Navigation Top
AGO Logo Graphic
AGO Header Image
File a Complaint
Contact the AGO
AGO 1965 No. 1 - January 06, 1965
AGO Opinion Header Image
John J. O'Connell | 1957-1968 | Attorney General of Washington


DISTRICTS ‑- SCHOOLS ‑- CONTRACTS ‑- GROUP MEDICAL INSURANCE PLAN OR HEALTH CARE PLAN FOR EMPLOYEES ‑- AUTHORITY ‑- NUMBER OF CONTRACTS ‑- DESIGNATION OF SPECIFIC EMPLOYEES TO BE COVERED BY PARTICULAR POLICY ‑- EXECUTION OF HEALTH OR MEDICAL INSURANCE CONTRACT AFTER EMPLOYMENT CONTRACTS HAVE BEEN EXECUTED.

(1) A school district pursuant to chapter 75, Laws of 1963 (RCW 41.04.180-41.04.190), may contract with more than one insurance carrier or health service contractor and allow each employee to choose the plan he or she desires, as long as each plan meets all of the requirements of chapter 75, Laws of 1963.

(2) A school district pursuant to chapter 75, Laws of 1963, may designate specific categories of its employees to be covered by a group policy or contract to the exclusion of other categories of employees.

(3) A school district which has designated specific categories of employees to be covered by a group policy or contract to the exclusion of other categories of employees is not required to make provision for like benefits for such excluded categories of employees by entering into similar contracts for such employees if the categories established by the district are not arbitrary, capricious or invidiously discriminatory.

(4) If existing employees' term contracts do not provide in any manner for such insurance, the school district may not provide such benefits during the term of such contracts since under RCW 41.04.190 such benefits constitute additional compensation and under Article II, § 25, Amendment 35, extra compensation may not be granted to any employee after the contract of employment has been entered into.

                                                              - - - - - - - - - - - - -

                                                                  January 6, 1965

Honorable George A. Kain
Prosecuting Attorney
Spokane County Court House
Spokane, Washington

                                                                                                                  Cite as:  AGO 65-66 No. 1

Dear Sir:

            By letter previously acknowledged you have requested an opinion of this office on the following questions:

             [[Orig. Op. Page 2]]

            (1) May a school district, pursuant to chapter 75, Laws of 1963 (RCW 41.04.180-41.04.190), contract with more than one insurance carrier or health service contractor and allow each employee to choose the plan he or she desires, as long as each plan meets all of the requirements of chapter 75, Laws of 1963?

            (2) May a school district, pursuant to the same law, designate specific categories of its employees to be covered by a group policy or contract to the exclusion of other categories of employees?

            (3) If so, must the district make provision for like benefits for such excluded categories of employees by entering into similar contracts for such employees?

            (4) In view of the provisions of RCW 41.04.190, may the school district contract for such benefits, subsequent to the execution of employment contracts with the employees for the present school year, and pay for such benefits, if the existing employee contracts do not provide for such insurance?

            We answer questions (1) and (2) in the affirmative, and questions (3) and (4) in the negative subject to the qualifications set forth in our analysis.

                                                                     ANALYSIS

            Question (1):

            RCW 41.04.180, codifying § 1, chapter 75, Laws of 1963, provides:

            "Any department, division, or separate agency of the state government, and any county, municipality or other political subdivision of the state acting through its principal supervising official or governing body may, whenever funds shall be available for that purpose, provide for all or a part of hospitalization and medical aid for its employees and their dependentsthrough contracts with regularly constituted insurance carriers or with health care service contractors as defined in chapter 48.44 RCW, for group hospitalization and medical aid policies or plans:   [[Orig. Op. Page 3]]Provided, That the contributions of any department, division or separate agency of the state government and school districts shall be limited to not to exceed fifty percent of any premium therefor, or five dollars per month per employee covered, whichever is less except that such limitation shall not apply to employees employed under chapter 47.64 RCW."  (Emphasis supplied.)

            The applicability of this statute to school districts was considered in AGO 63-64 No. 122 [[to Prosecuting Attorney, King County on September 22, 1964]], a copy of which is enclosed.  In that opinion we concluded, in material part, that:

            "RCW 41.04.180 authorizes a school district to contract for and make premium payments (either up to 50% or $5.00, whichever is less) toward the purchase of group disability insurance for its employees, . . ."

            The specific question which you have posed‑-whether a school district utilizing the authority thereby granted may contract with more than one insurance carrier or health service contractor and allow each employee to choose the plan he or she desires‑-is, in our opinion, answerable in the affirmative.  We arrive at this conclusion by reason of the fact that the particular phraseology of the statute which we have above underscored refers to "contracts" (plural) rather than to merely "contract" (singular).  For further emphasis on this point we restate the pertinent language only of the statute, as follows:

            "Any . . . political subdivision of the state . . . may . . . provide for . . . hospitalization and medical aid for its employees and their dependents through contracts with regularly constituted insurance carriers or with health care service contractors . . ."  (Emphasis supplied.)

            We point out however that an employee may only choose a plan contracted by the school district.  A school district cannot redelegate to the employee the power to contract already delegated to it by the legislature.  State ex rel. West v. Seattle, 61 Wn. (2d) 658, 379 P. (2d) 925 (1963).

             [[Orig. Op. Page 4]]

            Question (2):

            In regard to the matter of designation of specific categories of school district employees to be covered by a particular group policy or contract to the exclusion of other categories of employees, note should be made of RCW 48.21.010, a part of the state insurance code, defining "group disability insurance" as follows:

            "Group disability insurance is that form of disability insurance provided by a master policy issued to an employer, to a trustee appointed by an employer or employers, or to an association of employers formed for purposes other than obtaining such insurance, covering, with or without their dependents,the employees, or specified categories of the employees, of such employers or their subsidiaries or affiliates, or issued to a labor union, or to an association of employees formed for purposes other than obtaining such insurance, covering, with or without their dependents, the members, or specified categories of the members, of the labor union or association, or issued pursuant to RCW 48.21.030.  Group disability insurance shall also include such other groups as qualify for group life insurance under the provisions of this code."  (Emphasis supplied.)

            Thus, it is perfectly permissible under the state insurance code for group disability insurance to be issued to an employer covering either all of his employees or specific categories of employees.  We find nothing in RCW 41.04.180,supra, which in any way modifies this provision in so far as is concerned group hospitalization and medical aid insurance (i.e., this form of group disability insurance) covering state or municipal (including school district) employees.

            Question (3):

            By your third question, you have assumed the above affirmative answer to your second question, and have asked:

             [[Orig. Op. Page 5]]

            "If so, must the district make provision for like benefits for such excluded categories of employees by entering into similar contracts for such employees?"

            The authority of a school district to enter into multiple contracts has been discussed above.  We have concluded that a school district may enter into separate contracts, or contracts with more than one insurance carrier.  The district, having determined to utilize the provisions of RCW 41.04.180,supra, in order to provide this particular fringe benefit for its employees, does not have to cover all of its employees under a single contract.

            Nor, in our opinion, does a school district utilizing the statutory authority have to make available coverage for all of its employees underany group policy or contract.  There simply is no express requirement in the statute that all employees of a given department of state government or of a given political subdivision be afforded hospitalization and medical aid coverage merely because the employer has determined, as a matter of policy, to establish or make available this coverage for specific categories of its employees.  Of course, any classification as to employees covered and employees not covered must be rational.  It cannot be arbitrary, capricious, or invidiously discriminatory.  See,State ex rel. Raines v. Seattle, 134 Wash. 360, 235 Pac. 968 (1925), and authorities discussed therein.

            Question (4):

            Repeated for ease of reference, your final question reads as follows:

            "In view of the provisions of RCW 41.04.190, may the school district contract for such benefits, subsequent to the execution of employment contracts with the employees for the present school year, and pay for such benefits, if the existing employee contracts do not provide for such insurance?"

            RCW 41.04.190, to which you have referred, provides as follows:

            "The cost of any such group policy or plan to any such public agency or body shall be deemedadditional compensation  [[Orig. Op. Page 6]] to the employees covered thereby for services rendered, and any officer authorized to disburse such funds may pay in whole or in part to any such insurance carrier or health care service contractor the amount of the premiums due pursuant to any such contract."  (Emphasis supplied.)

            Because of this provision, we are of the opinion that your final question must be answered in the negative so long as the existing contract remains in force.  This conclusion, we believe, is necessitated by Article II, § 25, Amendment 35, of the Washington Constitution, which reads:

            "The legislature shall never grant any extra compensation to any public officer, agent, employee, servant, or contractor, after the services shall have been rendered,or the contract entered into, nor shall the compensation of any public officer be increased or diminished during his term of office.  Nothing in this section shall be deemed to prevent increases in pensions after such pensions shall have been granted."  (Emphasis supplied.)

            We reason as follows:

            (1) The school district's cost in regard to group hospitalization and medical aid policies contracted under the statute is "additional compensation to the employees covered thereby";

            (2) The constitution prohibits the grant of any extra compensation to a public employee under contract after the contract has been entered into.  Sonnabend v. Spokane, 53 Wn. (2d) 362, 333 P. (2d) 918 (1958);

            (3) Therefore, any payments made by a school district toward the cost of group hospitalization and medical aid for employees already under contract for the present school year‑-not provided for in the existing contracts‑-would be unconstitutional so long as the existing contract remains in force.

             [[Orig. Op. Page 7]]

            In thus answering your final question we have, of course, assumed the existence of the basic facts which you have related to us; specifically that the existing contractsin no manner provide for group hospitalization and medical aid benefits.1/

             We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

PHILIP H. AUSTIN
Assistant Attorney General

                                                         ***   FOOTNOTES   ***

1/We have further made the qualification that our negative answer to your final question assumes that the exsting contracts will remain in force for the remainder of that terms thereof.  Of course it is basic contract law that "so long as a contract remains executory, the parties thereto, acting upon sufficient consideration, may by agreement rescind, alter, modify, supplement, or replace it."  See,Pavey v. Collins, 31 Wn. (2d) 864,870, 199 P. (2d) 517 (1948); Westland Const. Co. v. Chris Berg, Inc., 35 Wn. (2d) 824, 215 P. (2d) 865, 278 P. (2d) 348 (1955); and Evans v. Oregon & Washington R. Co., 58 Wash. 429, 108 Pac. 1095 (1910).

Content Bottom Graphic
AGO Logo