AN ACTION in which an order of nuns running a medical centre in Mullingar is claiming almost £8 million in compensation against the VHI began in the High Court yesterday.
In the Supreme Court three years ago the nuns, who are members of the Franciscan Missionaries of Our Lady, won a long-running legal battle against the VHI. The Supreme Court decided the case should go back to the High Court to assess the nuns' claim for damages against the insurance board.
The nuns have claimed they are entitled to compensation for past losses calculated at £4.6 million over a five-year period and future losses of £3.1 million.
One Supreme Court judge, Mr Justice O'Flaherty, had stated that the hospital had been "singled out for special treatment" by the VHI. Another Supreme Court judge, Mr Justice Blayney, said it was extremely doubtful whether the VHI had a right to be entitled to impose cost control on hospitals in which members were treated.
After the VHI suffered substantial losses in 1988 a new agreement was given to private hospitals where a "cash limit" was imposed. In their High Court claim for loss and damage, the nuns allege that because of the VHI breach of duty the hospital had to endure "great stress and strain" in attempting to pay its debts as they became due.
Yesterday, when the case opened before Mr Justice Moriarty, Mr Patrick Keane SC, for the hospital trustees, said the hospital opened in 1968 and had 146 beds.
He said the relationship between the VHI and the hospital gas amicable until 1989 when the VHI instituted a recovery programme to run from March 1st, 1989, to June 30th, 1990.
Mr Keane said the hospital had no option but to enter into the agreement with the VHI because the alternative was to be relegated to partial participation in the board's insurance scheme.
Mr Keane claimed the hospital was singled out for special treatment by the terms of the agreement. The hospital had to suffer a 15 per cent reduction in income from the VHI. No such deduction or any comparable deduction was made in other hospitals.
Since the hospital opened in 1968, VHI members under the appropriate plan were entitled to full indemnity during their stay there.
Mr Keane said the agreement was signed by Sister Gregory O'Reilly on February 3rd, 1989. The hospital was almost totally dependent for its survival on the VHI and during the period of the agreement suffered substantial losses.
This unsatisfactory situation continued until the end of the agreement on June 30th, 1990. After that date there was no agreement with the VHI. Matters continued whereby VHI patients continued to attend hospital and payments were made by the VHI on an account basis.
On September 6th, 1991, the VHI ceased to make any payments and this brought an extremely serious situation to bear on the hospital. Mr Keane said legal proceedings against the VHI began in June 1991.
The case continues.