Can a Texas economic development corporation get its employees health benefits through a government risk pool?

Plain-English summary

State Senator John Carona, chairing the Senate Committee on Business & Commerce, asked the Attorney General whether an economic development corporation could provide health benefits to its employees through a risk pool established under chapter 172 of the Local Government Code. Chapter 172 lets a political subdivision (or a group of them, acting through the Interlocal Cooperation Act) provide health and accident coverage for its officials, employees, and retirees, directly or through a risk pool. The catch the senator pointed to: an economic development corporation is not a political subdivision, so on the face of chapter 172 it would seem unable to join such a pool.

The opinion looked at a second statute, section 501.067 of the Local Government Code, which says that "notwithstanding any law to the contrary" and with the consent of its authorizing unit, an economic development corporation may obtain health benefits coverage (along with liability, workers' compensation, and property coverage) through the authorizing unit's policies, through self-funded coverage, or under an interlocal agreement with a political subdivision.

Reading the two statutes together, the opinion concluded they could be harmonized rather than treated as a conflict. Section 501.067 controls because it applies "notwithstanding any law to the contrary," and because it is the later-enacted provision (the rule that the latest enactment prevails when statutes are irreconcilable). So while chapter 172 does not by itself authorize an economic development corporation to obtain benefits directly through a risk pool, section 501.067 permits the corporation to participate, and chapter 172 does not bar that arrangement. The bottom line: to the extent section 501.067 allows, an economic development corporation may obtain health benefits for its employees through a risk pool.

The opinion also noted, in a footnote, that an economic development corporation that meets the statutory definition of an "affiliated service contractor" could participate in a risk pool under section 172.004 directly, but whether any particular corporation fits that definition is a fact question the opinion process does not resolve.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

Economic development corporations (as the opinion described it): The opinion told them that section 501.067 expressly authorized them to obtain health benefits coverage and that chapter 172 did not stand as a bar, so they could obtain employee benefits through a risk pool to the extent section 501.067 permitted, with the consent of the authorizing unit.

The authorizing units (cities and other sponsoring governments, as the opinion described it): The opinion described section 501.067 as requiring the authorizing unit's consent for the corporation to obtain coverage under that section.

Senator Carona and legislators (as the opinion described it): The opinion resolved the apparent tension the request identified by reading section 501.067's "notwithstanding any law to the contrary" language and its later enactment date as controlling over chapter 172.

Common questions

Can a Texas economic development corporation cover its employees through a government risk pool?
The opinion concluded it can, to the extent section 501.067 of the Local Government Code permits, because that section expressly authorizes the corporation to obtain health benefits coverage and applies notwithstanding any contrary law.

Doesn't chapter 172 limit risk pools to political subdivisions?
The opinion acknowledged that chapter 172 does not by itself authorize an economic development corporation (which is not a political subdivision) to obtain benefits directly through a risk pool, but it found that section 501.067 supplies that authority and chapter 172 does not bar it.

Why does section 501.067 win when the two statutes seem to conflict?
The opinion gave two reasons: section 501.067 applies "notwithstanding any law to the contrary," and it is the later-enacted provision, which prevails when statutes are irreconcilable.

What if the corporation is an "affiliated service contractor"?
The opinion noted in a footnote that such a corporation could participate in a risk pool directly under section 172.004, but whether a particular corporation meets that definition is a fact question outside the opinion process.

Background and statutory framework

The question sat at the intersection of two Local Government Code provisions. Section 172.004(a) lets a political subdivision (or a group acting under the Interlocal Cooperation Act, chapter 791 of the Government Code) provide health and accident coverage, directly or through a risk pool, for its officials, employees, retirees, and employees of affiliated service contractors. Section 501.055(b) provides that an economic development corporation is not a political subdivision, which is why the request questioned whether such a corporation could join a chapter 172 pool.

Section 501.067(a) addresses the corporation's coverage directly: "[n]otwithstanding any law to the contrary" and with the authorizing unit's consent, the corporation may obtain health benefits coverage (and liability, workers' compensation, and property coverage) under the authorizing unit's policies, through self-funded coverage, or under an interlocal agreement with a political subdivision.

The opinion applied standard tools of statutory construction: giving effect to legislative intent (TGS-NOPEC Geophysical Co. v. Combs), starting from plain language and common meaning (City of Rockwall v. Hughes), harmonizing statutes where reasonably possible and presuming the whole statute is effective under Government Code section 311.021(2) (La Sara Grain Co. v. First Nat'l Bank of Mercedes), reading "notwithstanding any law to the contrary" as superseding contrary law on the same subject (State v. Mid-South Pavers, Inc.), and applying the later-enacted-prevails rule of section 311.025(a) for irreconcilable statutes (Jackson v. State Office of Administrative Hearings).

Citations

Cases:

• TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011)
• City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008)
• La Sara Grain Co. v. First Nat'l Bank of Mercedes, 673 S.W.2d 558, 565 (Tex. 1984)
• State v. Mid-South Pavers, Inc., 246 S.W.3d 711, 721-22 (Tex. App.—Austin 2007, pet. denied)
• Jackson v. State Office of Admin. Hearings, 351 S.W.3d 290, 297 (Tex. 2011)

Texas Attorney General opinion referenced:

• Tex. Att'y Gen. Op. No. GA-0876 (2011)

Statutes:

• Tex. Loc. Gov't Code Ann. § 172.004(a) (West 2008); §§ 172.004(b), 172.005; § 172.003(1) (West Supp. 2012)
• Tex. Loc. Gov't Code Ann. § 501.067(a)(1) (West Supp. 2012); § 501.055(b); § 501.002(5)
• Tex. Gov't Code Ann. §§ 791.001-.035 (West 2012); § 791.001
• Tex. Gov't Code Ann. § 311.021(2) (West 2005); § 311.025(a)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0990
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2013/ga0990.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

February 19, 2013

The Honorable John J. Carona Opinion No. GA-0990
Chair, Committee on Business & Commerce
Texas State Senate Re: Whether an economic development
Post Office Box 12068 corporation may provide health benefits to its
Austin, Texas 78711-2068 employees through a risk pool established
under chapter 172, Local Government Code
(RQ-1084-GA)

Dear Senator Carona:

You seek our opinion on the question of whether an economic development corporation may provide employee benefits for its employees through a risk pool established under Chapter 172 of the Local Government Code.[1] Subsection 172.004(a) provides that "[a] political subdivision or a group of political subdivisions pursuant to The Interlocal Cooperation Act[2] . . . directly or through a risk pool may provide health and accident coverage for political subdivision officials, employees, and retirees, . . . and employees of affiliated service contractors."[3] TEX. LOC. GOV'T CODE ANN. § 172.004(a) (West 2008) (footnote added); see id. §§ 172.004(b) (listing types of coverage that may be provided); 172.005 (authorizing political subdivisions to establish a risk pool). You state that under this section, "employers that join a risk pool must be either a political subdivision or an affiliated [service] contractor." Request Letter at 2. Because an economic development corporation is not a political subdivision, you suggest that an economic development corporation may not participate in a risk pool. See id. at 1-2; see also TEX. LOC. GOV'T CODE ANN. §§ 501.055(b) (West Supp. 2012) (providing that an economic development corporation is not a political subdivision); 501.002(5) (defining the term corporation).

Your request letter also points out that an economic development corporation's authority to participate in a risk pool may be affected by Local Government Code section 501.067, which provides as follows:

Notwithstanding any law to the contrary and with the consent of the [economic development] corporation's authorizing unit, a corporation may obtain . . . health benefits coverage, liability coverage, workers' compensation coverage, and property coverage under the authorizing unit's insurance policies, through self-funded coverage, or under coverage provided under an interlocal agreement with a political subdivision . . . .

TEX. LOC. GOV'T CODE ANN. § 501.067(a)(1) (West Supp. 2012); see Request Letter at 1-2. Under section 501.067, an economic development corporation is expressly authorized to obtain health benefits coverage for its employees. Id. Section 501.067 enumerates three methods by which the economic development corporation may obtain these employee benefits. See id. To the extent that any of the three health coverage methods include the possibility of an economic development corporation securing employee benefits through a risk pool, you suggest that the arrangement may be prohibited by section 172.004. See Request Letter at 1-2.

As we consider the relationship between these statutory provisions, we are mindful that the court's primary objective in construing statutes "is to ascertain and give effect to the Legislature's intent." TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011). Like the courts, we begin with the plain language of the statute and apply its common meaning. See City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008). In addition, we seek to reconcile and harmonize statutory provisions, if it is reasonably possible, so that every legislative enactment may be given effect. See TEX. GOV'T CODE ANN. § 311.021(2) (West 2005) ("In enacting a statute, it is presumed that . . . the entire statute is intended to be effective[.]"); La Sara Grain Co. v. First Nat'l Bank of Mercedes, 673 S.W.2d 558, 565 (Tex. 1984) ("Generally, courts are to construe statutes so as to harmonize with other relevant laws, if possible.").

We do not agree that section 172.004 is an impediment to section 501.067. Indeed, section 501.067 applies "[n]otwithstanding any law to the contrary." TEX. LOC. GOV'T CODE ANN. § 501.067(a) (West Supp. 2012). Thus, to any extent that section 172.004(a) is contrary to section 501.067, it is expressly superseded by the plain language of section 501.067. See State v. Mid-South Pavers, Inc., 246 S.W.3d 711, 721-22 (Tex. App.—Austin 2007, pet. denied) (describing the phrase "notwithstanding any law to the contrary" as indicative of legislative intent that the section in question is to supersede other Texas law regarding same subject). Further, section 501.067 is the later-enacted provision.[4] TEX. GOV'T CODE ANN. § 311.025(a) (West 2005) (providing that "if statutes enacted at the same or different sessions of the legislature are irreconcilable, the statute latest in date of enactment prevails"); see Jackson v. State Office of Admin. Hearings, 351 S.W.3d 290, 297 (Tex. 2011) (utilizing rule to resolve statutory conflict).

Thus, sections 172.004 and 501.067 may be harmonized so that both are effective. Under section 172.004, an economic development corporation is not expressly authorized to directly obtain benefits for its employees through a risk pool. However, section 501.067 permits an economic development corporation to participate in a risk pool, and section 172.004 does not stand as a bar to such an arrangement. We conclude that to the extent permitted by section 501.067, an economic development corporation may obtain benefits for its employees through a risk pool.

SUMMARY

To the extent permitted by section 501.067 of the Local Government Code, an economic development corporation may obtain health benefits for its employees through a risk pool.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chairman, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable John J. Carona, Chair, Bus. & Commerce Comm., to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (Sept. 19, 2012), http://www.texasattorneygeneral.gov/opin ("Request Letter").

[2] The Interlocal Cooperation Act is found in chapter 791 of the Government Code. See TEX. GOV'T CODE ANN. §§ 791.001-.035 (West 2012). Its stated purpose is to "increase efficiency and effectiveness of local governments by authorizing them to contract, to the greatest possible extent, with one another and with agencies of the state." Id. § 791.001.

[3] An "affiliated service contractor" is "an organization qualified for exemption under Section 501(c), Internal Revenue Code (26 U.S.C. Section 501(c)), as amended, that provides governmental or quasi-governmental services on behalf of a political subdivision and derives more than 25 percent of its gross revenues from grants or funding from the political subdivision." TEX. LOC. GOV'T CODE ANN. § 172.003(1) (West Supp. 2012). There is no question that an economic development corporation satisfying the definition of affiliated service contractor may participate in a risk pool as allowed under section 172.004. The question of whether any particular economic development corporation is an affiliated service contractor is a fact question inappropriate to the attorney general opinion process. See Tex. Att'y Gen. Op. No. GA-0876 (2011) at 3.

[4] Section 501.067 was originally added to Texas statutes in 1999 as an amendment to section 5190.6 of the Revised Civil Statutes. See Act of May 30, 1999, 76th Leg., R.S., ch. 1425, § 1, 1999 Tex. Gen. Laws 4864, 4865. It was codified as part of the Local Government Code in 2007. See Act of May 15, 2007, 80th Leg., R.S., ch. 885, § 3.01, 2007 Tex. Gen. Laws 1905, 2092. Section 172.004 was originally added to the Local Government Code in 1989. See Act of May 16, 1989, 71st Leg., R.S., ch. 1067, § 1, 1989 Tex. Gen. Laws 4316, 4317.