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November 28, 2010

Advocating Competitive Insurance Benefits for employees of the Texas A&M University System

Kim Jarrett, J.D. Researcher R.A.W. Strategies (512) 786-3534 kimberly.jarrett@sbcglobal.net

Park Silkenson, Esq. Attorney at law Silkenson Law Firm 502 West 13th Street Austin, Texas 78701 (512) 850-4040 park@silkensonlaw.com


Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Can the Texas A&M System Board of Regents create a new beneficiary category? (including potential legal objections) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Defining a new Plus-One Financial Dependent beneficiary category (including potential legal objections) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The applicability of the Plus-One hard health benefit findings to other Texas public university systems. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .12 The ability of Texas public university systems to create new categories of Soft Benefit beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Addendum I: Beneficiary categories at issue in National Pride at Work, Inc. v. Governor of Michigan (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Addendum II: Texas Constitution, Article I, Section 32. . . . . . . . . . . . . . . . . . . . . 23 Addendum III: Texas Family Code Section 6.204 . . . . . . . . . . . . . . . . . . . . . . . . . .24 Addendum IV: University of Georgia Council Faculty Benefits Committee Domestic Partnership Soft Benefits Proposal, Appendix A: Public Colleges and Universities with Full and Partial Domestic Partner Benefits . . . . . . . . . . . . . . .25


Introduction “Employers today have made great efforts to establish employee benefit policies that do not discriminate against current employees or applicants based on age, race, marital status, sexual orientation, disability, national origin, or religion. In the process of maintaining equality and equity in monetary and non-monetary benefits, employers have found it necessary to reconsider how indirect compensation is distributed to nontraditional households, for example, domestic partnerships. At the center of this issue is employers’ need to remain competitive in attracting and retaining qualified talent,” according to James Schaefer, MBA, who is a Dallas-based health-care consultant specializing in employer-sponsored health and welfare employee benefits.1 Where the employer is a public university in a state with laws prohibiting recognition of same-sex relationships, the most urgent problem is not determining which types of benefits make financial sense, but whether certain benefits that render today’s universities competitive in faculty and staff recruitment and retention, namely those encompassing employee domestic partners, can be lawfully offered at all. According to Tiffany C. Graham in the Virginia Journal of Social Policy and the Law: “Starting in 1998, 45 states prohibited the creation or recognition of same-sex marriage, and 30 states solidified their positions through the passage of state constitutional amendments. Eighteen of these amendments extended their prohibitions even further by refusing to create or recognize civil unions, domestic partnerships, or any other alternative to traditional marriage that was patterned 1

James Schaefer, MBA, Domestic Partner Benefits in the United States-A Discussion of Issues Related to Cost, Plan Design, and Administration, Graziadio Business Review, 2010, available at http://gbr.pepperdine.edu/2010/08/domestic-partner-benefits-in-theunited-states/#_edn2 (last visited Nov. 8, 2010). 1


after marriage. It is this last group of amendments that currently poses a potentially intractable problem: Is the language employed by these amendments so broad that they arguably prevent public entities from providing Domestic Partner Benefits to their gay and lesbian employees? Public institutions around the country - especially institutions of higher learning - have struggled with this issue. If current law in their states prevents them from offering domestic partner benefits, how can they compete effectively for talented gay and lesbian employees, and retain the ones they already have?”2 The Texas Constitution and Family Code prohibit state recognition of same-sex relationships, and advocates of more competitive benefits within Texas public universities face the problem well summarized by Graham. Framing the Discussion This report updates the findings in The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System (2009)3. The 2009 report concluded that the legislative history the of the act4 regulating the University of Texas System’s employee health plans indicates Texas lawmakers intended to grant the board of regents the authority to create new categories of beneficiaries of employee health benefits.5 The report also suggested that, to avoid offending the Texas Constitution and Family Code, advocates of Texas public university employee health plans encompassing domestic partners should consider promoting new beneficiary categories defined by economic relationships, rather than by personal or family

2

Tiffany C. Graham, Exploring the Impact of the Marriage Amendments: Can Public Employers Offer Domestic Partner Benefits to their Gay and Lesbian Employees, Virginia Journal of Social Policy and the Law, 2009, 17 VAJSPL 83, at 84-85. 3 Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009. 4 Texas Insurance Code, Title 8, Subtitle H, ch. 1601, Uniform Insurance Benefits Act for Employees of the University of Texas System and the Texas A&M University System, V.T.C.A., Insurance Code § 1601.001 (2001). 5 Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 17-25. 2


relationships (i.e., relationships defined by gender, marriage alternative status, cohabitation, blood relation). This report further explores how recognition of employee financial dependents might lawfully allow the Texas A&M University System to offer both hard health benefits and Soft Benefits to a new class of people financially-related to employees. Although a narrow class of people would qualify as strictly-defined employee financial dependents, a diverse range of individuals, such as qualified employee domestic partners, parents, close friends, etc, could potentially comprise that narrow class. Because recognizing a Plus-One Financial Dependent category encompassing qualified employee domestic partners would render a university system more competitive in the recruitment and retention of faculty and staff without restricting coverage solely to employee domestic partners or basing coverage on domestic partner/marriage alternative/cohabitation status, this report will refer to the benefits in question as “Competitive Insurance Benefits,” rather than “Domestic Partner Benefits.” Focus upon “Competitive Insurance Benefits” reflects the diverse interests of people who support equal rights of employees to assign their earned benefits. Scope of this Report The Texas A&M Chapter of the American Association of University Professors commissioned this update to gather information about the following: •

The degree to which the Texas A&M System is similar to the University of Texas System in its discretion to provide Competitive Insurance Benefits (CIB) to system employees.

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The ability of the A&M System to provide Plus-One benefits for employees.

The ability of the A&M System to provide Soft Benefits to a class of people including the domestic partners of employees.

The applicability of the findings to other Texas public universities, including the University of Houston.

Potential legal objections to the findings.

Fore ease of presentation, potential legal objections will not be discussed in a separate section, but will be discussed as they relate to the preceding issues. This report was commissioned to provide background information for advocates of CIB. The information contained herein is not intended to offer legal advice. Any individual or entity considering taking action related to CIB should retain legal counsel especially for that purpose.

Can the Texas A&M System Board of Regents create a new beneficiary category? If the Texas A&M System Board of Regents creates a new category of employee health plan beneficiaries encompassing domestic partners, the first legal challenge might be an assertion that the regents do not have the authority to provide benefits to a class of people not specified in Chapter 1601 of the Texas Insurance Code (The Systems Benefits Act)6. In other words, it might be asserted that the act creates a ceiling of coverage that cannot be exceeded.

6

Texas Insurance Code, Title 8, Subtitle H, ch. 1601, Uniform Insurance Benefits Act for 4


However, there is support for the position that the Texas A&M Board of Regents has the authority to create a new category of employee health plan beneficiaries because the legislative history of the System Benefits Act regulating employee health plans indicates that the act was intended to create a floor of coverage, rather than a ceiling, and because Texas common law also supports this interpretation. One of the key findings in R.A.W. Strategies’ 2009 report was that when Texas lawmakers first began regulating state employee health plans in 1975, all employees were going to be regulated by a single piece of legislation, the “Texas Employees Uniform Group Insurance Benefits Act of 1975”, now codified as Chapter 1551 of the Texas Insurance Code (the State Benefits Act).7 Through a detailed legislative history8, the 2009 report makes clear that because lawmakers wanted Texas universities to have the local autonomy and flexibility to design unique health plans that would best enable them to attract and retain the most qualified faculty and staff, state university employee health plans became regulated by a separate act9, the Systems Benefits Act. Following are some quotes taken from the Systems Benefits Act’s legislative history. These pieces of legislative history indicate that legislators intended the act to Employees of the University of Texas System and the Texas A&M University System, V.T.C.A., Insurance Code § 1601.001 (2001). 7 Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 18, citing Audio Recording of Senate State Affairs Committee Hearing on SB 95, January 24, 1977, available at www.tsl.state.tx.ux/ref/senatetapes/65/index.html#state, file #: 878b (accessed at the Texas State Library on Aug. 12, 2009). 8 I Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 17-25. 9 Texas Insurance Code, Title 8, Subtitle H, ch. 1601, Uniform Insurance Benefits Act for Employees of the University of Texas System and the Texas A&M University System,V.T.C.A., Insurance Code § 1601.001 (2001). 5


establish minimum levels of coverage that Systems must offer to employees, while leaving the Systems free to exceed those minimum levels: “This separate program for colleges and universities can offer better benefits than the state employees’ program. Good benefits could give Texas an important edge in the highly competitive labor market for higher education.” H. Comm. Rep. on SB 95, 65th Leg., Reg. Sess., ch. 32, at 2 (1977). [Empahsis added.]10 “Employees’ interests will be protected through the administrative council and the advisory committee. And, within the guidelines set by the council, the autonomy of the colleges and universities will be respected.” H. Comm. Rep. on SB 95, 65th Leg., Reg. Sess., ch. 32, at 2 (1977). [Empahsis added.]11 “This bill establishes a uniform life, health and accident insurance program for employees of public junior and senior colleges and universities…Existing insurance programs may be kept if they meet the council’s basic standards. If a school’s program is sub-standard, the council will give the institution time to upgrade before imposing a new program.” H. Comm. Rep. on SB 95, 65th Leg., Reg. Sess., ch. 32, at 1 (1977). [Empahsis added.]12 Among its duties, the Administrative Council [that helped implement the Systems Benefits Act] was to “determine if existing institutional programs meet, equate to, or exceed standards for such basic coverages. If so, such programs may be continued in accordance with existing contractual arrangements between those institutions and their carrier or carriers, provided, however, that each program so continued shall be submitted by the institution for competitive bidding within standards established by the administrative council at least once during each four-year period following the effective date of coverage under this act.” V.T.C.A., Insurance Code Art. 3.50-3 § 4(b)(4)(D), as enacted by 65th Leg., Reg. Sess., ch. 32 (1977). [Empahsis added.]13 “The solution offered by this bill to the funding problem facing a few schools is better than mandating a statewide system. Such a system would be difficult to set up and would undermine the local autonomy and flexibility that many of the school’s desire.” H. Comm. Rep. on SB 295, 69th Leg., Reg. Sess., ch. 141, at 3 (1985). [Emphasis added.] 14

10

Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 18. 11 Id. at 19. 12 Id. at 20. 13 Id. at 20-21. 14 Id. at 22. 6


Only the Texas A&M University System and the University of Texas System remained covered by the System Benefits Act in 2001.15 The Texas A&M System had the option to be regulated under the State Benefits Act, if exercised by notification to the Board of Trustees of the Employee Retirement System of Texas by November 1, 2004 and if employees, annuitants and dependents began participating before September 1, 2005.16 However, no evidence suggests that Texas &M exercised this option, and this is further supported by the current title of the System Benefits Act, “Uniform Insurance Benefits Act for Employees of the University of Texas System and the Texas A&M System.” All of this indicates that the A&M System is still covered under the System Benefits Act17 and that the suggestions from the 2009 report—chiefly, that the legislative history of the act supports the board of regents’ authority to create a new beneficiary category that is lawfully defined—equally apply to both the Texas A&M System and University of Texas System. The 2009 report also highlights a Texas court case in which the Lower Colorado River Authority (LCRA) created a retirement plan, even though the LCRA was not granted express authority to do so in the statute regulating its benefit plans. The LCRA’s creation of retirement benefits was upheld by a Texas court, which stated that even when a state agency has not been given express authority to create a new benefit, if the agency has been given authority over any related matter, then it becomes not only the agency’s

15

HB 2811 (enrolled), 77th Leg., Reg. Sess., ch. 1419 § 31(b)(8) (2001). V.T.C.A., Insurance Code § 1551.006(c) (2001); V.T.C.A., Insurance Code § 1601.011 (2001). 17 Also, according to a personal communication from an attorney for the A&M System in 2009, the system did not exercise the option. 16

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right, but its duty and a matter of its business judgment, to create new benefits in the interest of retaining employees and strengthening employee loyalty.18 In other words, the court found the statute regulating the LCRA’s benefits established a floor of coverage. A similar interpretation might be applied to the System Benefits Act. Competitive Insurance Benefits advocates for the Texas A&M System, like those for the University of Texas System, can suggest that the legislative history of the System Benefits Act and Texas common law evidence the boards of regents’ authority to create new beneficiary categories.

Defining a new Plus-One Financial Dependent beneficiary category The second legal objection that the systems might face were they to create a new category of beneficiaries is that the category violates the Texas Family Code’s prohibition of state and political subdivision recognition of same-sex marriages, relationships intended as alternatives to marriage, and relationships primarily applying to people who cohabitate. (See Addendum III). It might also be alleged that the category somehow violates the Texas Constitution’s limit on the definition of marriage to be a relationship between one man and one woman. (See Addendum II). The University of Texas System has consistently maintained that these laws inhibit its ability to dispense benefits to any person not recognized as a spouse or child.19

18

Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 14-16, citing Lower Colorado River Authority v. Chemical Bank & Trust Co., 185 S.W.2d 461, 467 (Tex.Civ.App. 1945). 19 Matt Presser, University of Texas Lecturer Begins Hunger Strike to Demand Domestic Partner Benefits, The Austin American-Statesman, Jan. 16, 2008, available at http://www.campus-watch.org/article/id/4692 (last visited Nov. 9, 2009); See also, 8


R.A.W. Strategies’ 2009 report on the potential for CIB within the UT System suggested advocating creation of a new beneficiary category defined as “Plus One Financial Dependent,” evidenced by joint interest in real or personal property.”20 The report suggested “financial dependency” might be evidenced by: “… one or more of the following documents proving joint right to use property or joint ownership: mortgage, real property deed, vehicle title, stock certificate, real or personal property lease, checking account statement, credit card statement, or one or more of the following documents: the employee or beneficiary applicant’s will, designating the other as a primary beneficiary, the employee or the beneficiary applicant’s life insurance policy, designating the other as a primary beneficiary, a power of attorney for property or health care assigned by the employee or the beneficiary applicant delegating power to the other”.21 The report noted that this category might not offend Texas marriage laws, while being narrow enough to constrain the scope of potential beneficiaries. Because only one person per employee could qualify places a finite cap on how many people would be added to the systems’ plans, and the financial dependence criteria are constraining enough that for many employees, no one who is not already eligible as their spouse or child would qualify. Because creation of a Plus-One Financial Dependent category does not seem to have been previously attempted in Texas, the legal outcome is uncertain. But, according to Graham’s research presented in the 2009 Virginia Journal on Social Policy and the Law article, there would be functionally little debate about whether a new beneficiary

Tiffany C. Graham, Exploring the Impact of the Marriage Amendments: Can Public Employers Offer Domestic Partner Benefits to their Gay and Lesbian Employees, Virginia Journal of Social Policy and the Law, 2009, 17 VAJSPL 83, at 85-86. 20 Kim Jarrett, The Potential for Domestic Partner Benefits/Competitive Insurance Benefits in the University of Texas System, Sept. 2, 2009, at 25-26. 21 Id. 9


category “recognizes” a relationship.22 The debate would instead center upon whether the relationship recognized encroaches upon the spheres restricted by the state’s marriage laws.23 The plain language of the Texas Constitution and the Texas Family Code indicates that the spheres they regulate are relationships based on gender, cohabitation, or similarity to marriage.24 Because a Plus One Financial Dependent category would be defined only by the economic relationship between system employees and new beneficiaries (not by bloodline, gender, cohabitation, similarity to marriage), a new category so defined could arguably comport with the Texas Constitution and Family Code. Support for advocating that a financial dependent category does not offend Texas’ marriage laws because it does not encroach upon the spheres regulated by the marriage laws might be found by looking to Michigan. There, in 2008, “the Michigan Supreme Court became the first, and to date only, court of last resort in the nation to find that the marriage amendment in its state prohibited public employers from premising the receipt

22

Tiffany C. Graham, Exploring the Impact of the Marriage Amendments: Can Public Employers Offer Domestic Partner Benefits to their Gay and Lesbian Employees, Virginia Journal of Social Policy and the Law, 2009, 17 VAJSPL 83, at 99. 23 Id. at 88: “A closer examination of the Comparative Model MSAs suggests that the scope of any prohibition will ultimately turn on the degree of replication between marriage and any alternative regime that is forbidden by the amendment in question.” 24 Vernon’s Ann. Texas Const. art. 1, § 32(a) (2005); Texas Family Code, Title 1, Subtitle C, ch. 6, subchapter C, Recognition of Same-Sex Marriage or Civil Union, V.T.C.A., Family Code § 6.204 (2003). Also, V.T.C.A., Family Code § 2.001(b) (1997). 10


of partner benefits on the existence of an employee's gay or lesbian relationship” (Emphasis added).25 The Michigan court found that Michigan’s marriage amendment inhibited public employers from offering of Domestic Partner Benefits, but there were some key differences distinguishing it from the Competitive Insurance Benefits approach discussed herein. First, although some of the Michigan beneficiary categories and proposed categories required some proof of financial interdependence, all of the categories were primarily defined by gender, same-sex relationship, evidence of domestic partnership status, lack of blood relation, and cohabitation. (See Addendum I). The heart of the Michigan Supreme Court’s holding was that Michigan’s marriage amendment mandated that “the union of one man and one woman in marriage shall be the only agreement recognized as a marriage or similar union for any purpose,” and that providing health benefits to public employee’s same-sex partners recognized a union similar to marriage for a purpose. The court said: “All the domestic-partnership policies at issue here require the partners to be of a certain sex, i.e., the same sex as the other partner. Similarly, Michigan law requires married persons to be of a certain sex, i.e., a different sex from the other. MCL 551.1 (“Marriage is inherently a unique relationship between a man and a woman.”). In addition, each of the domestic-partnership policies at issue in this case requires that the partners not be closely related by blood. Similarly, Michigan law requires that married persons not be closely related by blood. MCL 551.3 and MCL 551.4. Although there are, of course, many different types of relationships in Michigan that are accorded legal significance-e.g., debtorcreditor, parent-child, landlord-tenant, attorney-client, employer-employeemarriages and domestic partnerships appear to be the only such relationships that are defined in terms of both gender and the lack of a close blood connection. As discussed earlier, “similar” means “having a likeness or resemblance, [especially] in a general way; having qualities in common[.]” 25

Tiffany C. Graham, Exploring the Impact of the Marriage Amendments: Can Public Employers Offer Domestic Partner Benefits to their Gay and Lesbian Employees, Virginia Journal of Social Policy and the Law, 2009, 17 VAJSPL 83, at 86. 11


Random House Webster's College Dictionary (1991). Marriages and domestic partnerships share two obviously important, and apparently unique (at least in combination), qualities in common. Because marriages and domestic partnerships share these “similar” qualities, we believe that it can fairly be said that they “resembl[e]” one another “in a general way.” Therefore, although marriages and domestic partnerships are by no means identical, they are similar. Because marriages and domestic partnerships are the only relationships in Michigan defined in terms of both gender and lack of a close blood connection, and, thus, have these core “qualities in common,” we conclude that domestic partnerships are unions similar to marriage.”26 Perhaps the Michigan Supreme Court’s decision would have been different had the beneficiary categories at issue been solely defined by economic relationships (PlusOne Financial Dependent). Again, because creation of a Plus-One Financial Dependent category does not seem to have been previously tested, the legal outcome if a Texas public employer were to attempt it is uncertain, but the Michigan case demonstrates that it is arguable.

The applicability of the Plus-One hard health benefit findings to other Texas public university systems Thus far, research indicates that in 1992, the University of Houston System and the Texas Tech University System exercised options to join the state employees benefits system, which is now regulated by Chapter 1551 of the Texas Insurance Code and to which has herein been referred as the State Benefits Act.27 The University of Houston System and Texas Tech were the last two institutions other than the A&M and UT

26

National Pride at Work, Inc. v. Governor of Michigan, 481 Mich. 56, 71 (2008).

27

H. Bill Analysis of HB 3178 (enrolled), 76th Leg., Reg. Sess., ch. 1057, at 1 (1999). 12


Systems to be covered by Article 3.50-3 of the Texas Insurance Code of 1951.28 In 2001, the Article 3.50-3 was codified as Chapter 1601 of the Texas Insurance Code and renamed to reflect application to only the University of Texas System and Texas A&M University Systems. Because only the Texas A&M and UT Systems are currently regulated under the System Benefits Act, the University of Houston and Texas Tech Systems, and other systems, like the University of North Texas System, would not sensibly make an identical argument when urging their boards of regents to create new beneficiary categories. In other words, because they are not regulated by the Systems Benefits Act, the University of Houston and Texas Tech Systems would not argue that the legislative history of the System Benefits Act evidences that the Texas legislature intended them to have especially broad powers to create new beneficiary categories. Nevertheless, CIB advocates for the University of Houston and Texas Tech Systems might argue, using the LCRA common law, that the State Benefits Act under which they are regulated grants their governing bodies authority to create new, lawfullydefined beneficiary categories. It should be noted, however, that the System Benefits Act states a goal of creating equal benefits amongst “system” employees29, whereas the State Benefits Act states a

28

HB 3178 (enrolled), 76th Leg., Reg. Sess., ch. 1057 § 1 (1999), amending V.T.C.A., Insurance Code Art. 3.50-3 § 3(a)(7). V.T.C.A., Insurance Code § 1601.002(1) (2001): “The purposes of this chapter are to: provide uniformity in the basic group life, accident, and health benefit coverages for all system employees” 29

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goal of creating equal benefits amongst “state” employees30. Texas A&M and University of Texas System action leading to legal discussion would more likely lead to comparison against employees within the two systems. Were a legal action to result from the University of Houston System or Texas Tech System creation of a new beneficiary category, the benefits given to their employees may be compared against employees of all other state agencies. This raises immediate issues: 1)

Would the systems have the authority to offer the benefits if most other Texas state agencies don’t offer them?

2)

A comparison might call into the light and put at risk certain state agencies or political subdivisions that currently offer benefits to employee domestic partners.

3)

Lawyers representing Texas A&M or UT System benefits creation might not be able to represent University of Houston or Texas Tech benefit creation because the discrepancy in arguments might present a conflict of interest.

The ability of Texas public university systems to create new categories of Soft Benefit beneficiaries “Soft benefits” are generally considered to be benefits provided to employees that are not financial in nature. Additionally, they are usually benefits that are not regulated

V.T.C.A., Insurance Code § 1551.002(1) (2001): The purposes of this chapter are to: provide uniformity in life, accident, and health benefit coverages for all state officers and employees and their dependents.” 30

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by legislation. Thus, they must be analyzed somewhat differently than employee health benefits that are regulated by the Systems Benefits Act. There are two possible ways the system universities could offer soft benefits to domestic partners of employees: either in addition to employee hard health benefits under a Plus-One system, or as a stand-alone benefit where no employee hard health benefits are offered. Additionally, there are two general providers of soft benefits: those offered by the university, and those offered by local private businesses. Regardless of who provides a soft benefit, they can be classified even further as either health-related or non health-related. Soft Benefits in a system that offers Plus-One hard health benefits If any Texas public university system creates a new, Plus-One beneficiary category that does not offend the marriage laws of Texas and employee health benefits are extended to that group, it is reasonable to conclude that all categories of soft benefits could also be extended to members of that group. This reasoning is especially applicable to health-related soft benefits, such as use of university gyms within the Texas A&M and University of Texas systems; this is because one of the stated purposes of the Systems Benefits Act that regulates their health plans is “promoting and preserving economic security and good health among employees.” 31 (Emphasis added.)

31

V.T.C.A., Insurance Code § 1601.002(4) (2001): “The purposes of this chapter are to: recognize and protect the investment of the systems in each employee by promoting and preserving economic security and good health among employees.” 15


Soft Benefits in a system that does not offer Plus-One hard health benefits Can the systems offer soft benefits to the domestic partners of employees even if they do not extend hard health benefits to them through a lawfully defined category? First, the systems must identify authority to offer soft benefits; second, they must make sure that the benefits are offered to a lawfully-defined category of people. Authority to Offer Soft Benefits To address the first issue, we do not look to the Systems Benefits Act, but rather to the Texas Education Code. The Education Code that establishes Texas public university system boards of regents and grants them power is even more broadly worded than the System Benefits Act.32 This is a good starting point for asserting that the board of regents of any Texas public university system has the authority to establish new categories of people to whom it will extend soft benefits. For example, the Board of Regents for The Texas A&M University System have the power to regulate university services,33 and university services are typically what are offered to employees as soft benefits. The Texas A&M Human Resources department promotes online that “employees may take advantage of the many university museums, library systems and services on campus for free or at a discounted rate.”34 According to the Educational Code, the board of regents should be allowed to extend these services to additional groups as it sees fit.

32

Texas Education Code § 65.11, § 85.21, § 95.01, § 95.21, § 103.02, § 105.101, etc. Each university is covered by a separate subtitle, and within each respective subtitle there is a chapter of the code that establishes the powers and duties of the board of regents. 33 Texas Education Code § 85.21. 34 The Texas A&M University website, available at http://employees.tamu.edu/focus/perks.aspx (last visited Nov. 14, 2010). 16


The Education Code grants all other state university Boards of Regents similar powers, albeit in somewhat differing language. For example, at Texas State University, the Board has control over the “organization, control, and management of the state university system,”35 and has the power to “perform such other acts as in the judgment of the board contribute to the development of the universities in the system or the welfare of their students.”36 In all state universities, this theme of broad power and discretion with respect to regulating university services is consistent. It will be important for CIB advocates to further investigate whether Soft Benefits may be considered “locally-controlled” benefits, allowing various campuses to make independent soft-benefit offerings to lawfully-defined categories of people. For example, when a University of Georgia faculty council was making its argument in favor of extending soft benefits to the domestic partners of employees, it noted that two University of Georgia System campuses were already offering them.37 In October 2010, University of Texas President Bill Powers began establishing a working group to identify ways to offer soft benefits to university employees in the interests of equity and competitiveness.38 According to UT’s human resources director, the university is focusing on identifying authority for offering soft benefits.

35

Texas Education Code § 95.01. Texas Education Code § 95.21. 37 University of Georgia Council Faculty Benefits Committee, (n.d), UGA Domestic Partnership Soft Benefits Proposal, p. 1, available at http://www.ask.com/web?qsrc=2990&o=0&l=dir&q=texas+university+system+board+of +regents+and+%22soft+benefits%22 (last visited Nov. 14, 2010). 38 Audrey White, UT students, Powers make strides with domestic partner benefits talks, The Daily Texan, Oct. 6, 2010, available at http://www.dailytexanonline.com/content/utstudents-powers-make-strides-domestic-partner-benef%E2%80%8Ait-talks (last visited Nov. 12, 2010). 36

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“There is some flexibility for institutions of higher learning in the higher education code, and we’ve been working to see how can we take advantage of that flexibility,” said Human Resources Director Julien Carter. “Some of it is just trying to find the proper authority in Texas law so that we can proceed with interpreting these statutes, and writing our own policies to provide these sorts of benefits. It just takes time.”39 Lawfully Defining a New Category of Soft Benefits Beneficiaries As with Plus-One hard benefits, the challenge in extending soft benefits to a new category of recipients is in defining the recipients in a way that does not offend the Texas Constitution and Family Code. Even though the boards of regents may have authority to offer soft benefits to additional groups, they are nevertheless state agents thus prevented from recognizing civil unions or marriages between persons of the same sex.40 It will therefore be necessary, in order to extend soft benefits to domestic partners of employees, to define the new beneficiary group in terms of something like a Plus-One economic relationship, so as to avoid conflicting with Texas’s marriage laws.

Conclusion In sum, the Texas A&M and University of Texas Systems can both argue that the System Benefits Act currently provides them broad authority to create new categories of health plan beneficiaries. While the report focuses on the A&M System, it notes that Texas public university systems other than A&M and UT will have to take a different approach, advocating that their boards of regents derive authority to create new categories of health care beneficiaries from the State Benefits Act. Because the Texas A&M and University of Texas Systems might urge that the System Benefits Act grants

39 40

Id. V.T.C.A., Family Code § 6.204(c)(2) 18


broader authority than the State Benefits Act, a conflict of interest may inhibit one advocacy group from arguing for both the A&M and UT Systems and other systems at the same time. Also, the systems regulated by the State Benefits Act may face additional challenges because that act requires uniformity of coverage among all state employees. To comport with the Texas Constitution and the Texas Family Code, all systems can be urged to create beneficiary categories defined by the beneficiary having an economic relationship with the employee that is not contingent upon gender, bloodline, marriage alternative relationship, or cohabitation. Research indicates that the Michigan Supreme Court has been the only state court of last resort to find that the state’s marriage laws inhibited public employer awards of benefits to domestic partners, but the beneficiary categories at issue in that case were primarily based upon gender, alternative to marriage, or cohabitation. This indicates that a purely economic basis for awarding benefits, a Plus-One Financial Dependent category, has not yet been tested against a state’s marriage laws in a court of last resort. Finally, advocates can look to the Texas Education Code for board of regents’ authority to presently offer Soft Benefits, and Soft Benefits advocates should consider further investigating whether soft benefits are arguably “locally controlled” benefits in Texas. Like hard health beneficiary categories, it seems the Texas Constitution and Family Code likely prevent public universities from offering soft benefits based upon gender, marriage alternative relationships, or cohabitation, and the Soft Benefits recipients might be offered to people with a defined economic relationship to university employees.

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Addendum I: Beneficiary categories at issue in National Pride at Work, Inc. v. Governor of Michigan

I. One proposed beneficiary category would have been defined as follows: 1. Be at least 18 years of age. 2. Share a close personal relationship with the employee and be responsible for each other's common welfare. 3. Not have a similar relationship with any other person, and not have had a similar relationship with any other person for the prior six months. 4. Not be a member of the employee's immediate family as defined as employee's spouse, children, parents, grandparents or foster parents, grandchildren, parentsin-law, brothers, sisters, aunts, uncles or cousins. 5. Be of the same gender. 6. Have jointly shared the same regular and permanent residence for at least six months, and have an intent to continue doing so indefinitely. 7. Be jointly responsible for basic living expenses, including the cost of food, shelter and other common expenses of maintaining a household. This joint responsibility need not mean that the persons contribute equally or in any particular ratio, but rather that the persons agree that they are jointly responsible.41 II. The City of Kalamazoo was also party to the case, and at issue was its policy that established the following criteria: 1. For the purposes of the City of Kalamazoo's program, the definition and use of the term domestic partner shall only include couples of the same sex. To be considered as domestic partners, the individuals must: a. Be at least 18 and mentally competent to enter into a contract; b. Share a common residence and have done so for at least six (6) months;

41

National Pride At Work, Inc. v. Governor of Michigan, 481 Mich. 56, 64. (2008).

20


c. Be unmarried and not related by blood closer than would prevent marriage; d. Share financial arrangements and daily living expenses related to their common welfare; e. File a statement of termination of previous domestic partnership at least six (6) months prior to signing another Certification of Domestic Partnership.42 In addition, domestic partners in Kalamaoo were required to provide evidence of “mutual economic dependence,” such as a joint lease or mortgage, and evidence of a “common legal residence,” such as driver's licenses or voter's registrations.43

III. For a domestic partner to be eligible for health-insurance benefits under the University of Michigan's “Same-Sex Domestic Partner Policy,” the employee and his or her partner had to: 1. Be of the same sex; and 2. Not be legally married to another individual; and 3. Not be related to each other by blood in a manner that would bar marriage; and 4. Have registered or declared the Domestic Partnership in the manner authorized by a municipality or other government entity44 IV. Michigan State University provided health-insurance benefits to its employees' domestic partners if the employee and the domestic partner: 1.

are [the] same-sex and for this reason are unable to marry each other under Michigan law,

42

Id. at 65. Id. 44 Id. 43

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45

2.

are in a long-term committed relationship, have been in the relationship for at least 6 months, and intend to remain together indefinitely,

3.

are not legally married to others and neither has another domestic partner,

4.

are at least 18 years of age and have the capacity to enter into a contract,

5.

are not related to one another closely enough to bar marriage in Michigan,

6.

share a residence and have done so for more than 6 months,

7.

are jointly responsible to each other for the necessities of life, and

8.

provide a signed “partnership agreement� that obligates each of the parties to provide support for one another, and provides for substantially equal division, upon termination of the relationship, of earnings during the relationship and any property acquired with those earnings.45

Id. at 66. 22


Addendum II: Texas Constitution, Article I, Section 32 Sec. 32. MARRIAGE. (a) Marriage in this state shall consist only of the union of one man and one woman. (b) This state or a political subdivision of this state may not create or recognize any legal status identical or similar to marriage.46

46

Vernon’s Ann. Texas Const. art. 1, § 32(a) (2005)

23


Addendum III: Texas Family Code Section 6.204 ยง 6.204. RECOGNITION OF SAME-SEX MARRIAGE OR CIVIL UNION. (a) In this section, "civil union" means any relationship status other than marriage that: (1) is intended as an alternative to marriage or applies primarily to cohabitating persons; and (2) grants to the parties of the relationship legal protections, benefits, or responsibilities granted to the spouses of a marriage. (b) A marriage between persons of the same sex or a civil union is contrary to the public policy of this state and is void in this state. (c) The state or an agency or political subdivision of the state may not give effect to a: (1) public act, record, or judicial proceeding that creates, recognizes, or validates a marriage between persons of the same sex or a civil union in this state or in any other jurisdiction; or (2) right or claim to any legal protection, benefit, or responsibility asserted as a result of a marriage between persons of the same sex or a civil union in this state or in any other jurisdiction.47

47

V.T.C.A., Family Code ยง 6.204 (2003). 24


Addendum IV: University of Georgia Council Faculty Benefits Committee Domestic Partnership Soft Benefits Proposal

25


48

48

University of Georgia Council Faculty Benefits Committee, (n.d), UGA Domestic Partnership Soft Benefits Proposal, Appendix A, available at http://www.ask.com/web?qsrc=2990&o=0&l=dir&q=texas+university+system+board+of +regents+and+%22soft+benefits%22 (last visited Nov. 14, 2010). Note that these lists were likely compiled before the Michigan Supreme Court found it unlawful for state agencies to offer benefits to “domestic partners.� 26


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Advocating competitive insurance benefits  

Plus-one benefits for Texas A&M University and the University of Texas

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