Rival considering suing State on back of landmark case
HEALTH insurer Aviva is considering a legal action against the State for compensation following the European Court of Justice's landmark ruling.
Legal experts have warned that rivals such as Aviva and BUPA, which entered the Irish market at a time when the VHI was enjoying unfair competitive advantages to which it was not entitled, could also sue the State for damages.
This is because the ECJ refused a request by the Irish Government to limit the temporal effects of its ruling.
The refusal to impose a time limit on the effects of the ruling means that rivals may sue for business gains they might have enjoyed in the past had the Government not allowed the VHI to move into new business areas without having the same capital and other regulatory requirements imposed on its rivals.
"There is a key legal risk for the Government because a wrong has been identified raising a risk of action for damages," said Tom Carney, partner in EU and Irish competition law at Dillon Eustace solicitors.
The Government is expected to defend any new compensation claims on the grounds that despite its breaches it had acted in good faith when it allowed the VHI to operate outside normal insurance rules.
Last night Aviva said that it was now considering all of its options, including legal action.
"For too long, VHI has played by different rules," said Siobhan Fay, managing director of Aviva Health.