Bupa, the second largest private health insurance company, remained defiant last night after a High Court ruling allowing Minister for Health Mary Harney to go ahead with the risk equalisation scheme which will require it to cross-subsidise the VHI from New Year's Day, writes Martin Wall.
There were indications that Bupa lawyers may go back to court early in January seeking a judicial review of Ms Harney's ministerial order rather than await a full hearing of the issues due to take place in the High Court in February.
In spite of warnings by Bupa that it would not stay in the Irish market if the implementation of risk equalisation goes ahead, Bupa reassured their customers that yesterday's interim court ruling will have no immediate effect and there is no need to panic.
Bupa believes that it will be several years before that matter has been dealt with by the Irish and European courts.
The company yesterday failed in its attempt in the High Court to halt the implementation of the scheme pending a full hearing of a legal action scheduled to begin in early February.
In this action, Bupa will claim the legislation underpinning risk equalisation is unconstitutional and in breach of EU law.
Highly-placed sources said last night that the company was seriously considering issuing additional proceedings early in the New Year in which it would seek a judicial review of the decision of Ms Harney last week to trigger the implementation of the scheme from January 1st.
These new court proceedings would be separate to both the application for the court injunction to prevent the implementation of the scheme heard over recent days and the trial of the constitutional challenge to the scheme to be heard in February.
Yesterday's ruling by Ms Justice Finlay Geoghegan means that the meter on the amount which Bupa could have to pay in risk equalisation payments to its main rival, VHI, will begin running from Sunday.
Under a previous High Court ruling, Bupa will not have to make any payments to its rivals until the outcome of its substantial court challenge to the legality of risk equalisation.
However, as things stand at the moment, the company's contingent liability for risk equalisation payments will begin accumulating from the weekend.
For Bupa's 600,000 subscribers yesterday's High Court ruling will have no immediate effect.
However the company has said that it will "unequivocally" withdraw from the Irish market if risk equalisation is ultimately found to be valid.
It has also given notice that it could be forced to withdraw from the market during the course of its various legal challenges if the accumulating contingent liability for risk equalisation payments reaches a stage where it represents an unacceptable risk for the business.
Bupa has estimated that its substantive High Court challenge to risk equalisation could be referred to the Supreme Court and the European Court of Justice.
It has estimated that it could take three years for a final judgement to be handed down.
By that time, Bupa has forecast that it could face a potential risk equalisation liability of €161 million for a period in which its projected profits were €64 million.
VHI has said that the introduction of risk equalisation could curb the rate of increases seen in subscription levels over recent years.
However as no money will be paid over to VHI in the immediate term at least, it is unclear as to whether yesterday's decision will have any effect on the company's plans for prices for 2006 which are likely to be set out in July.
Risk equalisation is a form of compensation system in the health insurance sector under which companies such as Bupa, which have a relatively younger membership profile, would have to make payments to rivals such as VHI which have a relatively older subscriber base.