61978C0256
OPINION OF MR ADVOCATE GENERAL MAYRAS
DELIVERED ON 6 DECEMBER 1979 (
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Mr President,
Members of the Court,
I —
The large number of applications made by the applicant for the reimbursement of sickness expenses and the large amounts involved in most of them seem to be the main raison d'être of this case. Mr Misenta, a scientific official with the Commission posted to the Joint Research Centre at Ispra (Italy), has in fact submitted for the period from 8 March 1977 to 2 May 1978 six applications for the reimbursement of medical expenses totalling DM 12235. This amount represents the medical expenses and hospital fees incurred by the applicant in the Federal Republic of Germany, his country of origin, from 10 February 1976 to 2 February 1978. The Commission tells us that subsequently the applicant again presented on 5 June 1978 a statement for treatment mostly paid for in lire and another on 18 July 1978 in which only treatment paid for in German marks appears.
The applicant has calculated that as regards the six reimbursement claims referred to above he has suffered a loss of DM 936 (DM 9777 less DM 8841) compared to what he would have received if, upon application of Article 72 of the Staff Regulations, he had in fact been reimbursed at the rate of 80% of the costs which he incurred. As may be seen from the second table which the applicant has attached to his application now before the Court, he has, for example, on his two reimbursement claims of March 1977 suffered a loss of DM 502.15 compared to the prescribed refund.
Faced with what he considered to be an injustice Mr Misenta requested on 12 March 1978 a reasoned decision pursuant to Article 90 (1) of the Staff Regulations. The applicant confined this request to his reimbursement claim of 25 October 1977 relating to the medical expenses and hospital fees which he had incurred in his country of origin from 29 November 1976 to 23 August 1977 except for those dealt with by two bills in lire dated 22 June 1977. The statement of these expenses was issued by the Ispra office responsible for settling claims on 20 December 1977 and the applicant's account was credited with the refund in Italian currency on 19 January 1978.
The applicant submitted a claim amounting to DM 3317.40 for the expenses which he had incurred in Germany. The statement which he received on 18 January advised him that this sum had been converted into Belgian francs amounting to Bfr 51249. This statement then showed a refund, for all of the bills submitted, of Bfr 42711 actually amounting to a rate of 80% (round figures). It finally showed that the amount of the refund was equivalent to Lit 997382 which was the sum for which the applicant received a payment advice from his bank in Italy on 20 January.
Two working days after receipt of this advice, on 24 January 1978, the applicant transferred to his account with his bank in Germany the sum of Lit 956165 converted into German marks at the daily free market rate and corresponding to the expenses he had incurred in German marks; the sum of DM 2316.96 was credited to that account. Thus at the conclusion of this transfer, as regards the currency in which he had incurred expenses amounting to DM 3317.40, he actually received a refund of 69.8% and not 80% as the Staff Regulations provide, which should have been DM 2653.92. He therefore suffered a loss of DM 336.96 (DM 2653.92 less DM 2316.96) which he asked to be paid to him or the equivalent amount in lire calculated at the rate for the day of payment.
This request was rejected in a decision of 14 March 1978 by the Director General of Ispra in his capacity as appointing authority. The decision explained to the applicant the system, of whose unfortunate effects he was a victim, and the legal basis upon which it rested.
This information led him to decide to take the matter further: he made a complaint to the Commission under Article 90 (2) of the Staff Regulations, dated 5 June 1978, and received on 12 June. The complaint repeated-the whole of his previous claim except for the amount of the refund requested, which was decreased slightly, from DM 336.96 to DM 326.92. He explains that this latter amount corresponds to the difference between reimbursement at 80% which he should have received and which amounted to DM 2653.92, and the équivalent in German marks at the rate in force on the day of the bank transfer of DM 1 to Lit 410.8, namely DM 2327.70, of the sum which he had received in lire and which he transferred to his account in Germany.
Since the Commission did not comment on this complaint within the period laid down the applicant started these proceedings on 23 November 1978. Later, however, on 30 November 1978, the Commission rejected the complaint. The applicant was informed of this by a letter dated 14 December 1978 signed by the Member of the Commission for Administration, Mr Tugendhat.
Before going any further, I think that it is appropriate to define the scope of these proceedings.
In accordance with the applicant's wishes the dispute concerns only one of the refund claims (the one made on 25 October 1977) for which he believes he has incurred financial losses, while these losses arose from the time of the first claim referred to in the file and lodged by Mr Misenta on 8 March 1977 for expenses dating back to 1 July 1976. Presumably, however, it was because he had in fact incurred exchange losses for the same reasons several times previously, as he shows in his complaint through official channels, and because the trend in the lira did not hold out any prospect of any real improvement in the foreseeable future, that the applicant decided, when bringing an action before the Court, to direct its attention not only to the losses which he had personally suffered but also to an aspect going beyond his personal case, namely the inappropriate nature of the system which had brought about the losses.
Over and above the refund claim for DM 326.22, what the applicant is calling in question in bringing this matter before the Court is not the application by the accounting officer at Ispra of the rules concerning the refund of sickness expenses when the cost of treatment is paid for in strong currency and refunded in weak currency. What he is contesting is the very validity of the system which, according to him, by failing to protect officials against the vagaries of exchange rates, has an adverse effect upon sickness cover as provided for by the Staff Regulations.
We should therefore examine the system whose validity is called in question.
II —
The applicant's problems stem from the fact that he has incurred expenses in a strong currency (German marks) and, after conversion into Belgian francs, the reference currency for calculating amounts owing, he was reimbursed in a weak currency (lire) whose relative value had fallen considerably in the time between the expenditure's being incurred and its reimbursement.
This type of problem has not escaped the attention of the Commission which on 6 November 1974 took a decision by written procedure, C/2981/74, taking effect from the beginning of that month. This decision, with. the preparatory stages of which staff representatives had been associated, and the rules for which were moreover adopted by the other institutions, deals precisely with the administrative problems created by currency fluctuations. The decision was taken because the exchange rates used by the Commission until that date — the rates declared and accepted by the International Monetary Fund — no longer corresponded to the relative real values of the currencies.
The decision makes a major distinction between three groups of emoluments: first, the reconversion of the remuneration expressed in Belgian francs into the currency of the place where the official carries out his duties (Articles 63 and 64 of the Staff Regulations); then, the transfers which officials may make to their country of origin under Article 17 of Annex VII; finally, the grants and allowances intended to reimburse expenses upon the presentation of bills, or upon a lump-sum basis.
As regards the latter type, the decision states that “the aim to be achieved above all else ... is that officials are reimbursed for expenses actually incurred”. It goes on to state more precisely that “situations should be avoided by which officials, having the same amount of expenditure, find themselves reimbursed according to different percentages, depending on whether they are employed in a country with a currency which is ‘strong’ or ‘weak’ by reference to the currency of the, country in which the Community has its seat”.
For the reimbursement of expenses upon the presentation of bills, including sickness expenses, the Commission chose to use exchange rates brought up to date. In this regard it would be as well to distinguish two cases. The exchange rates applicable as between the Belgian franc and the currencies of the countries which then observed the relatively narrow fluctuation margins in relation to the Belgian franc (currencies which were then called “snake” currencies and associated currencies) are laid down in point 1 of Annex II to the decision.
The exchange rates applicable as between the Belgian franc and the floating currencies including the lira are determined under point 2 of Annex II as follows: “In the middle of each quarter, and on the basis of the exchange rates applied at that moment on the unofficial market in Brussels, the accounting officer of the Commission shall issue the rates to be used from the commencement of the following quarter”.
In the sickness insurance field these rules were defined by a circular of 5 March 1975 from the Central Office of the Joint Sickness Insurance Scheme called “Implementing Provisions relating to the bringing up to date of Exchange Rates in the field of Sickness Insurance”. The relevant powers of this body are based on Article 19 of the Rules on Sickness Insurance for Officials of the European Communities. Under that article the Central Office is given the responsibility of coordinating and monitoring the work of the offices responsible for setting claims and ensuring that the rules concerning the payment of benefits are consistently applied.
In the circular referred to above the Central Office lays down the following two rules for the payment of benefits :
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“Where treatment is paid for in currencies other than Belgian francs the sums paid are to be converted into Belgian francs at the up-to-date rate in force at the date when the treatment was provided;
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If payment is made in a currency other than Belgian francs the amount in Belgian francs for each treatment is to be reconverted into the currency in which payment was made at the up-to-date rate in force at the date when treatment was provided”.
It would no doubt be possible to summarize the rules laid down by the provisions mentioned above by saying that the decision by the Commission lays down the method of determining the exchange rates brought up to date (quarterly exchange rates; choice of free market) and that the circular by the Central Office selects the date of treatment for the (double) conversion.
The applicant is asking the Court to declare the decision of the Commission of 6 November 1974 to be inapplicable with respect to him and consequently, let it be added, the circular regarding its application in the field of sickness insurance issued by the Central Office of the Joint Sickness Insurance Scheme on 5 March 1975. His application is of course restricted to such of those provisions as are applicable to the reimbursement of sickness expenses incurred by him in the Federal Republic. It goes without saying that it does not and cannot be intended to call in question the whole of the system of refunding all expenses for which exchange rates brought up to date quarterly have been used, as the defendant appears to fear.
The applicant's argument is as follows: the system set up in 1974/75 is incompatible with Article 72 (1) of the Staff Regulations and with Annex I to the Rules on Sickness Insurance — rules governing the reimbursement of medical expenses — and with the principle of equal treatment for officials as laid down and defined by the Court's case-law. The applicant further submits that the application of point 2 of Annex II to the said Commission decision which he criticizes does not allow the object, which the same decision defines as the reimbursement of expenses actually incurred, to be achieved.
As the Court is aware, it is Article 72 (1) of the Staff Regulations which provides that an official and his dependants shall receive sickness insurance cover up to 80% of the expenses incurred. In application of that provision the Rules on Sickness Insurance were adopted, Annex I to which, governing the reimbursement of medical expenses, provides generally speaking for a refund of 80% of the expenses up to a certain level. It is this rate which is applicable to all the expenses in these proceedings, since the applicant complains only of the reimbursement of his expenses incurred in Germany. That is why his purchase in Italy of glasses and a spectacle frame, which are only reimbursed at 65%, may be disregarded.
The applicant also thinks that the system set up by the Commission conflicts with the principle of the equal treatment of officials in regard to the reimbursement of sickness expenses in the same original currency, discriminating between officials posted to Italy or any other country with a weak currency and those posted to Belgium, Luxembourg or any other country with a strong currency. The principle of the equality of treatment of officials is a general principle of the law of the European civil service which the Court has formally laid down on a number of occasions. This was done, in particular, in the judgment of 16 March 1971, Bernardi v European Parliament (Case 48/70 [1971] ECR 175, particularly paragraph 27, at p. 185). More recently the Court upheld this principle in a judgment where, as here, the applicant, who was also posted to Ispra, complained he was at a financial disadvantage as against officials employed in Belgium or Luxembourg, the Newth judgment of 31 May 1979 (Case 156/78 [1979] ECR 1941, particularly paragraph 13 at p. 1952).
Moreover, equality of treatment is clearly one of the objects referred to above which the Commission had in mind in its decision of 6 November 1974 on the reimbursement of expenses actually incurred. The applicant is therefore on firm ground in demonstrating that the application of the rules laid down by that decision is in conflict with its declared object.
III —
Faced with these criticisms the Commission does not deny the imperfections of its system. It merely thinks that they are not sufficiently serious to call in question its legality. It points out the complexity of the subjectmatter and emphasizes all the efforts it has made, including devising the system in dispute, and which it is still making in order to ensure that its officials receive a fair reimbursement of their sickness expenses. It also stresses that a large number of the applicant's comments are suggestions for the setting up of another system which are not for him to make in the context of the present proceedings and which, besides, would be much open to criticism.
I share the Commission's view on this point and do not wish to waste the Court's time arguing about the legal relevance and the practicalities of the reforms proposed by the applicant: direct reimbursement in the currency in which the expenses arose and choice of the rate valid on the day of the refund for the exchange between the currency in which the expenses arose and that in which they are reimbursed by the Fund. These considerations clearly lie within the field of de lege ferenda and also seem to me to be irrelevant for the purpose of making a reasoned assessment of the system now under examination.
It is equally true that the problems of currency exchange are complex and difficult, if not impossible, to resolve entirely satisfactorily from the legal point of view. Finally, it is indisputable that the Commission cannot be blamed for the often severe variations in the value of currencies on the international currency exchange market.
It was the task of the Commission only to find a balance between the inevitable constraints imposed by the administration of a complex system extending over the entire world and the higher exigencies of justice which dictate that all patients in comparable situations be reimbursed on an equal basis. Therefore the Commission could not regard itself as bound by a duty to achieve a given result (“obligation de résultat”) but only by a duty to choose an appropriate means (“obligation de moyen”), to adopt this cardinal distinction of French law on civil liability.
That means that in the present case the defendant is not obliged to reimburse exactly 80% to all officials who incur sickness expenses anywhere in the world. The use of the words “up to 80% of the expenditure incurred” in Article 71 (1) of the regulations also militates against this meaning, since, as the defendant says, this expression may be interpreted as meaning that an approximate percentage rate is' intended at which expenditure is to be reimbursed.
But these factors must not result in the Commission's having complete freedom of action. It had the duty to devise a system fitted to the factual circumstances in question and, if experience proved that the chosen system was unsuitable, to improve it within the shortest possible time.
It seems to me that the Commission has not exercised all the diligence required of it. This emerges first of all from the fact that the accounting officer of the Commission was himself prevented by the depreciation of the lira from observing the rule laid down by the Decision of 6 November 1974 according to which “in the middle of each quarter, and on the basis of the exchange rates applied at that moment on the unofficial market in Brussels”, the accounting officer is to “issue the rates to be used from the commencement of the following quarter”.
The documents provided in Annex 5 to the defence show that the rates to be used from the commencement of a given quarter were not laid down in the middle of the previous quarter but at a date much closer to their entry into force. The file also shows that these rates were again altered during the actual course of the quarter in which they came into force, probably because the accounting officer was aware of the imperfections of the system selected in a period of severe currency instability.
The defendant's negligence also stems from the delay in modifying the rules of whose defects it was aware, as the attitude of its accounting officer proves. In fact it has waited until 1 April this year, that is four years and five months, before replacing the system of quarterly rates by a system of monthly rates applicable to all expenses covered by Annex I to its decision of 6 November 1974, save sickness and accident expenses (Articles 71 and 73 (3) of the Staff Regulations). As regards the latter expenses, the Commission has decided that the rate to be applied shall remain a quarterly rate but that this shall be issued on the first working day of the quarter concerned. Without giving a definitive judgment in the limited context of this case upon the value of this amendment, it does seem to me to be a more realistic approach. It is only the long delay taken to introduce this amendment which I criticize, whereas the decision itself was an internal one and taken by written procedure and was apparently easy to amend.
In view of these facts, none of the arguments for the defence manages to change my unfavourable view.
The Commission points out that the sickness insurance scheme in favour of its officials is by and large a generous one and stresses the efforts it has made to establish conversion rates for little known currencies into Belgian francs and I readily acknowledge this. But these circumstances do not seem to me to be such as to absolve it as regards the specific problem which concerns us.
Moreover, when pointing out that losses are often minimal it forgets to take into account the fact that these losses are relative when calculated in comparison with the 80% refund laid down by the Staff Regulations and that if occasional minor losses can be tolerated, regular losses cannot.
The Commission also criticizes the applicant for abusing the right of free choice of practitioner given by Article 9 (1) of the Rules on Sickness Insurance because in almost all cases he has submitted bills for treatment given in Germany. The Commission feels that exchange risks act as a sort of counterbalance to the very generous rule contained in Article 9.
That is not my way of thinking.
As a matter of principle I believe that when a rule has been laid down even the potentially unfavourable consequences must be recognized and an attempt made to reduce them by appropriate means rather than by adopting a solution which would risk detracting from the efficacy of the rule. This might happen if sick officials employed in a country with a weak currency and coming from a country with a strong currency were forced to forego treatment for themselves and their dependants in their country of origin because of exchange losses. We should bear in mind too the numerous officials who obtain treatment in Switzerland.
Over and above the personal position of the applicant it seems to me that officials avail themselves of the right to obtain health care abroad and in particular to consult a medical practitioner and receive treatment in their country of origin much more often than the defendant is willing to admit.
Another consequence of the free choice of practitioner is the conversion — for which the applicant is strongly criticized — into German marks at the free market rate of the refund which was paid to him in lire. The Commission vigorously attacks this private initiative of the appellant which the Commission claims he should have left out of his calculations. But it is obvious that a doctor practising in Germany is paid in German marks and that the comparison between what is paid and what is reimbursed can only be made in the currency in which treatment is paid for and, since the transaction is effected by a private individual, at the rate of exchange applicable to private individuals.
Furthermore, the calculations carried out by the applicant in support of his complaint through official channels show that an official employed in Brussels or Luxembourg who incurred the same expenses in German marks in the same quarters would have received, in Belgian francs and adopting the same methods of calculation, a much higher refund.
The Commission points out once again that although it is true that a considerable variation in the exchange rate may occur to the detriment of officials between the date of treatment and that of reimbursement, the length of the interval between treatment and the request for reimbursement is largely in their own hands.
It is true that according to the provisions of Article 13 of the Rules on Sickness Insurance the application for reimbursement may be made “during the calendar year following that in which treatment was administered”; this leaves at the outside nearly two years to do this. The Commission thinks that this prolonged lapse of time also gives persons covered by the insurance the opportunity to speculate on currencies.
But to a considerable extent the length of the period between the date of treatment and the date of reimbursement is beyond the control of officials. This is true first for the period between the date of treatment and the date when the bill for fees or expenses is received by the patient. Secondly, and even more, it is also true for the period required for the administrative processing of claims which is the defendant's responsibility and which runs from the time bills are submitted to when they are actually reimbursed. The opportunities for speculation are therefore more limited than the Commission claims.
Besides, if this danger exists, it should be counteracted otherwise than by choosing a conversion system whose scope in general inevitably affects all officials including those who speculate and those who do not. In view of the frequently shifting reality of the exchange market I do not think that a method exists which will completely eliminate this risk. The most one can do is reduce it. Perhaps I may be permitted to suggest that the period for the submission of sickness expenses for reimbursement should be reduced. This would, incidentally, facilítate the work of the departments responsible for making payments.
In any event, is not the amendment introduced from the second quarter of this year, to bring the system closer into line with reality, the clearest admission of the shortcomings of the previous system?
This search for a more suitable solution is another feature which this case has in common with the Newth case (cited above) which concerned the graduated allowance payable after retirement from employment in the interests of the service and also involved exchange losses for an official working in Italy as compared to officials working in Belgium or in Luxembourg. These losses were considered by the Court, following Mr Advocate General Reischl's opinion, to be in “breach of the principle of equality among officials whose circumstances are similar” (paragraph 13).
I do not believe that the higher loss of Mr Newth compared to that of Mr Misenta (30% instead of 10 to 12%) and the rarity of retirement from employment in the interests of the service in comparison with the frequency of claims for sickness expenses constitute such decisive differences that there is a breach of equality of treatment in the first case and not in the second.
Furthermore, in matters of sickness expenses, the predicament of the applicant is contrary to Article 72 (1) of the Staff Regulations and Annex I (Rules governing the reimbursement of medical expenses) to the Rules on Sickness Insurance.
I therefore think it possible and desirable to transpose that solution to this dispute.
Before finishing I feel I must draw the Commission's attention to certain drawbacks to decisions made by written procedure. The experience of dealing with this case has demonstrated that it is extremely difficult to discover the full and definitive wording of these decisions and the exact date on which they were adopted. Since they are measures of mandatory application even if they apply only within the Community institutions I think that they merit more than publication in “Administrative Notices” several months after they have entered into force.
In conclusion I propose that the Court grant Mr Misenta's application and consequently that it should:
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Declare that as from 1 July 1976 the system resulting from the application to the sickness expenses which he had incurred in Germany of Commission Decision No C/2981/74 of 6 November 1974 (Annex II, point 2) and the Implementing Provisions of the Central Office for the Sickness Insurance Scheme of 5 March 1975 (paragraph 2 — Payments) is not applicable to him;
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Annul the implied decision rejecting his complaint;
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Order the Commission to pay him the sum of DM 326.22 together with legal interest from the date of the complaint;
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Order the Commission to pay the costs.
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