The Irish Supreme Court today ruled that the Government's risk equalisation scheme for health insurance is based on a wrong interpretation of the law and should be set aside. The court upheld UK health insurer BUPA's appeal against a High Court decision rejecting its challenge to the scheme.
VHI, the State-owned health insurer, was due to receive payments of more than €40m from its rival but the payments had been postponed pending the outcome of this appeal.
The Quinn Group agreed to acquire BUPA's Irish operation in 2006 following its parent's decision to quit the market because of the risk equalisation issue.
BUPA'sappeal was heard by the five-judge Supreme Court last November and it reserved judgment which was announced this morning. All five judges ruled in favour of BUPA in today's ruling.
Earlier this year, the European Court of First Instance rejected BUPA's appeal against a European Commission decision to approve the scheme on the basis that the Government was entitled to compel BUPA to make compensatory payments to the VHI.
The stay on the introduction of risk equalisation was obtained in July 2007 by the Quinn Group, which took over BUPA earlier that year.
The Quinn Group has claimed in separate proceedings yet to be determined that it is not obliged to make risk-equalisation payments for three years. It claims it would incur costs of €30 million if obliged to make payments.
The Judgment had not been provided on the Courts Service website, at the time of posting this news report.
Vhi Healthcare said that it is very disappointed with today's Supreme Court decision.
Commenting on the Supreme Court decision, Jimmy Tolan, Chief Executive, Vhi Healthcare said: "We will take time to carefully review this decision. Community Rating has always been central to the Irish health insurance system and risk equalisation is necessary to ensure community rating is implemented. Today's decision may have serious consequences for older and chronically ill members of society and it is our goal to try and ensure that private health insurance can continue to be purchased on acceptable terms by our more medically vulnerable customers."
Statement from Quinn Healthcare:
Quinn Healthcare welcomes the outcome of the BUPA Supreme Court appeal.
We fully support a fair and competitive community rated market where access to private health insurance is fully available to all members of society. The Risk Equalisation Scheme previously introduced was clearly neither a fair nor appropriate means of achieving such a market.
Through our operations in Fermoy, we have built a loyal and maturing customer base over the past 12 years and we remain committed to providing both our existing customers and any new customers with the best value in the marketplace, regardless of age.
In the current market, where the VHI enjoys a State-supported dominant position, the removal of risk equalisation will encourage both competition and innovation to the benefit of a community rated market.