BUPA IRELAND Ltd v HEALTH INSURANCE AUTHORITY

• Jurisdiction: Ireland
• Judge: Murray C.J.
• Judgment Date: 16 July 2008
• Neutral Citation: [2008] IESC 42
• Date: 16 July 2008
• Court: Supreme Court
• Docket Number: Neutral Citiation Number: [2008] IESC 42 ,[S.C. No. 17 of

Between

BUPA IRELAND LIMTED AND BUPA INSURANCE LIMITED

APPLICANTS / APPELLANTS

AND

THE HEALTH INSURANCE AUTHORITY,MINISTER FOR HEALTH AND CHILDREN,IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

AND

THE VOLUNTARY health INSURANCE BOARD

NOTICE PARTY

Murray C.J.

Denham J.

Hardiman J.

Geoghegan J.

Fennelly J.

Neutral Citiation Number: [2008] IESC 42

Record No: 2007/17

THE SUPREME COURT

Abstract:

Constitutional law - Insurance law - Appeal - Risk Equalisiation - Property rights VHI - Community rating - Statutory interpretation - Third Non Life Directive -Health Insurance Act 1994 - SI No. 261 of 2003 - SI No. 710 of 2003

Facts: On appeal from the High Court, the applicant/ appellants challenged the validity of s. 12 of the Health Insurance Act 1994, which the Minister had used to introduce a system of risk equalisation to the health insurance market in the form of community rating in 2003. The appellant alleged that the scheme was unfair in so far as it entailed that it had to pay a large subsidy to its rival on account of their elderly client base. The issue arose as to whether the scheme was ultra vires the powers of the Minister pursuant to the Act.

Held by the Supreme Court, per Murray CJ (Denham, Hardiman, Geoghegan, Fennelly JJ. concurring), that the Minister had misconstrued the power and had acted ultra vires. The High Court had erred in law. The intention of the Oireachtas was to be found within an Act only. The plain intent of the Act was that community rating applied across the market. The best overall interest of all consumers applied across the market. The appeal would be allowed and the scheme of 2003 would be held to be ultra vires the Minister.

Reporter: E.F.

1 JUDGMENT of Murray C.J. delivered on the 16th day of July 2008

2 The Health Insurance Act 1994 was adopted with a view to opening the market for private medical insurance in Ireland to competition.

3 The issues in this appeal concern a challenge by the appellant to the validity of s. 12 of the Health Insurance Act 1994, as amended, and in particular to the validity of a scheme known as a risk equalisation scheme brought into effect by the second named respondent, the Minister, in 2003 pursuant to s. 12.

4 The Act of 1994 Act ended the State monopoly on the provision of health insurance on foot of contractual arrangements with individuals or groups of individuals. Since its establishment in 1957 this had effectively been the sole prerogative of the Voluntary Health Insurance Board, hereafter the 'VHI'. The VHI was established as a body corporate by virtue of the provisions of the Voluntary Health Insurance Act 1957 and was charged with making and carrying out schemes of voluntary health insurance for defraying the cost to persons paying subscriptions to the Board of prescribed medical, surgical, hospital and other health services availed of by them or their dependants.

5 In opening the market in health insurance to competition the Act of 1994 also sought to fulfil the purposes of Directive 1992/49/EC known as the Third Non-Life Directive (TNLD).

6 With the ending of the effective monopoly enjoyed by VHI in the private health insurance market and the entry of other operators which would provide health insurance in that market the Oireachtas considered it necessary, in the interests of the common good, to regulate the market and the conditions under which all undertakings operated,

7 including the VHI.

8 This was done by means of enacting the Act of 1994 which was subsequently amended by the Health Insurance (Amendment) Act 2001 and the Health Insurance (Amendment) Act 2003 although nothing turns on the provisions of the latter. The Act of 1994 is the Principal Act and the three Acts are required to be construed together as one Act.

9 The long title to the Act of 1994, as enacted and unchanged, states:

10 "An Act to regulate further, in the interests of the common good, the provision of voluntary health insurance so as to provide, inter alia, for the establishment of the health insurance authority, for the establishment of schemes for the equalisation of risks between health benefits undertakings, for a minimum range of cover on such insurance, for uniformity of the premiums charged by each particular such undertaking in respect of specified ranges of such cover and for the establishment of a register of such undertakings and to provide for related matters."

11 The Parties

12 The first named appellant is a limited liability company incorporated in this country where it is a registered insurance intermediary authorised to sell the products of the second named appellant. The second named appellant is a company incorporated in the United Kingdom for the sale of products in the private medical insurance market. As indicated, it operates in this country through the first named appellant. For the purposes of this judgment both appellants are referred to as BUPA.

13 The first named respondent is a statutory body established under Part IV of the Health Insurance Act 1994, as amended, and has the responsibility of carrying out certain functions assigned to it under the provisions of that Act. Although this respondent had exercised certain statutory functions it was agreed by all parties that the outcome of these proceedings would not adversely affect the interests of this respondent in a manner distinct from the other respondents. In the circumstances the Health Insurance Authority was not represented in the proceedings and took

14 no active part in them.

15 The second named respondent is the Minister responsible, inter alia, for exercising certain statutory powers pursuant to the Act of 1994, as amended, and pursuant to the provisions of S.I. No. 261 of 2003 adopted for the purpose of giving effect to the Act. An initial risk equalisation scheme was promulgated by the Minister in 1996 pursuant to the Act of 1994. That scheme was never operated and was revoked in 1998. Subsequently, again pursuant to s. 12 of the Act of 1994, a risk equalisation scheme was promulgated in 2003. This scheme consists of that promulgated by S.I. No. 261 of 2003 and as amended by S.I. No. 710 of 2003. In April 2005 the Health Insurance Authority recommended that the 2003 scheme be implemented by the Minister from 1st July 2005. It has not been put into operation pending the outcome of these proceedings. The risk equalisation scheme affects the manner in which the appellants, the VHI and other undertakings should conduct their private medical insurance business and the nature of such a scheme is referred to in more detail later in this judgment. The subject matter of these proceedings is the validity of this Scheme and the statutory provisions of the Health Insurance Act 1994, as amended, pursuant to which such Scheme was introduced.

16 The fourth and fifth respondents are parties by virtue of their interest, inter alia, in the issues concerning the validity of certain impugned statutory provisions having regard to the provisions of the Constitution and Community Law.

17 The notice party, the VHI, was joined as a notice party to these proceedings by reason of the business which the party conducts in the private health insurance market and its exceptional interest and standing in that market.

18 The Reliefs Sought:

19 The appellants in these proceedings have sought the following reliefs:-

• (a)A declaration that the risk equalisation scheme introduced by the Minister in 2003 was ultra vires the powers of the Minister under the Health Insurance Act 1994, as amended, and therefore invalid.

• (b) A declaration that s.12 of the 1994 Act, as amended, is invalid having regard to the

  Constitution of Ireland and in particular Articles 15, 21, 40.3 and 43 thereof.

• (c) A declaration that the promulgation of the 2003 scheme is unconstitutional and represents a non-constitutional delegation of legislative function.

• (d) A declaration that s.12 of the 1994 Act, as amended, is invalid and/or the introduction of the 2003 scheme represents a breach by the third named respondent of the provisions of Directive 92/49/EEC.

• (e) A declaration that the enactment of s.12 of the 1994 Act (as amended) and/or the introduction by the second named respondent of the 2003 scheme infringes the applicants rights to freedom of establishment and the freedom to provide services under Articles 43 and 49 of the EC Treaty.

• (f) A declaration that the enactment of s.12 of the 1994 Act (as amended) and/or the introduction by the second named respondent of the 2003 scheme are not authorised by Directive 92/49/EEC.

• (g) A declaration that the enactment of s.12 of the 1994 Act (as amended) and/or the introduction by the second named respondent of the 2003 scheme was not a requirement imposed on respective insurance contracts as provided for in Article 54 of Directive 92/49/EEC.

• (h) A declaration that private health insurance schemes in the State do not operate as or constitute a partial or complete alternative to health cover provided by 'a statutory social security system' within the meaning of Article 54 of Directive 92/49/EEC.

  (i) A declaration that the existence of the 2003 scheme and/or any determination on the part of the first named respondent pursuant to the 2003 scheme would constitute a breach of Article 10 and Article 82 of the EC Treaty or a breach of Article 86 of the EC Treaty.

• (j) An injunction, and if necessary, an interlocutory injunction, restraining the second named respondent from purporting to impose upon private health insurers in the State, and in particular the applicants, any obligation to contribute sums of money to other health insurers and in particular to the VHI, whether pursuant to the 2003 scheme or otherwise.

• (k) Damages for breach of statutory duty and for breach of...