Court Opinion

ID: 4127679
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:32:06.21934+00
Date Added: 2024-06-11T14:32:39.552072
License: Public Domain

ATTORNEY GENERAL OF TEXAS
                                            GREG        ABBOTT

                                                   May 21,2014

Jonathan D. Bow, J.D.                                     Opinion No. GA-1061
Executive Director
State Office of Risk Management                           Re:       Whether state agencies, including
Post Office Box 13 777                                    institutions of higher education, must obtain
Austin, Texas 78711-3777                                  approval from the State Office of Risk
                                                          Management prior to purchasing msurance
                                                          coverage (RQ-1169-GA)

Dear Mr. Bow:

       You ask "[w]hether state agencies, including institutions of higher education, that
purchase property, casualty or liability insurance coverage, are permitted to purchase such
insurance without the approval ofthe State Office of Risk Management [(SORM)]." 1

         Under chapter 412 of the Labor Code, SORM is directed to "operate as a full-service risk
manager and insurance manager for state agencies as provided by Subsection (c)." TEX. LAB.
CODE ANN. § 412.01l(b)(1) (West Supp. 2013). One of SORM's duties under subsection (c) is
to "purchase insurance coverage for a state agency subject to Chapter 501,2 except for an
institution subject to Section 501.022, under any line of insurance other than health or life
insurance .... " !d. § 412.011(c)(2). SORM must also "develop an implementation schedule for
the purchase under this section of insurance for state agencies by [SORM and] phase in, by line
of insurance, the requirement that a state agency purchase coverage only through [SORM]." !d.
§ 412.011(d). Pursuant to these provisions, you tell us that SORM "sponsors specific lines of

         1
           Request Letter from Jonathan D. Bow, J.D., to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (Nov. 22,
20 13), http://www.texasattorneygeneral.gov/opin ("Request Letter").

         2
          Chapter 501 of the Labor Code is the chapter governing workers' compensation insurance coverage for
state employees. TEX. LAB. CODE ANN.§§ 501.001-.050 (West 2006 & Supp. 2013). Chapter 501 defines the term
"state agency" as "a department, board, commission, or institution of this state." Jd. § 501.001(6) (West Supp.
2013); see also id. § 412.001(4) (West 2006) (defining "state agency" for chapter 412 as "a board, commission,
department, office, or other agency in the executive, judicial, or legislative branch of state government that has five
or more employees, was created by the constitution or a statute of this state, and has authority not limited to a
specific geographical portion of the state").
Mr. Jonathan D. Bow, J.D. - Page 2                      (GA-1061)

insurance" for state agencies, such as property, directors and officers, automobile liability, and
volunteer. Request Letter at 2 & n.2. You indicate that SORM has adopted an administrative
procedure through which state agencies seek SORM approval of their own insurance purchases.
See id. at 2; see also 28 TEX. ADMIN. CODE§§ 252.301-.313 (2013) ("Reporting and Obtaining
Insurance Coverage"). You state that there are instances when a state agency has either
purchased insurance outside of SORM's sponsored purchase program or without the approval of
SORM or purchased insurance in spite of SORM's disapproval of an exception. 3 Request Letter
at 3. In this context, you ask whether state agencies, including institutions of higher education,
that purchase property, casualty or liability insurance coverage, may purchase such insurance
without the approval of SORM. Id. at 4.

        As we consider your question, we are mindful that the cardinal rule of statutory
construction is to ascertain and give effect to the Legislature's intent as expressed in the statutory
text. See Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013). Subsection 412.011(e) provides that
"[a] state agency subject to Chapter 501, except for an institution subject to Section 501.022,
may not purchase property, casualty, or liability insurance coverage without the approval of the
[SORM] board." TEX. LAB. CODE ANN. § 412.01l(e) (West Supp. 2013). Subsection 412.011(e)
uses the phrase "may not." Id Absent context indicating a contrary meaning, "may not" is
usually construed as a prohibition. TEX. Gov'T CODE ANN.§ 311.016(5) (West 2013). Here, the
prohibition is accompanied by a condition. A state agency is prohibited from purchasing its own
property, casualty, or liability insurance "without the approval" of SORM. TEX. LAB. CODE ANN.
§ 412.011(e) (West Supp. 2013). The statutory text is unambiguous. State agencies subject to
section 412.011 may only purchase the identified types of insurance with SORM approval.

        The plain language of subsection 412.011(e) contains some exclusions, however.
Subsection 412.011(e) expressly does not apply to a state agency that is not subject to chapter
501. See id. § 412.011(e), id. § 412.052 (West 2006) (providing that chapter 412 does not apply
to state agencies that had workers' compensation insurance prior to January 1, 1989); see, e.g.,

         3
          We received a brief disputing the facts presented in the request letter and alleging that SORM is acting
beyond the scope of its statutory authority and its administrative rules. See Brief from Fernando C. Gomez, J.D.,
Ph.D., Vice Chancellor & Gen. Counsel, Tex. State Univ. Sys., to Honorable Greg Abbott, at 1-4 (Jan. 16, 2014).
In its brief, the Texas State University System ("University") states that SORM is requiring the University to
procure excessively costly insurance that does not meet its particular needs. See id. at 2-3. This dispute cannot be
resolved in an attorney general opinion. See Tex. Att'y Gen. Op. No. GA-0750 (2009) at 2 (stating that "a
determination as to whether the city complied with relevant law ... would require the application of the law to a set
of disputed facts" and noting the inability of an attorney general opinion to investigate and resolve disputed
questions of fact). We note that SORM's rules require it to select lines of insurance based on several factors,
including whether the insurance is "necessary to protect the interests of the state" and whether the insurance is
"economically advantageous to the state." 28 TEX. ADMIN. CODE § 252.301(b)(4}-(5) (2013). Thus, if the
University is correct that it has been prohibited from obtaining insurance that better protects the state's interests at a
lower cost, SORM may have a duty to allow the University to obtain such insurance.
Mr. Jonathan D. Bow, J.D. - Page 3         (GA-1061)

id. §§ 502.001-.070 ("Workers' Compensation Insurance Coverage for Employees of the Texas
A&M System and Employees of Institutions of the Texas A&M System"). By its plain terms,
subsection 412.011(e) also does not apply to an institution subject to section 501.022. See id.
§§ 412.011(e), 501.022 (West Supp. 2013) ("Employees of Component Institutions of Texas
Tech University System"). Nor would it apply in the event of an applicable exception elsewhere
in Texas statutes. See, e.g., TEX. Gov'T CODE ANN.§§ 811.008 (West 2012) (providing that the
Employees Retirement System of Texas may "[n]otwithstanding any other law, ... self-insure or
purchase any insurance in amounts the board considers reasonable and prudent"); 825.103 (West
2012) (excepting, with certain provisos, the Teacher Retirement System from chapter 412).

       In summary, under subsection 412.01l(e), except for those agencies excluded by chapter
412 or some other law, a state agency subject to chapter 501 of the Labor Code must have
SORM approval to purchase property, casualty, or liability insurance.
Mr. Jonathan D. Bow, J.D. - Page 4          (GA-1061)

                                     SUMMARY

                        Under subsection 412.011(e) of the Labor Code, except for
               those excluded by chapter 412 or some other law, a state agency
               subject to chapter 501 of the Labor Code must have State Office of
               Risk Management approval to purchase property, casualty, or
               liability insurance.

                                            Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee