February 15, 1980

Ms. Helen Wegner 
Secretary 
Department of Commerce 
State Capitol 
Pierre, South Dakota 57501

Official Opinion No. 80-9

Ambulance Service Subscription Contracts

Dear Ms. Wegner:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

Sioux Falls Ambulance, Inc. has proposed a prepaid ambulance service subscription program covering services provided by the Sioux Falls Ambulance, Inc. only.  The plan itself is somewhat similar to the towing service plans which are offered by various major oil companies.  Families and individuals would have an opportunity to sign up for the ambulance service contract for a flat yearly fee. In return for the annual membership, the ambulance company would not charge subscribers to the program any costs for the provision of ambulance service in a bona fide medical emergency.  The subscription plan would cover subscribers only for service directly provided by Sioux Falls Ambulance, Inc. No service provided by any other ambulance service would be reimbursed to a subscriber nor would Sioux Falls Ambulance indemnify the subscriber for other ambulance expenses incurred by the subscriber with providers other than Sioux Falls Ambulance.  Also, the subscription would be paid directly to the provider, Sioux Falls Ambulance, rather than to any special corporation set up simply to sell and administer these subscriptions.

Based upon the above facts, you have asked the following question:

QUESTION: 

Is the proposal of Sioux Falls Ambulance, Inc. 'doing an insurance business' under SDCL Title 58?

In Official Opinion 78-39, my predecessor considered a similar question regarding prepaid legal services plans.  The result and conclusion of that opinion was that a prepaid legal service which provided service as the central element, not an indemnity in the traditional sense, was not 'insurance' under the definition of insurance in SDCL 58-1-2(1).

Although I can see factual distinctions between the prepaid legal service plan involved in Official Opinion 78-39, and the fact situation presented in the case of Sioux Falls Ambulance, Inc., I am of the opinion that the similarities are basic and that a conclusion similar to the one in Official Opinion 78-39 is also appropriate here.

Consequently, it is my opinion that the answer to your question is no.

Respectfully submitted,

Mark V. Meierhenry
Attorney General