The High Court yesterday rejected health insurer Bupa's demands to suspend the introduction of multimillion-euro risk equalisation payments to the VHI from January 1st next.
Ms Justice Mary Finlay Geoghegan said Bupa had sought to have a stay in operation for up to three years, the extent of time it perceived it would take the courts to determine fully a legal challenge to the Risk Equalisation Scheme (RES).
Judge Finlay Geoghegan said the application went far beyond what was normally sought in an interlocutory injunction, that of preserving the status quo until legal determination of the issues.
She said Bupa was asking the court to make a determination that the risk equalisation scheme commencement date of January 1st next, as already determined by the Minister for Health, would never apply.
She said the company was, in effect, asking her to make a final determination of issues already before the court in judicial review proceedings due to be heard on February 7th.
Bupa had threatened in court to pull out of the health insurance market in Ireland if it lost its overall challenge to the scheme.
The company claimed that over the next three years it could face equalisation payments of €161 million in a period when its profits would be €64.8 million.
It claimed that to stay in the market in these circumstances would be commercial folly.
Bupa managing director Martin O'Rourke had told the court that if the levy came into operation from the beginning of next week in circumstances where its validity would not be known for three years, it was inevitable that the company would have to stop doing business in Ireland.
In a reserved judgment Judge Finlay Geoghegan said Bupa had sought a court order declaring that the risk equalisation scheme would not take effect pending the termination of its judicial review proceedings challenging its validity .
The substance of such a declaration was that the scheme commencement date should be postponed until a date after the trial in the High Court of those proceedings.
The order sought to secure for Bupa a position where, even if it was unsuccessful in its challenge to the scheme, Bupa would not carry during the period of litigation the risk of ultimately being required to make payments under the scheme.
Bupa had asserted that the level of estimated payments was exorbitant and commercially unacceptable.
It had decided that if the scheme was upheld it would lose the market in Ireland.
"It stated that notwithstanding its current legal advice as to the probable success in these proceedings, it is a commercially unacceptable risk to permit the contingent liability under the RES to accumulate over what is a perceived three-year period of litigation," Judge Finlay Geoghegan said.
Bupa, while continuing to pursue the proceedings in Ireland, had claimed it might be forced to leave the Irish market. If that occurred, even if it was ultimately successful in its challenge to the legislation and the scheme, it might have left the market and have suffered a loss of business for which damages would not be an adequate remedy.
Judge Finlay Geoghegan said legislation providing for the introduction of a risk equalisation scheme had been in existence since 1994 prior to Bupa's entry into the Irish market.
It had only been after the Health Insurance Authority's recommendation to the Minister in April 2005 that the scheme commencement provision should be triggered that Bupa had begun proceedings challenging the entire legislation and scheme.
While Bupa had initially obtained an order which would have prevented the Minister determining the commencement date, this order had been changed by Mr Justice John Quirke and no appeal had been taken to the Supreme Court.
When Bupa had been notified in November of the proposed commencement date it had not at that stage sought to bring a further application to restrain the Minister from determining a commencement date.
Judge Finlay Geoghegan said that even if she was wrong in her conclusion, she had gone on to determine that damages would be an adequate remedy.
The proceedings were essentially a claim which related to the financial position of Bupa and even if the company might be forced in the course of these proceedings to leave the Irish market, the losses it might suffer were capable of being quantified.