The Attorney General of Texas 

March 9. 1983 

JIM MATTOX 

Attorney General 

Supreme Court Building 

P. 0. BOX 12548 

Austin. TX. 78711.2548 

512/475-2501 

Telex 919lS74.1367 

Telecopier 5121475Q255 

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r 

1220 Dallas Ave.. Suite 202 

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Lubtwxk. TX. 79401.3479 

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McAllsn. TX. 78501.1885 

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San Antonio. TX. 78205.2797 

51212254191 

An Equal Oppdrtunityl 

Affirmative Action Employer 

Honorable Gibson D. Lewis 

Chairman 

Committee on Intergovernmental 

Affairs 

Texas House of Representatives. 

P. 0. Box 2910 

Austin, Texas 78769 

Opinion No. JM-5 

Re: Benefits for treatment 

of alcohol and drug 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 2 of this act provides: 

Insurers, nonprofit hospital sad medical 

service plan corporations subject to Chapter 20 of 

thls code, and health msintensnce organizations 

transacting health insurance or providing other 

health coverage In this state shall offer and make 

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. Such offer~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.~ 

Any benefits ‘so provide@phall be determined as 

if necessary care and treatment in en alcohol or 

other drug dependency treatment center were care 

and treatraent in a hospital.. For purposes of this 

Act, the term ‘alcohol or other drug dependency 

treatment center’ mesns a facility vhlch provides 

p. 15 
Honorable Gibson D. Lewis - Page 2 (JM-5) 

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 on Accreditation of Hospitals. or (3) 

licensed as an alcohol treatment program by the 

Texas Conrmission on Alcoholism, or (4) certified 

ss a drug dependency trestment program by the 

Texas Department of Community Affairs in 

accordance with such standards. if any, ss may be 

adopted pursuant to Subsection (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 

Community Affairs. 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, or approve. 

The act is remedial and therefore should be liberally construed. 

See Burch v. City of San Antonio. 518 S.W.Zd 540. 544 (Tex. 1975); 

Board of Insurance Conrmissioners v. Great Southern Life Insurance 

Company. 239 S.W.2d 803. 809 (Tex. 1951). 

You first ask: 

Can an insurer deny payment of benefits for the 

necessary csre and treatment of alcohol and other 

drug dependency to s provider meeting the 

definition of.an !alcohol or other drug dependency 

treatment center' in article 3.51-9. Insurance 

Gode. on the basis that the provider Is not slso 

included in the definition of a '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 may deny benefits when the provider-is sn alcohol 

or other drug dependency treatment center, but not a hospital. We 

snsver in the negative. The act 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 ? 

P. 16 
Honorable Gibson D. Lewis - Page 3 (JM-5) 

csre and treatment in a hospital. (Emphasis 

added). 

Ins. Code art. 3.51-9, 62. It is clear from the underscored language 

that the legislature did not intend that “alcohol or other drug 

dependency treatment center,” ss that item Is defined in section 2 of 

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 two should be whether 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 be equally able to limit benefits under the act. 

Unless statute or public policy prohibits it. the parties to an 

insursnce contrsct may agree to any- provisions they wish. Hatch v. 

Turner, 193 S.W.2d 668. 669-70 (Tex. 1946); Boon v. 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, an insurer may limit 

provision of benefits under the act to certain 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 to chapter 20A of the.Insurance Code. 

: . 

Chapter 3 insurers sre prohibited from restricting coverage to 

certain providers by article 3.51-6. section 3 of the Insurance Code. 

which states, in pertinent part: 

_. -7 

I 

p. 17 
Honorable Gibson D. Lewis - Page 4 (JM-5) 

The policy may provide that all or s portion of 

any Indemnities provided by any such policy on 

account of hospital. 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 may not 

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 3 insurer must provide benefits if the insured 

goes to any alcohol 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. Code art. 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 ss may be agreed upon In 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 human illness or 

injury. 

p. 18 
Honorable 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 may be '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. The set exempts such policies 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 a corporation from contracting to furnish 

to the member s physician or any medical services, from attempting to 

control the relations existing between a member end his or her 

physician. and from restricting the right of the patient to obtain the 

services of any licensed doctor of medicine. Article 20.12. however, 

does not give the insured the right to insist on a physician 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 harmony with the act because 

the corporation must still make available benefits under the act and 

because the insured likewise does not have full choice of physician 

for physical illness generally. 

A health meintenance organization [hereinafter "HMO"] governed by 

chapter 20A of 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 made available and alcohol or drug dependency treatment 

centers are treated the same as hospitals. 

Your third question is: 

Does s group health Insurance policy or 

contrsct subject to article 3.51-9 provide 

coverage as s matter of law for the necessary care 

and treatment of alcohol and other 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? 

We snswer in the affirmative. The act dictates that group insurers 

"shall offer and make available, under group policies, . . . benefits 

p. 19 
Honorable Gibson D. Lewis - Page 6 (JM-5) 

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 

Company mm Bunt. 469 S.W.Zd 151, 155 (Tex. 1971); Harklns V. Indiana 

Lumbermens Mutual Insurance Company. 234 S.W.Zd 430, 431 (Tex. Civ. 

APP. - Galveston 1950, no writ). Therefore, eve" if a group policy is 

silent, the insurer nevertheless "offers and makes available" benefits 

for alcohol and other drug dependency that are not less favorable than 

for physical illness generally, because the statute obligates it to do 

so. 

If the offer is read Into a silent policy, is an acceptance or 

rejection by the policyholder implied? For three reasons we believe 

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 Company V. Sloan, 565 S.W.Zd 580, 583 '(Tern. Civ. 

APP. - Austin 1978, writ ref'd n.r.e.); Guarantee Insurance Company of 

Texas V. Boggs, 527 S.W.Zd 265. 268 (Tex. Civ. App. - Amarillo 1975. 

writ dism'd). Third, the act makes the right to rejector select 

alternative level of benefits possible only if the right is offered or 

negotiated by the insurer. Ins. Code art. 3.51-9. 52. If alternative 

benefits have not been explicitly offered, they cannot be chosen. 

Therefore. when the offer is implied as a matter 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 by the group of full benefits? 

We answer in the negative. The act requires the insurer to offer 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 of benefits would be rendered meaningless. Statutes will not be 

construed so as to render parts of them meaningless. Brow" V. ? 

p. 20 
. 

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

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

- Houston jl4th Dist.] 1962, writ ref'd n.r.e.). 

Questions five and six are: 

What evidence is required of such a rejection 

or alternate selection of benefits? 

Must there be written evidence of such s 

rejection or alternate selection of benefits? 

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 must be written that requirement must arise 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, 168 S.W.Zd 226, 229 (Tex. 1942). 

Additional grounds exist for declining to imply legislative 

intent that rejection be written. The legislature is presumed to have 

known existing statutes and to have known the~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. no writ). 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 1981 to add the 

writing requirement, despite 'an appellate court holding that written 

rejection was required by rule of the Insurance Board. See Employers 

Casualty Company v. Sloan, s. Because the same legislature passed 

article 3.51-9. the intent to alloyoral rejection in article 3.51-9 

must be assumed. 

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 and monitored by a physician? 

p. 21 
Honorable Gibson D. Lewis - Page 8 (JM-5) 

The act does not define "necessary care and treatment 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 a program for the treatment of alcohol or other drug 

dependency pursuant to a written treatment plan approved and monitored 

by a physician." Ins. Code art. 3.51-9 12. An act should be 

interpreted in a manner which 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. The act 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 on addiction. Because the language of 

'the act leaves the act's intent obscure with respect to treatment, 

extrinsic aids to construction, such as the purpose of the act, public 

policy. and legislative history, may be examined. Harris V. city of 

Fort Worth, 180 S.W.Zd 131, 133 (Tex. 1944). The act was sponsored 

and prepared by the National Association of Insurance Commissioners 

(C-l) Task Force on Alcoholism, Drug Addiction, and Insurance. A -, 

report prepared by the Task Force dated May 26. 1981 is a valuable 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. 1973 ti Supp. 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 a maximum of two year-long 

benefit periods per lifetime. Each benefit period includes outpatient 

care 88 well as inpatient care. Counseling and therapy 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. 

The only 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 an official report, tapes of the committee hearing when the 

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 

- 

p. 22 
Honorable Gibson D. Lewis - Page 9 (JM-5) 

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 a preliminary 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. See Ins. Code art. 3.51-9. 52. 

- 

Your eighth question is: 

Can an insurer require that each new member of a 

covered group be medically underwritten prior to 

coverage as a condition on the ability of the 

group to select 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. See Ins. Code art. 3.51-9, $2. Although conditioning full 

coverage on individual underwriting may appear coercive on the part of 

the insurer, it does not violate the act so long as full coverage for 

other physical illnesses is conditioned on individual underwriting. 

The act should be construed to be constitutional. State v. City 

of Austin, 331 S.W.Zd 737 ,(Tex. 1960). If underwriting restrictions 

were implied, insurers could argue that the act violates due process 

or impairs the obligation of contracts. See Insurers' Action Council, 

Inc. V. Markman. 490 F.Supp. 921 (D. Minn. 1980). aff'd 653 F.2d 344 

(8th Cir. 1981). in which the court uuheld a Minnesota insurance law 

mandating the offer of basic medical coverage because the law allowed 

the insurer to apply its own underwriting standards in order to charge 

a premium commensurate 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. when the provider is an 

alcohol or other drug dependency center. but is 

not a hospital. All insurers subject to the act 

must make available benefits under the act and 

must treat alcohol or other drug dependency 

>+. :7 

p. 23 
. ,I 

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

treatment centers like hospitals. A group health 

insurer governed by chapter 3 of the Insurance 

Code must provide benefits if the insured goes to 

any alcohol or drug dependency treatment center. 

Nonprofit corporations governed by chapter 20 of 

the Insurance Code may both 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 a matter of law ~, if a 

policy governed by the act is silent, it 

automatically provides full benefits. An insurer 

may not assign an alternate level of benefits 

without express rejection of full benefits. 

Rejection need not be in writing. "'Necessary care 

and treatment of alcohol dependency" me&s an 

entire treatment plan as set out in the act and 

requires more than detoxification. An insurer may 

require each new member to be medically 

underwritten prior to coverage as a condition to 

the group selecting full benefits, so long as this 

is its underwriting policy for physical illness 

generally. I 

Very ruly your LLmb . 

JIM MATTOX 

Attorney General of Texas 

TOM GREEN 

First Assistant Attorney General 

DAVID R. RICHARDS 

Executive Assistant Attorney General 

Prepared by Deborah J. Hersberg 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Deborah J. Herzberg 

Jim Moellinger 

p. 24