Bupa Ireland has threatened to pull out of the health insurance market here if the Minister for Health forces it to make multimillion-euro risk equalisation payments to other health insurance providers, mainly the VHI.
The payments are to be introduced to compensate the VHI for the extra cost of providing health insurance for its much older age profile consumers.
It was argued in the High Court yesterday that Bupa had aimed its products at the younger healthier and less costly consumer.
Michael Collins SC, for Bupa, told Mrs Justice Mary Finlay Geoghegan he had unequivocal instructions to inform the court that if risk equalisation scheme payments were introduced on January 1st Bupa would leave the health market.
He said Bupa, the Department of Health and the VHI had agreed that an interim injunction Bupa had secured last week be discharged.
In its place he asked the court to grant Bupa an order declaring that no aspect of the scheme should take effect until a legal challenge by way of judicial review had been determined by the High Court.
He said the six-week challenge was scheduled for hearing before Mr Justice McKechnie from February 7th, but added that the losing party would inevitably appeal the judge's decision, expected by the end of May.
The litigation to Supreme Court and European Court level would take an estimated three years.
Mr Collins said Bupa had resolved that, in the absence of a stay on the payments for the duration of the litigation, it would not stay in the Irish market but would honour its existing health insurance contracts, mainly of year-long duration, and take on no new business from January pending an ultimate ruling on its legal challenge.
The application was opposed by Gerard Hogan SC, for Mary Harney, Minister for Health, and Paul Gallagher SC, for the VHI, who argued that Bupa's application was groundless and a breach of the separation of powers principle between the judiciary and the State.
Mrs Justice Finlay Geoghegan will give her decision in the High Court today.
David Clarke, a solicitor, stated in an affidavit for VHI that no ruling had been made by any court or authority which could have justified Bupa in concluding that the law would be set aside, or that the payments scheme would not come into operation.
VHI's argument was that if Bupa was unable or unwilling to conduct health insurance in Ireland without making exceptional profits, then its departure from the market was an outcome that had to be accepted.
Bupa could have conducted its business in such a way as to avoid encouraging higher proportions of healthier, rather than less healthy older consumers, buying its products.
Alternatively, it ought to have either established reserves or credit arrangements with its British parent derived from the exceptional levels of profit it had made in the Irish market in the absence of risk equalisation.
It could also have ensured its financial situation by raising its premiums.
Whatever its financial situation, if its potential liabilities compelled it to close its business then no legal restraint on the Minister could enable it to avoid the situation.
Bupa managing director Martin O'Rourke said if the Minister decided to start risk equalisation payments Bupa would have to make provision for levy liabilities from January 1st.
He said Bupa Ireland was neither willing nor able to continue to operate in Ireland with exposure to a levy of €161 million over the next three years.
It would be an unacceptable business risk when considered in the context of projected company profits over the same period of €64.8 million.
"It is inconceivable that any business could tolerate that situation, and Bupa Ireland is therefore faced with a wholly unacceptable risk by virtue of the Minister's determination," he said.
Mr O'Rourke said the board of Bupa Ireland and the board at Bupa group level had resolved that if risk equalisation began, closure, subject to run-off, be authorised forthwith.
He believed Bupa Ireland had made a significant commitment to and investment in the Irish market and was anxious to continue to operate in Ireland. Initiating a levy would make Bupa's position in Ireland untenable.
Patrick Barrett, assistant principal in the Department of Health and Children, said the Minister on December 23rd had decided January 1st would be the commencement day for the risk equalisation scheme.
He believed Bupa's application was unwarranted, given the adequacy of damages as a remedy should it win its legal challenge.
He said it was hard to avoid the conclusion that the purpose of Bupa's application was to delay and frustrate the operation of the risk equalisation scheme.