BUPA Ireland Ltd v Health Insurance Authority

JurisdictionIreland
CourtSupreme Court
JudgeKearns J.
Judgment Date02 December 2005
Neutral Citation[2005] IESC 80
Docket Number[S.C. No. 315 of 2005]
Date02 December 2005
BUPA IRELAND LTD & BUPA INSURANCE LTD v HEALTH INSURANCE AUTHORITY & ORS
JUDICIAL REVIEW

BETWEEN

BUPA IRELAND LIMITED AND BUPA INSURANCE LIMITED
APPLICANT/RESPONDENTS

AND

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

AND

VOLUNTARY HEALTH INSURANCE
NOTICE PARTY/APPELLANT

[2005] IESC 80

Kearns J.

Macken J.

Clarke J.

[APPEAL NO. 315/05]
NO. 532JR/2005

THE SUPREME COURT

PRACTICE AND PROCEDURE

Parties Removal of party from proceedings - Whether presence of notice party necessary for effectual and complete determination of proceedings - Whether notice party directly affected by proceedings before court - Rules of the Superior Court 1986 (SI 15/1986), O 15, r 13 & O 84, rr 22(6) & 26(1) - Notice party reinstated (315/2005 - SC 2/12/2005) [2005] IEHC 80 - [2006] 1 ILRM 308 - Bupa Ireland Ltd v Health Insurance Authority

HEALTH INSURANCE ACT 1994 S12

CONSTITUTION ART 15

CONSTITUTION ART 21

CONSTITUTION ART 40.3

CONSTITUTION ART 40

TREATY OF ROME ART 10

TREATY OF ROME ART 82

TREATY OF ROME ART 86

RISK EQUALISATION SCHEME 2003 SI 261/2003

RSC O.84 r 22(6)

RSC O.84 r 26(1)

RSC O.84

RSC O.84 r 22(2)

RSC O.15

O'KEEFFE v BORD PLEANALA 1993 1 IR 39 1992 ILRM 237

SPIN COMMUNICATIONS T/A STORM FM v INDEPENDENT RADIO & TELEVISION COMMISSION UNREP SUPREME 14.4.2000 2000/16/6286

BUCKLEY & ORS (SINN FEIN) v AG 1950 IR 67

BLAKE v AG 1982 IR 117 1981 ILRM 34

O'B v S 1984 IR 316

RSC O.15 r13

BARLOW & ORS v FANNING & UNIVERSITY COLLEGE CORK (UCC) 2002 2 IR 593 2003 1 ILRM 29

FINCORIZ SAS v ANSBACHER & CO LTD UNREP LYNCH 20.4.1987 1987/2/592

HALSBURYS LAWS OF ENGLAND 4ED VOL 37 PARA 226

1

JUDGMENT delivered by Kearns J. on the 2nd day of December, 2005

2

These proceedings concern an appeal brought by the notice party/appellant, The Voluntary Health Insurance Board ( "VHI"), from the judgment of the High Court (Peart J.) delivered on the 27 July, 2005, and from the order made pursuant to that judgment on 29 July, 2005, whereby the High Court directed that the action should proceed as between the applicants/respondents, BUPA Ireland Limited and BUPA Insurance Limited ( "BUPA") and the third and fourth named respondents being respectively The Health Insurance Authority ( "HIA"), the Minister for Health and Children ( "the Minister"), Ireland and the Attorney General ( "the State") without the presence of VHI as a notice party. The purpose of the appeal therefore is to reinstate the VHI as a notice party on the basis that it is a party genuinely interested in and affected by these proceedings which are scheduled to be heard in the High Court in early December.

Background
3

The proceedings were commenced by BUPA pursuant to leave granted by the High Court (Clarke J.) on 24 May, 2005. As originally initiated, BUPA's claim sought to impugn a recommendation ( "the First Recommendation") dated 29 April, 2005 of the HIA to the Minister that payments under the Risk Equalisation Scheme, 2003 ( "the Scheme") should be commenced by the Minister. BUPA also sought to impugn the Scheme and certain provisions of the Health Insurance Act, 1994 (as amended) ( "the Act") under which the Scheme was established. BUPA sought to do so on various grounds, including constitutional grounds, and other grounds which include alleged breaches of the law of the European Union.

4

The principle of community rating is at the heart of the dispute between the parties, a dispute the resolution of which is seen by both BUPA and VHI as having enormous financial implications for both insurers to the point where it has been said that a successful outcome for one party would threaten the other's financial viability and ability to compete. The fundamental principle of community rating is that all insured persons should share equally in the cost of health care on the basis that the excess of premiums over claims for younger, healthier members is used to pay the excess of claims over premiums for older and less healthy members. It is based on the principle of societal and inter-generational solidarity and prevents insurers risk-rating individuals for health insurance. It is combined with the principle of "open enrolment" which dictates that a private health insurer cannot refuse cover to anyone below age 65 and also the principle of "lifetime cover" which guarantees the right of the insured to renew a private health insurance policy. Furthermore the legislation incorporates the principle of "minimum benefits", which dictates that all private health insurance schemes or plans must provide at least a certain level of coverage. The scheme is intended to assist the maintenance of community rating across the market for people who are or may become privately insured, providing that health insurance undertakings, whose risk profile of members is less costly than the risk profile of all insured persons, should compensate those undertakings with more costly risk profiles. While VHI contend that the Scheme is essential to render effective the principle of community rating, BUPA takes quite a different position. It contends:-

5

(a) That s.12 of the Act provides for an unauthorised delegation of legislative power contrary to Article 15 of the Constitution.

6

(b) That the Risk Equalisation Scheme implemented under s.12 of the Act amounts to an imposition of a form of direct or indirect taxation, or implementation of a money bill, by way of delegated legislation contrary to Articles 15 and 21 of the Constitution.

7

(c) That the imposition of charges pursuant to s.12 interferes with BUPA's rights to private property and to carry on its business, contrary to articles 40.3 and 43 of the Constitution.

8

(d) That s.12 of the Act and the Scheme constitute an impermissible restriction by Ireland upon BUPA's right of establishment and freedom to provide services subsisting under the EC Treaty and the Third Non-Life Insurance Directive, contrary to the provisions of the Treaty and the Directive.

9

(e) That the State has failed to discharge its obligations under Article 10 of the EC Treaty in enacting a Scheme which results or is capable of resulting in the reinforcement of VHI's dominant position in the Irish market, contrary to Article 82 of the Treaty.

10

(f) That the State has breached Article 86 of the EC Treaty in enacting a scheme which might have the consequence of bringing about the abuse of the VHI's dominant position contrary to Article 82 of the Treaty.

11

At present the Scheme does not operate. The Act and the Statutory Instrument made thereunder provide for the introduction of the Scheme in certain circumstances. The Risk Equalisation Scheme, 2003 ( S.I. No.261/2003) provides for an evaluation by HIA of the operation of health insurance in the market and in particular requires the HIA to determine the nature and distribution of risks amongst Scheme undertakings and to make recommendations to the Minister. The Minister is empowered to make a determination to introduce the Scheme. If the Scheme is implemented, it will undoubtedly involve the making of very substantial payments to VHI.

12

When granting leave to BUPA to commence these proceedings on 24 May, 2005, the court also granted a stay on the implementation of the First Recommendation. Ultimately, however, the Minister did not accept the first Recommendation and the Scheme was not implemented. However, as appears later, the HIA thereafter made a provisional Second Recommendation that the Scheme be implemented, which said recommendation became a final Recommendation on the 28 October, 2005, the day following the hearing of this appeal by the court.

13

By Notice of Motion dated 27 May, 2005, application was made on behalf of VHI pursuant to Order 84, Rule 22(6) and/or Order 84, Rule 26(1) of the Rules of the Superior Courts and/or pursuant to the inherent jurisdiction of the court, joining VHI as a notice party to the proceedings and permitting VHI to participate in the proceedings. In the grounding affidavit in support of the application, David Clarke, solicitor for the VHI, outlined VHI's interest in the proceedings. He asserted there was a clear justification for VHI being joined as a notice party because VHI was and is the party entitled to receive the greater part of any funds becoming available as a result of payments directed by the Minister under the Scheme. VHI also relied on the fact that the Statement grounding BUPA's application for judicial review and the affidavit sworn on behalf of BUPA by Martin O'Rourke on 24th May, 2005, made a number of specific claims, assertions and allegations in relation to the situation and conduct of VHI in the market.

14

The High Court (Quirke J.) made an order on 30 May, 2005, joining VHI as a notice party to the proceedings. It is of some significance to note that BUPA did not oppose VHI's application at that time.

15

Thereafter, Opposition papers were served on behalf of the State and on behalf of VHI. The Statement of Opposition on behalf of VHI was verified by an affidavit sworn by Vincent Sheridan, the Chief Executive Officer of VHI, on 15 June, 2005. In the meantime, however, the Minister decided on 27 June, 2005, not to accept the First Recommendation and the claim by BUPA in respect of the First Recommendation as such became moot. However, the balance of BUPA's claims continued, although from that point in time onwards - and in the absence of any further recommendation - it is fair to say that BUPA regarded the presence of the HIA and VHI as superfluous to the issues to be disposed of by the High Court.

16

The matter came back to the High Court (Quirke J.) on 4 July, 2005, when, with the agreement of the parties, the court directed the parties to...

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