IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 05-0006

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National Plan=20 Administrators, Inc. and CRS Marketing Agency, Inc., = Petitioners,

National Health = Insurance=20 Company, Respondent

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On Petition for Review from = the

Court of Appeals for the Third = District of=20 Texas

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Argued February=20 16, 2006

=20 Justice Johnson = delivered=20 the opinion of the Court.

=20 National Health Insurance Company, Inc., contracted with National = Plan=20 Administrators, Inc. (NPA), for NPA to perform third-party administrator = duties=20 for cancer insurance policies issued by National Health. When National = Health=20 decided to exit the cancer insurance market, NPA =93rolled=94 most of = the cancer=20 policies to Hartford Insurance Company. National Health sued NPA and = obtained a=20 jury finding that NPA breached its general fiduciary duty to National = Health. We=20 hold that NPA did not owe National Health a general fiduciary duty. We = reverse=20 the court of appeals=92 judgment and render judgment that National = Health take nothing.

I. Background

CRS = Marketing=20 Agency, Inc., began marketing individual = insurance=20 policies [1] to school district employees in = the late=20 1970s. Through the years, CRS developed its own policy forms and pricing = structures. It marketed insurance through agents and earned =93override=20 commissions=94 on the sales. CRS also developed expertise in helping = school=20 districts administer insurance and other benefit plans by means of a=20 =93common-remitter=94 program. The CRS common-remitter program was = offered through=20 NPA, a corporation wholly owned by CRS. The common-remitter program = allowed NPA=20 to offer multiple products to an employer and the employer to offer = insurance=20 products and fringe benefits to employees with minimal administrative=20 difficulties. The common-remitter program also allowed NPA and CRS to = develop=20 relationships with employers which helped its marketing efforts.

=20 In the late 1980s and early 1990s, CRS marketed cancer policies = which=20 were underwritten by American Heritage Life Insurance Company. The = relationship=20 between American Heritage and CRS became strained, in part, because some = of the=20 independent agents that CRS approached to market the cancer policies = were=20 contracting directly with American Heritage and depriving CRS of=20 commissions.

=20 In early 1995, CRS and National Health began discussing the = possibility=20 of National Health underwriting CRS=92s = cancer policies.=20 Scott Smith, President and CEO of National Health at the time the = agreement with=20 NPA was executed and through the time frame relevant to the lawsuit, = told Clyde=20 Sommerlatte, the owner of CRS, he was opposed to =93rolling=94 American = Heritage=20 policies to National Health. =93Rolling=94 of policies was described as = a process by=20 which a great number of individual policies in force are effectively = transferred=20 or rolled from one insurer to another by way of an agent or marketer = presenting=20 the new insurer=92s product and recommending to an employer and insured = employees=20 that the existing policies be rewritten with the new insurer. The = rolling=20 process can result in less-desirable insureds, such as=20 those with open claims, remaining with the original carrier while other, = lower-risk insureds become policyholders = with the new=20 carrier.

=20 In the negotiations between NPA and National Health, Sommerlatte made it clear that he wanted CRS = products to be=20 sold only through CRS. Negotiations leading up to the contract lasted = several=20 months and were conducted at arms length. Both parties received the = advice of=20 counsel. National Health and NPA eventually executed an Administrative,=20 Compensation, and Claim Service Agreement (the Agreement). The Agreement = provided that CRS-developed insurance products would be marketed = exclusively=20 through NPA. The Agreement also stated that NPA =93shall act as an = independent=20 contractor in the performance of responsibilities formed under this = Agreement,=20 and that [NPA=92s] services are not = exclusive to=20 National Health and that [NPA] will provide services to third = parties.=94 The=20 rolling practice was not addressed in the Agreement.

=20 After the Agreement was executed in 1995, NPA began = administering, and=20 CRS began marketing, cancer policies underwritten by National Health. In = 1997,=20 NPA also began administering cancer policies for Hartford Life Insurance = Company. The Hartford policies were CRS policies = similar to=20 the policies CRS marketed for National Health, but they were not sold to = school=20 district employees through the schools. In May 1999, unbeknownst to = National=20 Health, NPA and Hartford discussed = rolling cancer=20 policies underwritten by both National Health and American Heritage to = Hartford. In = July 1999,=20 National Health informed NPA that it was going to discontinue = underwriting=20 CRS-marketed cancer policies and that National Health had found a buyer = to=20 purchase the existing policies (referred to by the parties as a =93book = of=20 business=94). The potential buyer would administer the policies itself = instead of=20 using NPA=92s services. National Health gave = NPA ninety=20 days to find a buyer for the National Health book of business that would = allow=20 NPA to continue as administrator.

=20 NPA approached Hartford about purchasing National = Health=92s=20 entire cancer policy book of business. In order for Hartford to evaluate the offer, NPA sent = Hartford what = National=20 Health contends was confidential information as to National Health=92s=20 policyholders and premiums. Hartford ultimately declined to = purchase=20 National Health=92s entire cancer book of business, but agreed to offer=20 replacement policies to National Health insureds=20 without requiring evidence of insurability so long as the insureds were =93actively at work.=94

=20 Ultimately, most National Health policies were replaced by = Hartford = policies. Within=20 a short time in the fall of 1999, the number of NPA-administered = National Health=20 policies dropped from approximately 7,000 to approximately 500. The = policies of=20 most National Health insureds who were not = actively at=20 work remained with National Health; most insureds=20 actively at work switched to Hartford.

=20 National Health sued NPA, CRS, and Hartford.[2] The claims against NPA and CRS = included=20 breach of contract, breach of fiduciary duty, fraud, fraudulent = inducement,=20 =93unfair or deceptive act or practice,=94 misappropriation of trade = secrets, and=20 negligent misrepresentation. At trial, the breach of fiduciary duty = claim was=20 submitted as follows:

Question No.=20 8

=20 Did NPA fail to comply with its fiduciary duty to [National = Health]?

=20 =20 You are hereby instructed that, in its role as [National = Health=92s]=20 third-party administrator, NPA owed National Health a fiduciary duty. To = prove=20 that it complied with its duty, NPA must show that:

a. =20 The transaction(s) in question were fair and equitable to [National = Health];

b. =20 NPA made reasonable use of the confidence that [National Health] placed = in=20 NPA;

c. =20 NPA acted in the utmost good faith and exercised to the utmost = scrupulous=20 honesty toward [National Health];

d. =20 NPA placed the interests of [National Health] before its own, did not = use the=20 advantage of its position to gain any benefit for itself at the expense = of=20 [National Health], and did not place itself in any position where its=20 self-interest might conflict with its obligations as a fiduciary; = and

e. =20 NPA fully and fairly disclosed all important information to [National = Health]=20 concerning NPA=92s role as third-party = administrator for=20 [National Health].

&nbs= p; =20 Answer =93Yes=94 or =93No.=94

&nbs= p; =20 ANSWER: _______

NPA objected=20 to this submission, in part, on the basis that the question and = instructions=20 inquired about a general fiduciary duty when NPA did not owe such a duty = to=20 National Health. The trial court overruled NPA=92s=20 objection. The jury answered =93Yes=94 and found = National Health=92s=20 damages were $744,937.[3] The jury also found malice and = assessed=20 $100,000 in punitive damages. Based on a jury finding that NPA and CRS = were a=20 single business entity, the trial court entered judgment against NPA and = CRS=20 jointly and severally for actual and punitive damages.

=20 NPA and CRS appealed. The court of appeals affirmed. 150 S.W.3d 718. The court of appeals concluded that = NPA owed=20 a general fiduciary duty to National Health:

[G]iven the structure of the statutes regulating = agents in the=20 insurance industry generally, the scope of the statute regulating = third-party=20 administrators in particular, and the details of the written agreement = between=20 National Health and National Plan Administrators, we hold that National = Plan=20 Administrators generally owed a fiduciary duty to National Health.

Id. at=20 732. The court of appeals also concluded that the single-business = enterprise theory was a valid means of piercing the corporate veil to = impose=20 liability on CRS.

=20 NPA and CRS filed petitions for review. NPA asserts that it did = not have=20 a general fiduciary duty to National Health under the Insurance Code=92s = specific=20 provisions, its general structure, or the parties=92 Agreement. NPA = urges that, as=20 prescribed by Insurance Code provisions governing third-party = administrators, it=20 owed National Health a fiduciary duty only in regard to holding premiums = it=20 collected, and National Health did not claim a violation of that duty.[4] NPA also concedes that it owed = National=20 Health certain other specific fiduciary duties, but asserts that the = Agreement=20 limited the scope of those duties and its actions in connection with = rolling=20 policies to Hartford fell outside that scope. CRS = claims=20 that the single-business enterprise theory is not a basis for = disregarding the=20 corporate form.

II. Fiduciary Duty

Whether a=20 fiduciary duty exists is a question of law. Meyer = v. Cathey, 167 S.W.3d 327, 330 (Tex. = 2005).=20 Fiduciary duties are imposed on parties to certain relationships based = on the=20 special nature of the relationships. Johnson v. = Brewer=20 & Pritchard, P.C., 73 S.W.3d 193, 199 (Tex. 2002).

An = agency=20 relationship imposes certain fiduciary duties on the parties. Id. at=20 200. But even in an agency relationship such as = employer-employee, courts=20 take all aspects of the relationship into consideration when determining = the=20 nature of fiduciary duties flowing between the parties. For example, in=20 Johnson, we considered the question of whether an associate = lawyer at a=20 law firm breached a fiduciary duty to his employer by referring a matter = to=20 another firm without obtaining a referral fee for his employer. We = approved the=20 Restatement (Second) of Agency in regard to the general duty of an = agent:=20 =93[u]nless otherwise agreed, an agent is = subject to a=20 duty to his principal to act solely for the benefit of the principal in = all=20 matters connected with his agency.=94 Id. We adhere to that view. = Unless=20 otherwise provided by statute or law, duties owed by an agent to his or = her=20 principal may be altered by agreement. Accordingly, factors which must = be taken=20 into consideration when determining the scope of an agent=92s fiduciary = duty to=20 his or her principal include not only the nature and purpose of the=20 relationship, but also agreements between the agent and principal.

A. Insurance Code

The = Legislature has, by statute, imposed fiduciary duties in some instances. = See, e.g., Tex. Fam. Code =A7 9.011 (providing that a fiduciary = obligation is=20 created when a party receives property that was awarded to a former = spouse in a=20 divorce decree); Tex. Ins. Code =A7 4053.106 (former Tex. = Ins. Code art. 21.07-3) (funds = held by=20 managing general agents on behalf of an insurance company are held in a=20 fiduciary capacity); Tex. = Ins. Code =A7 = 4151.106 (former=20 Tex. Ins. Code art. 21.07-6) = (third-party=20 administrator must hold premiums and other funds collected on behalf of = an=20 insurance company in a fiduciary capacity). The Insurance Code has = modified=20 common-law agency principles when necessary for the Code=92s purpose. = See Crown=20 Life Ins. Co. v. Casteel, 22 S.W.3d 378, 385 (Tex. 2000) = (noting that=20 the Insurance Code specifically limits an agent=92s power to bind a = company to a=20 policy=92s terms). However, we disagree with the court of appeals that = the=20 Insurance Code imposes a statutory general fiduciary duty on third-party = insurance administrators.

=20 The court of appeals first concluded that NPA was an agent as the = term=20 was defined under the Insurance Code in effect at the relevant time. = See=20 Act of May 23, 1951, 52nd Leg., R.S., ch. = 491, 1951=20 Tex. Gen. Laws 868, 1061-62, repealed by Act of May 20, 2003, = 78th Leg.,=20 R.S., ch. 1274, =A7 26(a)(1), 2003 Tex. Gen. = Laws 3611,=20 4138 (former Tex. Ins.=20 Code art. = 21.02) (=93Any=20 person who solicits insurance on behalf of any insurance company . . . = or who=20 takes or transmits other than for himself any application for insurance = or any=20 policy of insurance to or from such company . . . or who shall . . . = receive, or=20 collect, or transmit any premium of insurance . . . shall be held to be = the=20 agent of the company . . . .=94). The court then recognized that the = Insurance=20 Code specifies duties owed by third-party administrators to insurance = companies:=20 a third-party administrator may only provide services pursuant to a = written=20 agreement; a third-party administrator must carry a fidelity bond to = protect=20 against its acts of fraud or dishonesty; and a third-party administrator = must=20 hold premiums and other funds collected on behalf of an insurance = company in a=20 fiduciary capacity. See Act of May 27, 1989, 76th Leg., R.S., = ch. 1094, 1989 Tex. Gen. Laws 4477, 4480-81, 4483, = repealed by Act of May 20, 2003, 78th Leg., R.S., ch. 1274, =A7 26(a)(1), 2003 Tex. Gen. Laws 3611, = 4138 (former=20 Tex. Ins. = Code art. 21.07-6). The = court held=20 that the structure of statutes regulating agents generally, the scope of = the=20 statues applicable to third-party administrators, and the agreement = between NPA=20 and National Health gave rise to a general fiduciary duty. 150=20 S.W.3d at 732.

=20 We recognize that the Insurance Code in effect when this case was = filed=20 and appealed imposed certain specific fiduciary duties owed by various = agents to=20 insurance companies. As previously noted, funds held by managing general = agents=20 on behalf of an insurance company must be =93held in a fiduciary = capacity.=94 Act of=20 May 27, 1967, 60th Leg., R.S., ch. 757, 1967 = Tex. Gen.=20 Laws 2048, 2050, repealed by Act of May 20, 2003, 78th Leg., = R.S., ch. 1274, =A7 26(a)(1), 2003 Tex. Gen. Laws 3611, = 4138 (former=20 Tex. Ins. = Code art. 21.07-3). On = the other=20 hand, premiums collected by a specialty license holder need not be = treated =93as=20 money received in a fiduciary capacity=94 under certain circumstances. = Act of May=20 30, 1999, 76th Leg., R.S., ch. 1530, 1999 = Tex. Gen.=20 Laws 5259, 5260, repealed by Act of May 20, 2003, 78th Leg., = R.S., ch. 1274, =A7 26(a)(1), 2003 Tex. Gen. Laws 3611, = 4138 (former=20 Tex. Ins. = Code art. 21.09). The = article=20 defining =93agents=94 states that it does not authorize an agent to = alter the terms=20 of an insurance policy, but it does not otherwise specify duties of the = agents.=20 See Act of May 23, 1951, 52nd Leg., R.S., ch.=20 491, 1951 Tex. Gen. Laws 868, 1061, amended by Act of May 9, = 1985, 69th=20 Leg., R.S., ch. 202, 1985 Tex. Gen. Laws = 790,=20 repealed by Act of May 20, 2003, 78th Leg., R.S., ch. 1274, =A7 26(a)(1), 2003 Tex. Gen. Laws 3611, = 4138 (former=20 Tex. Ins. = Code art. 21.02).

=20 Even if we assume the Code provisions pertaining to agents = generally also=20 apply to third-party administrators, the Legislature clearly and = specifically=20 addressed certain fiduciary duties in the Code, yet it did not impose a = general=20 fiduciary duty on agents in general or on third-party administrators. It = is=20 neither an absurd nor an unjust result for the Legislature not to have = imposed a=20 general fiduciary duty on third-party administrators when the = administrators are=20 statutorily required to have a written contract with the party they = serve as=20 administrator. See Univ. of Tex. Sw. Med. = Ctr. v.=20 Loutzenhiser, 140 S.W.3d 351, 356 & = n.20=20 (Tex. 2004)=20 (recognizing that the Court should not construe a statute in a way that = leads to=20 absurd results). The Legislature could have rationally presumed that = parties to=20 a written agreement, especially parties in a commercial setting = bargaining in=20 their own self interest, would set out their respective duties, = obligations, and=20 expectations in the agreement as did NPA and National Health.

=20 We hold that the Insurance Code does not create a general = fiduciary duty=20 applicable to third-party administrators. And because we do not expand = the=20 meaning of statutes by implication, see Sorokolit=20 v. Rhodes, 889 S.W.2d 239, 241 (Tex. 1994), we also hold that the = general=20 structure of the Code does not create such a duty.

B. The Contract

=20 We next consider whether NPA had a general fiduciary duty under = the=20 common law. NPA asserts that any fiduciary duties were limited by the = parties=92=20 agreement and urges us to adopt section 376 of the Restatement (Second) = of=20 Agency which states that the =93existence and extent of the duties of = the agent to=20 the principal are determined by the terms of the agreement between the = parties.=94=20 Restatement (Second)=20 of Agency =A7 376 (1958). After NPA filed its brief, the = Second=20 Restatement was superceded by the Third = Restatement.=20 Section 376 of the Second Restatement does not appear verbatim in the = Third=20 Restatement, but the Third Restatement carries forward the principle = that the=20 parameters of an agency relationship are to be established by the = agreement of=20 the parties. According to the Third Restatement, =93[a]n agent has a = duty to act=20 in accordance with the express and implied terms of any contract between = the=20 agent and the principal.=94 Restatement (Third) of Agency = =A7 8.07=20 (2006). =93This section makes the basic point that an agent=92s = duties of=20 performance to the principal are subject to the terms of any contract = between=20 them.=94 Id. cmt. a. The Restatement=92s position and = our prior=20 cases are consistent in respecting the right of persons to define the = terms of=20 their business relationships, In re Prudential Insurance Co. of = America,=20 148 S.W.3d 124, 129 & n.11 (Tex. 2004), particularly sophisticated = parties.=20 See Schlumberger Tech. Corp. v. Swanson, 959 = S.W.2d=20 171, 180 (Tex.=20 1997). We have also noted that common-law agency principles may = be=20 limited contractually, Casteel, 22 S.W.3d at 385, that a = contractual=20 obligation does not generally give rise to a fiduciary duty, = Johnson, 73=20 S.W.3d at 203; Manges v. = Guerra, 673=20 S.W.2d 180, 183 (Tex. 1984), and that fiduciary duties are equitable in = nature=20 and generally not subject to hard and fast rules. Tex. Bank=20 & Trust Co. v. Moore, 595 = S.W.2d 502, 508=20 (Tex.=20 1980). We agree with NPA that the extent of its duties to = National Health=20 should be considered in light of the parties=92 written contract.

=20 The Agreement between NPA and National Health imposed several = obligations=20 on NPA. For example, NPA was to solicit potential insureds, receive and process applications, = maintain=20 accounting, administrative, and statistical records, and process and pay = eligible claims. Under the contract, NPA controlled large amounts of = information=20 regarding the cancer policy book of business. The court of appeals noted = that=20 through its obligation to market National Health=92s product, NPA = exercised=20 control over the potential value of the business. 150 S.W.3d=20 at 732. The court of appeals concluded that this extensive = agreement,=20 coupled with the Insurance Code, gave rise to a general fiduciary = duty.

=20 NPA admits that under certain contractual obligations it acted as = National Health=92s agent and these obligations encompassed certain = specific=20 fiduciary duties. For example, NPA does not contest that it owed a = fiduciary=20 duty to act in National Health=92s interest when it processed and paid = eligible=20 claims, as it was required to do under the contract. But NPA claims that = it only=20 owed a fiduciary duty with respect to those specific obligations = because, under=20 the contract, NPA and National Health agreed that NPA =93shall act as an = independent contractor in the performance of responsibilities formed = under this=20 Agreement, and that [NPA=92s] services are = not exclusive=20 to National Health and that [NPA] will provide services to third = parties.=94 As=20 previously stated, we agree that the substance of the agreement to act = on behalf=20 of a principal must be considered in determining the exact nature of the = relationship. See Johnson, 73 S.W.3d at 200; see also Warner = v.=20 Winn, 197 S.W.2d 338, 342 (Tex. 1946) (holding that parties = were not=20 partners in a fiduciary relationship where they carefully defined the = extent of=20 their enterprise in a contract). The present Agreement did not provide = that NPA=20 would generally act on National Health=92s behalf in all matters = connected with=20 their relationship. There was no agreement that NPA would not market = policies=20 underwritten by other insurers in direct competition with National = Health=20 policies. To the contrary, National Health=92s witnesses acknowledged = that they=20 were not concerned with such activities by NPA so long as NPA produced = certain=20 premium levels for National Health. National Health entered into the=20 relationship with NPA knowing that NPA had developed relationships and = contracts=20 with school districts and employers through a common-remitter program = which gave=20 it an advantage in marketing insurance products. NPA=92s=20 relationships and marketing program were the primary attractions for = National=20 Health to enter its agreement with NPA.[5] There was no prohibition in the = Agreement=20 against rolling of policies by NPA, although both parties were aware of = the=20 practice in the industry and National Health=92s business for years had = been in=20 writing individual policies that lapsed and were replaced (or not) at = the=20 individual policyholder=92s choice.

=20 A general fiduciary duty owed by NPA to National Health could = have been=20 breached by NPA=92s marketing policies for = another=20 insurance company without first submitting the applications to National = Health,=20 if the policies were similar to those underwritten by National Health = and if=20 sales of the policies produced premiums for other insurers. But National = Health=20 did not contract for such actions on behalf of NPA. The detailed = Agreement=20 specified just the opposite: NPA was an independent contractor whose = activities=20 in administering and marketing insurance products were not exclusive to = National=20 Health. We decline to impose a general fiduciary duty on NPA when the = parties=20 expressly agreed that NPA could take actions that would be in violation = of such=20 a duty. See Warner, 197 S.W.2d at 340, 342.

=20 This was an arms-length business transaction. National Health was = experienced in negotiating agreements in the insurance industry and was=20 represented by experienced employees and by counsel when it entered the=20 agreement. The parties agreed that NPA would act as National Health=92s = agent only=20 for specific purposes. We need not determine the exact fiduciary duties = owed to=20 National Health by NPA because jury question eight inquired only as to a = general=20 duty, which NPA did not owe.

=20 National Health argues that NPA waived its claims that the = contract=20 limited the scope of NPA=92s agency = obligations because=20 NPA failed to request an instruction in the jury charge regarding those=20 limitations. NPA objected to the submission of the jury question on = several=20 grounds including the ground that it =93does not adequately describe for = the jury=20 the basis of the fiduciary duty . . . . The question as phrased imposes = a=20 general fiduciary duty upon NPA that does not exist as a matter of = law.=94 NPA=92s argument on appeal is not that the jury = question was=20 defective, but that because NPA did not owe National Health a general = fiduciary=20 duty at all, the question should not have been submitted.

=20 Whether a party owes a fiduciary duty is a legal matter. = Meyer,=20 167 S.W.3d at 330. Because NPA did not owe = National=20 Health a general fiduciary duty, the question should not have been = submitted,=20 the question is immaterial, and it cannot support a judgment for = National=20 Health. Salinas v. Rafati, 948 S.W.2d = 286, 288=20 (Tex. 1997) (noting that a jury = finding is=20 immaterial if the question should not have been submitted); Spencer = v. Eagle=20 Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994). Even though it did so, = NPA was not=20 required to object to the immaterial question. See Oliver v. = Oliver,=20 889 S.W.2d 271, 273-74 (Tex. 1994).

III. Conclusion

=20 Because NPA did not owe National Health a general fiduciary duty, = the=20 question and the jury=92s answer are immaterial and cannot support a = judgment.=20 There are no other findings on which to base a judgment against NPA.=20 Accordingly, we reverse the judgment of the court of appeals and render = judgment=20 that National Health take nothing from NPA. = The=20 judgment against CRS likewise must be reversed and rendered because it = was based=20 on NPA=92s liability. We do not reach the = question of,=20 and express no opinion on, whether the single-business enterprise theory = is a=20 viable doctrine to pierce the corporate veil of a party such as CRS.

&nbs= p; = ; = &= nbsp; &n= bsp; =20 ________________________________________

&nbs= p; = ; = &= nbsp; &n= bsp; =20 Phil Johnson

&nbs= p; = ; = &= nbsp; &n= bsp; =20 Justice

OPINION DELIVERED: September 28, 2007

^[1]=20 The policies at first were only cancer policies. The various types = of=20 policies will be referred to as =93cancer policies=94 for ease of=20 reference.

^[2]=20 The jury questions as to Hartford were = answered=20 in Hartford=92s favor and the trial = court rendered=20 a take-nothing judgment against National Health as to Hartford. National=20 Health did not appeal as to Hartford.

^[3]=20 The jury also found that NPA failed to comply with the agreement, = committed=20 fraud against National Health, and misappropriated information regarding = National Health=92s policyholders. But the jury did not find that = National=20 Health was damaged by those actions.

^[4]=20 Under the Insurance Code in effect at the time of trial, premiums = collected by a=20 third-party administrator on behalf of an insurer were to be held in a = fiduciary=20 capacity. Act of May 27, 1989, 71st Leg., R.S., ch. 1094, 1989 Tex. Gen. Laws 4477, repealed = by Act=20 of May 20, 2003, 78th Leg., R.S., ch. 1274, = =A7=20 26(a)(1), 2003 Tex. Gen. Laws 3611, 4138 (former Tex. Ins. Code = art. 21.07-6=20 =A7 17(a)).

^[5]=20 The advantages of NPA=92s program was described at trial by one of National = Health=92s witnesses=20 as follows:

&nbs= p; =20 Well, by having that common remitter would = allow you=20 to actually have almost an unlimited number of insurance companies or = products,=20 because they would be doing all the administration. And [Sommerlatte] had custom built or hand built kind = of a=20 home-grown system to be able to do that different than any other = programs out=20 there.

&nbs= p; =20 So what -- he was using that as a marketing = tool as an=20 opportunity to go into school districts and say, look, you=92re having = to manage=20 four or five or six different slots. We could consolidate that to = one slot=20 for you and we=92ll do a lot of that administrative expense.

&nbs= p; =20 That gives him a foot in the door that he = wouldn=92t=20 have any other way, but it also would now allow him to offer other = products in=20 addition to what they currently have. So in that case, he was = using the=20 third-party administrator as an opportunity to also promote = product. And=20 so you had a unique joining of the relationships=20 there.