THE ATTORSEY GENERAL OF TEXAS
August 2, 1988

Honorable Chet Brooks Chairman Committee onHealth and Human Services Texas State Senate P. 0. Box 12068 Austin, Texas 78711-2068
Dear Senator Brooks: Opinion No. JM-937
Re: Insurance coverage for invitro fertilization (RQ-1334)

You ask our opinion on anumber of questions concerning arequirement imposed by the legislature that certain group health insurance policies provide coverage for in vitro fertilization procedures,1 or reproduction through fertilization of anovumby a sperm outside of the body. Annas and Elias, In Vitro Fertilization and Embrvo Transfer: Medicoleaal Asvects of aNew Technioue to Create a Familv 17Family L.J. 199at n. 1 (1983). After describing th;? legislation, wewill answer each ofyour questions inturn.
The 70th Legislature amended the Insurance Code to mandate health insurance coverage for invitro fertilization procedures incertain circumstances. Acts 1987, 70th Leg., ch. 526, at 2135. The legislation was effective on September 1, 1987, and applies to all policies and other evidence of coverage delivered, issued for delivery, or renewed after January 1, 1988. Id. The text of the statute follows. [Invitro fertilization ~procedure]

Sec. 3A. (a) All insurers, nonprofit hospital and medical service plan corporations subject to Chapter 20of this code,

1. The statute also applies to entities such ashealth maintenance organizations and employer self-insurance plans. See aenerallv Chapter 20ofthe Insurance Code. Our discussion of the lawapplies to all such entities.

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health maintenance organizations subject to the Texas Health Maintenance Organization Act (Chapter ZOA,Vernon's Texas Insurance Code), and all employer, multiple-employer, union, association, trustee, or other self-funded or self-insured welfare or benefit plans, programs, or arrangements that either issue group health insurance policies, enter into health care service contracts orplans, or provide forgroup health benefits, coverage, or services in this state for hospital, medical or surgical expenses incurred as a result of accident or sickness shall offer andmake available to each group policyholder, contract holder, employer, multipleemployer, union, association, or trustee under a group policy, contract, plan, program, orarrangement that provides hospital, surgical, andmedical benefits, coverage for services andbenefits onan expense incurred, service, or prepaid basis for out-patient expenses thatmay arise from invitro fertilization procedures, if the group insurance policy, contract, plan, program, or arrangement otherwise provides pregnancy-related benefits for the insureds, enrollees, subscribers, employees, members, or other persons covered under the policy contract, plan, program, or arrangement. (b) An offermade under Subsection (a)of this section is subject to this section. (c) A rejection ofan offer to provide the coverage for services or benefits provided by Subsection (a) of this section must be inwriting. (d) Benefits for invitro fertilization procedures must be provided to the same extent as the benefits provided for other pregnancy-related procedures under the policy, contract, plan, program, or arrangement. (e) The offer tomake the coverage available is required onlyunder the following conditions:

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(1) thepatient forthe invitro fertilization procedure is an insured, enrollee, subscriber, member, or otherwise covered employee or,person under the policy, contract, plan, program, or arrangement: (2) the fertilization or attempt at fertilization of the patient's oocytes is made onlywith thepatient's spouse's sperm: (3) thepatient and thepatient's spouse have a history of infertility of at least five continuous years' duration or the infertility isassociated with one ormore of the following conditions: (A) endometriosis; (B) exposure in utero to diethylstilbestrol (DES): (C) blockage of or surgical removal of one orboth fallopian tubes: or (D) oligospermia; (4) thepatient has been unable to attain a successful pregnancy through any less costly applicable infertility treatments for which coverage isavailable under the policy, contract, plan, program, or arrangement: and (5) the invitro fertilization procedures areperformed at a medical facility that conforms to theAmerican College ofObstetric andGynecology guidelines for invitro fertilization clinics or to theAmerican Fertility Society minimal standards forprograms of in vitro fertilization.
(f) An insurer, health maintenance organization, or self-insuring employer that isowned by or that ispart of an entity, group, ororder that isdirectly affiliated with abona fide religious denomination that includes asan integral part of its beliefs andpractices that invitro fertilization is contrary to moral principles that the religious denomination considers to be an essential part of itsbeliefs isexempt from

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this section's requirement to offer coverage for invitro fertilization.
Ins. Code art. 3.51-6, 5 3A.
Several salient points should be noted inthis statute. First, coverage for in vitro fertilization procedures ismandated only if the insurance policy also provides pregnancy-related benefits. Art. 3.51-6, 5 3A(a). Second, coverage in such instances need be made available only to the same extent that coverage is provided for pregnancyrelated procedures. Id. § 3A(d). Third, benefits for in vitro fertilization procedures may be limited topersons who have specified pre-existing medical conditions. Id. 5 3A(e). Finally, benefit providers and policyholders "directly affiliated with a bona fide religious denomination that includes as an integral part of itsbeliefs and practices that in vitro fertilization is contrary to the moral principles that the religious denomination considers to be an essential part of itsbeliefs" are exempt from the requirement to offer coverage for invitro fertilization. Id. § 3A(f). Thus, agroup ,policyholdermay avoid the requirement to provide coverage for invitro fertilization procedures by either ending u coverage for any pregnancy-related condition m meeting the test forareligious exemption.2
We caution that the federal Pregnancy Discrimination Act of 1978, 42 U.S.C. section ZOOOe(k), requires that employees or their insured spouses disabled due to pregancyrelated medical conditions must be provided the same benefits as those furnished to other workers and their spouses for "all employment-related purposes, including receipt ofbenefits under fringe benefit programs . . . .I' Id. See alsoNewnort News Shivbuildina and Drvdock Co. v. EEOC 462 U.S. -, 669 (1983)and Attorney General Opinion

2. We note that apolicyholder who isentitled to an exemption on religious grounds from the requirement to provide coverage for in vitro fertilization procedures may continue to provide coverage forpregnancy-related conditions, while a policyholder unable .to obtain such an exemption on religious grounds must terminate coverage for allpregancy-related conditions before lawfully refusing coverage for invitro fertilization procedures. We express no opinion on the constitutionality of this provision.

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JM-337 (1985). Thus, ifanemployer subject to the federal law terminates fringe benefit payments applicable to pregnancy-related conditions to avoid coverage for in vitro fertilization procedures, then the employer alsomust end u fringe benefit plans covering othermedical conditions.
I.
You first ask:
Under article 3.51-6, section 3Aof the Insurance Code, does the group policyholder or the individual employee covered under the group policy have the right to reject coverage for invitro fertilization?
The Insurance Code requires that group accident and health insurance policies be issued to thosewho aredenominated by the code as the l'policyholder.l' Ins. Code art. 3.51-6, 0 l(a)(l)-(6). See, e.a., art. 3.51-6, 5 l(a)(l) ("policy issued to an employer . . .who shall bedeemed the policyholder, insuring employees of such employer forthe benefit ofpersons other than the employer."). Beneficiaries under group insurance policies are issued a "certificate of insurance," and not a "policy." Ins. Code art. 3.51-6, 9 l(a)(c). Likewise, section 3Aof the codewhich mandates coverage for in vitro fertilization clearly identifies the policyholder as the entity towhich anoffer for coverage for invitro fertilization must bemade. Ins. Code art. 3.51-6, § 3a(a), (b). Thepolicyholder may reject the offer of coverage and such rejection must be inwriting. L at §3A(c). Nowhere is itprovided that individuals who are merely the beneficiaries under apolicy of insurance issued to their employer have any right to reject such element of the group insurance coverage.
II.
You next ask:
Ifan insurer issues agroup policy to a company whose headquarters are domiciled outside Texas but the group policy covers Texas-based employees, ' required to offer covera:: the insurer for in vitro fertilization to [the]Texas employees? and

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If the group policyholder has the right to reject coverage under section 3.51-6, g 3Aof the Insurance Code, does the company whose headquarters aredomiciled outside of Texas have the right to reject coverage for in vitro fertilization onbehalf of its Texas employees? Article 21.42 of the Insurance Code provides that: Any contract of insurance payable to any citizen or inhabitant of this State by an insurance company g:atecorporation doing business within this shall **be** held to be a contract made and entered intounder and byvirtue of the laws of this State relating to insurance, andgoverned thereby, notwithstanding suchpolicy or contract of insurance may provide that the contract was executed and the premiums and policy (in case it becomes a demand) should be made payable without this State, or at thehome office of the company or corporation issuing the same.
Ins. Code art. 21.42. Article 1.14-1 of the Insurance Code sets forth the transactions which constitute "doing an insurance business inthis state." Ins. Code art. 1.14-1, §2(a). Whether an insurance company isdoing business inTexas isa question of fact. &
Ifan insurance company doina business inTexas issues agroup insurance policy to an out-of-state employer forthe benefit of its employees inTexas, article 21.42 applies, and the provisions in article 3.51-6 relating to mandatory coverage for in vitro fertilization procedures govern the policy. John Hancock Mutual Life Ins. Co.v. Schroeder, 349 F.2d 406 (5thCir. 1965); General American Life Ins. Co. v. Rodriauez, 641 S.W.Zd 264 (Tex.App. -Houston [14th Dist.] 1982, nowrit); Locomotive Ena. &Cond.Mut. Prot. Ass'n v. Bush, 576 S.W.Zd 887 (Tex.Civ.App. -Tyler 1979, nowrit). Cf. Howell v.American Live Stock Ins. Co., 483 F.Zd 1354 (5thCir. 1973) and Austin Buildina Comvanv National Union Fire Ins. co., 432 S.W.Zd 697 (Tex. T968). See aenerallv Cox, Grouv Insurance Contracts forEmvlovees, 38 Tex. L.Rev., 211, 230 (1959).
But the courts have held that group insurance policies issued to an employer domiciled outside the state for the

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benefit of its employees inTexas by insurers not otherwise "doina business" inthe state aregoverned by the lawof the place where thepolicy is issued, and notby the Insurance Code. Boseman v. Connecticut General Life Ins. co., 301 U.S. 196 (1937) (interpreting former article 5054, V.T.C.S., now article 21.42 of the Insurance Code); Schroeder, SUE?Z, Metrovolitan Life Insurance Co. v. Wann, 109 S.W.Zd 470 (Tex. 1937).

.- However, ruling case law inTexas on the choice-of-law

issues implicit inyour queries has changed completely since thedecision inBoseman and thevarious Texas cases which rely on it, including decisions issued as recently as 1982.
InRoseman, theUnited States Supreme Court applied what now might best be considered as the "traditional" choice of law rule for determining the applicable law governing the contract performance questions -- the socalled "lex loci contractus/place of performance" rule. Boseman, 301U.S. at 201. See aenerallv Stoles and Hay, Conflict of Laws 55 18.14-18.15 (1984) and Multum non multa --Festschrift furKurt Livstein, 251, 256 (P. Feurstein and C. Perry eds. 1980). See also Restatement First, Conflict of Laws, 8 331 (1934).

In 1984' in a seminal shift inthe choice of law regime, theTexas Supreme Court announced that the "lex loci contractusNqdoctrine, including the "place of performance" rulewould no longer be followed. Instead, the lawof the statewith themost significant relationship to aparticular substantive issue concerning the performance of a contract obligation istobe applied, absent a valid choice of law clause inthe contract dictating otherwise. Duncanv. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984).
The rule announced forthe resolution of choice-of-law inDuncan follows that inthe current version of the Restatement of Lawspublished by theAmerican Law Institute:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law. (2)~When there isno suchdirective, the factors relevant to the choice of the applicable rule of law include: (a) the needs of the interstate and international systems,

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(b) the relevant policies of the forum: (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease indetermination and application of the law tobe applied.
Restatement (Second)ofConflict of Law, 5 6 (1971).m 665 S.W.Zd at 426.

In light of the adoption of the restatement test by the Texas Supreme Court inDuncan, we think that even in the case of an insurance company not doina business in Texas which issues policies to out-of-state employees for coverage of their Texas employees, a courtwould probably apply the substantive provisions of Texas insurance law to the contract, thus subjecting such contract requirements relating to coverage for invitro fertilization procedures set out in article 3.51-6, section 3Aof the Insurance Code.
SUMMARY

An employer furnishing a group health insurance policy for the benefit of its employees in Texas is the "policyholde?? within the meaning of a provision of the Insurance Code which grants to VVpolicyholders" the right to reject insurance coverage for in vitro fertilization procedures. Ins. Code art. 3.51-6, § 3A. The Insurance Code does not extend to employee beneficiaries ofgroup health insurance plans the right to reject coverage for in vitro fertilization procedures. Under current choice of lawrules, acourtwould probably hold that article 3.51-6, section 3A, of the Insurance Code applies to contracts forgroup

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health insurance entered into by employers located outside of the state forthe benefit of employees within the state,whether or not the insurance company is otherwise "doing business" inTexas. Very truly yo s 

# L/ti

A/;, JIM MATTOX Attorney General ofTexas

MARY KELLER FirstAssistant Attorney General
LOUMCCREARY Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General
RICK GILPIN Chairman, Opinion Committee Prepared by Don Bustion and Susan L.Garrison Assistant Attorneys General

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