The EU's Internal Market Commissioner Charlie McCreevy is expected to rule today on the Irish Government's defence of derogations guaranteed to State health insurer VHI.
According to reports this morning, Mr McCreevy is expected to reject the Government's defence of the VHI's standing which private health insurance provider Vivas contends distorts competition in the Irish private health insurance market.
Vivas Health claims the VHI is in breach of a condition set by a European directive in 1973 which allows the State health insurer an exemption from strict solvency requirements on the basis that it keeps to its core activity of health insurance.
However, Vivas contends that in recent years the VHI has diversified and provides travel and dental insurance and the Swiftcare emergency clinics.
Other health insurance providers have to maintain reserves of about 40 per cent of subscription income before they can enter the Irish market. The VHI's reserves stand at about 23 per cent of income.
The Government will have the chance to defend its case on one more occassion but faces the eventual prospect of ending up at the European Court of Justice if it is unsuccesful.