## RNEY GENERAL OF TEXAS CR*wP”RD c. MAHTIN 

### AUSTIN, Texan 787ll AT-rORNEY GENER*L May 15, 1969
Dr. John Kinross-Wright Commissioner ofTexas Department ofMental Health and Retardation Box S, Capitol Station Austin, Texas 78711 Opinion No. M-394

Re: The legality of a state department head’s decision towithhold insurance premium payments from the salaries of Dear Dr. Kinross-Wright: employees for only one insurance company. Reference is made to your letter inwhich you request an opinion from this office as to the captioned matter. We quote from your letter, inpart, as follows: “By . . . letter dated February 27, 1969, all superintendents of institutions under control and management ofthis Department were notified ofmy decision adopting the Northeastern Life Insurance Company ofNew York as the official insurance carrier of this Department and that this carrier would be the only insurante company towhom premium payments would be made on apayroll deduction basis. The payroll ofall institutions of this Department are prepared and processed by the Central Office of the Department. My decision and action was a culmination of several weeks’ study by a committee of employees appointed by me to study and report to me an insurance program which would be the best for all ofthe employees of our Department . .

1,

. . . Wherefore, your opinion and advice as to the legality ofwithholding insurance premium payments from the salaries of employees ofthis Depart-



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Dr. John Kinross-Wright, page 2 M-394

ment and its institutions for one insurance company only is respectfully requested. ‘I Itis noted from materials furnished by you that the Department’s proposed insurance program consists of group life, health and accident insurance. The statutory provision regulating group life insurance for State employees, Subsection (3) of Section 1, Article 3.50, Texas Insurance Code, reads, inpart, as follows:

“(3) Apolicy issued to . . . any association of state employees . . . and any department ofthe state government which employer or association shall be deemed the policyholder to insure the employees of . . any such department of the state government, members of any association of state . .

‘l(b) The premium for the policy may be paid inwhole or inpart from funds contributed by the policyholder or inwhole or inpart from funds contributed by the insured employees . , , and provided further, that the employer may deduct from the employee’s salaries the employee’s contributions for the premiums when authorized inwriting by the respective employees so to do ~~. ” (Emphasis added. ) Subsection (Z), Section 1, Article 3. 51 ofthe Texas Insurance Code is the applicable provision relating to group health and accident insurance for State employees. Itprovides, inpart, as follows:

“Sec. l(a) The State of Texas and each of its

. . departments, agencies, associations ofpublic employees . . are authorized to procure co~ntracts insuring their respective employees . ~under apolicy or policies of group, health, accident, accidental death and dismemberment, disability income replacement and hospital, surgical and/or medical expense insurance . . The employees contributions to the premiums for such insurance issued to the employer or to an association of public employees as the policyholder may be de-

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Dr. John Kinross-Wright, page 3 M-394

ducted by the employer from the employee’s salaries when authorized inwriting by the respective employees so to do. The premium for the policy may be paid in whole or inpart from funds contributed by the employer or inwhole or inpart from funds contributed by the insured employees. ” When the requis,ites of Articles 3.50 and 3.51 have been met and the state employee has consented there is no question but that the department head has the authority tomake the payroll deductions for the payment of the group insurance premiums. Attorney General’s Opinion No. V-1374 (1951). The question is now presented: Do Articles 3.50and 3. 51 ofthe Insurance Code allow the department head to restrict payroll deductions for group insurance premium payments to only those employees having coverage with one particular insurance company?

We answer this question in the affirmative. Articles 3. 50 and 3.51, with regard to the payroll deduction aspect respectively read “the employer may deduct from the employee’s salaries” and “the employee’s contributions to the premiums . . may be deducted by the employer. ‘I (Emphasis added. ) In discussine the meanine of “mav”. the Court inKleck v. Zoning Board Civ. ofAdjustment ofthe City ofSanI Antonio. 319 S.W. 2d 406 (Tex. Civ. App. 1958, error ref. )stated: “The ordinary meaning ofthe word rmay” is merely permissive in character . . . InSamuel v. American Mortgage Corp., Tex. Civ. App., 78 S.W. 2d 1036, 1039, affirmed 130 Tex. 107, 108 S.W. Zd 193, the Court said:

‘Where the word “may” occurs in a statute, itis to be construed as merely permissive, and not as mandatory, except for the purpose of sustaining or enforcing a right -- either public or private -- but is never construed as mandatory for the purpose of creating aright ’” (Emphasis added. ) Inaccord, 67 C.J.S. 401, Officers, Sec. 113.



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The two pertinent Articles, 3.50 and 3. 51 of the Insurance Code, when read intheir entirety, reflect that the making of payroll deductions for state employees inpayment of group insurance premiums, is amatter within the discretion of the department head and does not create a contractual right or obligation. Statutes directed to public officers concerning modes ofprocedure methods, and systems are construed as discretionary only, provided nomandatory duty is imposed. 67 C.J.S. 399, Officers, Set, 113, As was stated in Attorney General’s Opinion No. V-1374 (1951), with particular reference to Article 3. 51: “We think itis within the discretion of each department head to decide whether and with whom he will contract for insurance covering his employees. ” (Emphasis added. ) To rule that it is mandatory for the department head to make payroll deductions for employee’s contributions for agroup insurance program, wherein an association ofpublic employees is the policyholder, might impair the department heads’ authorization to procure the best group insurance program available for his employees.

Therefore, t.hedecision of the Texas Department of Mental Health and Mental Retardation towithhold grot-p insurance premium payments from the salaries of its employees, when authorized by such employees, for only one insurance company, is not inviolation of the applicable provisions ofthe Insurance Code. Itis within the discretion ofthe department head to make such a decision. The right ofa stat.e employee to contract with any group insurance carrier and pay the necessary premiums thereto is not affected by whether the statutory payroll deduction authorization is permitted by adepartment head. However, once the depart,- ment head has exercised his discretion and provided for the payroll deduction, certifying his payroll to the State Comptroller of Public Accounts, the latter is required to make the proper payroll deduction. Attorney General’s Opinion No. V- 1374, supra.

The employee is merely given an option under the statute t:ohave payroll deductions for group coverage where his employer may aut:horize his participation inthe group plan in such manner. The employer, who is the state department head, is the person towhom the statute is directed and inwhom the discretion is given to authorize the payroll de- 

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duction. The deduction is not made mandatory by statutory language calculated to effect that intent. SUMMARY Whether to allow or disallow the payroll deductions of state employees’ contributions for group insurance premiums is amatter within the discretion of the state department head.

Prepared by Ray McGregor Assistant Attorney General APPROVED: OPINION COMMITTEE Kerns Taylor, Chairman George Kelton, Vice-Chairman Alfred Walker Charles Parrett Rick Fisher Robert Owen W. V. Geppert Staff Legal Assistant Hawthorne Phillips Executive Assistant



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