(See PDF for image) STATE OF WISCONSIN
DEPARTMENT OF JUSTICE
BRAD D. SCHIMEL
Paul W. Connell
Deputy Attorney General
Delanie M. Breuer
Chief of Staff
114 East, State Capitol
P.O. Box 7857
Madison, WI 53707-7857
November 6, 2017
The Honorable Scott Walker
State of Wisconsin
115 East, State Capitol
Madison, WI 53702
Dear Governor Walker:
¶ 1. You ask whether chapter 40 of the Wisconsin Statutes authorizes the State of Wisconsin Group Insurance Board (the “Board”) to establish a self-insured group insurance plan open to municipal employers. If so, you ask whether article VIII, section 3 of the Wisconsin Constitution, which prevents extending “the credit of the state,” would prohibit municipal participation in those plans. As described on the Board’s website, self-insurance means that, “instead of paying health plans a monthly premium for coverage, the State will pay medical claims directly through third-party administrators.”
¶ 2. Under chapter 40, the Board is authorized to offer group health insurance plans that public employers, including the State and other public employers, may offer to their employees. See Wis. Stat. §§ 40.03(6), 40.51(6)–(8m). The Board is authorized to contract with insurers for those plans or may offer any plan on a self-insured basis. Wis. Stat. § 40.03(6)(a)1.–2. In turn, municipal employers may offer their employees a plan through “a program offered by” the Board.
Wis. Stat. § 40.51(7)(a). I conclude that the plain language of these statutes allows municipalities to offer a self-insured plan if offered by the Board. Further, article VIII, section 3 of the Wisconsin Constitution poses no bar. That section forbids legally binding the State as a guarantor of a private corporation’s debt. Because offering municipalities self-insured plans does not involve that kind of relationship, the constitutional provision does not bar it.
¶ 3. The meaning of provisions in chapter 40 presents a question of statutory interpretation. “[S]tatutory language is interpreted in the context in which it is used; not in isolation but as part of a whole; in relation to the language of surrounding or closely-related statutes; and reasonably, to avoid absurd or unreasonable results.” State ex rel. Kalal v. Circuit Court for Dane Cty., 2004 WI 58,
¶ 46, 271 Wis. 2d 633, 681 N.W.2d 110. “Statutory language is read where possible to give reasonable effect to every word, in order to avoid surplusage.” Id. “If this process of analysis yields a plain, clear statutory meaning, then there is no ambiguity, and the statute is applied according to this ascertainment of its meaning.” Id. (citation omitted).
¶ 4. Wisconsin Stat. § 40.03(6) grants the Board authority to offer group insurance plans. The Board may either contract with an insurer or may provide any plan on a self-insured basis:
The group insurance board:
(a) 1. Shall, on behalf of the state, enter into a contract or contracts with one or more insurers authorized to transact insurance business in this state for the purpose of providing the group insurance plans provided for by this chapter; or
2. May, wholly or partially in lieu of subd. 1, on behalf of the state, provide any group insurance plan on a self-insured basis in which case the group insurance board shall approve a written description setting forth the terms and conditions of the plan, and may contract directly with providers of hospital, medical or ancillary services to provide insured employees with the benefits provided under this chapter.
¶ 5. Chapter 40 specifically allows municipal employers to provide Board plans to their employees. Wisconsin Stat. § 40.51, titled “Health care coverage,” provides that “[a]ny employer, other than the state, . . ., may offer to all of its employees a health care coverage plan through a program offered by the group insurance board.” Wis. Stat. § 40.51(7)(a). “[E]mployer” includes “any county, city, village, town, school district, other governmental unit or instrumentality of 2 or more units of government.” Wis. Stat. § 40.02(28). An “employee” is “any person who receives earnings as payment for personal services rendered for the benefit of any employer.” Wis. Stat. § 40.02(26).
¶ 6. Thus, the Board may offer “any group insurance plan on a self–insured basis,” and a municipal employer may “offer . . . a health care coverage plan through a program offered by the group insurance board.” Wis. Stat. §§ 40.03(6)(a)2., 40.51(7)(a). Applying these sections as written, a municipal employer may offer a
self-insured plan if offered by the Board.
¶ 7. An Attorney General opinion from 1987 reached a contrary conclusion, but it contains no significant analysis. 76 Op. Att’y Gen. 311 (1987), 1987 WL 341185. Rather, the opinion largely discusses other topics. Only the final statements summarily address whether the Board may establish a “self-funded” plan available to municipal employers. The opinion states that the words “on behalf of the state”
in the self-insurance subsection, Wis. Stat. § 40.03(6)(a)2., should be dispositive because the clause references only “the state,” as opposed to other public employers.
76 Op. Att’y Gen. at 315. However, that conclusion incorrectly conflates the duties delegated to the Board to establish plans with the State’s separate role as an employer.
¶ 8. In the present context, “on behalf of the state” means that the
Board—which is a part of the State of Wisconsin’s Department of Employee Trust Funds—may act for the State by offering plans that are made available to public employers. A common meaning of “on behalf of” is as to act “in place of” or as an “agent” of another entity. See, e.g., Wis. Stat. § 49.454(1)(a)3. (discussing actions of “[a] person . . . to act in place of or on behalf of the individual” whose assets are used to form a trust); Green v. Heritage Mut. Ins. Co., 2002 WI App 297, ¶ 17,
258 Wis. 2d 843, 655 N.W.2d 147 (“[A]gent merely contracts on behalf of a disclosed principal . . . .” (citation omitted)). The Board acts “on behalf of the state” when it contracts for, approves of, and otherwise makes available insurance plans.
See Wis. Stat. § 40.01 (creating ETF, including the Board, to benefit public employee participants).
¶ 9. In reaching a contrary conclusion, the 1987 opinion appears to conflate the Board’s plan-establishment role with the State’s separate role as an employer that offers plans to state employees. Wisconsin Stat. § 40.51(6) addresses the latter role, providing that the State offers plans “approved by the group insurance board” to
“all of its employees.” The State thus acts in two capacities: (1) it delegates its power to the Board to establish group insurance plans for public employees and (2) it selects plans and offers them to state employees. Wis. Stat. §§ 40.03(6), 40.51(6). Paralleling that second role, Wis. Stat. § 40.51(7) allows municipal employers to offer a
“plan through a program offered by the group insurance board.” The State’s first role—the delegation of authority to the Board to establish plans—is not limited by the second role as an employer offering plans.
¶ 10. That plain reading is further supported by the surrounding statutory text. The insurance-contract subsection uses the same phrase as the self-insurance subsection to describe the Board’s authority: the Board “[s]hall, on behalf of the state, enter into a contract or contracts with one or more insurers . . . for the purpose of providing the group insurance plans provided for by this chapter [i.e., chapter 40].” Wis. Stat. § 40.03(6)(a)1. If it were true that “on behalf of the state” excludes municipalities from self-insured plans under subsection (6)(a)2., the same language would exclude municipalities from insurer-based plans under subsection (6)(a)1.
That result would be contrary to express language in Wis. Stat. §§ 40.03(6)(a) and 40.51(7)(a).
¶ 11. To illustrate, the Board’s powers stated in Wis. Stat. § 40.03(6)(a)1.–2. apply to “any” plans under “this chapter,” which is a reference to chapter 40.
The municipal plan provision is part of chapter 40. Under the plain language, it is therefore encompassed by the authority granted to the Board. Further, the statutes broadly allow municipal employers to offer plans “through a program offered by” the Board, without relevant limitation. Wis. Stat. § 40.51(7)(a). The 1987 opinion does not give effect to that express language, in conflict with the principles of statutory interpretation. State ex rel. Kalal, 271 Wis. 2d 633, ¶ 46.