Monday 21 October 2019

Supreme Court strikes down risk equalisation scheme

BUPA has won its challenge to risk equalisation, with the Supreme Court striking down the scheme this morning.

The five-judge court has found that the scheme adopted by the minister in 2003 was founded upon an erroneous interpretation of the legislation.

This means that the VHI will not be receiving any payments to compensate it for its older and less profitable customer base.

BUPA lost its case against risk equalisation in late 2006 and it lost a similar case in the European courts in February this year.

It mounted a Supreme Court challenge to the scheme and this morning, the five judges of the court all agreed that the appeal be allowed, that the scheme adopted in 2003 was founded on an erroneous interpretation of the law.

They found that it was introduced on the basis that community rating meant community rating across the entire insured population and not as defined in the act.

The Chief Justice ordered that the decision by the minister to adopt risk equalisation be quashed.

BUPA left the Irish health insurance market last year because of the scheme, under which rival insurers would have to compensate the VHI for its older client base.

It argued that the scheme was anti-competitive and restricted new entrants to the market.

VHI had been in line to receive a payment of around ?40m if BUPA lost this challenge, but this judgment means the scheme is now null and void.

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