or restrict the use of the funds or
otherwise insure that the money is spent for the re-
quired activity for which it is therein appropriated,
if the provisions or riders are necessarily connected
with and incidental to the appropriation and provided
they do not conflict with general legislation."
In our opinion the quoted rider is intended to detail, limit,
or restrict the use of appropriated funds, and is connected with
and incidental to the appropriation. It is therefore valid
unless it is, or conflicts with. general legislation.
We are of the opinion that the rider conflicts with general
legislation only to the extent later noted in this opinion and
is a valid restriction on the expenditure of appropriated funds.
The statutory authority for a State department or agency to
contribute to insurance premiums for their employees is found in
Articles 3.50 and 3.51 of the Texas Insurance Code.* Article
3.50 deals with group life insurance and Article 3.51 relates
to policies of group health, accident, accidental death and
dismemberment, disability income replacement and hospital,
surgical and/or medical expense insurance.
*All Articles cited are Vernon's Texas Insurance Code, unless
otherwise stated.
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Dr. David Wade, page 5 (M-919)
Question No. 1 inquires whether your department is
authorized to utilize appropriated funds to pay premiums on
policies of group insurance for: (a) its part-time employees:
(b) its temporary/seasonal employees.
In our opinion such life insurance as you elect to offer
your employees must be available to all employees, part-time,
temporary and seasonal. Section 1(3)(a) of Article 3.50 reads
as follows:
"(a) The persons eligible for insurance under
the policy shall be all of the employees of the em-
ployer or if the pol=holder is an association, &J
of the members of the association." (Emphasis supplied.)
On the other hand you may include or exclude part-time or
seasonal gmplsyees as to the insurance authorized by Article
3.51 of the Insurance Code.
Section l(a) of Article 3.51 reads in part as follows:
II
.. .are authorized to procure contracts with
any insurance company authorized to do business in
this state insuring their respective employees, or
if an association of public employees is the policy-
holder, insuring its respective members, or any class
or classes thereof under a policy or policies of group
health, accident, accidental death and dismemberment,
disability income replacement and hospital, surgical
and/or medical expense insurance..." (Emphasis supplied.)
Question No. 2 inquires whether your department is required
to Utilize a&cqpriated funds to pay premiums on policies of
group insura$b for'~(a) its part-time employees and (b) its
temporary~sed+inai employees.
Jn our opinion you are not required to pay premiums for any
Qf your employee+. The statutes authorizing employer contributions,
Artioles 3.50 and 3.51, are permissive. We do not construe the
word Yshall":in the first Bentence of the paragraph quoted from
Section 10, Artiole V of Senate Bill 11 to make state contribu-
tion mandatory. We think "shall" is mandatory only in designating
the funds from which any contribution must be made.
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Dr. David Wade, page 6 (M-919)
On the other hand, if you do elect to provide life insurance
for your employees, then you are required to make it available to
all employees. YOU may set up eligible classes for the other
coverages authorized by Article 3.51. See our answer to your
first question.
Question No. 3 inquires as to a formula for determining your
contribution for part-time or seasonal employees. We think the
creation of a reasonable formula under the circumstances presented
is a matter within the discretion and province of the particular
department. We think you would be on firm ground if you used the
amount expended for full-time employees as a guide line for a
proportional formula.
Questions Nos. 4, 5, 6 and 7 are answered together. Neither
Article 3.50, Article 3.51, nor the rider places a minimum or a
maximum on the contribution that a department may make to the cost
of premiums on an individual employee. To the contrary, both
statutes in the Insurance Code expressly provide that the premiums
II.. .may be paid in whole or in part from funds contributed by the
employer." We think the rider does restrict the overall contribu-
tion that a department may make in a month to a figure reached by
multiplying $12.50 by the number of full-time employees on the
departmental payroll. The rider could not under Section 35 of
Article III of the Constitution amend or alter general legislation,
but the Legislature has the power to restrict available appropri-
ated funds. Linden v. Finley, 92 Tex. 451, 49 S.W. 578 (1889).
The formula that you use in allocating expenditures, within your
overall limit, for each employee will be determined by the terms
of the contracts which you are able to negotiate.
Your department is further restricted by the rider in that
it may expend for premiums only funds other than those for
personal service, and from items which include operating expenses.
Question No. El is answered in the affirmative as to both
parts. Your question indicates that the persons involved are
departmental employees, and not employees of the granting agency.
You have advised us, in fact, that all payroll records for those
persons are handled by your department or a local institution,
and that those persons are members of the Employees Retirement
System of Texas. Such being the case, the department is authorized
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Dr. David Wade, page 7 (M-919)
to make the same contribution to insurance policies for them
that it is authorized under Articles 3.50 and 3.51 of the Texas
Insurance Code to make for any of its other employees. The de-
partment has the same interest in their morale and mental state
that it has in its other employees. See Attorney General's
Opinion No, M-125 (1967) quoting from Appleman's Insurance Law
and Practice, Volume I, pages 53 and 54. Note that under the
provisions of Section 10, Article V, of Senate Bill No. 11. the
department does not make contributions for insurance premiums
from funds for personal services.
Question No. 9 is answered in the negative. In our view,
the Legislature intended that the department's contribution
should be limited to a share of the cost of the premiums calcu-
lated for an employee and his dependents. An additional contri-
bution on the grounds that a dependent is also an employee would
cause the department to contribute a disproportionate part of the
premium in terms of contribution for other employees.
If each employee here involved is eligible for coverage in
his own name under your group policy, however. we see no reason
that a contribution could not be made to the cost of each em-
ployee's coverage. This assumes a separate certificate issued in
the name of each employee.
Question No. 10 is answered in the negative. The authority
for the department's contribution is found in Section l(3) of
Article 3.50 and in Se&ion l(a) of Articlr 5-51, Texas Insurance
Code. ~These statutes provide for contribution ~by the employing
department where the policy is "issued to" the department, or
where the department procures the contract. We think it clear
that the department is not authorized to contribute to the cost
of premiums where the policy is not so issued or procured.
As in Question 9, however, if your employee is eligible
for coverage under your group policy, the fact that he is
covered as a dependent under another group would not preclude his
receiving a contribution if a certificate is issued in his name
in your group.
We think that in connection with your inquiry we should also
discuss Section 3 of Article V, Senate Bill No. 11, the General
Appropriation Act enacted by the 62nd Legislature, Regular Session, 1971
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,. .
Dr. David Wade, page 8 (M-919)
and Subsection B of Section 9, added to Article 622Ba, Vernon's
Civil Statutes, by the same Legislature under Chapter 359 (Senate
Bill No. 531, Section 11).
The cited Section 3, after providing for the transfer of
funds to pay "the proportionate cost of premiums of policies
containing Group Life, Health, Hospital, Surgical, and/or Medical
Expense Insurance for retired employees and officials," further
provides as follows:
I‘...Payment by the State from the designated
funds on Group Insurance policy or policies for retired
employees shall be limited to the amount of payment
authorized for active employees. Notwithstanding any
other provisions of this Act, any department or agency
for which funds in this Act are appropriated shall make
such transfers of funds as are necessary, except from
those funds appropriated for personal services, to pay
premiums for insurance for retired employees and officials
as authorized in this Act." ~(Emphasis supplied.)
Section 11 of S.B. 531 provided that, "The Board of
Trustees shall adopt Rules and Regulations ... providing for
the payment of not less than one-half (4) the premium cost of
Group Life and Health coverage for all member retirees. Premium
costs ... shall be based on rates not to exceed rates charged
members of the Group Insurance Plan of department or agency from
which the member retired..."
We think that the above cited statutes, together with the
Appropriation Bill must all be read together in determining
legislative intent. We are of the opinion that when so read
they disclose a clear intent on the part of the Legislature to
place the retired employee on equal footing with active employees
as regards insurance benefits.
Section 3 provides that payment of premiums for retired
employees shall be limited to the amount authorized for active
employees. The same section refers to transfer of funds to pay
premiums for insurance for retired employees "as authorized in
this Act." The underscored language necessarily includes the
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Dr. David Wade, page 9 (M-919)
provisions of Section 10. The latter section authorizes an
overall fund, calculated by multiplying $12.50 by the number
of full-time employees, from which to pay premiums on all
eligible employees. This is the concept of administering
group insurance as authorized by the Legislature.
We have noted also that Subsection B provides that
premium costs shall be based on rates not to exceed those
charged members of the Group Insurance Plan from which the
member retired.
In view of the above provisions of the statutes cited
and the Appropriation Act, we have concluded that the statutes
contemplate that a department will contribute to premiums for
its retirees and that the overall sum will be determined by
multiplying the number of retired persons in the group by not
more than $12.50, and that the department may expend that sum
in such a manner as in its best judgment accomplishes the
purpose of these statutes for the benefit of its retired em-
ployees.
Subsection B provides that the department shall contribute
not less than one-half the cost of premiums for retirees. That
,subsection, however, provides that premium costs shall be paid
from the funds of the agency or department from which the mem-
ber retired. That being true, the funds are appropriated funds,
and are subject to such limitation on their expenditure as the
Appropriation Bill may include. We think the provision in
Section 3, Article V of the Appropriation Bill, that contribu-
tions to premiums for retired employees may not exceed the
amount authorized for active employees, must prevail.
We have stated earlier that we think an exception must be
made to our opinion that Section 10, Article V, of Senate Bill
No. 11 is a valid rider to the General Appropriation Act. The
exception is this: The portion of Section 10 quoted at the
outset of this opinion provides, in part, that,
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,. .
Dr. David Wade, page 10 (M-919)
$6
...The dependents of such employees may be
insured under group policies which provide accidental
death, accident, hospital, surgical and/or medical ex-
pense insurance . .." (Emphasis supplied.)
Article 3.50. Section l(3) of the Insurance Code provides
life coverage for only the employees of a department. Article
3.51, Section l(a) provides, in part, that,
II...The dependents of any such employees or associa-
tion members, as the case may be, may be insured under
group policies which provide hospital, surgical and/or
medical expense insurance..."(Emphasis supplied.)
We are of the opinion, therefore, that the above cited rider
is invalid to the extent that it would authorize a contribution
to provide for dependents accidental death and accident insurance
not included in hospital, surgical and/or medical expense insurance.
Such provision for additional coverage not authorized by general
statutes would be general legislation, would create a conflict
with existing general legislation, and is therefore invalid.
Attorney General's Opinions Nos. 2965 (1935) and V-1254 (1951);
Moore v. Sheppard, 144 Tex. 537, 192 S.W.Zd 559 (1946).
SUMMARY
State Departments are authorized to utilize
appropriated funds to pay premiums or policies of
group insurance for: (a) its part-time employees:
and (b) its temporary/seasonal employees.
The only mandatory feature of departmental
contribqtions is that if the department elects
to provide life insurance for any employees, then
the same contribution must be available to all em-
ployees.
The amount expended for part-time and seasonal
employees in proportion to that expended for full-
time employees is within the discretion of the
department.
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. . -
Dr. David Wade, page 11 (M-919)
The overall contribution that a department
may make in a month to insurance premiums for its
employees is limited to an amount reached by mul-
tiplying $12.50 by the number of full-time employees
on the department's payroll. Neither statute nor
rider limits the amount that may be contributed
to premiums for an individual employee. Each de-
partment is. however, restricted by rider to the
funds appropriated for other than personal services,
and from items which include operating expenses.
Departmental employees are eligible to receive
a premium contribution from State appropriated funds
even though paid in part or in whole from grant
funds.
An employee of any department who is covered
by the insurance policy of a second employee of
the department is not thereby entitled to a premium
contribution by the department.
An employee of a department covered under the
group insurance policy of an employee of another
state department or agency is not thereby entitled
to a premium contriubtion by that department.
Section 10, Article V, of Senate Bill No. 11,
Acts of the 62nd Legislature, Regular Session, 1971,
is invalid to the extent that it would authorize a
department of the State to contribute to ,i:her)remium
for accidental death and accident insurar:cc?for -
de-
pendents of departmental employees.
Yo@jjvery truly,
Atto&y General of Texas
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Dr. David Wade, page 12 (M-919)
Prepared by James S. Swearingen
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor Chairman
W. E. Allen, Co-Chairman
Roger Tyler
Jack Goodman
Houghton Brownlee
Mel Corley
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant
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