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Slovakia loses court case, must pay €22 million to health insurer Union

Slovakia has lost a court proceeding initiated by Dutch company Achmea, which owns private health insurer Union. The International Court of Arbitration has ruled that the country must pay €22 million in compensation for preventing the company from retaining its profits. In addition, Slovakia must cover the court costs and other fees linked to the arbitration proceedings which stand at €3 million, the TASR newswire reported.

Slovakia has lost a court proceeding initiated by Dutch company Achmea, which owns private health insurer Union. The International Court of Arbitration has ruled that the country must pay €22 million in compensation for preventing the company from retaining its profits. In addition, Slovakia must cover the court costs and other fees linked to the arbitration proceedings which stand at €3 million, the TASR newswire reported.

“The rulings of both courts – the Slovak Constitutional Court as well as the International Court of Arbitration – clearly prove that any attempts to expropriate private health insurance companies will end in failure at the immense expense of Slovak taxpayers,” said executive director of Achmea, Willem van Duin, as quoted by TASR, adding that it might be a better idea to use the money to improve the quality of the Slovak health-care system instead.

Spokesperson for Union, Judita Smatanová, added that the Court of Arbitration ruled that Slovakia violated an investment agreement concluded with the Netherlands when it adopted major changes in legislation on health insurance with the aim of forcing out and harming investors in private health insurers.

Prime Minister Robert Fico said that the ruling is not effective yet and nobody will pay anything to anybody for now.

“We are not excited about this at all,” said Fico, as quoted by TASR. “We have to continue fighting. We fundamentally reject profits being paid out from this money [earned from health insurance]. Estimates show that the profits of health insurers may have reached around €80 million a year. Retaining profits was banned for a period of three years, so €240 million has been returned to the health-care system.”

He added that this ruling will not discourage him from plans to merge all three of Slovakia’s health insurers into a single state-owned entity.

“Profit is one thing, the number of health insurers is a different matter,” PM added.

The legislation introduced during the first government of Robert Fico (2006-10) banned health insurers from retaining their profits as of 2008. Union shareholders consequently initiated the court case against Slovakia. The state rejected an out-of-court settlement.

The Slovak Constitutional Court ruled in January 2011 that the legal norm is at odds with the Slovak Constitution as well. The former government of Iveta Radičová (2010-12) responded by amending the law and enabling private health insurers to keep their profits again last year, albeit under certain conditions.

Meanwhile, Achmea addressed European Commissioner Health and Consumer Policy Tonio Borg to inform him about the plans of the government to establish a single health insurer in Slovakia. The company considers this step a violation of the laws of the European Union, as well as the Slovak constitution and the agreement over protection of investments, the SITA newswire reported.

“Measures planned by the Slovak government represent the apparent restriction of the freedom to settle down and free movement of capital,” said Achmea, as quoted by SITA, adding that this restriction is not excluded from the legal framework of the EU since the Slovak health-care system cannot be considered a system of “social security”.

The company also stressed that it is not clear what the benefit of expropriation of the private health insurers will be. Achmea says that there is no public interest in this move and that the expropriation will be unconstitutional, SITA wrote.

Source: TASR, SITA

Compiled by Radka Minarechová from press reports

The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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