OFFICES AND OFFICERS ‑- STATE EMPLOYEES' INSURANCE BOARD ‑- INSURANCE PROGRAMS ‑- CONTRACTS
Effect of chapter 147, Laws of 1973, Ex. Sess., upon existing insurance plans covering state employees payable solely from employee payroll deductions; necessity for insurance board's approval for continuation of such insurance plans or payroll deductions; scope of liability insurance which may be provided under chapter 147, supra; authority of insurance board to provide liability coverage for employees of a higher educational institution in those instances where the board of regents or trustees does not.
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July 25, 1973
Honorable Leonard Nord
State Employees Insurance Board
600 South Franklin
Olympia, Washington 98501
Cite as: AGLO 1973 No. 81
By recent letter you have requested our opinion on a number of questions pertaining to chapter 147, Laws of 1973, Ex. Sess., an act relating to certain insurance programs for state employees. We shall state these questions along with our answers thereto in the body of this response.
Chapter 147, Laws of 1973, Ex. Sess. (SB 2066) is an act amending certain provisions of an earlier law (chapter 39, Laws of 1970) which involved medical insurance or health care coverage for state employees. The essence of this act, as set forth in § 1 (2), is to expand the kinds of insurance coverage which may be made available through the insurance board to include:
". . . life insurance, liability insurance, accidental death and dismemberment insurance, and disability income insurance or any one of, or a combination of, the enumerated types of insurance . . ."
In addition the new act makes certain changes in the composition of the state employees insurance board as originally created by the 1970 act to administer the procurement of group medical insurance or health care coverage for state employees other than those of the several institutions of higher education. See, § 2 (1), amending RCW 41.05.020 (1) in this regard.
Questions (1) ‑ (4):
Your first four questions deal with existing insurance contracts (other than those providing medical or health care coverage heretofore procured by or under the supervision of the insurance board itself) which are currently in effect for various groups of state employees. You ask:
[[Orig. Op. Page 2]]
"1. Are the existing insurance contracts between carriers and State agencies or institutions of higher education legally valid without Insurance Board approval after July 16, 1973?
"2. If question 1. is answered in the negative, can such contracts remain in force with Insurance Board approval?
"3. Is it legally necessary to provide Insurance Board approval for the types of insurance enumerated in SB 2066 in order for payroll deductions to continue for existing contracts for State employees and higher education employees?
"4. If Board approval is required for payroll deductions, can this approval be given for a limited period and later be withdrawn when the Board's own contracts are in effect ‑ thus removing the authority for payroll deductions for plans not approved by the Board?"
In considering the effect of chapter 147, supra, upon those existing insurance contracts which have heretofore been entered into or procured by the various state agencies (other than the insurance board) for the benefit of their employees, it is critically important to distinguish between those insurance plans which are exclusively funded by employees' contributions ‑ normally in the form of payroll deductions ‑ and those which are funded in whole or in part by payments from the various state agency-employers. Our reading of the overall provisions of both the original text of chapter 39, Laws of 1970, Ex. Sess., supra, and those of the more recently enacted 1973 amendments leads us to conclude that the factor of approval of an insurance plan by the state employees' insurance board has nothing whatsoever to do with the present or continuing validity of any existing insurance plans falling within the first of these two categories. The basic authority for employers to allow employees' payroll deductions for insurance premiums is and remains as set forth in RCW 41.04.020, a long-standing statute which was unaffected by chapter 147, supra, and, thus, continues to provide that:
"Any employee or group of employees of the state of Washington or any of its political subdivisions, or of any institution supported, in whole or in part, by the state or any of its political subdivisions, may authorize the [[Orig. Op. Page 3]] deduction from his or their salaries or wages, the amount or amounts of his or their subscription payments or contributions to any person, firm or corporation furnishing or providing medical, surgical and hospital care or either of them, or life insurance or accident and health disability insurance: Provided, That such authorization by said employee or group of employees, shall be first approved by the head of the department, division office or institution of the state or any political subdivision thereof, employing such person or group of persons, and filed with the state auditor; or in the case of political subdivisions of the state of Washington, with the auditor of such political subdivision or the person authorized by law to draw warrants against the funds of said political subdivision."
See, in particular, RCW 41.05.030 (2), as amended by § 2, chapter 147, supra, relating to the transmittal of employers' contributions to the state employees insurance revolving fund; RCW 41.05.050, as amended by § 3, which requires "Every department, division, or separate agency of state government . . . [to] provide contributions to insurance and health care plans for its employees, and their dependents, . . ." in amounts to be fixed by the insurance board; and, finally, § 10, chapter 147, supra, which states that:
"This bill shall not take effect until the funds necessary for its implementation have been specifically appropriated by the legislature and such appropriation itself has become law. . . ."
This requisite appropriation was, in fact, made by § 86, chapter 137, Laws of 1973, Ex. Sess., the omnibus appropriations act for the 1973-75 biennium, which became effective when signed by the governor on April 23, 1973. Both this factor and that of the references to employer contributions under §§ 2 and 3, supra, strongly suggest that the legislature intended the insurance board to have jurisdiction only over insurance programs involving expenditures of state funds ‑ as contrasted with the funds of state employees.
And, moreover, insurance board approval likewise has nothing whatsoever to do with the validity of any insurance plans which have or may in the future be provided by the boards of regents or trustees of the several institutions of higher education under the authority granted to them by RCW 28B.10.660 ‑ a statute which was amended by § 4, chapter 147, supra, to read as follows:
[[Orig. Op. Page 4]]
"The regents or trustees or any of the state's institutions of higher education may make available liability, life, health, health care, accident, disability and salary protection or insurance or any one of, or a combination of, the enumerated types of insurance, or any other type of insurance or protection, for the regents or trustees and students of the institution. The premiums due on such protection or insurance shall be borne by the assenting regents, trustees, or students. The regents or trustees of any of the state institutions of higher education may make liability insurance available for employees of the institutions. The premiums due on such liability insurance shall be borne by the university or college."
By this amendment the legislature withdrew the prior authority of a board of regents or trustees to pay a portion of the premiums on any insurance plans obtained under this statute. Therefore, it will readily be seen that (except as to liability insurance which is still to be paid for by the contracting university or college) no further "employers' contributions" can be made to fund those existing plans which have been procured by such a board under this statute unless a particular plan is now taken over and administered by the insurance board under the provisions of chapter 147, supra ‑ a procedure which we regard as being legally defensible and would assume the insurance board will be quite willing to follow on an interim basis until the plan in question comes up for renewal. Subject to this qualification, however, and otherwise limiting our conclusion to those plans not requiring insurance board approval as thus described, we answer your first question in the affirmative and thereby render your second question moot. Insurance board approval is not a requisite to the continuing validity of those existing insurance plans for state employees which are funded solely from employees" contributions; nor is it a requisite to the continuing validity of any existing liability insurance plans for the employees of a university or college as provided for in RCW 28B.10.660, supra.
By the same token, turning to your third question relative to payroll deductions, we may also advise you that insurance board approval is not required here, either, if by payroll deductions you are referring only to employees' contributions as authorized by RCW 41.04.020, supra.1/
[[Orig. Op. Page 5]]
As with question (3), supra, this answer to question (3) likewise renders question (4) moot.
Next you pointed to RCW 41.04.230 which (like RCW 41.04.020, supra) also authorizes payroll deductions for the payment of certain insurance premiums ‑ specifically for "accident and casualty premiums" ‑ and have asked:
"Would this language permit deductions for 'liability' or 'accidental death and dismemberment' plans in addition to those approved by the Board?"
RCW 41.04.230 is a general statute authorizing payroll deductions from the salaries of state employees for a variety of purposes including, but not limited to, the payment of insurance premiums. Insofar as is germane to your question this statute reads as follows:
"Any official of the state authorized to disburse funds in payment of salaries and wages of public officers or employees is authorized, upon written request of the officer or employee, to deduct each month from the salaries or wages of the officers or employees, the amount of money designated by the officer or employee for payment of the following:
". . .
"(7) Accident and casualty premiums to a single insurer: PROVIDED, That twenty-five or more officers or employees of a single agency, or a total of one hundred or more officers or employees of several agencies have authorized such a deduction for payment to that insurer.
"(8) Insuance contributions to the trustee of contracts for payment of premiums under contracts authorized by the state employees' insurance board.
"Deductions from salaries and wages of public officers and employees other than those enumerated in this section or by other law, may be authorized by the budget director for purposes clearly related to state employment or goals and objectives of the agency.
[[Orig. Op. Page 6]]
"The authority to make deductions from the salaries and wages of public officers and employees as provided for in this section shall be in addition to such other authority as may be provided by law: PROVIDED, That the state or any department, division, or separate agency of the state shall not be liable to any insurance carrier or contractor for the failure to make or transmit any such deduction."
Although subsection (8) of this statute was amended by § 5 of the 1973 amendatory act here under consideration, subsection (7) was not. Accordingly, while insurance board authorization is now clearly a requisite to any further payroll deductions under the former, it is not under the latter ‑ for the same reasons that it is not under RCW 41.04.020, supra. Therefore, to the extent that a particular "liability" or "accidental death and dismemberment" plan comes within the purview of this subsection relating to accident and casualty premiums,2/ and to the further extent that the covered group can meet the numerical participation requirements set forth in the proviso thereto, we answer your question (5), supra, in the affirmative.
This leads us to your sixth question which asks, in the case of liability insurance, whether this type of insurance when procured under the provisions of chapter 147, supra, is limited to liability for acts of an employee as the servant or agent of his employer.
In asking this question you have directed our attention to a proviso in § 1 (2) of chapter 147, supra, which, after authorizing the insurance board to include liability insurance within the package of plans to be made available to state employees, states:
". . . that liability insurance shall not be made available to dependents. . . ."
We do not, however, read this language as limiting the scope of any liability insurance which might be obtained under [[Orig. Op. Page 7]] the act to insurance covering an employee's potential liabilities as servant or agent of the state agency by which he is employed. Had the legislature intended this more limited result, it doubtless could have found more precise language in which to express it.
Your seventh and final question relates to another proviso contained in subsection (2) of § 1, supra, which states:
". . . That the boards of trustees and boards of regents of the several institutions of higher education shall retain sole authority to provide liability insurance as provided in RCW 28B.10.660. . . ." (Emphasis supplied)
Your question is whether, in view of this proviso, the insurance board may provide liability insurance coverage for employees of a higher educational institution in those instances in which the governing board of regents or trustees does not. We believe that this question must be answered in the negative. Even though the insurance board has, in general, the requisite authority to provide liability insurance for state employees under the provisions of chapter 147, supra, the above‑quoted proviso constitutes a limitation upon that authority in the case of those state employees serving one of our various state colleges, community colleges or universities. As to those employees the legislature has specifically provided that the governing boards of trustees or regents "shall retain sole authority to provide liability insurance as provided in RCW 28B.10.660" ‑ a statute which we have previously quoted in responding to your opening question.
This completes our response to your several questions, and we trust that it will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
KENNETH W. ELFBRANDT
Assistant Attorney General
*** FOOTNOTES ***
1/See also, RCW 41.04.230 (7), quoted below in connection with question (5), together with a further provision in this statute which authorizes additional payroll deductions upon approval by the budget director.
2/See, RCW 48.11.070 (1), a part of the insurance code which lists at least the most common forms of liability insurance as constituting forms of "general casualty insurance."