Law Which Creates An Association That Would Pay Workers' Compensation Claims for Political Subdivisions
In AG Opinion DM-326, the Attorney General discussed whether proposed legislation creating an association that would pay workers' compensation claims for political subdivisions was constitutional. Op. Tex. Atty. Gen. No. DM-326 at 3424.
Because political subdivisions' membership would be mandatory, and the association would derive its funding through assessments imposed on its members, the Attorney General concluded that the proposed association would violate section 52(a). Op. Tex. Atty. Gen. No. DM-326 at 3424-26.
In reaching this conclusion, the Attorney General noted that the proposed association would operate like a mutual assessable insurance program in which subscribers contribute payments for all subscribers' losses and expenses. Op. Tex. Atty. Gen. No. DM-326 at 3425.
Such programs do not calculate payments based on each subscriber's actual expense and loss experience, because each subscriber acts as both an insured and insurer for the other subscribers. Op. Tex. Atty. Gen. No. DM-326 at 3426.
The Attorney General suggested that if the proposed association calculated payments based on the subscribers' actual claims history, the association would have self-insurance characteristics and, therefore, would be constitutional under section 52(a). Op. Tex. Atty. Gen. No. DM-326 at 3426.