The travel team at Penningtons Manches has successfully defended a claim for medical expenses pursued by Gestitursa against Liverpool Victoria (LV), following a recent judgment in the Court of Appeal in Madrid. Although the decision is not technically binding, it is likely to have a significant impact on other similar cases. 

LV's policyholder was admitted to the Torrevieja Hospital on 30 May 2013 having suffered from a loss of consciousness. His wife signed a sickness consent form that same day to confirm that she consented to his medical treatment and that she wanted to rely upon their private insurance cover, rather than an EHIC. 

A few days later Gestitursa notified LV of the admission and requested payment of EUR 3,942.72 for medical treatment. In response LV sent Gestitura a Provisional Replacement Card (PRC) and refused payment. They also instructed Mark Lee, a fluent Spanish speaker, and a partner at Penningtons Manches, to defend the claim.  

Gestitursa then issued and served preliminary proceedings against LV’s fiscal representative, domiciled in Madrid. The case was listed for a procedural hearing with Gestitursa requesting disclosure of the patient’s travel insurance policy. 

The Court of First Instance in Madrid concluded that LV's tax representatives constituted a ’procedural domicile’ for the purpose of receiving summons and communications. Following disclosure of the requested documents, Gestitursa lodged a payment order request, demanding payment of the sum due. To counter this, Penningtons Manches drafted and lodged an opposition document to reject the request for payment. The payment order procedure was then closed. 

At this point Gestitursa filed a claim at the Madrid Court of First Instance and served the papers on LV’s fiscal representative. There was then a hearing to determine jurisdiction. Gestitursa argued that LV operated in Spain (through its tax representative) and that consequently the Spanish courts had jurisdiction to determine the claim. In reply, LV disputed jurisdiction, on the grounds that the tax representative did not have authority to accept service of proceedings on behalf of LV (and was only tenuously connected). 

The Court of First Instance concluded that the Spanish courts did have jurisdiction and the case was therefore listed for a trial to determine the substantive issues. At trial Gestitursa argued as follows: 

  • the patient did not provide an EHIC or a provisional certificate to the hospital;
  • the hospital was given signed consent for him to be treated on a private basis, payable by his insurers;
  • LV would benefit from an 'unjust enrichment', if it did not pay, since it would pocket the policy excess for the claim for medical expenses;
  • third parties are liable to pay for medical costs, with regard to compulsory insurance, pursuant to Article 83 of the Spanish Decree 14/1986.

In reply, it was argued that: 

  • the claim was in breach of EC regulations given the infringement proceedings previously invoked by the European Commission;
  • the court should refer to the guidelines issued by the Spanish Ministry of Public Health following those infringement proceedings;
  • the insured was unable to make a choice, since he was unconscious on admission;
  • travel insurance was not an 'obligatory' insurance, with reference to Art 83 of Spanish Decree 14/1986;
  • there could be no 'unjust enrichment' given the LV policy wording, which excluded excess payments if a policyholder is able to rely upon an EHIC card.

The presiding judge ruled in favour of Gestitursa and ordered that LV should pay the sum due. Although the judge omitted to refer to arguments raised in the defence, or to cite any relevant case law, he concluded that travel insurers were obliged to pay in circumstances where there was both private insurance and NHS cover in place and where a patient signed an authorisation form for treatment. 

Mark Lee remained of the view that there was a good prospect of success on appeal and an application was therefore lodged with the Madrid Court of Appeal.

Whilst waiting for the appeal to be determined, the Barcelona High Court handed down a ruling against Gestitursa regarding another claim for medical expenses against a foreign travel insurer. LV’s legal team successfully applied for permission to rely upon that additional case law to assist the court with its decision on appeal. 

In an order dated 23 October 2015, the Madrid Court of Appeal ruled in favour of LV and overturned the judgment of the lower court. In summary the court held: 

  • the Spanish courts did have jurisdiction to hear this matter. The court concluded that LV was domiciled and operating in Spain, given its usage of a tax representative in Madrid;
  • Gestitursa's claim falls outside the obligatory criteria for reimbursement envisaged by Annex 9 of Decree 1030/2006;
  • the patient, on presenting his EHIC card, and pursuant to EC law, should have received free medical treatment and there was no obligation on LV to pay Gestitursa for treatment received;
  • LV was entitled to recover a proportion of the Spanish lawyer's fees (plus interest) for the work relating to the Court of First Instance claim.

Commenting on the case, Mark Lee said: “We have acted for numerous UK travel insurers against Gestitursa over the last few years. At the outset, Gestitursa capitalised on the uncertainty of UK travel insurers and targeted those who decided to pay. However, since then the industry has adopted a consistently robust approach and defended claims both here and in Spain. This Court of Appeal decision mirrors the approach adopted by the European Commission and the Spanish Ministry of Public Health and confirms that these claims are contrary to EC law. Whilst each case will turn on its facts, it is bound to be very persuasive and should be relied upon by UK insurers defending existing claims. Although Gestitursa lodged an appeal to the Supreme Court, we have since been informed (at another hearing) that it has gone into liquidation. It therefore remains to be seen whether the appeal will go ahead.” 

This article was published in International Travel Insurance Journal (ITIJ) in November 2015.