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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Bupa Ireland Ltd. & Anor v. Health Insurance Authority & Ors [2005] IEHC 453 (29 December 2005) URL: http://www.bailii.org/ie/cases/IEHC/2005/H453.html Cite as: [2005] IEHC 453

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Neutral Citation No: [2005] IEHC 453

THE HIGH COURT

DUBLIN

Case No. 532 JR/2005

BUPA IRELAND LTD. AND BUPA INSURANCE

LTD.

APPLICANTS

and

THE HEALTH INSURANCE AUTHORITY, THE MINISTER FOR HEALTH AND CHILDREN,

IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

VOLUNTARY HEALTH INSURANCE BOARD

NOTICE PARTY

MS. JUSTICE FINLAY GEOGHEGAN DELIVERED JUDGMENT AS FOLLOWS ON THURSDAY, 29 DECEMBER 2005

This judgment is given in an application made yesterday on behalf of the Applicants for interlocutory orders pending the hearing of the proceedings in the High Court which have now been fixed for 7 February 2006 and estimated to last six weeks.

At the outset yesterday morning there were applications from the Respondents and the Notice Party, that is to say the Minister and the VHI, to discharge the interim orders made on 23 December. At that stage there was no application before the Court from the Applicants, to whom I will refer to simply as Bupa, but who were opposing the application to discharge the interim injunction. When clarification was sought to the issues before the Court it was then agreed between the parties that the Court should, firstly, on consent make an order discharging the interim orders made on 23 December, and, secondly, that the Court should then treat the application before the Court as an application from Bupa for interlocutory orders and hear that application on the affidavits which had been filed in the interim application brought on 23 December and the application by the Minister and VHI to charge the interim order made. Bupa was then given leave to issue a Notice of Motion seeking interlocutory orders. It was required to provide to the Court by 2:00 yesterday, which it did, a Notice of Motion setting out the interlocutory orders being sought. Whilst this was done in fact the form of interlocutory order ultimately sought in the course of the hearing was different to that set out in the Notice of Motion and I will return to that.

It is necessary before considering the application to set out briefly the background to the proceedings, the present stage reached in the relevant statutory scheme and the decision which is now the subject matter of this interlocutory application.

In 1994 the Oireachtas passed the Health Insurance Act of that year in which they provided, inter alia, for the Minister to make what is known as a Risk Equalisation Scheme. That Act was substantially amended by the Health Insurance (Amendment) Act of 2001 and again amendments were made by a 2003 Act of the same name. Section 7 of the Act effectively requires private health insurers, which include both Bupa and the VHI, to write what are known as community rated health insurance contracts. In simple terms these are contracts where the cost does not alter with age, gender or medical history. Section 12, as amended, enabled the Minister top rescribe a Risk Equalisation Scheme. Again in very simple terms the essence of such a scheme is to require payments to be made by private health insurers with a customer age and gender profile different to the typical market age and gender profile and then permits the Health Insurance Authority to in turn make such payments to other private health insurers with what might be described as an adversely different market profile. In practical terms, insofar as the parties before the Court is concerned, the effect of the scheme is to permit payments to be required to be made by Bupa to the HIA and in turn to permit the HIA to pay to the VHI payments. This is stated as intended to compensate the VHI for the fact that it carries in its insured a far greater number of older aged insured than do Bupa.

Section 12(4)(a) of the 1994 Act as amended, which is of some importance to the present application, provides that a scheme is to include provisions requiring the making of such payments by what are referred to in legislation as registered undertakings to the Authority and for the making of the payments by the Authority, that is to say the HIA, to other registered undertakings. Section 12(4)(b) provides that the payment provisions in the scheme are not to have effect until such day as the Minister determines and appoints in accordance with the provisions of the scheme.

In June 2003 the Minister made the Risk Equalisation Scheme 2003, which is promulgated in Statutory Instrument No. 261 of 2003. In accordance with the terms of the scheme itself all of the provisions other than what I would describe as the payment provisions made pursuant to section 12(4)(a) came into operation on 1 July 2003. Those provisions provide for the reporting by the private health insurers to the HIA on a six monthly basis which was to commence on 1 July 2003. The first six month period commenced on that date. It also provides for certain determinations and analyses to be carried out by the HIA and in particular the computation of what is referred to as the Market Equalisation Percentage and is prescribed in the scheme in its technicalities. It also provides for the HIA to report to the Minister on a six monthly basis. Where the Market Equalisation Percentage is not less than 2 nor greater than 10%, the HIA are then obliged under article 10(4) of the scheme to recommend to the Minister as to whether or not the Minister should exercise her powers under article 13 of the scheme to bring into operation the payment provisions.

Under the terms of the scheme article 13 of the scheme provides that articles 11 and 12 shall come into operation with effect from the day to be knownas the Risk Equalisation Commencement Day determined by the Minister and notified in writing to the Authority and all registered undertakings. As I think I have already indicated articles 11 and 12 are the payment provisions and hence they were not to come into effect until such day as the Minister determined to be the Risk Equalisation Commencement Day.

The scheme contains detailed provisions which it is unnecessary for me to go into as to the steps which must be taken by the Minister following a report from the HIA which recommends that she should exercise her powers under article 13.

In the report of April 2005 the HIA recommended, I think for the first time, that the Minister should exercise her powers under article 13 to bring into operation the payment provisions of the Risk Equalisation Scheme.

Following that and on 24 May 2005 Bupa obtained leave of the High Court ex parte to commence these proceedings and to seek 22 identified reliefs challenging the validity of the relevant legislation, the Scheme and the then recommendation of the HIA. Bupa on that day sought as part of the reliefs and was granted ex parte an order that the granting of the leave:

"Shall act as a stay on any further steps being taken by the Respondents in relation to the scheme until the determination of the application or until the Court otherwise orders."

It is common case between the parties that the effect of that order was to preclude the Minister from exercising her powers until section 12 of the Act and in accordance with article 13 of the scheme to bring the payment provisions into operation. The Respondents brought an application to vary the terms of that order and on 30 May 2005 the High Court by Quirke J having heard that application, and it would appear at the same time an application from the VHI to be joined as a Notice Party, made an order joining the VHI and then made an order:

"That the stay granted by the High Court on 24 May 2005 be vacated and replaced with a stay on the implementation of a determination of the Minister for Health and Children pursuant to the Risk Equalisation Scheme 2003."

Again it is common case between the parties that the effect of the stay as granted on 30 May did not preclude the Minister making a commencement order, but did and does continue to preclude the making or the requirement that Bupa make any payments under the RES scheme.

In the course of submissions yesterday counsel for the VHI produced a note of the ex-tempore judgment given by Quirke J on that occasion which makes clear that the common position of the parties is correct and also makes clear that the issue as to whether or not the Minister should be restrained from exercising the powers given her to make a commencement order pending the determination of the High Court proceedings was a live issue before Quirke J on that occasion and an application which he rejected.

The next important step in the history is that the HIA made its further six monthly report at the end of October sent by a letter dated 27 October 2005 to the Minister. Following that report the Minister wrote on 21 November 2005, inter alia, to Bupa Ireland and stated in that letter in the operative part:

"In accordance with section 12 of the Act I as Minister for Health and Children have considered the Authority's recommendation that the powers under article 13 of the scheme be exercised and my proposed determination is that the Risk Equalisation Commencement Day will be 1 January 2006. It is proposed to make this determination taking account of the arguments made in the Authority's letter of 27 October."

In the same letter the Minister sought submissions from Bupa within 21 days.

I should have perhaps indicated that prior to that letter, as will be apparent, the Minister did not act on the earlier recommendation of the HIA in the report of April 2005, but notwithstanding these judicial review proceedings proceeded and were ready for hearing and were in fact assigned a hearing date on 16 November 2005. Unfortunately due to the unavailability of judges on that date the hearing date had to be put back to, I think, initially the 1^st and the 7 December, but ultimately it has now been assigned to a designated judge in the High Court and fixed for hearing on 7 February.

In these proceedings the challenge to the validity of the legislation and the scheme subsists and as outlined by counsel there are essentially three aspects to the challenge: It is challenged as being contrary to certain provisions of the Constitution, it is challenged as being contrary to the third non-life insurance directive and it is challenged as being contrary to certain provisions of the EC Treaty.

Subsequent to the letter of 21 November the next significant step is that the Minister on 23 December determined that the Risk Equalisation Commencement

Date be 1 January 2006 and on that the date wrote again, inter alia, to Bupa and stated:

"I wish to inform you that in accordance with section 12 of the Health Insurance Acts 1994 to 2003 I as Minister for Health and Children have determined that the Risk Equalisation Commencement Day will be 1 January 2006. Having considered the representations made I am satisfied that the reasons set out in the Health Insurance Authority's letter of 27 October remain valid and I consider that the commencement of risk equalisation is in the best overall interest of health insurance consumers as defined in the Health Insurance Act."

On the same say an ex parte application was made and an interim order obtained from the High Court:

"Pending the trial of the action preventing the Respondents from taking any steps whatsoever pursuant to any determination by the Minister under section 12 of the Health Insurance Act 1994 as amended."

That is the order which was discharged by consent of the parties yesterday morning.

It is necessary just to consider briefly the effect of the Minister's determination made on 23 December. In accordance with article 13 of the scheme it provides expressly that articles 11 and 12 shall come into operation with effect from the day determined by the Minister. Articles 11 and 12 set out detailed provisions which require the HIA to do certain calculations to determine the payments which are to be made pursuant to section 12(4)(a) of the Act of 1994 in respect of each six month period commencing with the first period which is to commence on the Risk Equalisation Commencement Day, that is pursuant to the determination 1 January 2006. Those calculations are to be carried out on the basis of the reports furnished by the insurance undertakings and there is then an obligation on the insurance undertakings to pay an amount notified within 30 days of the notification.

The present effect on Bupa of articles 11 and 12 must be considered in the context of the order which they have from the High Court of 30 May 2005. That is an order which effectively prevents it being required to make any payment under the RES pending the trial before the High Court. In any event, it is common case that the first payment would not fall to be made until August 2006. However, it is important to consider the present application from Bupa in that context.

The orders which are sought in the Notice of Motion presented to the Court yesterday by Bupa are orders restraining the Minister either from giving effect to the requirement of section 12(4)(a) of the 1994 Act or from giving effect to her decision. Counsel for the Minister submitted that the Minister is now functus officio under the legislation and scheme in relation to the commencement, that is to say the submission is that her role in this part of the statutory scheme is over by the determination that 1 January 2006 is the Risk Equalisation Commencement Date. Counsel for Bupa did not seek to suggest, subject to one argument which was not strongly pursued on the wording of section 12, that there was anything further to be done by the Minister and the application before me proceeded essentially on the basis that there is now nothing further to be done by the Minister as of yesterday, as of the date of the hearing before me. Counsel for Bupa seemed to accept that there was no purpose now being served in seeking to restrain the Minister and did not effectively pursue the reliefs which are set out in the Notice of Motion.

However, what counsel on behalf of Bupa did seek was:

"An order declaring the provisions referred to in section 12(4)(a) of the Act of 1994 shall not take effect pending the determination of the present proceedings in the High Court."

As I have already indicated those provisions are the payment provisions set out in articles 11 and 12 of the Risk Equalisation Scheme. They are the provisions which in accordance with article 13 take effect in accordance with the Minister's determination. Bupa in seeking the order declaring that those provisions shall not take effect are not simply seeking to restrain the impact of those provisions on Bupa pending the High Court proceedings. In substance they already have such an order by the order of 30 May 2005 preventing any payment being sought from Bupa pursuant to the Risk Equalisation Scheme. The substance of the declaration sought by Bupa is that the Risk Equalisation Commencement Date should now be permanently postponed until a date after the trial in the High Court of these proceedings.

It is clear from the submission of counsel and the affidavits sworn that the form of the order sought is to secure for Bupa a position that even if it is unsuccessful in its challenge in these proceedings to the Risk Equalisation Scheme and the relevant legislation that Bupa will not carry during the period of the litigation the risk of ultimately being required to make payments under the scheme with effect from 1 January 2006. The submission made on their behalf as to the need for such an order was that Bupa asserts that the level of estimated payments under the scheme are exorbitant and commercially unacceptable in the context of Bupa's operating profits such that Bupa has decided that if the Risk Equalisation Scheme is upheld as valid it will leave the market in Ireland.

Further, they have stated on affidavit, and it was submitted on their behalf, that notwithstanding their current legal advice as to the probability of success in these proceedings that it is a commercially unacceptable risk to permit a contingent liability under the RES scheme to accumulate over what is perceived as a possible three year period if there is an appeal to the Supreme Court and a reference to the European Court of Justice and that therefore Bupa, whilst continuing to pursue the proceedings in Ireland, may be forced in the interim to leave the Irish market. It is submitted that it that occurred it would mean that even if Bupa were ultimately successful in their challenge to the legislation and Risk Equalisation Scheme in the proceedings that they might have left the Irish market and have suffered a loss of business for which damages would not be an adequate remedy.

The Minister and the VHI oppose this application on a number of grounds and I will simply summarise three. Firstly, the submission is that the nature of the order sought is highly unusual. It is not in the usual form of a temporary or interlocutory order in proceedings pending the ultimate determination of the Court which seeks to preserve an existing state of affairs pending trial, but the submission is that it is now rather a final determination that 1 January 2006 should never be the Risk Equalisation Commencement Date regardless of the outcome of these proceedings.

I accept the submission that this is a highly unusual form of order. The purpose of interlocutory relief has been stated on many occasions by the Court and I would simply refer briefly to what was stated bythe Supreme Court by O'Higgins CJ in Campus Oil –V- Minister for Industry and Commerce [1983] IR88 at

page 106, where he stated:

"As I have already mentioned, interlocutory relief is intended to keep matters in statu quo until the trial, and to do no more. No rights are determined nor are issues decided. I think that the principle is stated correctly in the following passage from Kerr on Injunctions (6th ed. P 2), Edition which was noted by Lavery J. IN the Educational Company case:

'In interfering by interlocutory injunction, the court does not in general profess to anticipate the determination of the right, but merely gives it as its opinion that there is a substantial question to be tried, and that till the question is ripe for trial, a case is being made out for the preservation of the property in the meantime in statu quo.'"

I accept the submission that the form of order now being sought by Bupa before this Court yesterday goes well beyond that principle. As of yesterday before this court the statu quo is that the Minister on 23 December has made a determination that 1 January 2006 be the Risk Equalisation Commencement Date. As I have already indicated the form of order is in effect asking this court as of now to determine for all time that such date will never be the Risk Equalisation Commencement Date and to so determine it regardless of the outcome of the proceedings. That appears to me to be asking the Court at this stage to determine rights between the parties.

However, counsel for the Minister in his submission submitted that whilst it might be too absolutist to say that this Court should never entertain the making of an order such as is sought in these proceedings now, that it should only do so if the circumstances were wholly exceptional and that there are no such wholly exceptional circumstances on the facts of this case. In his submission, as indeed in the submission made on behalf of the VHI, it was accepted that if one was applying what I would describe as the normal interlocutory principles that Bupa had made out an arguable case on the issues to be tried at the hearing. It this Court were simply applying the normal interlocutory principles the next issue then for the Court to consider would be whether damages were an adequate remedy. Whilst there was a slight disagreement between the parties as to whether that should be considered either as part of the balance of convenience or as a separate issue it does not seem to me necessary to resolve that as it was on the balance of convenience the major issue replied upon on behalf of Bupa.

It appears to me that having regard to the exceptional nature of the order sought that this Court should now on the assumption, and accepting that there is an arguable case, should consider firstly whether there are any exceptionalcircumstances which would warrant the highly unusual order which is sought and only if there are such exceptional circumstances go on to consider whether damages would be an adequate remedy.

Having considered the matter I have come to the conclusion that there are no highly exceptional circumstances which would warrant the making of an order of the type sought now which would in effect be a final determination that 1 January 2006, regardless of the outcome of the proceedings, would never be the Risk Equalisation Commencement Date. The principle reasons for which on the facts that I have concluded that there are no exceptional circumstances relate primarily to the history which I have taken some time to relate. Firstly, that the legislation providing for the Risk Equalisation Scheme has been in existence since 1994, prior to Bupa's entry to the Irish Market.

Secondly, that the precise scheme with all the relevant legislation has been in existence since July 2003.

Thirdly, that it was only after receipt of the first HIA recommendation in April 2005 that the commencement provisions should be triggered that proceedings were commenced challenging the entire legislation and scheme. Fourthly, whilst Bupa obtained initially an order which would have prevented the Minister determining a commencement date when that order was varied on an interlocutory basis on 30 May 2005 by Quirke J no appeal was taken against that variation to the

Supreme Court.

Fifthly, when Bupa were notified on 21 November of a proposed commencement date Bupa did not at that stage even seek to bring a further application to restrain

the Minister making the determination of the commencement date.

On those facts I cannot see on the submissions made on behalf of Bupa yesterday that there are any highly unusual circumstances applicable which would now warrant this Court determining on a final basis that in effect article 13 of the scheme should not continue to apply in accordance with its terms even if on the final hearing of these proceedings all the legislation and the scheme were to be upheld as valid.

Having reached that conclusion it is perhaps strictly speaking unnecessary for me to consider the further submission that damages would be an adequate remedy

even if I were to go on and consider that, but having heard the submissions it is perhaps appropriate for me to indicate that I have reached the conclusion that even if I were wrong in my last conclusion and were to go on to consider the matter in accordance with traditional interlocutory principles I have determined that damages would be an adequate remedy.

This is essentially a claim which relates to the financial position of Bupa. Even taking Bupa's submission at its height that it may be forced in the course of these proceedings to leave the Irish market; the Bupa company which is carrying on the business in the Irish market as the second named Applicant is the English insurance company (Bupa is carrying on the business here through a branch of the English company) and it has been carrying on the business in Ireland now for a period of almost 10 years, nine or 10 years. It has a track record. If Bupa were forced out of Ireland the losses which Bupa might suffer by so being forced out of Ireland appear to me capable of being quantified. It may be difficult, but I accept as correct the submission made by counsel for the Minister in reliance upon the decision of the Supreme Court and judgment of Finlay CJ in Curust Financial Services Ltd. –V- Loewe-Lack-Werk [1994] IR 450 where at page 469 in relation to the quantification of loss and damage in an interlocutory context, he said:

"Difficulty as distinct from complete impossibility in the assessment of such damages should not in my view be a ground for characterising the awarding

of damages as an inadequate remedy."

It was not asserted on behalf of Bupa that if it were successful in these proceedings that the nature of the challenges are such that they would not be entitled to damages as against the Respondents.

Mr. Hogan has drawn attention on behalf of the Minister, without making any concession obviously, that insofar as the claims are claims which relate to a breach of constitutional rights and also certain EU provisions that there is precedent for the awarding of damages in such circumstances.

Accordingly, I have also concluded that damages are an asequate or would be an adequate remedy and would also refuse the application on that basis.

Having so decided it seems unnecessary to consider the further submissions made on behalf of the Respondents relating to the cap which was placed on

the undertaking which was proffered to the Court.

For those reasons I am refusing the application made by the Applicants in the proceedings, Bupa Ireland Ltd. and Bupa Insurances Ltd., for the order sought.

Approved: Finlay Geoghegan J.