The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

JENNIFER M. GRANHOLM, ATTORNEY GENERAL

HEALTH MAINTENANCE ORGANIZATION:

INSURANCE:

Health care insurer's duty to provide coverage for certain medications necessary for treatment of diabetes

Commercial insurance carriers that provide an expense-incurred hospital, medical, or surgical policy or certificate delivered or issued for delivery in this state must, under 2000 PA 425, include coverage for those items listed in subsections (4)(a)-(c) of section 3406p for the medically necessary treatment of diabetes if the insurer's policy or certificate provides outpatient pharmaceutical coverage directly or by rider.


Opinion No. 7088

August 28, 2001

Honorable Raymond M. Murphy
State Senator
The Capitol
Lansing, Michigan 48913

You have asked if commercial insurance carriers that provide an expense-incurred hospital, medical, or surgical policy or certificate delivered or issued for delivery in this state must, under 2000 PA 425, include coverage for those items listed in subsections (4)(a)-(c) of section 3406p for the medically necessary treatment of diabetes without regard to whether the insurer's policy or certificate provides outpatient pharmaceutical coverage directly or by rider.

The Insurance Code of 1956 (Insurance Code), MCL 500.100 et seq, consolidates the laws relating to the insurance business. 2000 PA 425 (Act 425) amended the Insurance Code by adding new section 3406p. Your question seeks an interpretation of the language of subsection 4 of section 3406p of Act 425, which provides that:

(4) An expense-incurred hospital, medical, or surgical policy or certificate delivered or issued for delivery in this state and a health maintenance organization contract that provides outpatient pharmaceutical coverage directly or by rider shall include the following coverage for the treatment of diabetes, if determined to be medically necessary:

(a) Insulin, if prescribed by an allopathic or osteopathic physician.

(b) Nonexperimental medication for controlling blood sugar, if prescribed by an allopathic or osteopathic physician.

(c) Medications used in the treatment of foot ailments, infections, and other medical conditions of the foot, ankle, or nails associated with diabetes, if prescribed by an allopathic, osteopathic, or podiatric physician. [Emphasis added.]

You inquire whether the phrase "that provides outpatient pharmaceutical coverage directly or by rider" modifies only the word "contract" applicable to a health maintenance organization (HMO) or whether it also modifies the words "policy" and "certificate" delivered or issued for delivery in this state by a commercial insurer. Because the language is susceptible to more than one interpretation, an ambiguity exists within section 3406p(4) of Act 425. This ambiguity is important because one of these interpretations creates a significant difference in the obligations of commercial insurers as opposed to HMOs.

Where language employed by the Legislature is susceptible to more than one interpretation, judicial construction is justified in order to give effect to the Legislature's intent. Rowell v Security Steel Processing Co, 445 Mich 347, 353; 518 NW2d 409 (1994). It is a general rule of statutory construction that a modifying phrase is confined solely to the last antecedent, unless a contrary intention appears. Sun Valley Foods Co v Ward, 460 Mich 230; 236; 596 NW2d 119 (1999). Even a literal reading of a statute may be modified "if that reading leads to a clear or manifest contradiction of the apparent purpose of the act." People v Preuss, 436 Mich 714, 721; 461 NW2d 703 (1990).

The primary goal of statutory interpretation is to ascertain and give effect to the Legislature's intent. McJunkin v Cellasto Plastic Corp, 461 Mich 590, 598; 608 NW2d 57 (2000). In determining legislative intent, it is often instructive to examine proposed legislation as introduced and to track its evolution and amendments, if any, as it progresses through the Legislature. Nation v WDE Electric Co, 454 Mich 489, 497; 563 NW2d 233 (1997). Act 425 originated as SB 261, introduced on February 4, 1999. As introduced, SB 261 purported to amend the Insurance Code by adding new section 3406n, which applied only to commercial insurers. SB 261 did not apply to HMOs because, at that time, HMOs were regulated pursuant to Part 210 of the Public Health Code, 1978 PA 368, MCL 333.21001 et seq. On the same day that SB 261 was introduced, however, the Senate also introduced SB 262, which amended the Public Health Code to mandate the identical coverages for HMOs as SB 261 mandated for commercial insurers. As introduced, both SB 261 and SB 262 mandated coverage for insulin and oral agents for controlling blood sugar. There were no exceptions to this mandated coverage as applied to either commercial insurers or HMOs.

On March 18, 1999, the Senate adopted SB 261 (S-2) as a substitute for SB 261. SB 261 (S-2) modified the requirements imposed on commercial insurers with respect to the mandated coverages for insulin and oral agents for controlling blood sugar by adding the phrase "that provides outpatient pharmaceutical coverage directly or by rider." On the same day, the Senate also adopted SB 262, pertaining to HMOs. SB 262 did not, however, contain the same modifying phrase as used in SB 261 (S-2). Thus, SB 262 mandated that an HMO provide insulin and oral agents for controlling blood sugar whether the HMO provided outpatient pharmaceutical coverage directly or by rider1.

On November 30, 2000, the House passed SB 261 (H-3) which mandated coverages for both HMOs and commercial insurers in a single act amending the Insurance Code. SB 261 (H-3) contained the same modifying phrase "that provides outpatient pharmaceutical coverage directly or by rider" as in SB 261 (S-2). Like SB 261 (S-2), SB 261 (H-3) applied this modifying phrase only to commercial insurers. Similar to SB 262, no such modifying phrase was applied to the coverage mandated for HMOs.

On December 5, 2000, the Senate voted against SB 261 (H-3) and referred the matter to conference committee. One week later, a conference report issued. 2000 Journal of the Senate 2086 (No. 78, December 13, 2000). The report stated, "That the Senate and House agree to the Substitute of the Senate [S-2] as passed by the Senate, amended to read as follows: . . . ." In the amendment to SB 261 (S-2) recommended by the conference committee, the words "health maintenance organization" were added as in SB 261 (H-3), but the modifying phrase was transposed in the bill to appear subsequent to the reference to HMOs. The conference committee's specific approval of SB 261 (S-2) evidences its intent to retain the modifying phrase's applicability to commercial insurers. The placement of the modifying phrase following the reference to HMOs evidences its intent to apply it to both commercial insurers and HMOs. The amended form of SB 261 (S-2) contained in the conference report was the form that was ultimately adopted by both the Senate and House and became 2000 Enrolled SB 261.

The legislative analysis of Enrolled SB 261 further confirms that the modifying phrase applies to both commercial insurers and HMOs:

Under Senate Bill 261, if an insurer or HMO issued a policy or contract providing outpatient pharmaceutical coverage directly or by rider, then the policy or contract would have to include coverage for insulin or non-experimental medication for controlling blood sugar, if determined to be medically necessary and prescribed by a physician. Senate Legislative Analysis, SB 260 and 261, January 4, 2001. [Emphasis added.]

It is my opinion, therefore, that commercial insurance carriers that provide an expense-incurred hospital, medical, or surgical policy or certificate delivered or issued for delivery in this state must, under 2000 PA 425, include coverage for those items listed in subsections (4)(a)-(c) of section 3406p for the medically necessary treatment of diabetes if the insurer's policy or certificate provides outpatient pharmaceutical coverage directly or by rider.

JENNIFER M. GRANHOLM
Attorney General

1On June 29, 2000, 2000 PA 252 was enacted. It repealed Part 210 of the Public Health Code and transferred full responsibility for the regulation of HMOs to the Commissioner of the Office of Financial and Insurance Services under chapter 35 of the Insurance Code.