The Honorable R. T. Weber, D.D.S. Secretary-Treasurer, Texas State Board of Dental Examiners Capital National Bank Bldg. Austin, Texas 78701

Dear Dr. Weber: Opinion No. H-41 Re: The right ofa Dental

Association to regulate the relationship between the licensed dentist, the patient, and athird party with whom the patient has contracted to provide dental care to members ofhis Group. You have requested the opinion of this office with regard to a suggested amendment to the Texas Non-Profit Corporation Act. Article 1396-2. OlA(l), Vernon’s Texas Civil Statutes, currently provides inpart as follows:

“Charitable corporations may be formed for the purpose ofoperating aDental Health Service Corporation which service corporat.ion will manage and coordinate the relationships between the contracting dentist, who will. perform the dental services, and the patient who will. receive such services where such patient is amember of agroup which has contracted with the Dent~al Heal.th Service Corporation to provide dental care to members ofthat group . . . . A corporation formed hereunder shall maintain not less than t.hirt.y percent: (30%) ofthe number of dentists actually engaged inthe practice of dentistry inth,is state as pa~rt:icipat,ing or contracting den.- tists, and shal,l file with t,heTexas State Board of Dent.al Examiners each Septem’ber the names and addresses of all contract.ing or participating dentists. ” The suggested amendment would add rhe foll,owing language as Article 1396-2. OlA(2), V. T. C.S.:

p. 166The Honorable Dr. R. T. Weber, page 2 (H-41)

“Nothing contained inArticle 1396-2. 01shall be construed to limit the authority of any Dental Association with at least 70% ofthe dentists legally engaged inthe practice of Dentistry inthis State from establishing acommittee or council or unincorporated association or corporation with full authority to regulate, contract, manage, control and coordinate the relationship between the licensed dentist, who will perform the services, and the patient who will receive such services, and athird party with whom the patient has contracted to provide dental care to members of his Group. The Dental Association may form acorporation for the above purposes under this Article or itmay provide such services through the Texas Dental Association. ” Any Dental Health Service Corporation (DHSC) established under Article 1396-2. OlA(1) must maintain atleast thirty percent participation of all practicing dentists. Ithas the authority to contract with groups toprovide dental care to members of such groups, care tobe provided by the participating dentists. Such DHSC is, therefore, athird party given the authority to “manage and coordinate” the relationship between the participating dentist onthe one hand and the group memberpatient onthe other. The two classes ofparties subject to its management enter that relationship voluntarily, by contractual agreement. The suggested amendment would allow the creation of an organization (a committee or council or unincorporated association or corporation) which would have “full authority to regulate, contract, manage, control and coordinate” relationships among the designated parties. Those parties are ofthree classes rather than the two subject to DHSC management. The first subject party is “the licensed dentist, who will perform the services. ” Any dentist who is toperform the services to the designated individuals, whether or not he isamember ofthe Dental Association, is to be made subject t:oits full authority to regulate and control,.

p. 167The Honorable Dr. R. T. Weber, page 3 (H-41)

The second subject party is “the patient who will receive such services. ” There is no requirement ofany relationship, contractual or otherwise,, between the patient and the Dental Association towhose authority the patient, inhis relationship with his dentist, is tobe made subject. The third party subject to the Association’s authority is that “third party with whom the patient has contracted to provide dental care to members of his Group, ”that is, the party which provides the link.between the dentist and the group member -patient, aparty which, like the dentist and patient, does not necessarily stand in any contractual or other relationship with the Association. One such third party would therefore be any DHSC organized under Article 1396-2. OlA(l), V. T. C.S. The suggested amendment could conceivably subject aDHSC of exactly 30% ofthe practicing dentists ofthe State and their patients to the “full authority to regulate, contract, manage, control and coordinate” their internal contractual relationships of acouncil established by aDental Association made up exclusively ofthe other 70% ofthe practicing dentists ofthe State.. Itthus appears that the effect ofthe suggested amendment would be to permit aprivate sector ofthe population to establish an organization with independent powers to regulate contractual relations among other elements ofthe public with whom it stands in no contractual relationship. The creation of an organization so empowered would be in effect an attempted delegation oflegislative powers, inviolation ofArt,icle 2, $1 and Article 3, §1ofthe Constitution, to aprivate organization. Such anattempted delegation would be unconstitutional and void. Trimmier v. Carlton, 296 S.W. 1070 (1927); Texas National Guard Armory Board v. McGraw, 126 S.W. 2d 627 (Tex. , 1939); Davis v. City of Lubbock, 326 S.W. 2d 699 (Tex., 1959); Daniel v. Tyrrell &Garth Inv. Co., 93 S.W. 2d 372 (1936); Brown v. Humble Oil &Ref. Co., 83 S.W. 2d 935 (1935), reh. den. 87 S.W. 2d 1069; Calvert v. Capital Southwest Corp., 441 S.W. 2d 247 (Tex. Civ.App., Austin, 1969, writ ref. n.r. e.), appeal dismissed, 397 U.S. 321. Very truly yours,

JOHN L. HILL Attorney General of Texas

p. 168The Honorable Dr. R. T. Weber, page 4 (H-41)

APPF$$JED:

DAVID M. KENDALL, Chairman Opinion Committee