Press Release

Statement by the Minister for Health, Dr James Reilly T.D., following the High Court judgement which rejects the BUPA Damages case in its entirety and determined that no liability arose under Irish or European law

The Minister for Health, Dr James Reilly T.D., today, (Thursday 7th March) welcomed the decision of the High Court to dismiss entirely the case taken by BUPA against Ireland for a claim of damages, arising from the Supreme Court decision of July 2008 concerning the Risk Equalisation Scheme 2003.

Commenting on today’s Court decision, the Minister said:

“Since BUPA decided to leave the market of their own free will, it would have been completely unjustified to penalise Irish tax payers by seeking damages from the State for their decision. The judgement rejects the BUPA case in its entirety and determined that no liability arose under Irish or European law.

The Government’s objective in health insurance has always been that it should be affordable for older and sicker people. I am strongly committed to protecting the principle of community rating in the private health insurance market, whereby the level of risk that a particular consumer poses to an insurer does not directly affect the premium paid. The risk equalisation scheme (RES) is the financial mechanism to support community rating.

I am pleased, therefore, that the judgement of the High Court in this matter supports the justification for a risk equalisation scheme and the principle of community rating in the private health insurance market. The Government remains fully committed to maintaining a stable and sustainable health insurance market and the recent introduction of a permanent RES, with effect from 1 January 2013, will continue the objective of making health insurance more affordable for older people. I would also point out that the principles of community rating and intergenerational solidarity are core societal values which the Oireachtas has repeatedly supported”.

The Minister finished by saying that the judgement fully endorses the introduction of a permanent Risk Equalisation Scheme in the Irish market, as legislated for by this Government with effect from 1 January 2013.”

ENDS

Note for Editors:

Following the introduction of the 2003 Risk Equalisation Scheme (RES) and the decision to introduce risk equalisation payments from 1 January, 2006, BUPA initiated High Court and (subsequently) Supreme Court proceedings against the State. The High Court ruled in favour of the State but subsequently the RES was deemed by the Irish Supreme Court to be ultra vires in July 2008, on the basis of interpretation of the legislation, and the entire scheme fell.

This necessitated the putting in place of an interim scheme of loss compensation as provided for under the Health Insurance (Miscellaneous Provisions) Act 2009 – essentially an Interim Scheme of Risk Equalisation which was introduced on a temporary basis in order to provide direct support to community rating. The scheme expired on 31 December 2012 and the Health Insurance (Amendment) Act, 2012 provides for a permanent RES for the private health insurance market from 1 January 2013.

Following on from the Supreme Court in 2008, BUPA initiated proceedings in the courts seeking damages from the State, based on an interpretation of the Supreme Court judgement and an assertion that the policy objective of RES was thus not justified and that the company was forced to leave the market due to the introduction of the RES. The State argued that the Supreme Court decision of 2008 did not mean that the justification for RES itself fell, but rather that there was a technical error in the drafting of the 2003 RES and, as such, BUPA were not entitled to recover damages in respect of losses, if any, incurred as a result of the introduction of the RES. The State argued that, in effect, the possibility of the introduction of the RES was an ordinary commercial risk of operating in the Irish private health insurance market and the decision by BUPA to leave was a free and voluntary act.

BUPA left the market and sold its business to the Quinn Group in advance of a final court decision in July 2008, which found that the RES was ultra vires. No actual financial transfers took place under the RES and the position of the Minister for Health has always been that, since BUPA unilaterally decided to leave the market, taking significant profits with them, it is not in any way justified that they should now seek to penalise the Irish taxpayer for their actions.

A hearing on preliminary issues commenced in the High Court on 31st January 2012, ran over seven days to Thursday 9th February 2012 and judgement was reserved.

Judgement from Justice Cooke has now been made available on Thurs 7th March 2013.