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Dentists appealed Court ruling on contract change

16 Mar 2016

Ed Madden, BL, looks at a Supreme Court case in which two dentists appealed against a High Court decision that there was no breach of contract by the HSE when it confined dental care funding for medical card holders to emergency treatment.

In March 2016, the Supreme Court issued its decision in an appeal taken by two dentists against a decision of the High Court that there was no breach of contract on the part of the HSE when it unilaterally issued a circular in 2010 that effectively confined funding in respect of dental care for medical card holders to emergency treatment.

The unilateral change was brought about by a Government decision to reduce funding for the scheme from €80 million to €63 million for 2010 and subsequent years. This was separate from the reduction in fees pursuant to the Financial Emergency Measures in the Public Interest (FEMPI) legislation.

When the case came on for hearing, the Court was told that Martin Reid and James Turner, who are self-employed dentists, had been members of the Irish Dental Association (“the Association”) for many years. In 1999, the Association negotiated a series of amendments to an earlier agreement reached between the health boards and the Association in 1994.

Prior sanction
One of these amendments was a relaxation of the requirement on the part of dentists to obtain prior health board sanction in respect of routine treatments for patients. In that context, the Association provided a specific assurance to the health boards in relation to budgetary constraints. The assurance is contained in the following extract from a letter dated September 17, 1999, from the Association to the head of industrial relations in the Health Service Employers Agency: “We recognise that the Health (Amendment) Act 1996 governs the provision of health services. Health [b]oards are obliged to live within their monetary obligations. The [Irish Dental Association] acknowledges that, in the light of the above, [h]ealth [b]oards have the right to take whatever measures are necessary to live within budget and statutory obligations.”

The position of the Association and the corresponding position of the health boards in relation to this matter were reflected in the subsequent agreement between the parties.


The Four Courts, Dublin

The statutory provision referred to in the letter from the Association to the employer body is contained in section 2(1)(a) of the Health (Amendment) (No. 3) Act, 1996, which reads as follows: “A health board, in performing the functions conferred on it by or under this Act or any other enactment shall have regard to — (a) the resources, wherever originating, that are available to the board for the purposes of such performance and the need to secure the most beneficial, effective and efficient use of such resources”.

Counsel for the dentists submitted that the wording in the 1996 Act was “so weak in terms of the conferring of authority” that it did not support the extreme measures taken by the HSE in 2010 that changed the entire nature of the arrangements agreed between health boards and dentists.

It was also submitted that the HSE had failed to prove that the collective agreement that was agreed in 1999 was a term of the individual contracts entered into between the two dentists and the funding body.

Unilateral amendment
Counsel for the HSE submitted that the 1999 revision of the agreement authorised the HSE to unilaterally amend the contract based on budgetary considerations and to vary the range of health treatments covered by the scheme.

It was also submitted that dentists who entered into the contract and who operated the arrangement for a number of years had become bound by the collective agreement entered into by their Association.

Giving the judgment of the five-person court, Mr Justice Charleton said that the agreement reached in 1999 would not have been entered into by the health boards in the absence of the acknowledgement provided by the Association in its letter of September 17, 1999.

In the body of the agreement there is a statement on the part of the funding body that “Health boards are obliged to live within their monetary allocations”.

This gave the funding body “virtually untrammelled choice” in withdrawing funding from particular forms of dental treatments.

Budgetary constraints
The judge said that the change relating to budgetary constraints introduced in 1999 “was unequivocal as to the effect which it might have”, even though the nature of the change that occurred in 2010 was as unexpected in 1999 as the economic crash which necessitated the extreme measures adopted by the HSE more than 10 years later. While the power to unilaterally alter a contract agreed between parties was unusual, there was no basis upon which a court could change an unambiguous meaning through the application of any principle that would contradict the express words of the contract.

Dealing with the contention that the HSE had failed to prove that the collective agreement entered into in 1999 was a term of the individual contracts between the two dentists and the funding body, the judge said that they had worked under the terms of the contract without protest for more than 10 years. This gave rise to the inference that the full terms of the contract were mutually accepted by the parties.

The Court went on to dismiss the appeal against the High Court judgment.

Reference: [2016] IESC 8

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Click here to view the full article which appeared in Irish Medical Times: Opinion