Could Connecticut's comptroller offer a pooled municipal health plan without Insurance Department approval?

Plain-English summary

Connecticut's Insurance Commissioner challenged a July 2007 AG opinion approving a voluntary, risk-pooled, self-funded health plan for municipal employers and employees. After reconsidering the Commissioner's objections, Attorney General Richard Blumenthal reaffirmed his earlier conclusion. He read Conn. Gen. Stat. § 5-259(i) as authorizing the comptroller's plan without Insurance Department approval and concluded that participating municipalities would not be unauthorized insurers.

The Commissioner argued that insurance oversight still applied and cited a federal case involving multiple employer welfare arrangements. The AG said the statute expressly required the Commissioner's approval in other subsections but not in subsection (i). He also said the cited federal case addressed a different question, whether federal law preempted state regulation of such arrangements, and did not decide the comptroller's authority under Connecticut's statute.

Currency note

This opinion was issued in 2007. 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.

Municipal employers and benefits officials at the time

The opinion reaffirmed that municipalities could participate in the voluntary pooled plan described by the comptroller without becoming unauthorized insurers. It addressed the comptroller's particular statutory plan, rather than every form of municipal health coverage.

Insurance Department and plan bidders at the time

The AG rejected the Commissioner's assertion that Insurance Department approval was required for a subsection (i) plan. He asked the Commissioner to withdraw a notice sent to potential bidders that conflicted with the AG's reaffirmed opinion.

Common questions

Q: Did Connecticut's comptroller need Insurance Department approval for the proposed municipal health pool?
A: The AG said no under the 2007 version of the statute he analyzed. He read the lack of an approval requirement in subsection (i), compared with express requirements elsewhere, as deliberate.

Q: Would a town joining the comptroller's pool have been treated as an unauthorized insurer?
A: The AG reaffirmed that participating municipalities would not be unauthorized insurers under the arrangement he described.

Q: Did the federal case about multiple employer welfare arrangements overturn the earlier AG opinion?
A: The AG said no. He explained that the case concerned federal preemption of state insurance regulation, not the comptroller's authority to establish the plan under Connecticut law.

Background and statutory framework

This opinion responded to the Insurance Commissioner's request to revisit Formal Opinion 2007-12. The earlier opinion had approved a self-funded, risk-pooled municipal plan. In the follow-up, the AG compared subsections of Conn. Gen. Stat. § 5-259 and reviewed amendments that had expanded the comptroller's options for different employer groups. He found subsection (i) distinct from provisions expressly requiring the Insurance Commissioner's approval.

The AG also addressed the comptroller's general statutory duties and the federal case the Commissioner cited. He concluded neither displaced the specific plan authority he found in subsection (i).

Citations and references

Statutes cited in the opinion: Conn. Gen. Stat. § 5-259(i); Conn. Gen. Stat. § 3-112.

Case cited in the opinion: Atlantic Healthcare Benefits Trust v. Googins, 2 F.3d 1 (2d Cir. 1993).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2007-formal-opinions/honorable-thomas-r-sullivan-commissioner-department-of-insurance-formal-opinion-2007029-attorney-gen

Original opinion text

Honorable Thomas R. Sullivan, Commissioner, Department of Insurance, Formal Opinion 2007-029, Attorney General State of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

November 29, 2007

The Honorable Thomas R. Sullivan

Commissioner

Department of Insurance

P.O. Box 816

Hartford, CT 06142-0816

Dear Commissioner Sullivan:

This letter is in response to your November 19, 2007 request that I reconsider my formal legal opinion issued to Comptroller Nancy Wyman on July 25, 2007 (Attorney General Opinion 2007-012). In my opinion to Comptroller Wyman, I concluded that Conn. Gen. Stat. § 5-259(i) authorized the Comptroller to establish a voluntary, risk-pooled, self-funded health plan for municipal employers and employees and that municipalities participating in such an arrangement would not be considered unauthorized insurers. In your letter, you disagree with my legal conclusion and raise several specific concerns.1 In particular, you point out that:

(1) “[T]he language of Conn. Gen. Stat. § 5-259, by providing for a single statutory exception to compliance with Title 38, seems to suggest regulation by the Insurance Department, not the reverse;”

(2) “While one might argue that a self funded plan is not governed by sub part (a) of [Conn. Gen. Stat. § 5-259], it is equally plausible that the legislature did not intend to forego insurance department oversight, mentioned at least twice in the statute, when it gave the comptroller the discretion to select a risk pooled plan in subsection (i) that is different from a group health plan;”

(3) “[N]othing in the powers and duties of the Comptroller [set forth in Conn. Gen. Stat. § 3-112] support an interpretation of Conn. Gen. Stat. § 5-259 that permits the Comptroller unfettered discretion to operate a health insurance plan without Insurance Department oversight;” and

(4) The Opinion does not reference the holding of Atlantic Healthcare Benefits Trust v. Googins, 2 F.3d 1 (2d Cir. 1993), which you suggest supports the conclusion that the Comptroller’s plan is an illegal multiple employer welfare association (“MEWA”).

Although my opinion did not address all of these points explicitly, each of them was in fact considered in preparing the opinion. In response to your request, I have reviewed each point in depth, taking into account your concerns. After very careful reconsideration, none of them alters my opinion that Conn. Gen. Stat. § 5-259(i) authorizes the Comptroller to create a risk-pooled, self-funded health plan for municipal employers and employees and that municipalities participating in such an arrangement are not unauthorized insurers.

With regard to your first point, I disagree that the language of Conn. Gen. Stat. § 5-259(i) exempting self-funded plans created under subsection (i) from compliance with Part V of Chapter 700c governing small employer “Blue Ribbon Health Care Plans” means that all other insurance provisions of Title 38 must therefore apply to subsection (i) plans.2 On the contrary, the plain language of subsection (i) refutes such an interpretation. In contrast to subsections (a) and (f) of Conn. Gen. Stat. § 5-259, which explicitly require approval of the Insurance Commissioner, it is notable that subsection (i) by its terms does not require such approval or oversight. The fact that the Legislature included such express language in other subsections of the same statute but did not do so in subsection (i) evidences that the Legislature did not intend the Insurance Department to oversee subsection (i) plans. Interlude, Inc. v. Skurat, 266 Conn. 130, 143 (2003)(the court "generally presume[s] that when the legislature repeatedly uses certain terminology and chooses not to use that terminology in a particular provision, it has intended a different meaning"); In re Darien, 82 Conn. App. 169, 179, cert. denied, 269 Conn. 904 (2004).

This interpretation is buttressed by the legislative history of § 5-259(i). In 2001, the Legislature amended § 5-259 to permit the Comptroller to arrange health coverage for nonprofit employees, in addition to municipal employees. See 2001 Conn. Pub. Acts No. 01-30. The amendment also gave the Comptroller authority to arrange and procure “health benefit plans that vary from the plan or plans procured under subsection (a)." Id. These "alternate plans," however, could be "offered to municipal employees on a fully underwritten basis only." Id. "Notwithstanding any provision of law," such alternate plans could be offered to nonprofits on either a fully underwritten or risk pooled basis, at the discretion of the Comptroller. Id.

In 2003, § 5-259 was amended again. This time it was expanded to permit the Comptroller to provide coverage for the employees of small employers and community action agencies, in addition to municipal and non-profit employees. See 2003 Conn. Pub. Acts No. 03-149. This amendment deleted the requirement that coverage for municipal employees had to be on a fully underwritten basis only and instead provided that "[n]otwithstanding any provision of law, the coverage provided under this subsection may be offered to employees on either a fully underwritten or risk-pooled basis at the discretion of the Comptroller." Id. The sentence continued, however, with an exception applicable solely to small employers. As to them, the statute stated "except that coverage to small employers shall be fully underwritten in accordance with part V of chapter 700c." Id. Thus, as of 2003, the Comptroller had authority to offer alternate plans under subsection (i) on either a fully underwritten or risk-pooled basis to all groups except small employers. Id.

In 2005, the legislature amended § 5-259 again, this time to permit the Comptroller to offer coverage under subsection (i) to small employers, like all other groups included in the statute, on either a fully underwritten or risk-pooled basis. 2005 Conn. Pub. Acts No. 05-238. To make this change, subsection (i) was amended to read, "[n]otwithstanding any provision of part V of chapter 700c, the coverage provided under this subsection may be offered on either a fully underwritten or risk-pooled basis at the discretion of the Comptroller." Id. Thus, the purpose of the phrase "notwithstanding any provision of part V of chapter 700c" was simply to clarify that although small employers previously could only be offered plans that were fully underwritten in accordance with part V of chapter 700c, the law was now changed to permit the Comptroller to offer risk-pooled plans to such employees. The Comptroller’s already existing authority to offer the the option of risk pooled plans to municipalities was not affected by this amendment. Thus, the reference to part V of chapter 700c contained in P.A. 05-238 cannot be read to import a requirement of Insurance Department oversight to plans offered to municipalities that was never contained in subsection (i).

With regard to your second point, the fact that subsection (i) makes reference to subsection (a) plans in one part for one purpose does not mean that the Legislature by doing so intended subsection (i) plans to be subject to the oversight of the Insurance Department. Such an interpretation would be an insupportable stretch that would conflict with the plain language of subsection (i) itself, which does not require such oversight. Indeed, you yourself concede that it is “equally plausible” that a subsection (i) plan is not governed by subsection (a). I conclude that it is not simply “plausible,” but in fact the clear legislative intent that subsection (i) plans be distinct from subsection (a) plans, and not subject to Insurance Department oversight. As discussed supra, subsection (i) by its terms does not require the Insurance Commissioner’s approval for its authorized plans, whereas subsection (a) by its terms does.

In your third point, you note that the Comptroller’s powers set forth in Conn. Gen. Stat. § 3-112 do not explicitly permit her to operate a health plan without Insurance Department oversight. Article fourth, section 24 of the State Constitution provides that, in addition to the Comptroller’s authority to “adjust and settle all public accounts,” “[t]he general assembly may assign to [the Comptroller] other duties in relation to his office…and shall prescribe the manner in which his duties shall be performed.” It is clear that Conn. Gen. Stat. § 5-259 of Chapter 67 expands the Comptroller’s powers and duties to include the arrangement and procurement of health insurance plans for a number of groups, including municipalities. Consistent with this constitutional provision, nothing in § 3-112 prohibits other statutory sections, such as § 5-259, from providing specific authority to the Comptroller for such conduct. As discussed in my opinion, I conclude that § 5-259(i) provides such specific authority.

Lastly, you question why my opinion did not discuss Atlantic Healthcare Benefits Trust v. Googins, 2 F.3d 1 (2d Cir. 1993), which you suggest supports your position that the Comptroller’s plan is an illegal MEWA. I disagree that Atlantic Healthcare supports this conclusion. Atlantic Healthcare dealt solely with the issue whether ERISA preempts the application of the state insurance laws to MEWAs. In contrast to Atlantic, the present matter does not involve the preemptive scope of ERISA. Instead, what is at issue here is the Comptroller’s specific statutory authority under Conn. Gen. Stat. § 5-259(i). Because neither the Comptroller’s powers, nor the interpretation of § 5-259, is anywhere addressed or even mentioned in Atlantic, it sheds no light on the present matter and was therefore unnecessary to discuss in my opinion.3

Based on the foregoing analysis, I reaffirm my opinion, issued pursuant to my authority under Conn. Gen. Stat. § 3-125, that Conn. Gen. Stat. § 5-259(i) authorizes the Comptroller to establish a voluntary, risk-pooled, self-funded health plan for municipal employers and employees and that municipalities participating in such an arrangement would not be considered unauthorized insurers.

I trust that you will abide by my legal opinion, as reaffirmed in this letter, and will rescind the notice that you issued on November 19, 2007 to all insurance companies and other potential responders to the Request For Proposals issued by the Comptroller. The notice is obviously inconsistent with this opinion.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

1 Although I issued my opinion to the Comptroller on July 25, 2007, you did not express your concerns to me until almost four months later, on November 19, 2007. By this time, the Comptroller had already issued a Request for Proposals seeking bids on a self-funded, risk-pooled municipal health plan, and you had issued your notice to all insurance companies and others that deliver or issue individual and group health insurance policies in Connecticut that you disagreed with my opinion and they were “prohibited from entering into an arrangement that violates the insurance laws.”

2 The specific language of subsection (i) to which you refer states that:

The Comptroller may arrange and procure for the employees and eligible individuals under this subsection health benefit plans that vary from the plan or plans procured under subsection (a) of this section. Notwithstanding any provision of part V of chapter 700c, the coverage provided under this subsection may be offered on either a fully underwritten or risk-pooled basis at the discretion of the Comptroller.

Conn. Gen. Stat. § 5-259(i)(emphasis added). Part V of chapter 700c, entitled “Blue Ribbon Health Care Plans,” sets forth regulatory requirements for small employer health plans, which are plans offered for employers with no more than 50 eligible employees. See Conn. Gen. Stat. §§ 38a-564 to 38a-574.

3 In Atlantic Healthcare Benefits Trust v. Googins, 2 F.3d 1 (2d Cir. 1993), entities that offered health care benefits to employers through multiple employer welfare arrangements (“MEWAs”) argued that the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”), preempted the authority of Connecticut’s Commissioner of Insurance to regulate MEWAs. The Second Circuit disagreed, concluding that notwithstanding ERISA’s broad preemptive scope, a 1983 amendment to ERISA explicitly authorized states to regulate self-funded MEWAs as insurance companies as long as the regulations were not inconsistent with ERISA. Id. at 5. Concluding that the plaintiffs had failed to identify any provision of Connecticut’s insurance laws that was inconsistent with ERISA, the court granted summary judgment for the State.