Bupa equalisation stay continued

The Supreme Court has agreed to continue a stay on the introduction of risk equalisation into the health insurance market pending the hearing of an appeal by Bupa against the High Court's rejection last December of its challenge to the validity of the scheme.

The three-judge court of Mr Justice Adrian Hardiman, Mr Justice Hugh Geoghegan and Mr Justice Nial Fennelly yesterday granted an application by Bupa for the stay to continue until the hearing of Bupa's appeal. A date for that appeal hearing has yet to be fixed.

Last December, Bupa lost on all grounds its High Court challenge to the validity of the risk equalisation scheme.

Mr Justice Liam McKechnie said he accepted that the State's evidence that without such a scheme, there is a threat to the stability of the health insurance market. He also noted Bupa had entered the market knowing its regulatory framework.

Bupa had complained that the scheme, which would involve Bupa paying a subsidy to VHI to compensate for the VHI having a greater number of high-risk, older and more expensive subscribers, would cost it some €30 million.

Paul Sreenan SC, for Bupa, said yesterday his client was seeking a stay on the introduction of risk equalisation pending the outcome of the appeal. He also said the appeal may have to be split as there could be a referral in the appeal hearing of certain issues to the European courts.

Eugene Regan SC, for the State, said that while it had consented to allow the stay on introduction of risk equalisation to continue until June, the State was concerned about "an indefinite stay" in a matter that had already involved "protracted litigation".

Paul Gallagher SC, for VHI, said his client was also concerned about a "never ending extension" of the stay. This "long-term uncertainty" over the risk-equalisation scheme was causing "very significant difficulties" for the VHI, particularly in the way that premiums were set, he said.

Mr Justice Hardiman, presiding, said the appeal hearing, which is expected to last five days, would be heard in the summer.

While the court could hear those parts of the appeal that related to domestic law, issues could be sent to the European Court in Luxembourg for reference.

Bupa contends the Minister should have taken into account obligations under the Treaty of Rome not to enhance the dominant position of a company like the VHI.

Since Bupa lost its action to the validity of the scheme, its Irish business has been acquired by the Seán Quinn group which has said it is not obliged to make payment under the risk equalisation scheme for a three-year period.

The VHI, with 1.55 million members, has said the risk equalisation scheme is vital to the future of the community-rating scheme under which health insurers must charge customers the same premium for a particular plan regardless of their age or health history.