Bupa could face €5m legal bill for court action

Health insurance company Bupa Ireland could face a legal bill of about €5 million arising from its recent unsuccessful High Court challenge to the Government's planned risk equalisation scheme in the sector.

Mr Justice Liam McKechnie said yesterday that Bupa's challenge was essentially brought to preserve its commercial position and that there were no special factors which would justify the court departing from the normal practice that costs were paid by the losing party. A stay has been granted on the costs pending a forthcoming appeal by Bupa to the Supreme Court.

Bupa said last night that it noted the decision of the High Court.

The VHI, which was a party to the case, said that it welcomed the decision.

Meanwhile, the Cabinet is today expected to approve the membership of a three-person business review group which will examine whether the health insurance market, as currently regulated, can be profitable. The review group is expected to report within three months.

Bupa has contended that it has been forced out of the Irish market by the risk equalisation scheme which would see it having to pay €161 million over the next three years at a time when its projected profits are estimated at €61 million.

Bupa said last night that it was important to note that while the High Court had upheld the Government's right to have a risk equalisation scheme it noted there were anti-competitive aspects to this and that it would lead to the company operating at a loss.

In his ruling yesterday Mr Justice McKechnie said that while he had no doubt the issues raised in the case were of public importance and in the public interest, there was no doubt that the indisputable key factor and driving interest of Bupa was to preserve its position in the health insurance market and to protect its commercial position, its profits and reserves.

Bupa was perfectly entitled to pursue that action but it was "simply not so", as was suggested by the company, that its motivation was equally prompted by public interest concerns. It was clear "beyond doubt" that Bupa's focus remained on preserving its commercial position, especially given its decision to embark on an orderly withdrawal from the market without waiting for the outcome of its Supreme Court appeal against his decision.

Given the resources of Bupa and its parent company's worldwide interests, he could not believe the overall justice of the situation would be met by acceding to the application by counsel for Bupa, for costs or a percentage of those costs, he said. The challenge was heard over 35 days with judgment delivered last November.

The judge decided yesterday that Bupa must pay the costs of the State, the VHI and the Health Insurance Authority in the case.

A separate stay on Bupa having to make risk equalisation payments is to be extended until January 26th to facilitate the Supreme Court appeal.