# TheAttorney GeneralofTexas

March 9. 1983 JIMMATTOX Attorney General

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AnEqualOppdrtunityl Affirmative ActionEmployer Honorable Gibson D.Lewis Chairman Committee onIntergovernmental Affairs Texas House ofRepresentatives. P. 0. Box2910 Austin, Texas 78769 Opinion No.JM-5
Re: Benefits for treatment of alcohol anddrug dependency under article 3.51-9 of the Insurance Code

Dear Representative Lewis:

You have asked several questions regarding the construction of the Availability of Alcohol and Other Drug.Dependency Coverage Act, article 3.51-9 of the Insurance Code. Section 2of this act provides:

Insurers, nonprofit hospital sad medical service plan corporations subject toChapter 20of thls code, and health msintensnce organizations transacting health insurance or providing other health coverage In this state shall offer andmake available, under group policies. contrscts. and plans providing hospital and medical coverage on an expense incurred, service or prepaid basis. benefits for the necessary care and treatment of alcohol and other. drug dependency that are not leas :favorable than for physical illness generally, subject to the same.durstional limits, dollar limits. deductibles, and coinsurance factors. Suchoffer~of benefits shall be subject to the right of the group policy or contract holder to reject the coverage or to select any alternative level ‘of benefits
~‘lf%uch right Is offered :by :or~~ negotiated .with ‘such insurer, -service plans.corporation. or health ,mainteaance organization.~ Anybenefits ‘soprovide@phall bedetermined as if necessary 

### careand treatment in en alcohol or other drug dependency treatment center were care andtreatraent in ahospital.. For purposes of this Act, the term ‘alcohol or other drug dependency treatment center’ mesns afacility vhlch provides

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a program for the treatment of alcohol or other drug dependency pursuant to a written treatment plan approved and monitored by a physician and which facility is also (1) affiliated with s hospital under a contractual agreement with an established system for patient referral, or (2) accredited 8s such a facility by the Joint Commission onAccreditation of Hospitals. or (3) licensed as an alcohol treatment program by the Texas Conrmission onAlcoholism, or (4) certified
ss a drug dependency trestment program by the Texas Department of Community Affairs in accordance with such standards. if any, ss maybe adopted pursuant toSubsection (c) of Section 5.12 of the Texas Controlled Substances Act (Article 4476-15, Vernon's Texas Civil Statutes), by the Executive Director of the Texas Department of CommunityAffairs. or (5) licensed, certified, or approved ss an alcohol or other dtig dependency treatment program or center by any other state agency having legal authority to so license, certify, orapprove.
Theact is remedial andtherefore should be liberally construed. See Burch v. City of SanAntonio. 518 S.W.Zd 540. 544 (Tex. 1975); Board of Insurance Conrmissioners v. Great Southern Life Insurance Company. 239S.W.2d 803. 809 (Tex. 1951).
You first ask:

Cananinsurer deny payment ofbenefits for the necessary csre and treatment of alcohol and other drug dependency to s provider meeting the definition of.an !alcohol orother drug dependency treatment center' in article 3.51-9. Insurance Gode. onthe basis that the provider Is not slso included in the definition ofa 'hospital.'
We,flrst note that benefits are provided to the insured. i.e., the individual covered by the group insurance policy, not to thefacility
or doctor providing the treatment. Thus,. the question should be whether an Insurer maydeny benefits whenthe provider-is snalcohol
or other drug dependency treatment center, but not ahospital. We snsver in thenegative. Theact states that

-.

[a]ny benefits so provided shall be determined
as if necessary csre snd treatment in sn alcohol
or other drug dependency treatment center were ?

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csre and treatment in a hospital. (Emphasis added).

Ins. Code art. 3.51-9, 62. It is clear from theunderscored language that the legislature did not intend that “alcohol or other drug dependency treatment center,” ss that item Is defined in section 2of the act, should be synonomous with “hospital.” The fact that the act uses the word “shall” also shows that insurers sre not free to discriminate against euthorised treatment centers. See Schepps .v. Presbyterian Hospitsl. 638 S.W.2d 156, 157 (Tex. Civ.App. - Dallas 1982,writ ref’d n.r.e.).

Your second question is:

Are benefits for the necessary csre and treatment of alcohol snd other drug dependency payable under article 3.51-9 to all providers who fit the definition of an ‘alcohol or other drug dependency treatment center’ or only to those who contract with the insurer providing such coverage?

For the reasons stated above. question twoshould bewhether benefits
are payable if the insured goes to any alcohol or drug dependency treatment ~center, or only to one that contrscts with the insurer to provide such coverage. The act does not specifically address this issue, but states only that benefits shall be not less favorable than for physical illness generally. Therefore, if the insurer is able to limit benefits for physical illness on the basis of the particular providers, It would beequally able to limit benefits under the act.
Unless statute or public policy prohibits it. the parties to an insursnce contrsct mayagree to any-provisions they wish. Hatch v. Turner, 193S.W.2d 668. 669-70 (Tex. 1946); Boonv. Premier Insurance Company, 519 S.W.2d 703. 704 (Tex. Clv. App. - Texarkana 1975, no writ) ; Fruhman v. Nswcas Benevolent Auxiliary, 436 S.W.2d 912, 915 (Tex. Civ. App. -Dallas 1969, writ ref’d n.r.e.). .,Thus, unless other statutes or the policy of the act prohibits it, aninsurer maylimit provision of benefits under the act tocertain providers.
The‘act governs three different types of insurers: (1) group health insurers subject to chapter 3 of the Insurance Code, (2) nonprofit hospitsl and medical service plan corporations subject to chapter 20 of the Insurance Code, and (3) heelth maintenance organizations subject tochapter 20Aof the.Insurance Code. :
. Chapter 3 insurers sre prohibited from restricting coverage to certain providers byarticle 3.51-6. section 3of the Insurance Code. which states, in pertinent part:

_. -7I

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The policy mayprovide that all or s portion of any Indemnities provided by any such policy on account ofhospital. nursing, medical, or surgical services may. at the option of the insurer and unless the insured requests otherwise in'writing not later than the time of filing proofs of such loss, be paid directly to the hospital or.person rendering such services; but the policy maynot require that the service be rendered by a Particular hospital or person. Payment so made shall discharge the obligation of the insurer with respect to the amount of insurance so paid. (Emphasis added).
Therefore, a chapter 3insurer must provide benefits if the insured goes toanyalcohol or drug dependency trest.ment center. Nonprofit corporations for group hospital service governed by chapter 20 of the Insurance Code are given statutory authority to contract with specific providers. Such corporations-have the purpose of operating nonprofit hospital service plans whereby care-is provided through an established hospital or hospitals, and sanitariums with which it has contracted for such csre. Ins. Codeart. 20.01.
Article 20.11 further describes the right to‘contract. It states:

Such corporations shall have authority to contract with health care providers, other than physicians, in such manner as to sssure to each person holding a policy or certificate of said corporation the furnishing of such services and supplies ssmaybeagreed uponIn the policy, with the right to said corporation to limit in the policy the types of disease for which it shall furnish benefits; provided that such corporations shall not be required to contract with any particular health care provider; and provided further that this Article shall not be deemed to authorize such corporation to contract with any health csre provider in any manner which is prohibited by any licensing law of this state under which the health care provider operates. Health csre provider means any person, association. partnership. corporation, or other entity furnishing or providing any services or supplies for the purpose of preventing. alleviating. curing, or healing humanillness or injury.

p. 18Honorable Gibson D.Lewis - Page 5 (JM-5)

,-

P

,_ Thus, the corporation is free to contract with specific health

csre providers so long as the policyholder is assured services and supplies ss maybe 'agreed upon in the policy. Since article 20.11 authorizes the corporation to limit the types of disease for which it shall furnish benefits, a corporation that offers only limited or specified disease policies would not have to offer alcohol dependency coverege. Theset exempts suchpolicies from its coverage. Ins. Code art. 3.51-9. $3. Of course. chapter 20 corporations must treat alcohol or drug treatment facilities like hospitals under their policies.
Article 20.12 prohibits acorporation from contracting tofurnish to the membersphysician or anymedical services, fromattempting to control the relations existing between a member end his or her physician. andfrom restricting the right of the patient toobtain the services of any licensed doctor of medicine. Article 20.12. however, does not give the insured the right to insist onaphysician for the treatment of alcohol or drug dependency who is not acceptable to the provider, -, hospital or elcohoSl,etre&sent center, that has contracted with the corporation. Hospital Service v. ~;~rcc~~:,f;l S.W.Zd 418. 423 (Tex.5. Appp- Amarillo 1951, writ The interpretation is in harmonywith the act because the corporation must still makeavailable benefits under the act and because the insured likewise does not have full choice of physician for physical illness generally.

Ahealth meintenance organization [hereinafter "HMO"] governed by chapter 20Aof the Insurance Code is authorized to furnish medical
care services through physicians, providers, or groups of providers who contrsct with the DMO. Ins. Code art. 20A.06(~)(3). Therefore, HMO'S, like chspter 20 corporations, sre free to specify certain providers or physicisns. ss long 8s benefits for alcohol or drug dependency sre madeavailable andalcohol ordrug dependency treatment centers are treated the sameashospitals.

Your third question is:

Does s group health Insurance policy or contrsct subject to article 3.51-9 provide coverage assmatter of law for thenecessary care andtreatment of alcohol andother drug dependency not less favorable than for physical illness generally unless such coverage Is expressly rejected (or an alternate level of benefits expressly selected) by the group ‘.or contrsct holder?

Wesnswer in the affirmative. The act dictates that group insurers "shall offer andmakeavailable, under group policies,

. . .benefits

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for the necessary care and treatment, of alcohol and other drug dependency that are not less favorable than for physical illness generally." (Emphasis added). ,Ins. Code art. 3.51-9, §2. This offer, however. is subject to a right of rejection or selection of alternative benefits. Id.

Statutes bearing on insurance contracts become part of the contract as though they had been copied therein. Allstate Insurance CompanymmBunt. 469S.W.Zd 151, 155 (Tex. 1971); Harklns V. Indiana Lumbermens Mutual Insurance Company. 234 S.W.Zd 430, 431 (Tex. Civ. APP. - Galveston 1950, nowrit). Therefore, eve" if agroup policy is silent, the insurer nevertheless "offers andmakesavailable" benefits for alcohol andother drug dependency that are not less favorable than for physical illness generally, because thestatute obligates it todo
so.
If the offer is read Into a silent policy, is an acceptance or rejection by the policyholder implied? For three reasons webelieve acceptance of full benefits is implied. First, the act says that the insurer "shall offer and make available" the benefits. added). (Emphasis

Ins. Code art. 3.51~412. Second, although, because the statute is remedial in nature, It should be liberally construed to achieve ,its purpose, see Board of Insurance Commissioners V. Great Southern Life InsuranceCompang, supra. at 803. strict construction of the rejectlo" provisions would best effectuate that purpose. See ?

Employers Casualty CompanyV. Sloan, 565 S.W.Zd 580, 583'(Tern. Civ. APP. -Austin 1978,writ ref'd n.r.e.); Guarantee Insurance Companyof Texas V. Boggs, 527S.W.Zd 265. 268 (Tex. Civ. App. - Amarillo 1975. writ dism'd). Third, the act makes the right to rejector select alternative level ofbenefits possible only if the right is offered or negotiated bythe insurer. Ins. Codeart. 3.51-9. 52. If alternative benefits have not been explicitly offered, they cannot be chosen. Therefore. whenthe offer is implied as amatter of law. acceptance is also implied.

Your fourth question is:

Can an insurer assign a" alternate level of benefits to 8.covered group without the express rejection bythe group of full benefits?

Weanswer in thenegative. Theact requires the insurer tooffer full benefits. That offer is subject to the right of the policyholder to reject coverage or to select alternative benefits. If the insurer were free to assign the alternative level, the-language regarding the right of the policyholder to reject full coverage and requiring the offer ofbenefits would berendered meaningless. Statutes will not be construed so as to render parts of them meaningless. Brow" V. ?

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Honorable Gibson D.Lewis - Page 7 (JM-5)

Memorial Villages Water Authority, 361S.W.Zd 453, 455(Tex. Civ. APp.

-Houston jl4th Dist.] 1962,writ ref'd n.r.e.).
Questions five andsix are:

What evidence is required of such a rejection
oralternate selection ofbenefits?

Must there be written evidence of such s rejection or alternate selection ofbenefits?
The act does not specify the means of rejection, nor has the State Board of Insurance issued an administrative rule requiring written rejection. Therefore, if there exists a requirement that such rejection mustbewritten that requirement mustarise by implication. Interpretation by implication, however, is permissible only to supply obvious intent not expressly stated. not to add to a statute. Commonwealth of Massachusetts v. United North and South Development Company, 168S.W.Zd 226, 229(Tex. 1942).
Additional grounds exist for declining to imply legislative intent that rejection bewritten. Thelegislature is presumed tohave knownexisting statutes andtohave knownthe~construction placed upon similar statutes~ by the appellate courts. Gamer v. Lumberton Independent School District, 430 S.W.Zd 418. 423 (Tex. Civ. App. - Austin 1968. nowrit). Other insurance statutes deal with rejection of coverage. The Personal Injury Protection Coverage Act, article 5.06-3 of the Insurance Code, provides that all automobile liability insurance policies shall include personal injury protection coverage unless rejected by the insured in writing. The Uninsured or Underinsured Motorist Coverage Act, article 5.06-l of the Insurance Code, provides that allautomoblle liability. insurance policies shall include uninsured motorist coverage unless the insured rejects such coverage in writing. Article 5.06-l'was amended in 1981to add the writing requirement, despite 'an appellate court holding that written rejection was required byrule of the Insurance Board. SeeEmployers Casualty Companyv. Sloan, s. Because the samelegislature passed article 3.51-9. the intent to alloyoral rejection in article 3.51-9 mustbeassumed.

Your seventh question Is:

Does the 'necessary care and treatment of alcohol. dependency' as -that ~term is used in article 3.51-9 encompass detoxificafion only, nor the entire treatment provided under the treatment plan envisioned in paragraph 2 of section 2 as approved andmonitored byaphysician?

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The act does not define "necessary care andtreatment of alcohol dependency." As you point out. however, part of the definition of "alcohol or other drug dependency treatment center" is "a facility which provides aprogram for the treatment of alcohol or other drug dependency pursuant toawritten treatment plan approved andmonitored by a physician." Ins. Code art. 3.51-9 12. An act should be interpreted in amannerwhich gives effect to the entire act. Brow" V. Memorial Villages Water Authority. supra. at 455. Thus, the "necessary care and treatment of alcohol and other drug dependency" should be construed as meaning treatment according to the written plan.
Nevertheless, the act does not further describe the written treatment plan. Theact does state that benefits should be not less favorable than for physical illness generally, but that language is not helpful since drug dependency is fundamentally different from illnesses which are not based onaddiction. Because the language of 'the act leaves the act's intent obscure with respect to treatment, extrinsic aids toconstruction, such as thepurpose of the act, public policy. and legislative history, maybe examined. Harris V. city of Fort Worth, 180S.W.Zd 131, 133 (Tex. 1944). Theact was sponsored and prepared by the National Association of Insurance Commissioners (C-l) Task Force on Alcoholism, Drug Addiction, and Insurance. A -, report prepared bytheTask Force dated May26. 1981is avaluable aid to interpretation of the act. The legislature is assumed to have adopted the legislation with the same intent evidenced by the commission in its report unless the language of the statute unambiguously indicates the contrary. 2A Sutherland Statutory Construction 048.11 (4th ed. 1973tiSupp. 1982).
The report includes Model State Legislation, which the act follows almost verbatim, and a Model Benefit Structure. Both the Model ,State Legislation and the Model Benefit Structure were adopted by the Task Force. The benefits include amaximumof twoyear-long benefit periods per lifetime. Eachbenefit period includes outpatient
care 88well as inpatient care. Counseling andtherapy are included. The report does not contain any statement of intent, but the Model Benefit Structure indicates that something more than mere detoxification was required.
Theonly records of legislative discussion before passage of the act support the interpretation that more than detoxification is required. Although the Senate Committee on Economic Development did not issue anofficial report, tapes of the committee hearing whenthe bill was approved are available. Commit&e members' questions regarding duration of treatment were answered by reference to the. Model Benefit Structure. Official tape recording, August 3. 1981 meeting of the Texas Senate Economic Development Committee. See -

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Sutherland, s, 548.10 (resort to statements at committee hearings in construing statutes).

In keeping with the liberal construction of the act and its legislative history, benefits should go beyond detoxification. Detoxification is but apreliminary step in the care and treatment of alcohol or other drug dependency. Thus, we do not believe the legislature could have intended to limit the benefits to detoxification. The extent of the benefits would depend on the particular policy, including whether alternative level of benefits
were chosen, and considering the durational limits, dollar limits, deductibles, and coinsurance factors applicable to physical illness generally. SeeIns. Codeart. 3.51-9. 52.

- Your eighth question is:
Canan insurer require that each newmemberof a covered group be medically underwritten prior to coverage as a condition on the ability of the group toselect full benefit coverage?
The act is silent as to underwriting requirements. Since the benefits can not be less favorable than for physical illness generally, the insurer's underwriting method for alcohol or other drug dependency coverage must be as liberal as for physical illness generally. SeeIns. Codeart. 3.51-9, $2. Although conditioning full coverage onindividual underwriting mayappear coercive onthe part of the insurer, it does not violate the act so long as full coverage for other physical illnesses is conditioned onindividual underwriting.
Theact should be construed tobe constitutional. State v. City of Austin, 331S.W.Zd 737,(Tex. 1960). If underwriting restrictions were implied, insurers could argue that the act violates dueprocess or impairs the obligation of contracts. See Insurers' Action Council, Inc. V. Markman. 490F.Supp. 921 (D. Minn. 1980). aff'd 653F.2d 344 (8th Cir. 1981). inwhich the court uuheld aMinnesota insurance law mandating the offer of basic medical coverage because the law allowed the insurer toapply its ownunderwriting standards inorder tocharge
apremiumcommensurate with the risk.
SUMMARY

An insurer may not deny benefits under the Availability of Alcohol and Other.Drug Dependency Coverage Act, art. 3.51-9. whentheprovider is an alcohol or other drug dependency center. but is not ahospital. All insurers subject to the act must make available benefits under the act and must treat alcohol or other drug dependency

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Honorable Gibson D. Lewis - Page 10 (JM-5)

treatment centers like hospitals. Agroup health insurer governed by chapter 3 of the Insurance Codemustprovide benefits if the insured goes to any alcohol or drug dependency treatment center. Nonprofit corporations governed by chapter 20of the Insurance Code mayboth limit their benefits to their contracted providers and may refuse to provide benefits under the act at all in specific disease policies. Health maintenance organisations may restrict benefits to their contracted providers. As amatter of law~,if a policy governed by the act is silent, it automatically provides full benefits. Aninsurer may not assign an alternate level of benefits without express rejection of full benefits. Rejection need notbeinwriting. "'Necessary care and treatment of alcohol dependency" me&s an entire treatment plan as set out in the act and requires morethan detoxification. Aninsurer may require each new member to be medically underwritten prior to coverage as a condition to the group selecting full benefits, solong as this is its underwriting policy for physical illness generally. I Very ruly your 

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JIM MATTOX Attorney General ofTexas

TOMGREEN First Assistant Attorney General
DAVIDR. RICHARDS Executive Assistant Attorney General Prepared byDeborah J. Hersberg Assistant Attorney General

APPROVED: OPINION COMMITTEE
Susan L. Garrison, Chairman JonBible Rick Gilpin Deborah J. Herzberg JimMoellinger

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