February 20, 1975

The Honorable Henry Wade Criminal District Attorney Dallas County Courthouse Dallas, Texas 75202 Opinion No. H- 535 Re: Payment by Dallas County ofgroup health and life insurance premiums for retirees. Dear Mr. Wade:

You have requested our opinion as towhether or not Dallas County may “legally pay premiums on ahealth and life groupinsurance policy for persons who have retired from the county and are eligible for benefits under the County and District Retirement System, ” and if the answer to this question “is in the negative, and if the qualified retirees pay their own premiums, ” whether Dallas County may “legally pay the group insurance premiums for persons employed by the county when the group rate for employed persons would reflect and partially be based uponlosses sustained by persons in the retired category. ”

Our answer to both questions is in the negative. Article 3. 51-2(a) of the Texas Insurance Code empowers a county
“to procure contracts insuring its officials and employees” for, inter alia, group life and group health insurance and topay all or a portion of the premiums of such policies.

“Employees” is not defined in article 3. 51-2. Section 1ofarticle 3.50 dealing in general with the requirements for group life insurance’ policies, in its subsection (3)(d)which is applicable to policies issued to employees of governmental units, defines “employees” “in addition to its usual meaning [to] include elective and appointive officials of the state. ” Section l(2) ofarticle 3. 51, dealing with group health insurance policies issued to employees ofgovernmental units, defines “employees” to

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“include elective and appointive officials ofthe state” as well as its “usual meaning. ”

Itwould appear, then, that the question ofwhether to include

“retirees” within the scope “employees” should be determined by the “usual meaning” ofthe term “employees. ” The judicial decisions most pertinent to this inquiry are not Texas cases, butthey provide some illumination.

The U.S. Supreme Court recently ruled that the term “employee” as used in the National Labor Relations Act is to be taken in its ordinary meaning, and, as such, excludes retirees. Allied Chemical &Alkali Workers ofAmerica Local Union No. 1v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971). Youngstown Sheet & Tube Co. v. Review Board, 191N.E. 2d 32 (Ind. 1963) interpreted the meaning of “employee” for purposes ofa collective bargsining agreement, and quoting an earlier Indiana decision, Koch v. Wix, 25 N. E. 2d 277 (Ind. 1940), held that its “common, well-established meaning” is “one who is in the present service ofanother for pay at a particular time ” and “does not embrace one who has at some time been, but no longer is, in the employment ofanother. ” Youngstown, supra, at 36.

The Texa’s ca ses which have ~considered the definition of

“employee” do not deal with persons who have left the service oftheir employers, but the definitions the courts accept would seem to preclude the subsuming of “retiree” under the umbrella of “employee. ”

InRiverbend Country Club v. Patterson, 399 S.W. 2d 382 (Tex. Civ. APP. --Eastland 1965, ref. n.r. e.), the Court quoted the definition ofan
“employee” as one whose “employer has the power or right to control and direct the employee in the material details ofhow the work is to be performed.” Id. at 383. InNorthwestern National Life Ins. Co. v. Black, 383 S.W. 2dsO6 (Tex. Civ. App. --Texarkana 1964, ref. n.r. e.), the Court held that an “employee” is “one who works for an employer: a person working for a salary or awage. ” g, at 809.

Neither definition seems capable ofincluding the retiree. On the one hand, the employer has no “power or right to control or direct the

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The Honorable Henry Wade page 3 (H-535)

employee” and on the other, the retiree is no longer “working for a salary or awage. ” Thus, if the term “employee” is restricted to its “usual nxmiirg” it would seem to exclude the retiree.

There are other statutory provisions which argue on behalf of exclusion. Article 3. 51-4 ofthe Insurance Code authorizes the State of Texas to pay the group life and group health premiums for “retirees of the Central Education Agency, the Texas Rehabilitation Commission, and the Coordinating Board, Texas College and University System!’ If

“retirees” are included within the general definition of “employees, ” there would seem to be no~need to create a special category to provide for these particular retirees.

The only statutory authority which even apparently contradicts the proposition that a retiree is not an employee is found in section l(1)(a) of article 3.50 of the Insurance Code, which states that apolicy “may provide that the term ‘employees’ shall include retired employees. ” As has been pointed out, supra, section 1ofarticle 3. 50is concerned in general terms with the requirements for group life insurance policies. This office has previously ruled, inAttoiney General Opinion M-1109 (1972)) that section 1, subsection (3) and sections 2and 3ofarticle 3.50 are the only provisions ofarticle 3. 50 that apply to group insurance for state employees. Since subsection 3of article 3. 50 includes employees of all governmental units, itis reasonable to presume that the provisions of article 3. 50which have been interpreted as inapplicable to state employees, and in particular section 1, subsection l(a), are inapplicable to employees ofall governmental units. We conclude, therefore, that Dallas County may not legally pay premiums on ahealth and life group insurance policy for persons who have retired from the county and are eligible for benefits under the County and District Retirement System.

Your second question is a corollary to the first. The statute authorizing a county to provide group health and life insurance for its employees, article 3. 51-2, empowers the county “to procure contracts. ” Payment ofall or part of the premiums is left to the county’s discretion. The basic right conferred is that of initiating the program. Even if a retiree pays his own premiums. Dallas County has not been authorized to include the retiree within its group insurance plans.

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SUMMARY Dallas County may not legally pay premiums on ahealth and life group insurance policy for persons who have retired from the county and are eligible for benefits under the County and District Retirement System; even if the qualified retirees pay their own premiums, Dallas County may not legally pay the group insurance premium for persons employed by the county when the group rate for employed persons would reflect and partially be based upon losses sustained by persons in the retired category. Very truly yours,

Attorney General of Texas APPROVED:

DAVID M. KENDALL, First Assistant

Opinion Committee lg

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