THE STATE is facing a legal costs bill estimated at more than €5 million after the Supreme Court yesterday awarded private health insurer Bupa the legal costs of its successful challenge to the introduction of a risk-equalisation scheme of 2003 into the health insurance market.
Bupa is also seeking multimillion euro damages against the State but the issue of liability for damages has yet to be decided.
When dealing with issues arising from Bupa's successful appeal against the High Court's rejection of its challenge to the scheme, Chief Justice Mr Justice John Murray said he wanted to make clear that the Supreme Court's judgment allowing Bupa's appeal does not prohibit the Minister for Health proceeding with risk equalisation in any statutory form she wished.
He made the remark when granting an application by Paul Sreenan SC, with Michael Collins SC, for Bupa, for the costs of the case, both in the High Court and Supreme Court, against the State.
The Chief Justice also remitted to the High Court the hearing of Bupa's claim for damages against the Minister over the equalisation decision.
Bupa is expected to seek millions of euro in damages but Gerard Hogan SC, for the Minister, said his side would be strenuously resisting liability for any damages.
During Mr Hogan's submissions, Mr Justice Murray said there was nothing in the Supreme Court judgment on the appeal that would inhibit the Minister from proceeding with risk equalisation in any statutory form they wished. The judgment merely stated the law as laid down by the Oireachtas and contained no inhibition on the introduction of any scheme, he said.
The Chief Justice said he wanted to have that clarified because there were "misleading statements" in the media on many occasions to the contrary.
In July last, a five-judge Supreme Court unanimously granted Bupa's appeal against the High Court's rejection of its challenge after ruling the 2003 scheme was invalid because it was based on an incorrect interpretation of the phrase "community rating" in a provision of the Health Insurance Act 1994.
The 2003 scheme was to have come into effect in 2005 but its introduction was deferred pending the outcome of Bupa's challenge. The scheme was intended to spread the claims costs of high-risk people among all insurers in proportion to their market share, effectively meaning that insurance companies with lower-risk customers would compensate the VHI for its older and less profitable customer base. VHI has 20 times more customers aged over 80 than has Bupa.
The State had argued "risk equalisation" was a fundamental prerequisite for the effective operation of community rating as it would guarantees all insurers and the members of their schemes would share proportionately the costs inherent in community rating. The Supreme Court ruled the scheme invalid because the Minister for Health adopted it on the basis of an incorrect interpretation of the meaning of "community rating across the market for health insurance" as set out in the 1994 Act.