HEALTH ‑- INSURANCE ‑- HEALTH INSURANCE POOL ‑- CHIROPRACTORS ‑- ASSESSMENT OF HEALTH CARE SERVICE CONTRACTOR THAT PROVIDES COVERAGE EXCLUSIVELY FOR CHIROPRACTIC SERVICES

HEALTH ‑- INSURANCE ‑- HEALTH INSURANCE POOL ‑- CHIROPRACTORS ‑- ASSESSMENT OF HEALTH CARE SERVICE CONTRACTOR THAT PROVIDES COVERAGE EXCLUSIVELY FOR CHIROPRACTIC SERVICES

RCW 48.41.090 provides for assessment of members of the Washington State Health Insurance Pool based on the number of persons insured under the member's health plan.  A member is not subject to assessment if the coverage provided does not fall within the definition of "health plan."  RCW 48.41.030(9) defines "health plan" as an arrangement that includes coverage for both hospital and medical benefits.  Thus, coverage that is limited exclusively to chiropractic services with no hospital services is not a health plan and a member is not subject to assessment with respect to persons so covered.

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                                                                    June 7, 1991

Honorable Larry L. Vognild
State Senator, District 38
408-A Legislative Building
Olympia, Washington 98504
                                                                                                                 Cite as:  AGO 1991 No. 20

Dear Senator Vognild:

            By letter previously acknowledged, you asked for our opinion on a question we paraphrase as follows:

            Is a health care service contractor that provides health insurance coverage exclusively for chiropractic services to its subscribers, and does not provide health insurance coverage for hospital services or other medical services, subject to assessments under RCW 48.41.090 as a member of the health insurance pool established by chapter 48.41 RCW?

We conclude that the answer is "no" for the reasons set forth below.

             [[Orig. Op. Page 2]]

                                                                BACKGROUND

            In 1987 the Legislature enacted the Washington State Health Insurance Coverage Access Act.  Laws of 1987, ch. 431 (codified as amended at RCW 48.41).  The general purpose of the Act was to provide comprehensive health insurance coverage to Washington residents otherwise unable to obtain such coverage at reasonable cost because of their medical conditions.  See RCW 48.41.020, .100(1).  The Act established a high risk health insurance pool in which commercial insurers and other entities must participate as "members."  RCW 48.41.030(13), .040(1).

            The pool offers a comprehensive health insurance policy to persons who have been refused health insurance coverage by any pool member.  RCW 48.41.100, [48.41].110.  Certain minimum benefits must be provided by the pool policy.  These include hospital services, health care services, including surgery, rendered by professional health care providers, outpatient visits for diagnosis or treatment of mental illness or alcohol, drug, or chemical dependency or abuse, prescription drugs and contraceptive devices, skilled nursing services, home health services, chemotherapy and radiation therapy, diagnostic x-rays and laboratory tests, and hospice services.  RCW 48.41.110(1)(a)-(q).

            The pool charges enrolled individuals premiums that can be no higher than 150% of the current small group rates charged by pool members for group standard risks.  RCW 48.41.200.  These maximum rates are inadequate to cover all the paid claims and other expenses of the pool.  The resulting pool deficits are recouped through annual assessments of the pool members.  RCW 48.41.040(4), [48.41].050(5), (6), [48.41].060(4), [48.41].090.

            Assessments may be deducted by pool members in computing insurance premium taxes or business and occupation taxes payable by the members.  RCW 48.14.022(2), 82.04.4329; see WAC 458-20-163(2).  Because these provisions permit only tax deductions rather than tax credits,1/

            however, pool members must pass on most of the costs of assessments to other health insurance purchasers in the form of higher premiums.

                                                                     ANALYSIS

            Your question concerns a health care service contractor that provides insurance coverage exclusively for chiropractic services  [[Orig. Op. Page 3]] and does not provide coverage for hospital services or other comprehensive health care services.  You ask whether such a health care services contractor is subject to assessments under RCW 48.41.090 as a member of the pool.

            We begin our analysis of this issue by examining the language of RCW 48.41.090, which prescribes the method for determining pool members' assessments.2/

            This section provides in part:

                        (1)  Following the close of each accounting year, the pool administrator shall determine the net premium (premiums less administrative expense allowances), the pool expenses of administration, and incurred losses for the year, taking into account investment income and other appropriate gains and losses.

                        (2)(a)  Each member's proportion of participation in the pool shall be determined annually by the board based on annual statements and other reports deemed necessary by the board and filed by the member with the commissioner; andshall be determined by multiplying the total cost of pool operation by a fraction, the numerator of which equals that member's total number of resident insured persons, including spouse and  [[Orig. Op. Page 4]] dependents under the member's health plan in the state during the preceding calendar year, and the denominator of which equals the total number of resident insured persons including spouses and dependents insured under all health plans in the state by pool members.

                        (b) Any deficit incurred by the pool shall be recouped by assessments among members apportioned under this subsection pursuant to the formula set forth by the board among members.

(Emphasis added.)  According to the formula in RCW 48.41.090(2), each pool member's annual assessment is to be calculated by multiplying the pool's deficit by the following fraction:  Washington residents insured under the member's health plans/Washington residents insured under all members' health plans.  Thus, under the statute, two conditions must be satisfied before any entity is subject to assessments:  (1) it must be a "member" and (2) it must insure Washington residents under a "health plan."

            "Health plan" and "member" are defined in RCW 48.41.030(9)3/

            and (13)4/

            respectively.  Therefore, unless  [[Orig. Op. Page 5]] the context clearly requires otherwise, these statutory definitions control the meaning of these words whenever they appear in chapter 48.41 RCW.  See Seattle v. Shepherd, 93 Wn.2d 861, 866, 613 P.2d 1158 (1980); State v. Leek, 26 Wn. Ap. 651, 655-56, 614 P.2d 209,review denied, 94 Wn.2d 1022 (1980); RCW 48.41.030; 1A C. Sands,Statutory Construction § 27.02 (4th ed. rev. 1985).

            The statutory definition of "health plan" in RCW 48.41.030(9) leads us to conclude that a health care service contractor providing insurance coverage exclusively for chiropractic services is not subject to assessments under RCW 48.41.090.  Because the health care service contractor described in your question does not provide coverage for hospital services, we conclude that it does not insure any Washington residents under a "health plan," and therefore is not subject to assessments.

            The definition of "health plan" in RCW 48.41.030(9) has three parts.  The first part is the basic definition of the term:

                        "Health plan" means any arrangement by which persons, including dependents or spouses, covered or making application to be covered under this pool, have access to hospitaland medical benefits or reimbursement . . .

(Emphasis added.)  We read this language as excluding from the definition of "health plan" any arrangement that does not provide at least some coverage for both hospital services and other medical services.

            In reaching this conclusion, we recognize that courts sometimes have construed "and" to mean "or," and vice versa, in statutes.  See State v. Keller, 98 Wn.2d 725, 728-29, 657 P.2d 1384 (1983); 1A C. Sands, § 21.14.  The courts have done so, however, only when necessary to give effect to the probable intent of the Legislature.  E.g.,State v. Keller, supra; Geiger v. Kobilka, 26 Wash. 171, 174-75, 66 P. 423 (1901).  In the absence of clear evidence of a contrary legislative intent, "and"  [[Orig. Op. Page 6]] is presumed to be used in the conjunctive sense and does no mean "or."  See In re Discipline of Blauvelt, 115 Wn.2d 735, 743, 801 P.2d 235 (1990);State v. Tiffany, 44 Wash. 602, 604, 87 P. 932 (1906); 1A C. Sands, § 21.14, at 130.  In this instance, we have found no compelling evidence that the Legislature, contrary to its true intent, inadvertently used "and" rather than "or" in the definition of "health plan."5/

             The second part of the definition of "health plan" consists of the participial phrase following the word "reimbursement" in the first sentence of RCW 48.41.030(9).  The phrase reads:

            including any group or individual disability insurance policy; health care service contract; health maintenance agreement; uninsured arrangements of group or group-type contracts including employer self-insured, cost-plus, or other benefit methodologies not involving insurance or not governed by Title 48 RCW; coverage under group-type contracts which are not available to the general public and can be obtained  [[Orig. Op. Page 7]] only because of connection with a particular organization or group; and coverage by medicare or other governmental benefits.

(Emphasis added.)

            The words "including" and "includes" have various shades of meaning, depending on the context in which they are used.  In re Midas Coin Co., 264 F. Supp. 193, 198 (E.D. Mo. 1967).  Sometimes these words introduce illustrative examples of a general class.6/

            They often are used to introduce a partial listing of the members of a class previously defined.  "Includes," when used in this manner, essentially means "includes but is not limited to."

            In other instances, these words may signal an expansion of meaning of previous language.7/

            They often are used to add to a previously defined class something else that does not naturally belong to the class.  In these instances, they have the sense of "also," "as well as," "in addition to," or "together with."  "Includes," when used in this manner, essentially means "also includes" or "also means."

            In still other instances, these words may be used to specify particularly that which belongs to a general class.8/

            In these instances, they are used in a restrictive sense as words of limitation or enumeration, defining all the members of the class and excluding everything else.  "Includes," when used in this manner, is synonymous with "means."

            Our review of the entire Act leads us to believe that the Legislature probably used "including" in the second part of the definition to introduce illustrative examples of the "arrangements" defined as "health plans," without changing the meaning of "health plan" in the first part of the definition.

            The basic definition of "health plan" is both broad and exclusive.  As defined in RCW 48.41.030(9), this term "means any arrangement by which persons . . . have access to hospital and medical benefits or reimbursement . . . ."  Where "means" is used in a definition, the term and its definition are to be  [[Orig. Op. Page 8]] interchangeable equivalents.  Helvering v. Morgan's, Inc., 293 U.S. 121, 125 n.1, 79 L. Ed. 232, 55 S. Ct. 60 (1934);see 2A C. Sands, Statutory Construction § 47.07 (4th ed. rev. 1984) ("A definition which declares what a term means . . . excludes any meaning that is not stated.").  As used in RCW 48.41.030(9), "any" means "every."  See State ex rel. Evans v. Brotherhood of Friends, 41 Wn.2d 133, 145, 247 P.2d 787 (1952).  Thus, the Legislature's basic definition of "health plan" describes a class consisting of every arrangement providing coverage for hospital and medical benefits or reimbursement, and consisting of no other arrangements.

            We doubt that the Legislature, having defined "health plan" in this manner, intended to expand this basic definition substantially by inserting the participial phrase in the definition.  The limiting language, "by which persons . . . have access to hospital and medical benefits or reimbursement," would be rendered essentially meaningless if the participial phrase were to be given this kind of expansive interpretation.

            The third part of the definition of "health plan" in RCW 48.41.030(9) consists of the second sentence of that subsection.  The second sentence reads:

            This term ["health plan"] includes coverage through "health insurance" as defined under this section, and specifically excludes those types of programs excluded under the definition of "health insurance" in subsection (8) of this section.

            There are two possible ways to read the first clause of this sentence.  The clause could mean that every arrangement falling within the definition of "health insurance" in RCW 48.41.030(8)9/

            is a "health plan," regardless of the scope of  [[Orig. Op. Page 9]] coverage the arrangement provides.  Alternatively, the clause could mean that an arrangement falling within the definition of "health insurance" is a "health plan" if the arrangement provides coverage for hospital services and other medical services.

            We believe this alternative construction is the more reasonable of the two.  When viewed in isolation, the language of the clause could be read otherwise, but statutes should be read in their entirety and not piecemeal.  See Donovick v. Seattle‑First Nat. Bank, 111 Wn.2d 413, 415-16, 757 P.2d 1378 (1988);State v. Parker, 97 Wn.2d 737, 741, 649 P.2d 637 (1982).  Therefore, the meaning of the clause should be determined in context with the other parts of the definition of "health plan" and the remainder of the act.  See State ex rel. Tarver v. Smith, 78 Wn.2d 152, 155-58, 470 P.2d 172 (1970),cert. denied, 402 U.S. 1000 (1971); State v. Bartholomew, 56 Wn. App. 617, 620-21, 784 P.2d 1276 (1990).

            First, we believe the clause should be read in conjunction with the second part of the definition consisting of the participial phrase discussed above.  Repeated here for ease of reference, the phrase reads:

            including any group or individual disability insurance policy; health care service contract; health maintenance agreement; uninsured arrangements of group or group-type contracts including employer self-insured, cost-plus, or other benefit methodologies not involving insurance or not governed by Title 48 RCW;coverage under group-type contracts which are not available to the general public and can be obtained only because of connection with a particular organization or group; and coverage by medicare or other governmental benefits.

(Emphasis added.)  The clause contains similar language‑-"includes coverage through 'health insurance.'"  This similarity suggests that the Legislature intended the clause and the phrase  [[Orig. Op. Page 10]] to serve the same function in the definition.10/

            As we explained above, we believe the function of the phrase is to present illustrative examples of the "arrangements" defined as "health plans," without expanding the meaning of "health plan" in the first part of the definition.

            Second, there would be strange consequences if the definition of "health plan" were to include arrangements providing coverage only for limited medical services and no hospital services.  The term appears not only in RCW 48.41.090(2), but also in RCW 48.41.160(1), which reads:

            A pool policy offered under this chapter shall contain provisions under which the pool is obligated to renew the policy until the day on which the individual in whose name the policy is issued first becomes eligible for medicare coverage.  At that time, coverage of  [[Orig. Op. Page 11]] dependents shall terminate if such dependents are eligible for coverage under a different health plan.  Dependents who become eligible for medicare prior to the individual in whose name the policy issued, shall receive benefits in accordance with RCW 48.41.150.

(Emphasis added.)  According to the broad interpretation of "health plan" that we have rejected, coverage of a dependent would terminate under RCW 48.41.160(1) if the dependent were eligible for coverage under virtually any group or individual disability insurance policy or health care service contract, regardless of whether the policy or contract offered coverage for hospital services.  Under RCW 48.41.130, however, this same individual's right to purchase a pool policy could be denied only if he were eligible for coverage substantially equivalent to a pool policy from some other source.  A pool policy provides comprehensive health insurance coverage, including coverage for hospital services.  See RCW 48.41.110(1)(a).  Such inconsistent results should be avoided, if possible.  See Nisqually Delta Ass'n v. DuPont, 103 Wn.2d 720, 733, 696 P.2d 1222 (1985).

            Third, in RCW 48.41.040(4) the Legislature expressed its intent that the plan of operation for the pool provide for "the sharing of pool losses on an equitable, proportionate basis among the members of the pool."11/

            We believe our interpretation of sharing of pool losses than would a broader interpretation of the definition.  Typically, premium charges for limited medical coverage will be only a small fraction of premium charges for comprehensive coverage.  If "health plan" were to include arrangements providing coverage only for limited medical services and no hospital services, the burden of pool assessments on these arrangements often would be grossly disproportionate as a percentage of premium charges to the corresponding burden on arrangements providing comprehensive health insurance coverage.

             [[Orig. Op. Page 12]]

            This is because RCW 48.41.090(2) apportions pool losses on a per capita basis rather than on the basis of total premium volume.  For example, of a member's health plan covered 5,000 individuals (insured persons, spouses, and dependents) and the total number of individuals covered by all members' health plans were 250,000 the fractional share of pool losses for that member would be .02 (5,000 divided by 250,000).  If the pool incurred a deficit of $1,000,000, that member would be assessed $20,000 ($1,000,000 times .02) or $4 per covered individual.  The member would be subject to the $20,000 assessment regardless of the scope of coverage or the premium charged.  Thus, if the member charged an annual premium of $80 per individual for limited medical coverage, it would be assessed the same as another member charging an annual premium of $1,600 per individual for more comprehensive medical coverage.  The first member's assessment would be 5% of its annual premiums; the second member's assessment would be 0.25% of its annual premiums.  Based on the language of RCW 48.41.040(4), we doubt that the Legislature intended such a disproportionate sharing of pool losses.12/

             Fourth, the legislative history of RCW 48.41.090 suggests that the Legislature did not intend every arrangement within the definition of "health insurance" to also be a "health plan," regardless of the scope of coverage the arrangement provides.  The original version of the 1987 bill that established the pool apportioned pool losses on the basis of the member's total  [[Orig. Op. Page 13]] premium charges for "health insurance" written in the state.13/

            The House Health Care Committee recommended a substitute bill, which the House substituted for the original bill and passed.  House Journal, 50th Legislature (1987), at 248, 384-85.  The substitute bill consisted of a striking amendment that, among other things, changed the basis for apportioning pool losses to the per capita formula now contained in RCW 48.41.090(2).14/

             [[Orig. Op. Page 14]]

When the House committee changed the method for apportioning losses, it also substituted the term "health plan" for the term "health insurance" in the revised formula.

            This substitution of the term "health plan" may have been related to several sections of the striking amendment apparently designed to force employee welfare benefit plans and other self-insured or uninsured arrangements to participate as members of the pool to the extent authorized by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461.

             [[Orig. Op. Page 15]]

CompareSubstitute House Bill 99, §§ 2, 3, 4, 9, 13, 18, 20, 50th Legislature (1987) with House Bill 99, §§ 2, 3, 4, 8, 9, 18, 20, 50th Legislature (1987).  See also House Comm. on Health Care, 50th Legislature, Committee Report on HB 99 as of February 13, 1987; Recorded Proceedings of House Health Care Committee Hearing, February 4, 1987 (testimony of Richard Horsman).  The goal of bringing these entities into the pool could have been accomplished, however, without using the term "health plan" in RCW 48.41.090.  Therefore, we believe the term "health plan" probably was chosen in part to also restrict the entities subject to assessment to those providing reasonably comprehensive coverage.  If "health plan" were interpreted to include every arrangement within the definition of "health insurance," this probable legislative purpose would be defeated.

            Finally, the Legislature's general statutory statement of purpose in RCW 48.41.020 supports our interpretation of "health plan."15/

            The last sentence of RCW 48.41.020 reads:

            It is the intent of the Washington state health insurance coverage access act to provide a mechanism to insure the availability of comprehensive health insurance to persons unable to obtainsuch insurance coverage on either an individual or group basis directly under anyhealth plan.

(Emphasis added.)  This sentence suggests that the Legislature intended the term "health plan" to be limited to entities providing comprehensive health insurance coverage.  This is consistent with our conclusion that the definition of "health plan" in RCW 48.41.030(9) excludes any arrangement that does not provide at least some coverage for both hospital services and other medical services.

            We have concluded that the health care service contractor described in your question does not insure any Washington residents under a "health plan" as that term is used in RCW 48.41.090(2) because the health care service contractor does not provide coverage for hospital services.  This conclusion eliminates any need for us to determine whether the health care  [[Orig. Op. Page 16]] service contractor's program is specifically excluded from the definition of "health plan" by the last sentence of that definition.16/

            For similar reasons, we need not determine whether the health care service contractor is a "member" as that term is used in RCW 48.41.090(2).17/

             In summary, a health care service contractor that provides health insurance coverage exclusively for chiropractic services, and does not provide coverage for hospital services or other medical services, is not subject to assessments under RCW 48.41.090.

            We trust that this opinion will be of assistance to you.

Very truly yours,

KENNETH O. EIKENBERRY
Attorney General

DONALD F. COFER
Assistant Attorney General