The Competition Authority is taking the Irish Medical Organisation to court over fees paid to GPs. David Labanyi examines the background
It is a heavyweight contest: the largest insurers and banks in the State in dispute with the doctors' union, the Irish Medical Organisation (IMO).
The row over the fees paid to GPs for providing medical information for life insurance required for a mortgage became public last year when it was brought to the attention of the Competition Authority.
Following a year-long Competition Authority investigation, the IMO is being taken to court for alleged price-fixing. A statement from the authority said the doctors' union had restricted or distorted "competition in the market for medical information and in the market for life insurance in contravention of section 4(1) of the Competition Act, 2002".
If the case is not settled beforehand, the High Court will hear claims that the IMO organised a boycott of life insurance firms which declined to pay the recommended fees.
The Competition Authority also alleges doctors were given directions or recommendations by the IMO on the level of fees to charge for these services. Both the IMO and the Irish Insurance Federation (IIF)declined to comment, saying the matter was before the court.
Although it is a civil action, if judge Liam McKechnie upholds the Competition Authority allegations, it may open the IMO up to further litigation from third parties.
The irony is it is unlikely the case would have come to the attention of the Competition Authority if the IMO and the IIF had been able to reach an agreement in the summer of 2004 on a new level of fees for this information.
Since 1990, the IMO and IIF had a series of agreements that set fees for the provision of medical reports by GPs for life insurance companies.
As the property market boomed and demand for mortgages soared, providing information for life insurance policies became an increasingly lucrative activity for GPs.
Private medical attendants' reports (PMARs) can be compiled only by a person's GP, whereas any doctor can carry out independent medical examinations or other tests.
The agreement between the IMO and IIF included fees for an independent medical examination, blood tests, and the provision of patient histories, or PMARs. It was renegotiated at two or three-year intervals.
In early 2004, insurers and officials from the IMO's industrial relations team started work on a new set of fees to apply from July 1st that year.
Prior to the talks, both sides took legal advice on whether they could continue their agreement in light of the Competition Act 2002.
The legal advice was there was no issue with an agreed fee for the provision of PMARs, but there was concern at whether or not a fee could be set for an independent medical exam.
However, the real problems began when the sides put their respective proposals for a new fee on the table.
Drawing a comparison with the fee structure in Britain for these services, the IMO suggested an increase of 70 per cent over three years to the existing €55 fee.
To support this rise they also cited the increasing workload required of GPs for the production of these reports and the belief that the existing fee was starting from a low base.
The IMO proposal would have seen the cost of providing a PMAR rise to €77 from July 1st, 2004, to €87 the following year and €97 on July 1st, 2006.
The IMO also proposed a 50 per cent surcharge for emergency PMARs, required when a property purchaser is under pressure to close a sale on a property.
However, the insurers balked. Emboldened by frustration at what they saw as the declining usefulness of the PMARs, they countered with an offer in line with that previously agreed at the national partnership talks - 5.5 per cent over 18 months.
Insurance firms operating in Ireland had noted that while the property boom has seen an attendant rise in demand for PMARs - this increasing mobility means a house purchaser's current GP may often only have a couple of years' of medical records.
By comparison in the UK, a patient's file follows them, so a life-long medical history is possible.
Given the chasm between the sides, the talks quickly broke up without agreement. Since the talks collapsed there has been no formal agreement between the IIF and the IMO on the cost of providing PMARs.
However, the insurers' position collapsed when Eagle Star, independently, reached a formal agreement with the IMO on a new set of fees.
A number of other insurance companies followed suit, if not through formal agreements, then by tacitly agreeing to pay a fee.
Today, the majority of insurers now pay GPs a rate similar to that proposed for 2005 - €77-€85.
The fee paid is broadly similar for every insurance firm although in some cases an insurance firm will enter negotiations with an individual GP.
It is unlikely that the current fee will be increased until after the case is resolved.
The complaint to the Competition Authority in February 2005 is understood to have come from the insurance sector, although not from the IIF.
The Competition Authority's investigation started as a criminal one and in April of that year it obtained a warrant from the District Court.
On April 20th the offices of the IMO on Fitzwilliam Place in Dublin were searched by competition officials and gardaí.
More than 340 items were removed including a computer hard drive. The following month the Competition Authority also searched the office of a GP in the northwest.
Last October the IMO secured a court order for the return of its documents. In the months that followed, there was regular legal correspondence between the IMO and the Competition Authority.
It is understood the IMO was given a deadline of June 13th, 2006 to give assurances that it would cease certain activities which the authority was concerned about.
When this did not happen the authority issued a brief statement on July 3rd saying it had initiated legal proceedings against the IMO following an investigation of the period June 2004-June 2005.
If the case is not settled beforehand, it is likely to be heard in the High Court in October.
A legal source dealing with competition cases said most complaints were brought to the authority's attention as part of a bargaining ploy.
"What the authority has to decide is not whether someone has an agenda or is using a complaint as a bargaining tool. The question is was there a breach of the law?"
He added that it appeared "mutually convenient to both sides to have an agreement on fees and on that basis I don't think the authority has a robust case."
For the IMO, the concern is that if it is found to have breached the law in this case, it may lead to questions about GP fees generally.
For insurers, the case may hasten a gradual move away from the reliance on PMARs.
At least two of the major life insurers in the Irish market are looking at new ways of underwriting based on tele-questionnaires with the patient by a qualified nurse.
For the consumer, whatever the outcome of the case, any future fee for these services is likely to be more transparently presented to the customer when they take out life insurance, as it is they, ultimately, who pay the cost.