Can the board directors of a Texas water authority enroll in the district's employee health care plan?

TX AG Opinion GA-0650: Can water authority directors join the employee health plan?

Plain-English summary

The Chair of the Lower Neches Valley Authority (LNVA) asked whether members of the Authority's board of directors may participate in the Authority's health care plan. The LNVA is a conservation and reclamation district created under article XVI, section 59 of the Texas Constitution and is subject to chapter 49 of the Water Code.

The opinion started with the statute that authorizes the plan. Water Code section 49.069(c) says the board may include hospitalization and medical benefits "to its employees" as part of the compensation paid to officers and employees. The opinion read the plain terms to authorize those benefits only for employees. The question was whether directors might themselves count as employees. Relying on a prior opinion and the U.S. Supreme Court's rule that an undefined "employee" means the conventional master-servant relationship under common-law agency, the opinion concluded a director of a chapter 49 district is not an employee, so directors do not qualify for benefits under section 49.069(c).

The opinion reinforced this by contrasting the navigation-district statute, section 60.014, which expressly authorizes hospitalization and medical benefits "for officers and employees." That earlier opinion had allowed navigation-district board members to provide benefits to themselves precisely because the statute named officers. The fact that the Legislature used "officers and employees" there but only "employees" in section 49.069(c) showed it knew how to include officers and chose not to for chapter 49 districts.

The opinion then rejected two alternative theories. First, the directors' fees-of-office provision, section 49.060(a), does not give independent authority to offer health benefits; the board's only authority comes from section 49.069(c), and the fees provision ties a director's pay to actual substantive performance of duties, not to ongoing premium coverage. Authority to participate is a separate benefit beyond the mere cost, and it is a prerequisite the directors lack. Second, Local Government Code section 172.004, which lets a political subdivision cover officials, employees, and retirees, is broader and conflicts with section 49.069(c). Under the rules for reconciling general and specific provisions, the more specific Water Code provision controls, and because section 49.069(c) was also the later enactment, the general provision does not override it. The opinion concluded a director of the LNVA is not eligible to participate in the Authority's health care plan.

Currency note

This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Water Code chapter 49 and Local Government Code section 172.004 may have been amended since 2008. Confirm current law before relying on this analysis.

Who this opinion affected (as of 2008)

Boards of chapter 49 water districts: The opinion concluded they could offer hospitalization and medical benefits under section 49.069(c) only to employees, not to directors.

District directors: The opinion meant they were not eligible to participate in the district's health care plan, whether through the benefits statute, their fees of office, or the general political-subdivision coverage statute.

District employees: The opinion left intact their ability to receive hospitalization and medical benefits as part of compensation under section 49.069(c).

Common questions

Can a water district director enroll in the district's health plan?
No. The opinion concluded section 49.069(c) limits hospitalization and medical benefits to employees, and a director is not an employee.

Why isn't a director an employee?
The opinion applied the common-law agency test for an undefined "employee," which looks for a master-servant relationship. A director of a chapter 49 district does not have that relationship with the district.

Could a director's fees of office be used to buy into the plan?
No. The opinion explained the fees-of-office statute gives no independent authority to offer health benefits and ties pay to actual performance of duties, not ongoing coverage. Authority to participate is itself a separate benefit the directors lack.

Doesn't a general law let political subdivisions cover their officials?
Local Government Code section 172.004 does, but the opinion found it conflicts with and yields to the more specific, later Water Code provision, so it does not authorize covering the directors.

Background and statutory framework

The LNVA is a conservation and reclamation district under article XVI, section 59 of the Texas Constitution and is subject to chapter 49 of the Water Code, which applies to districts created under article III, section 52(b)(1)-(2) or article XVI, section 59 (Tex. Const. art. XVI, § 59; art. III, § 52(b)(1)-(2); Tex. Water Code Ann. §§ 49.001(a)(1), 49.002(a) (Vernon 2008)). Section 49.069(c) authorizes the board to include hospitalization and medical benefits "to its employees" as part of compensation (Tex. Water Code Ann. § 49.069(c) (Vernon 2008)). An undefined "employee" means the conventional master-servant relationship under common-law agency, and a chapter 49 director is not such an employee (Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992)). The navigation-district statute, by contrast, expressly covers "officers and employees," showing the Legislature knew how to include officers (Tex. Water Code Ann. § 60.014(a) (Vernon 2004)). The directors' fees-of-office provision gives no independent authority to offer benefits and ties pay to substantive performance of duties (Tex. Water Code Ann. § 49.060(a), (e) (Vernon 2008)). The general political-subdivision coverage statute conflicts with the specific Water Code provision; a specific provision controls over a general one, and an irreconcilable conflict is resolved in favor of the special provision unless the general provision is later and intended to prevail (Tex. Loc. Gov't Code Ann. § 172.004(a) (Vernon 2008); Tex. Gov't Code Ann. § 311.026(a)-(b) (Vernon 2005); City of Dallas v. Mitchell, 870 S.W.2d 21, 23 (Tex. 1994)). Words excluded from a statute are presumed excluded for a purpose (In re Bell, 91 S.W.3d 784, 790 (Tex. 2002); State v. Kaiser, 822 S.W.2d 697, 700 (Tex. App.-Fort Worth 1991, pet. ref'd)).

Citations

Statutes:

• Tex. Water Code Ann. §§ 49.001(a)(1), 49.002(a), 49.060(a), (e), 49.069(c), 60.014(a) (Vernon 2004 & 2008)
• Tex. Loc. Gov't Code Ann. § 172.004(a) (Vernon 2008)
• Tex. Gov't Code Ann. § 311.026(a)-(b) (Vernon 2005)
• Tex. Const. art. XVI, § 59; art. III, § 52(b)(1)-(2)

Cases:

• Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992)
• City of Dallas v. Mitchell, 870 S.W.2d 21, 23 (Tex. 1994)
• In re Bell, 91 S.W.3d 784, 790 (Tex. 2002)
• State v. Kaiser, 822 S.W.2d 697, 700 (Tex. App.-Fort Worth 1991, pet. ref'd)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0650
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2008/ga0650.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain - the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

July 29, 2008

Ms. Kathleen T. Jackson, Chair
Lower Neches Valley Authority
Post Office Box 5117
Beaumont, Texas 77726-5117

Opinion No. GA-0650

Re: Whether members of the board of directors of the Lower Neches Valley Authority may participate in the Authority's health care plan (RQ-0673-GA)

Dear Ms. Jackson:

You ask whether members of the board of directors of the Lower Neches Valley Authority may participate in the Authority's health care plan.

The Lower Neches Valley Authority (the "LNVA") was created in 1933 by special act of the Legislature "as a governmental agency, body politic and corporate, vested with all the authority as such under the Constitution and Laws of the State; and which shall have and be recognized to exercise all of the powers of such governmental agency and body politic and corporate as are expressly authorized in the provisions of the Constitution, Section 59 of Article 16." Act approved Oct. 23, 1933, 43d Leg., 1st C.S., ch. 63, 1933 Tex. Gen. Laws 169, 169-70. "The management and control of all the affairs of such district shall be vested in a Board of Directors, consisting of nine (9) members," who are appointed by the governor with the advice and consent of the Senate, and who shall hold office for staggered terms of six years. Act of May 26, 1997, 75th Leg., R.S., ch. 1263, § 1, 1997 Tex. Gen. Laws 4787, 4787.

As a conservation and reclamation district created under article XVI, section 59 of the Texas Constitution, the LNVA is also subject to chapter 49 of the Water Code. Chapter 49 is applicable to "all general and special law districts to the extent that the provisions of this chapter do not directly conflict with a provision in any other chapter of [the Water Code] or any Act creating or affecting a special law district." TEX. WATER CODE ANN. § 49.002(a) (Vernon 2008). The word "district," for purposes of chapter 49, means "any district or authority created by authority of either Sections 52(b)(1) and (2), Article III, or Section 59, Article XVI, Texas Constitution, regardless of how created," but does not include any navigation district or port authority or a district governed by chapter 36 of the Water Code. Id. § 49.001(a)(1).

You ask whether members of the board of directors are entitled to participate in the LNVA's health care plan established under section 49.069 of the Water Code. Request Letter, supra note 1, at 1. Section 49.069 authorizes a district operating under chapter 49 of the Water Code to offer a health care plan to its employees:

The board may include hospitalization and medical benefits to its employees as part of the compensation paid to the officers and employees and may adopt any plan, rule, or regulation in connection with it and amend or change the plan, rule, or regulation as it may determine.

TEX. WATER CODE ANN. § 49.069(c) (Vernon 2008). We presume for purposes of this opinion that members of the board of directors of the LNVA are "officers" within the meaning of section 49.069(c). The only express authorization to the board is to include hospitalization and medical benefits only in the compensation paid "to its employees." Id. Thus, under the plain terms of section 49.069(c), only employees may receive hospitalization and medical benefits as part of their compensation.

It has been suggested, however, that the directors of the LNVA might themselves qualify as "employees" for purposes of section 49.069(c). Request Letter, supra note 1, at 2. In a prior opinion, this office considered whether directors of a chapter 49 water district might be classified as "employees" for purposes of participation in a deferred compensation plan. See Tex. Att'y Gen. Op. No. JC-0197 (2000). The opinion relied on a decision of the United States Supreme Court declaring that when the term "employee" is used in the law without an accompanying definition, "the term presumably describes 'the conventional master-servant relationship as understood by the common-law agency doctrine.'" Id. at 3 (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992)). The opinion concluded that a director of a chapter 49 district "is not an employee of the district under the common law." Id. Based on this same reasoning and authority, we conclude that LNVA directors are not "employees" for purposes of section 49.069(c).

Moreover, the term "employees" in section 49.069(c) is clearly limited in its scope when contrasted with the language of section 60.014 of the Water Code. In a prior opinion, we said that members of the board of directors of a navigation district, another type of conservation and reclamation district, were authorized to provide medical benefits to themselves. See Tex. Att'y Gen. Op. No. GA-0284 (2004) at 4. The relevant statute provided, however, that "[t]he [navigation] commission may include hospitalization and medical benefits for officers and employees as part of the compensation paid to the officers and employees." TEX. WATER CODE ANN. § 60.014(a) (Vernon 2004) (emphasis added). This provision, by specifically permitting a navigation district to offer hospitalization and medical benefits to its officers, demonstrates that the Legislature was aware of the kind of language required to permit the offering of such benefits to an officer. In section 49.069(c), it elected not to do so, but rather to limit hospitalization and medical benefits to employees of the district.

You suggest that a director may nevertheless participate in the LNVA's health plan because hospitalization and medical insurance premium could be authorized by section 49.060(a) as a director's "fees of office" of "not more than $150 a day." See id. § 49.060(a); Request Letter, supra note 1, at 2. Your suggestion appears to be based on the idea that section 49.060 provides independent authority to the board to offer hospitalization and medical benefits. It does not. The board's only authority in this regard comes from section 49.069(c), which, as we have concluded, limits hospitalization and medical benefits to employees of the LNVA. Moreover, nothing in section 49.060(a), which limits the compensation of a director to an individual's substantive performance of duties, suggests that a director would be entitled to receive the maximum fees of office on an ongoing and consistent basis for the kind of continuous coverage necessary for hospitalization and medical benefits. Although a director may be theoretically eligible to receive the maximum compensation of $7,200 per year, that compensation, as we have indicated, must be tied to actual performance of substantive duties. In addition, even if the entire health insurance premium could be paid within the boundaries of a director's maximum annual compensation, again the relevant statutes do not specifically authorize a director of the LNVA, unlike the officers of a navigation district or the employees of the LNVA, to participate in the LNVA's health plan. Such authority to participate is a separate benefit, beyond the cost of such participation, and that authority is a prerequisite to the act of participation. We conclude that a director of the LNVA is not entitled or eligible to participate in the LNVA's health care plan.

Finally, you ask whether the directors may participate in the LNVA's health plan under the provisions of section 172.004 of the Local Government Code, which permits "a political subdivision ... directly or through a risk pool," to "provide health and accident coverage for political subdivision officials, employees, and retirees." TEX. LOC. GOV'T CODE ANN. § 172.004(a) (Vernon 2008). That statute, which is applicable to all "political subdivisions," is clearly broader than section 49.069(c) of the Water Code. Section 311.026(a) of the Government Code provides that, "[i]f a general provision conflicts with a special or local provision, the provisions shall be construed, if possible, so that effect is given to both." TEX. GOV'T CODE ANN. § 311.026(a) (Vernon 2005). Section 311.026(b) of the Government Code declares that "[i]f the conflict between the general provision and the special or local provision is irreconcilable, the special or local provision prevails as an exception to the general provision, unless the general provision is the later enactment and the manifest intent is that the general provision prevail." Id. § 311.026(b). Texas courts, including the Texas Supreme Court, have construed the term "special or local" to mean "specific." See City of Dallas v. Mitchell, 870 S.W.2d 21, 23 (Tex. 1994); see also Tex. Att'y Gen. Op. No. GA-0441 (2006) at 4-5 (section 311.026(b) of the Government Code has been construed to mean that, in case of conflict, a specific enactment controls over a more general enactment).

We believe that section 172.004 of the Local Government Code is in conflict with section 49.069(c) of the Water Code, which effectively operates to prohibit directors from participating in the LNVA's health plan. As we have noted, section 172.004(a) is the more general provision, in that it applies to all political subdivisions, while section 49.069(c) is limited to those districts to which chapter 49 of the Water Code is applicable. By excluding directors from the ambit of section 49.069(c), the Legislature made a decision to restrict the scope of section 172.004(a) with regard to those districts covered by section 49.069(c). See, e.g., In re Bell, 91 S.W.3d 784, 790 (Tex. 2002) ("every word excluded from a statute must ... be presumed to have been excluded for a purpose"); State v. Kaiser, 822 S.W.2d 697, 700 (Tex. App.-Fort Worth 1991, pet. ref'd) (legislative intent may be inferred from the fact that a statute does not contain a certain provision). Thus, we believe that a court would conclude that, with regard to a director's eligibility to participate in a district's health plan, section 172.004(a) of the Local Government Code is in irreconcilable conflict with the provisions of chapter 49 of the Water Code. Furthermore, section 49.069(c) of the Water Code, an enactment that is more specific than section 172.004(a) of the Local Government Code, was enacted subsequently to section 172.004. Compare Act of May 25, 1995, 74th Leg., R.S., ch. 715, 1995 Tex. Gen. Laws 3755, 3755-3804 (enacting chapter 49 of Water Code), with Act of May 16, 1989, 71st Leg., R.S., ch. 1067, 1989 Tex. Gen. Laws 4316, 4316-20 (enacting chapter 172 of Local Government Code). Thus, section 311.026(b) of the Government Code does not preclude the result we reach here. We conclude that section 172.004 of the Local Government Code does not authorize the LNVA to provide health coverage for its directors.

SUMMARY

A director of the Lower Neches Valley Authority is not eligible to participate in the Authority's health care plan.

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ANDREW WEBER
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee