Disability and medical and educational cover

On August 28, 2007 the Supreme Court of Justice delivered an important judgment  to private health insurance users and to health system payees in general.

The case reached the Supreme Court because of the extraordinary appeal brought by a private health insurance company (“CEMIC”) against a judgment of Division E of the Civil Court of Appeals, which had obliged the appellant to pay the required psychiatric medication and orthopedic equipment to a young disabled boy.

The boy - who suffers from cerebral paralysis and has a disability certificate - had made a claim for full coverage from CEMIC under Law No 24,901 (which provides basic benefits for support and complete rehabilitation for disabled people).

Law No 24,901 - included in the Obligatory Medical Program (PMO) -, compels health insurers to cover all benefits included in PMO, and also to offer educational, welfare and social benefits.

CEMIC denied the application of the law, arguing that:

i) the parties entered into a contract according to CEMIC’s general rules (approved by the Health Minister), and those (not different ones) are the governing rules;

ii) moreover, CEMIC said that obligations of a law which considers public health insurance and private health insurance as one and the same, only refer to medical attention, not social, welfare or educational requirements.

The Supreme Court of Justice rejected both arguments and confirmed the decision of the Court of Appeals which had found against CEMIC.

The Court based its decision on the following:

i) that in this case the private health insurer is the stronger party in the relationship and must therefore abide by the contractual clauses made within the framework of an adhesion contract (i.e. their standard form contract); and

ii) the technical and judicial subordination in which the party receiving the services finds itself. 

The Court described the relationship between private health insurance providers and users as “structural subordination”.

The Court also held that, even though the activity carried out by the private health insurance is financial, it also involves social commitment. For this reason, sticking to the small print of the contract could actually put the company at risk.

Finally, going beyond its purely judicial decision, the Court affirmed that a balance should be maintained as between money on the one hand and life and the right to health on the other, and for this reason the Court decided on the basis of equitable principles.

The Supreme Court of Justice has indicated a path that lower courts will have to follow, even when they are not compelled to do so. The decision follows a path that has already been taken by several courts ruling on similar matters.

Currently, the solution is being found through repeated court decisions (in this case of the Supreme Court). The weight of the matter justifies clearer legislative treatment.