Bupa has been granted a High Court order temporarily restraining the State from directing it to pay millions of euro to the VHI under the controversial risk equalisation scheme.
Minister for Health Mary Harney and the Health Insurance Authority were restrained by Mr Justice Michael Hanna from taking any steps whatsoever in relation to any decision the Minister might make with regard to triggering the risk equalisation mechanism in the private health insurance market.
Judge Hanna was told during an emergency lunchtime sitting of the court yesterday that Bupa Ireland expected the Minister to make an imminent announcement triggering the equalisation scheme which would mean the transfer of about €33 million from Bupa to the VHI.
Paul Sreenan, SC, for Bupa Ireland, said the transfer would take place in circumstances where in the same 12-month period the profit by Bupa had been in the order of €22 million, putting the group in a loss-making situation.
Mr Sreenan, who appeared with Michael Collins, SC, and Jonathan Newman, told the court the risk equalisation scheme constituted an unlawful infringement of Bupa Ireland's property rights, was unconstitutional and contravened European Union law.
He said that in April 2005 Bupa had been granted leave by the High Court to apply for a judicial review challenging the then recommendation by the Health Insurance Authority to the Minister that she should set up a scheme of risk equalisation. Due to the unavailability of judges that challenge had never been determined by the High Court and was now scheduled to be tried on February 7th.
An injunction restraining any further steps had been granted in April last, but this had since been varied by the High Court to the extent that it did not cover the current situation.
Bupa intended to argue that a risk equalisation scheme was unlawful, irrational and took into account irrelevant matters and failed to take into account relevant matters.
Mr Sreenan said the very legality of the primary legislation under which the Minister had been given power to set up such a scheme would be challenged on the basis that such legislation was contrary to the Constitution in that it delegated law-making powers of the Oireachtas.
He said it would be argued that a risk equalisation scheme was a form of domestic legislation beyond the powers of a member state of the EU to enact. EU law did not allow for a risk equalisation scheme.
Mr Sreenan said that if a risk equalisation scheme was commenced Bupa believed it would drive them out of business because they could not continue from a commercial point of view operating in a country where they were required to hand over all of their profits and more on an annual basis to a competitor (VHI) who was in a dominant position.
Bupa's business would, in a very short space of time, become unviable, with hundreds of staff facing being paid off, and leaving more than 600,000 insurance policyholders without cover.
Mr Justice Hanna said there were serious matters to be litigated between the parties and this had not occurred, due mainly to the fact that judges had not been available to determine the issues putting Bupa in a disadvantageous situation.
He granted an injunction restraining the Minister, the Health Insurance Authority and the State from taking any steps whatsoever pursuant to any determination made by the Minister under Section 12 of the Health Insurance Act 1994 as amended.
The injunction does not restrain the Minister from making a decision which would trigger the introduction of the risk equalisation mechanism.