Private hospital must present €1.79m in legal costs before pursuing claim against VHI

A private hospital company must put up some €1.79 million in legal costs before it can pursue a claim against the country’s largest health insurer, the High Court ruled.

Limerick Private Ltd and its director Shay Sweeney have sued the Voluntary Health Insurance (VHI) Board claiming the insurer abused its dominant position by refusing to provide cover in breach of competition law. They also seek damages for interference with their constitutional right to earn a livelihood.

VHI denies the claims.

The company was behind the Limerick Private Hospital project which was a proposal for five storeys above ground, with three levels underground, hospital costing some €75 million. It would have 95 beds and six operating theatres. Planning permission was granted in March 2007.

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Private hospitals essentially rely on health insurance funding to operate with a smaller input from patients who pay directly.

It is claimed that as a result of the VHI refusing cover, Limerick Private was unable to obtain third-party funding.

In 2015, shortly after the proceedings were initiated, the VHI’s lawyers wrote to the plaintiffs calling on them to provide security for costs should they lose the case.

They said this was based on its annual returns which showed Limerick Private Ltd had never traded, had no assets, and would not be able to meet an order for costs against it.

This year, following a number of delays and a case that went all the way to the Supreme Court in relation to whether Limerick Private could call a particular expert witness, the VHI applied to the court seeking security for costs.

Limerick Private claimed its impecuniosity had been caused by the actions of the VHI in refusing cover and therefore this was a special circumstance which should disallow the granting of security for costs. It also claimed the VHI had delayed bringing its security for costs application and this disentitled it to an order.

The court heard Legal cost accountants for the VHI assessed the VHI’s costs in defending at €1.79 million, excluding VAT. This includes solicitors’ fees of €1.02 million, senior counsel fees of €249,500, junior counsel of €177,500 and €285,000 for expert accountant and economist witnesses.

In a judgment on Friday, Mr Justice Max Barrett ordered the plaintiffs to provide security for costs in the amount of €1.79 million.

He said the Limerick Private plaintiffs had not contested that the VHI had made out the existence of a bona fide defence to the claims.

They also did not dispute their (the plaintiffs’) own impecuniosity although it was asserted that this has been caused by the defendant’s wrongdoing, he said.

He did not consider the plaintiffs had established any special circumstance which would tilt the balance of justice against the making of an order for security for costs.

He also did not see that the delay had caused anything by way of significant prejudice to the plaintiffs but the prejudice the VHI would suffer if it was not granted security far outweighed this.