North Carolina Department of Justice
North Carolina Department of Justice
North Carolina Department of Justice
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Reply to: ANNE GOCO KIRBY INSURANCE SECTION

(919) 716-6610 FAX: (919) 716-6757

August 23, 2001

Jack W. Walker Executive Administrator Teachers’ & State Employees’ Comprehensive Major Medical Plan 4509 Creedmoor Road, Suite 102 Raleigh, NC 27612

Re: Advisory Opinion: Applicability of the consultant contract provisions of Chapter 143 to contracts between the Teachers’ and State Employees’ Comprehensive Major Medical Plan and consultants hired to assist SHP in negotiating preferred provider networks for Plan members; N.C.G.S. § 135-40.4(a)(1999).

Dear Dr. Walker:

By Memorandum dated July 3, 2001, you requested an opinion as to whether the consultant contract provisions of Chapter 143 of the North Carolina General Statutes apply to contracts between the State Employees’ Comprehensive Major Medical Plan [“SHP”] and consultants hired to assist SHP in negotiating preferred provider networks for SHP members.

Article 3C of Chapter 143 places certain restrictions on State agencies desiring to obtain consultant or advisory services from outside contractors. N.C.G.S. § 143-64.20(b) provides that “[n]o State agency shall contract to obtain services of a consultant or advisory nature unless the proposed contract has been justified to and approved in writing by the Governor . . ..” N.C.G.S. § 143-64.20(b)(1999).

The legislature has enacted several exceptions to this procedure for hiring consultants. One such exception applies to SHP. Specifically, N.C.G.S. § 135-40.4(a) provides that “[t]he design, adoption, and implementation of . . . preferred provider contracts and networks are not subject to the requirements of Chapter 143 of the General Statutes... .” (Emphasis added). The language of N.C.G.S. § 135-40.4(a) is broad, but plain. The General Assembly obviously intended to exempt SHP from the various contracting requirements of Article 3C of Chapter 143, with respect to the performance of its duty to put preferred provider contracts and networks in place. By the plain words of the statute, this exemption extends from the “design” of those contracts and networks to their “implementation.” In our opinion, the negotiation of such Jack W. Walker August 23, 2001 Page 2

contracts fits within the span of the exemption the General Assembly has established.

In sum, in our opinion G.S. § 135-40.4(a) exempts the SHP from the requirements of Article 3C of Chapter 143 of the General Statutes with respect to contracts to assist SHP in negotiating preferred provider networks. We note, however, that the exemption from the consultant contract requirements of Article 3C of Chapter 143 of the General Statutes is limited to contracts for the “design, adoption and implementation” of “preferred provider contracts and networks.” Thus, when SHP makes consultant contracts for other purposes, Article 3C will apply.

We hope that this advisory opinion will be useful to you. Please let us know if you have additional questions concerning this matter.

Very truly yours,

Reginald L. Watkins Senior Deputy Attorney General

Anne Goco Kirby Assistant Attorney General