DATE: 10 August 1995
Subject: Applicability of House Bill 1563, 1993 (Reg. Sess. 1994) N.C. Session Laws Ch. 644, to North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan
Requested By: Patricia Crawford, Associate General Counsel, University of North Carolina at Chapel Hill
Question: Are the medical child support enforcement provisions of House Bill 1563, 1993 (Reg. Sess. 1994) N.C. Session Laws Ch. 644, applicable to the North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan, or the governmental entities whose employees and retirees, along with their dependents, are eligible for coverage under the Plan or its HMO option?
Conclusion: No, the medical child support enforcement provisions of House Bill 1563, 1993 (Reg. Sess. 1994) N.C. Session Laws Ch. 644, are inapplicable to the North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan and the governmental entities whose employees and retirees, along with their dependents, are eligible for coverage under the Plan or its HMO option.
The North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan ("State Health Plan") pays benefits for employees and retired employees of the State of North Carolina and certain of their dependents in accordance with the provisions of Article 3 of Chapter 135 of the North Carolina General Statutes. Optional prepaid hospital and medical benefits plans also are available to eligible individuals pursuant to N.C. Gen. Stat. § 135-39.5B (1994).
- N.C.
- Gen. Stat. § 135-40.2 (1994) describes those persons eligible for coverage under the Plan or the HMO option, while § 135-40.1(7) (1994) governs the enrollment of dependent children in the Plan. The effective date of an individual’s coverage is determined in accordance with the provisions of N.C. Gen. Stat. § 135-40.3 (1994). An employee or retiree may elect from three types of coverage: employee only; employee and children; or employee and family coverage.
- N.C.
- Gen. Stat. § 135-40.3(d). If an employee does not enroll or add an eligible dependent to his or her coverage when first eligible, he or she may do so later, but the dependent will be subject to a 12-month waiting period for preexisting health conditions. See N.C. Gen. Stat. §§ 13540.3(b)(2), 135-40.3(c)(5). Article 3 of Chapter 135 contains no mechanism for the enrollment of a dependent of an eligible employee or retired employee by any means other than an application for coverage of the dependent by the employee or retired employee.
House Bill 1563 was ratified as 1993 (Reg. Sess. 1994) N.C. Session Laws Ch. 644 and became effective 1 October 1994. It amended Article 51 of Chapter 58 and Part 6 of Article 2 of Chapter 108A of the North Carolina General Statutes to add new provisions requiring health insurers and employers, inter alia, to permit the enrollment and coverage of children of noncustodial parents eligible for family health benefit plan coverage who are required to provide such coverage for their children pursuant to a court or administrative order. Such enrollment and coverage must be provided without regard to enrollment season restrictions, and upon request of either the custodial or the noncustodial parent, or of the North Carolina Department of Human Resources. See N.C. Gen. Stat. §§ 58-51-120(b) (1994), 108A-69(b) (1994). House Bill 1563 thus provides a mechanism for the nonjudicial enforcement of medical child support orders without action by, or the consent of, the noncustodial parent obligated to provide health coverage.
Section 1 of House Bill 1563, codified at N.C. Gen. Stat. § 58-51-115(a) (1994), determines the scope of the medical child support enforcement requirements imposed upon insurers, as delineated in Article 51 of Chapter 58, by means of the following definitions:
- (1)
- ‘Health benefit plan’ means any accident and health insurance policy or certificate; a nonprofit hospital or medical service corporation contract; a health maintenance organization subscriber contract; a plan provided by a multiple employer welfare arrangement; or a plan provided by another benefit arrangement.
- (2)
- ‘Health insurer’ means any health insurance company subject to Articles 1 through 63 of this Chapter, including a multiple employee welfare arrangement, and any corporation subject to Articles 65 and 67 of this Chapter; and means a group health plan, as defined in section 607(1) of the Employee Retirement Income Security Act of 1974.
Section 3 of House Bill 1563, which added N.C. Gen. Stat. §§ 108A-69 and 108A-70 (1994) to the statutory scheme governing North Carolina’s Medicaid program, contains identical definitions of the terms "health benefit plan" and "health insurer." It should be noted, however, that the actual enrollment and coverage obligations set forth in new § 108A-69 are imposed upon "employer[s] doing business in this State," rather than upon "health insurer[s]" as in new § 5851-120.
House Bill 1563 does not define the term, "employer doing business in this State." The use of the qualifying phrase "doing business in this State" strongly suggests that neither the State itself, nor any other governmental entity whose employees and retirees and their respective dependents are eligible for coverage under the State Health Plan, is an "employer" within the meaning of the new legislation. The use of the phrase "doing business within the State" in other legislative contexts, such as long-arm statutes, usually connotes private rather than governmental entities. Moreover, general statutes that do not expressly mention the State ordinarily do not bind it. See Yancey v. North Carolina State Highway and Public Works Commission, 222 N.C. 106, 110, 22 S.E.2d 256 (1942). It accordingly appears that the obligations imposed by § 108A-69 upon employers of parents subject to medical child support orders are inapplicable to the State Health Plan and the governmental entities whose employees and retirees and their respective dependents are otherwise eligible for coverage under the State Health Plan.
Neither the State Health Plan, nor the governmental entities whose employees and retirees and their respective dependents are eligible for coverage thereunder, meet the definition of "health insurer" set forth in Sections 1 and 3 of House Bill 1563 (N.C. Gen. Stat. §§ 58-51-115(a)(2) and 108A-69(a)(2) respectively). Neither the State Health Plan nor the governmental entities in question are health insurance companies subject to Articles 1 through 63 of Chapter 58, or corporations subject to Articles 65 and 67 of that Chapter. Likewise, neither the State Health Plan, nor governmental entities whose employees and retirees and their respective dependents are eligible for coverage thereunder, are group health plans as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974 (ERISA). This is because ERISA is, by its express terms, inapplicable to governmental plans. See 42 U.S.C. §§ 1002(32), 1003(b)(1). It therefore can be concluded that the obligations imposed upon health insurers by House Bill 1563 do not extend to the State Health Plan or to the governmental entities whose employees and retirees and their respective dependents are eligible for coverage thereunder.
The evident exclusion of the State Health Plan and governmental employers from House Bill 1563 is consistent with the federal directives that provided the impetus for the adoption of the legislation. House Bill 1563 was enacted in response to a new federal mandate contained in the Omnibus Budget Reconciliation Act of 1993 (OBRA 93). OBRA 93 amended the federal Medicaid statutes set forth in Title XIX of the Social Security Act to require, inter alia, that states wishing to continue receiving federal funding for their Medicaid programs adopt various laws relating to medical child support. See 42 U.S.C. §§ 1396a(a)(60), 1396g-1. 42 U.S.C. § 1396g1(a) sets forth the subject matter and content of the required state laws. Section 1396g-1(a)(3) details the obligations that must be imposed upon an "employer doing business within the State," but does not define the term. As noted previously, however, this term ordinarily connotes a private rather than a governmental entity. It accordingly appears that governmental entities are not subject to the obligations that states must impose upon employers pursuant to § 1396g1(a)(3).
42 U.S.C. § 1396g-1(b) defines the term "insurer" to include "a group health plan, as defined in section 607(1) of the Employee Retirement Income Security Act of 1974, a health maintenance organization, and an entity offering a service benefit plan." As noted previously, the State Health Plan is not a group health plan as defined by ERISA. Nor is it a health maintenance organization. Furthermore, the term, "entity offering a service benefit plan" generally is understood to refer to Blue Cross/Blue Shield plans, under which the insuring entity furnishes payment to health care providers pursuant to contract, rather than providing reimbursement to the consumer of health services as is done under traditional indemnity plans.
42 U.S.C. § 1396g-1(b) does not include governmental plans as defined in 29 U.S.C. § 1002(32) within its definition of the term "insurer." Congress presumably would have done so had it intended that governmental entities and governmental plans such as the State Health Plan be subject to the required state laws governing the conduct of insurers with respect to medical child support orders. It reasonably can be concluded that Congress did not intend to subject state or local governments, or governmental plans such as the State Health Plan, to the requirements of the state laws mandated by 42 U.S.C. §§ 1396a(a)(60) and 1396g-1. The evident exemption of the State Health Plan, and of the governmental entities whose employees and retirees and their respective dependents are eligible for coverage thereunder, from the provisions of House Bill 1563, accordingly is consistent with underlying federal law.
In conclusion, the medical child support enforcement provisions of House Bill 1563, 1993 (Reg. Sess. 1994) N.C. Session Laws Ch. 644, are inapplicable to the North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan and the governmental entities whose employees and retirees, along with their dependents, are eligible for coverage under the Plan or its HMO option. Medical child support orders nonetheless may be enforced directly against State employees and retirees who fail to enroll, or maintain coverage for, their eligible dependent children under the State Health Plan in accordance with the provisions of N.C. Gen. Stat. §§ 5013.4(f), 50-13.9 and 50-13.11 (1994 Cum. Supp.).
MICHAEL F. EASLEY Attorney General
Jane T. Friedensen Assistant Attorney General