Could a Texas health insurer cover some speech and hearing impairments but exclude others because they arose from a birth defect or developmental problem?

Texas AG Opinion JM-621: Speech and Hearing Coverage

Plain-English summary

The State Board of Insurance asked how to read a statute requiring group health plans to offer benefits for the necessary care and treatment of speech or hearing loss. Some insurers had refused to cover impairments caused by birth defects or developmental problems while covering impairments secondary to an illness or injury.

JM-621 concluded that the initial offer had to include speech and hearing problems regardless of cause, with benefits no less favorable than those for physical illness generally. A policyholder could reject the coverage, and the parties could negotiate such items as dollar limits and deductibles.

The phrase "alternative level of benefits" did not, however, permit an insurer to cover only selected categories of impairment. The summary stated, "an insurer may not offer or issue a plan that covers only certain types of speech and hearing problems and not others." Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

Currency note

This opinion was issued in 1987. 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.

Common questions

Could an insurer limit its initial offer to impairments caused by illness or injury?

No. The opinion said the initial offer had to include treatment of speech and hearing problems "regardless of the cause of such problems." Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

Could the policyholder reject speech and hearing coverage altogether?

Yes. JM-621 stated that article 3.70-2(G) allowed the insured to reject coverage for speech and hearing problems. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

What could the insurer and policyholder negotiate?

The opinion said they could negotiate "dollar limits, deductibles, and other benefits," but could not cover some hearing problems while excluding speech or hearing problems arising from selected causes. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

Background and statutory framework

Article 3.70-2(G) required covered insurers, nonprofit service-plan corporations, and HMOs to offer group-plan benefits for necessary care and treatment of speech or hearing impairment. Those benefits could not be less favorable than benefits for physical illness generally and were subject to the same duration, dollar, deductible, and coinsurance terms.

The statute also allowed the group policyholder to reject coverage or select an alternative level of benefits. JM-621 called the wording "exceedingly difficult to construe" and urged legislative amendment. It nevertheless distinguished an alternative benefit level from alternative coverage. In its reading, the former permitted different financial terms, not cause-based exclusions. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

Citations and references

Statute:

• Texas Insurance Code article 3.70-2(G)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0621
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0621.pdf

Original opinion text

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

January 15, 1987

Mr. Lyndon L. Olson, Jr.
Chairman
State Board of Insurance
1110 San Jacinto Boulevard
Austin, Texas 78701

Opinion No. JM-621

Re: Claims for loss or impairment of speech or hearing under article 3.70-2(G) of the Insurance Code

Dear Mr. Olson:

You have asked numerous questions about the construction of article 3.70-2(G) of the Insurance Code, which provides:

Insurers, nonprofit hospital and medical service plan corporations subject to Chapter 20 of this code, and health maintenance organizations transacting health insurance or providing other health coverage in this state shall offer and make available, under group policies, contracts, and plans providing hospital and medical coverage on an expense incurred, service or prepaid basis, benefits for the necessary care and treatment of loss or impairment of speech or hearing that are not less favorable than for physical illness generally, subject to the same durational limits, dollar limits, deductibles, and coinsurance factors. Such offer of benefits shall be subject to the right of the group policy or contract holder to reject the coverage or to select any alternative level of benefits if such right is offered by or negotiated with such insurer, service plan corporation, or health maintenance organization.

Initially, we note that the language of this provision is exceedingly difficult to construe in a manner that makes sense. We believe that the legislature should address itself to amending it in its next regular session. The phrase "to select any alternative level of benefits if such right is offered by or negotiated with such insurer" has given rise to difficult questions of interpretation. You inform us that some insurers have construed that phrase to give the insurer the option of providing coverage of certain speech and hearing disabilities and not others. Specifically, some insurers have refused to cover treatment for loss or impairment of speech or hearing if the loss or impairment is a birth defect or developmental problem rather than a condition secondary to another illness or injury. You have asked us to determine what is meant by the phrase "alternate level of benefits" in article 3.70-2(G).

Article 3.70-2(G) requires insurers that provide health coverage in Texas to offer plans providing "benefits for the necessary care and treatment of loss or impairment of speech or hearing that are not less favorable than for physical illness generally." That phrase requires an offer of coverage for loss or impairment of speech or hearing; it does not authorize an initial offer limiting coverage to certain types of speech or hearing problems. Therefore, the initial offer must include benefits for treatment of speech and hearing problems, regardless of the cause of such problems, and those benefits must be as favorable as benefits for physical illness generally. See Attorney General Opinion JM-5 (1983). Article 3.70-2(G) also allows the insured to reject coverage for speech and hearing problems altogether. What the statute does not make clear is whether, once the initial offer is rejected, the insurer may offer coverage for loss or impairment of speech or hearing from certain causes and not others. Although the meaning of the phrase is obscure, we think that because the legislature chose the phrase "alternate level of benefits" rather than "alternate coverage," an insurer may not offer or issue a plan that covers only certain types of speech and hearing problems and not others. In other words, the insured and insurer may negotiate about dollar limits, deductibles, and other benefits, but they may not cover some hearing problems and exclude from coverage speech and hearing problems that stem from certain causes.

SUMMARY

Under article 3.70-2(G), an insurer may not offer or issue a plan that covers only certain types of speech and hearing problems and not others.

JIM MATTOX
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Tony Guillory and Sarah Woelk
Assistant Attorneys General