Court Opinion

ID: 4130582
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:06:03.020115+00
Date Added: 2024-06-11T14:05:37.172648
License: Public Domain

THE      ATTORNEY          GENERAL
                         OF   TEXAS

                        April 7, 1988

Honorable  David W. Wallace           Opinion   No.   JR-887
Sutton County Attorney
Sonora, Texas   76850                 Re:    Authority    of a commis-
                                      sioners court to enter        into
                                      certain contracts     to provide
                                      health    insurance      coverage
                                      for its employees       (RQ-1237)

Dear   Mr. Wallace:

       You   ask:

             Does [the County   Commissioners    Court   of
         Sutton County]    have the   authority,   in   its
         effort to provide health insurance       coverage
         for employees  and dependents,    to enter    into
         a contract    under   the   following     circum-
         stances:

             1. A portion of the total money spent by
         the county for coverage goes into a separate
         bank account   for payment   of a portion  of
         the medical benefits    due to  employees and
         dependents.

             2.  The   administration       of   the     above
         mentioned   bank   account,    and    the   benefits
         paid from it, is in the control of a company
         that is unlicensed      as an insurance       company
         and is totally     independent   from the      county
         except for    certain    contractual      conditions
         which are further     detailed   in this      request
         and the attachments.

             3. The administrator     of the bank account
         provides  for the purchase    of high deductible
         ($500.00) insurance.    However, the     coverage
         that the complete    program offers     is for    a
         lower deductible   ($100.00).    Sutton   County,
         through the administration      of this   account
         by the   third party,    assumes the    risk   for
         this difference   in deductible.
Honorable    David   W. Wallace    - Page   2   (-887)

             4. All    interest   on   the  county    funds
         deposited  to   this   account that    exceed    5%
         pass on to the exclusive     use of the adminis-
         trator.

             5. The      administrator   draws     regular
         monthly fees    out of this bank account.

             6.  Termination  of the contract with    the
         administrator    by  the  county   results     in
         penalties   of up to  50% of the county    funds
         in the above bank account to be forfeited     to
         the administrator.

      The scheme you       describe would       involve the      county's
self-insuring     a portion of the deductible         amount     provided
for    in the     underlying     insurance      contract.        Attorney
General   Opinion      MW-473     (1982)    noted    that    there     was
only one statutory        provision     authorizing      such    a self-
insurance   scheme,     i.e.,    section     2 of     article      2372h,
V.T.C.S.,   which app=         only to counties with         populations
of over 500,000.       Article 237211. was repealed by the            70th
Legislature    in    1987   and    section    2 was      recodified      as
section    157.002     of   the    Local    Government      Code.      The
provision   currently      embodied    in   section 157.002       remains
the only one in Texas law authorizing               a county to      self-
insure.    Since    Sutton County's       population     is   less    than
500,000, section 157.002         does not authorize         it to    Self-
insure.    Since    certain     counties     are    authorized,      under
section 157.002, to self-insure,          the lack of authorization
elsewhere   in Texas law for        other counties      such as     Sutton
County to self-insure,        indicates    that the legislature        did
not intend to      authorize    counties     with populations        under
500,000 to self-insure.         Commissioners     courts may exercise
only such powers specifically          conferred    upon them, by       the
constitution    or    by statute,      or which     may reasonably       be
implied therefrom.        Canales    V. LawhUn,         214 S.W.Zd      451
 (Tex. 1948).      See also     Attorney General        Opinion    JM-406
 (1985) .

      We are    therefore    of    the opinion    that    the   Sutton
County self-insurance      scheme you described      is not    author-
ized by law.     Having reached this conclusion,        we need     not
address the other issues that we would have addressed               had
we answered    in the   affirmative    the threshold    question     of
the   county's    authority     to   self-insure:     e.s.,    whether
county funds may      legally be deposited       with the     adminis-
trator in light      of chapter     116 of    the Local    Government
Code, whether     the administrator       would be    authorized     to

                                  p. 4345
.

    Honorable   David   W. Wallace       - Page    3 (JR-887)

    act as such   in light     of     article21.07-5       of the     Insurance
    Code, etc.
                                    SUMMARY

               The commissioners  court of Sutton   County
            is not   authorized  to   self-fund  a health
            insurance program for county employees.

                                                  JIM      MATTOX
                                                  Attorney  General    of Texas

    MARY KELLER
    First Assistant     Attorney      General

    LOUMCCREARY
    Executive   Assistant     Attorney        General

    JUDGE ZOLLIE STEAKLEY
    Special Assistant  Attorney          General

    RICK GILPIN
    Chairman,  Opinion      Committee

    Prepared by William Walker
    Assistant Attorney General

                                        p. 4346