Opinion ID: 894815
Heading Depth: 2
Heading Rank: 3

Heading: The Fund

Text: Chapter 2259 of the Texas Government Code authorizes governmental unit[s], which include local government[s], to self insure. TEX. GOV'T CODE §§ 2259.031-.034; 2259.001. The issuance of public securities or use of money for the purpose of funding self insurance is a public purpose of the governmental unit. Id. § 2259.032. Chapter 2259 specifically provides that a governmental unit's establishment and maintenance of a self-insurance program is not a waiver of immunity. Id. § 2259.002. Types of local governments able to self-insure under Chapter 2259 include a municipality or other political subdivision of this state or a combination of political subdivisions, including a combination created under Chapter 791. Id. § 2259.001(2). Chapter 791 of the Government Code, known as the Interlocal Cooperation Act, allows local governments to contract with each other to collectively perform certain governmental functions. Id. § 791.011(a). The Act defines the term local government to mean a county, municipality, special district, . . . or other political subdivision of this state or another state or a combination of two or more political subdivisions. Id. § 791.003(4)(A), (E). Because the term local government includes a combination of political subdivisions, the Fund itself would appear to enjoy local-government status under the Act. [3] Further indication that the Legislature intended such pooled entities to operate as distinct governmental units is found in the provisions of Chapter 2259, which allows local governments to self-insure, together with the provisions of Chapter 791 allowing local governments to pool resources for that purpose. We have said that where the governing statutory authority demonstrates legislative intent to grant an entity the nature, purposes, and powers of an arm of the State government, that entity is a government unit unto itself. See Harris County Flood Control Dist. v. Mann, 135 Tex. 239, 140 S.W.2d 1098, 1101 (1940) (holding statute creating flood-control District demonstrated legislative intent that the District be a state agency and a political entity distinct from the County, despite the identical boundaries of the District and County). A district with [s]uch powers of government and with the authority to exercise such rights, privileges and functions to achieve its purpose is considered a governmental unit. Id. (quoting Tex. Const. art. XVI § 59(b)). In Mann, the District had a governmental purposeflood prevention, reclamation and conservation of landand public funding to carry out its mission. Id. We reasoned that the nature, purposes and powers of the Act creating the flood-control District showed legislative intent that this District shall exist and function as a governmental agency and a body politic and corporate, separate, independent, and distinct within itself. Id. Similarly, Chapter 2259 and the Interlocal Cooperation Act imbue self-insurance pools with nature, purposes, and powers reflecting the Legislature's intent that the Fund exist as a discrete governmental unit. An interlocal contract may provide a governmental function that each contracting party is authorized to individually perform. TEX. GOV'T CODE § 791.011(c)(2). The Legislature has expressly authorized combinations of political subdivisions formed under the Act to perform governmental functions and services. TEX. GOV'T CODE §§ 791.003(4)(E), 791.011(a). The Act defines governmental functions and services to include any governmental functions in which the contracting parties are mutually interested. Id. § 791.003(3)(N). Local governments clearly have an interest in guarding against risk, and the Legislature has explicitly authorized combinations of political subdivisions created under the Interlocal Cooperation Act to provide self-insurance. TEX. GOV'T CODE §§ 2259.001(1)-(2), 2259.031. The Legislature has also authorized these combinations to issue public securities and use available money to finance a self-insurance pool, which is defined as a public purpose of the governmental unit. Id. §§ 2259.001(1)-(2), 2259.031(b)(1), 2259.032. In sum, the Legislature has determined self-insurance to be a function of local governments, and we see no reason why legislatively approved pooling of resources to perform this function would diminish its governmental character. See Op. Tex. Att'y Gen. No. MW-347 at 2 (1981) (stating [s]elf-insurance is a function of local governments if the government does not have insurance.). Many of our courts of appeals have considered self-insurance pools, though composed of political subdivisions, to be distinct governmental entities apart from their membership. See, e.g., Campbell v. Tex. Employers' Ins. Ass'n, 920 S.W.2d 323, 329-30 (Tex.App.-Houston [1st Dist.] 1995, no writ) (citing with approval a Texas court of appeals case that refers to a self-insurance risk pool as a governmental entity to hold that a private company that contracted to provide services to the Texas Association of School Boards' self-insurance fund was not entitled to governmental immunity); TML Intergovernmental Employee Benefits Pool v. Prudential Ins. Co. of Am., 144 S.W.3d 600, 605-07 (Tex.App.-Austin 2004, pet. denied) (holding an insurance pool bringing a declaratory judgment waived immunity from suit, necessarily implying possession of immunity in order to waive it); Milner v. City of Leander, 64 S.W.3d 33, 38-40 (Tex.App.-Austin 2000, no pet.) (treating self-insurance fund as governmental entity and concluding that the Legislature did not waive its immunity); cf. Campbell, 920 S.W.2d at 329-30 (suggesting that school boards' self-insurance fund was a governmental entity, but immunity did not extend to private company providing claims-adjustment services to the fund); Tex. Workers' Comp. Comm'n v. City of Bridge City, 900 S.W.2d 411, 414 (Tex.App.-Austin 1995, writ denied) (holding that because municipalities' risk pool derived its existence and powers from legislative enactments, it was subject to legislative control and supremacy to the same extent as other political subdivisions); GAB Bus. Servs., Inc. v. Moore, 829 S.W.2d 345, 350-51 (Tex.App.-Texarkana 1992, no writ) (intimating that municipalities' risk pool was a governmental entity, but holding that immunity did not extend to private company that contracted with pool to adjust claims); see also Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 384 (Tex.2002) (noting that, in determining whether certain Labor Code provisions applied to the risk pool itself in addition to its 1600 member municipalities, the Commission did not dispute that [the] Risk Pool itself qualifies as a political subdivision within the meaning of those provisions). We conclude that the Fund's nature, purposes and powers demonstrate legislative intent that it exist as a distinct governmental entity entitled to assert immunity in its own right for the performance of a governmental function. With regard to that function, the Fund enjoys the same governmental immunity as other political subdivisions. Having concluded that the Fund enjoys immunity in its own right, we need not decide whether the Fund's immunity is also derivative of its members.