Hospitals will be able to recover the full costs of treating road accident victims from insurance companies following a decision of the Supreme Court in a test case yesterday.
The judgment could benefit hospitals by several million pounds annually although road accident victims constitute less than 1 per cent of hospital users.
Prior to yesterday's decision, hospitals could make only "a reasonable charge" for services rendered to persons injured in road accidents who were entitled to compensation.
In yesterday's case, Beaumont Hospital, Dublin, had claimed £34,773 for hospital care and services to a road accident victim but, in accordance with a previous High Court ruling, it had received only £6,642. However, FBD Insurance plc had paid over the balance prior to the test case.
The Eastern Health Board took the test case to the Supreme Court in an appeal. Its success is expected to benefit hospitals and health boards and load further costs on insurance companies.
The case centred on the method of calculation of the charge payable to hospitals under the Health (Amendment) Act, 1986.
The health board had suggested that a new method should be adopted in relation to the charge to be made by a hospital.
The Supreme Court declared the proper method of calculation under the Act was the division of annual hospital costs by the number of occupied hospital beds during the same year.
The accident which led to the test case involved Mr Derek Crilly, Carntown, Drogheda, Co Louth. He was awarded £1.56 million damages arising out of injuries he received when struck by a car on September 30th, 1989.
He was provided with hospital services at Beaumont Hospital over 58 days in October/November 1989 and over 88 days between September 1990 and September 1991.
When the case was before the High Court, the EHB said the average daily cost (ADC) of in-care facilities in Beaumont was £218 in 1989 and £250 in 1990/91. Under a formula adopted by the courts some years ago a rate of £100 was fixed as the ADC, while the current rate is well in excess of that.
Delivering her decision in the Supreme Court yesterday, Mrs Justice Denham said that the issue between the EHB and the insurer was about the method of charging the Beaumont Hospital bill. In fact, the bill had been paid.
However, because the declaration sought related to an issue which arose every day of the week between the EHB and the insurer, the High Court judge had agreed, at the request of the parties, that the matter proceed.
She said there was ample factual evidence as to the nature of the charge. The evidence was that the EHB sought to recoup the ADC. It was calculated by taking a hospital's annual expenditure and dividing it by the number of bed days occupied in the year.
It appeared the hospital charge in a year lagged behind the actual cost because it was calculated on the basis of the preceding year's accounts.
Mrs Justice Denham said it was a system of averaging which was reasonable and consistent.
Yesterday's Supreme Court judgment was welcomed by Beaumont Hospital, but an insurance spokesman warned that it will mean higher motor insurance premiums.
Hospitals will be able to charge the insurance companies more than twice as much as at present for treating policy-holders for traffic injuries.
All acute hospitals will benefit from the ruling, but Beaumont, Cork University Hospital and the Mater all receive people injured in the worst road accidents in the State and stand to benefit particularly.
A spokesman for the Irish Insurance Federation said the ruling introduced a form of double taxation for motorists. They were paying for health services through their taxes and would now also pay for them through higher premiums, he said.