The State's second largest health insurer, Bupa Ireland, has said it would have to make outstanding payments of up to €161 million to its main rival VHI if it lost court challenges against the introduction of a risk equalisation scheme, writes Martin Wall.
The projected figures given to the High Court yesterday were the highest the company has produced concerning the cost to it of the Government's decision to introduce the measure for the health insurance sector from January 1st.
Bupa yesterday restated its position that it would pull out of the Irish market if the courts found the risk equalisation scheme was valid.
But for the first time Bupa, which has 600,000 subscribers and around 300 staff in Ireland, said it could close operations here before a final decision on its legal action was handed down, due to the scale of the risk equalisation liabilities that would mount while this decision was pending.
Bupa begins a High Court challenge to risk equalisation in early February.
It believes this action will end up in the Supreme Court, however, and possibly in the European Court of Justice. It estimates the entire proceedings could take two to three years.
At the end of that period the company believes it would face potential risk equalisation liabilities of up to €161 million when its projected underwriting profits for the period were €64 million.
Counsel for Bupa said that in effect it would be "betting the house on the ultimate success of the litigation" and that this would be an unacceptable risk for any commercial operation to take.
Ms Justice Mary Finlay Geoghegan will decide today on an order Bupa has sought to prevent the scheme's implementation pending the trial of its High Court action. The State, the Health Insurance Authority and the VHI oppose the move.
An interim injunction granted last Friday to Bupa was discharged yesterday with the agreement of all the parties.
Bupa chief executive Martin O'Rourke said that if it was possible for the firm to know now that the risk equalisation levy was valid that "unequivocally" it would withdraw from the market from January 1st.
"If the levy comes into operation on January 1st, 2006 in circumstances where it will not be known for two to three years as to whether it is valid, then it is inevitable that Bupa Ireland will have to cease doing business in Ireland before these proceedings are resolved," he said in an affidavit.
Counsel for the State Gerard Hogan SC said Bupa would not suffer any losses for which it could not be subsequently compensated if it won the case.
He said that the company was "putting a gun to its own head".
Risk equalisation is a system under which companies with a relatively older subscriber base would receive payments from rivals with relatively younger memberships.