Fico’s unhealthy health insurance legacy

The ongoing legal dispute between health insurers in Slovakia and the Slovak government over the profit ban imposed by the former government of Robert Fico has taken another twist as the European Court of Arbitration in Strasbourg says it will not deal with the case any further.

The court made the ruling on the grounds that the dispute between the shareholder of Dovera health insurer (Dutch company HICEE) and the Slovak Republic is not within its jurisdiction. Slovakia is being sued by the health insurers Dovera and Union, and now also a third insurer in the shape of the shareholder of the Apollo health insurer.

The former government of Robert Fico did not like the fact that health insurance companies were making profit on health insurance contributions and so in 2008 it effectively prohibited them from using generated profits. The health insurers reacted by filing lawsuits on grounds of investment protection, including one for EUR 500 million in compensation filed by Dovera’s shareholder HICEE in January 2009.

In November of the same year, the European Commission initiated action against Slovakia over the profit ban, which the Ministry of Health contested with the excuse that at the time the ban was imposed legislation allowed it. The lawsuit proceeded until January this year when the Constitutional Court in Slovakia also ruled that the move was unconstitutional.  This forced the current government to amend the legislation back, making it possible once again for health insurers to utilise part of their profits with effect from August.

The decision of the arbitration court that it has no jurisdiction over the case does not spell an end to the dispute, however. Once HICEE receives the official decision, expected in the coming weeks, its lawyers will analyse it and take appropriate steps.

PR manager of Penta Group (shareholder in Dovera), Martin Danko, explained that the latest ruling is neither for or against the action of the Robert Fico government, and that it does not rule out violation of the bilateral agreement between Slovakia and the Netherlands, the residence of HICEE.

Fico’s government took the decision to ban profits for health insurers despite being advised by lawyers and members of his own cabinet that it was unconstitutional and could lead to problems. Fico basically then challenged the health insurance companies to go ahead and do their worst.

So now Slovakia will likely have to compensate the companies for lost profit as well. Ironically, the money spent on the country’s legal defence works out more than the companies would have made in profit anyway. In February, Slovak finance minister Ivan Miklos drew up a bill for the dispute made out to Fico in person, saying he was acting “in the name of the people”, and that Fico should pay the costs as the situation was caused by his personal actions.

At the end of the day, the taxpayers have already lost out thanks to a rather stubborn decision made by a stubborn government, but the total cost will not be known for some time.