The Queen, on the application of Yvonne Watts v Bedford Primary Care Trust and Secretary of State for Health.
Date: 2006-05-16
46. The applicability of Article 22 to the present case does not, however, preclude it from also falling within the scope of Article 49 EC.
47. The fact that a national measure may be consistent with a provision of secondary legislation, in this case Article 22 of Regulation No 1408/71, does not have the effect of removing that measure from the scope of the provisions of the Treaty (Case C-158/96 Kohll  [1998] ECR I-1931, paragraph 25).
48. It should further be noted that the purpose of Article 22(1)(c)(i) of Regulation No 1408/71 is to confer a right to the services in kind provided, on behalf of the competent institution, by the institution of the place where the treatment is provided, in accordance with the provisions of the legislation of the Member State in which the services are provided as if the person concerned were registered with that institution (see Inizan , paragraph 20). The applicability of Article 22 of Regulation No 1408/71 to the situation in question does not mean that the person concerned may not simultaneously have the right under Article 49 EC to have access to healthcare in another Member State under rules on the assumption of costs different from those laid down by Article 22 (see to that effect Case C‑368/98 Vanbraekel and Others  [2001] ECR I-5363, paragraphs 37 to 53).
53. It should be noted as a preliminary point that, in the context of the general objectives of the Treaty, Article 22 of Regulation No 1408/71 is one of a number of measures designed to allow a patient covered by the legislation of one Member State to enjoy, under the conditions which it specifies, benefits in kind in the other Member States, whatever the national institution with which he is registered and whatever the place of his residence (see to that effect Case C-156/01 Van der Duin and ANOZ Zorgverzekeringen  [2003] ECR I-7045, paragraph 50, and Case C‑145/03 Keller  [2005] ECR I‑2529, paragraph 45).
54. By guaranteeing in paragraph (1)(c)(i) that a patient covered by the legislation of one Member State who has been authorised may have access to treatment in the other Member States on reimbursement conditions as favourable as those enjoyed by persons covered by the legislation of those States, and by stating in the second subparagraph of paragraph (2) that the competent national institution may not refuse such authorisation where the two conditions referred to in that provision are satisfied, Article 22 of Regulation No 1408/71 helps to facilitate the free movement of patients and, to the same extent, the provision of cross-border medical services between Member States (see to that effect Vanbraekel , paragraph 32; Inizan , paragraph 21; and Keller , paragraph 46).
55. The second subparagraph of Article 22(2) of Regulation No 1408/71 lays down two conditions which, if both satisfied, render mandatory grant by the competent institution, regardless of the Member State to which it belongs, of the prior authorisation to which that provision refers (see Inizan , paragraph 37).
56. To satisfy the first condition the treatment in question must be among the benefits provided for by the legislation of the Member State on whose territory the person resides. It does not appear that in the main proceedings the refusal to assume the costs of the treatment was based on the failure to comply with that first condition.
57. The second condition is satisfied only where the treatment which the patient plans to undergo in a Member State other than that in the territory of which he resides cannot be given within the time normally necessary for obtaining the treatment in question in the Member State of residence, taking account of his current state of health and the probable course of his disease.
59. As Mrs Watts, the French and Belgian Governments and the Commission pointed out in their written observations, the Court gave an interpretation in paragraphs 45 and 46 of the judgment in Inizan  of the time referred to in the second subparagraph of Article 22(2) of Regulation No 1408/71, adopting the interpretation it had given for the term ‘undue delay’ in Smits and Peerbooms  (paragraphs 103 and 104) and Müller-Fauré and van Riet  (paragraphs 89 and 90) concerning the assessment of the compatibility with Article 49 EC of a national provision making the assumption of the cost of hospital treatment planned in another Member State subject to a requirement that that treatment be necessary.
60. Indeed, as Advocate General Geelhoed observed in point 101 of his Opinion, there is no reason which seriously justifies different interpretations depending on whether the context is Article 22 of Regulation No 1408/71 or Article 49 EC, since in both cases the question is, as the Belgian Government pointed out in its written observations, whether the hospital treatment required by the patient’s medical condition can be provided on the territory of his Member State of residence within an acceptable time which ensures its usefulness and efficacy.
61. In paragraph 45 of Inizan  the Court thus held, referring by analogy to paragraph 103 of Smits and Peerbooms  and paragraph 89 of Müller-Fauré and van Riet , that the second condition set out in the second subparagraph of Article 22(2) of Regulation No 1408/71 is not satisfied whenever it is apparent that treatment which is the same or equally effective for the patient can be obtained without undue delay in his Member State of residence.
62. Basing its decision on paragraph 104 of Smits and Peerbooms  and paragraph 90 of Müller-Fauré and van Riet , the Court held that, in order to determine whether treatment which is equally effective for the patient can be obtained without undue delay in the Member State of residence, the competent institution is required to have regard to all the circumstances of each specific case, taking due account not only of the patient’s medical condition at the time when authorisation is sought and, where appropriate, of the degree of pain or the nature of the patient’s disability which might, for example, make it impossible or extremely difficult for him to carry out a professional activity, but also of his medical history ( Inizan , paragraph 46).
63. In paragraph 92 of Müller-Fauré and van Riet  the Court also pointed out that, in determining whether a treatment which is the same or equally effective for the patient is available without undue delay from an establishment on the territory of the Member State of residence, the competent institution cannot base its decision exclusively on the existence of waiting lists on that territory without taking account of the specific circumstances of the patient’s medical condition.
71. That is because if patients covered by a national health service such as that in issue in the main proceedings had to be authorised to go to another Member State to receive there, at the expense of the competent institution, hospital treatment which the hospitals covered by that service are able to supply within a medically acceptable period within the meaning of paragraph 68 of the present judgment merely because treatment which is the same or equally effective is available more quickly in that other Member State, the resulting patient migration would be liable to put at risk the competent Member State’s planning and rationalisation efforts in the vital healthcare sector so as to avoid the problems of hospital overcapacity, imbalance in the supply of hospital medical care and logistical and financial wastage (see to that effect Smits and Peerbooms , paragraph 106, and Müller-Fauré and van Riet , paragraph 91).
74. In such a situation, the fact that the grant of the authorisation sought would oblige a national health service such as that in issue in the main proceedings, which is characterised by free hospital treatment provided within its own establishments, to establish a financial mechanism so as to enable that service to satisfy the request for reimbursement from the institution of the host Member State and relating to the benefits in kind provided by that institution to the patient in question is also not a legitimate ground for refusing authorisation (see to that effect Müller-Fauré and van Riet , paragraph 105).
86. It should be noted in that regard that, according to settled case-law, medical services provided for consideration fall within the scope of the provisions on the freedom to provide services (see, inter alia, Case C-159/90 Society for the Protection of Unborn Children Ireland  [1991] ECR I-4685, paragraph 18, and Kohll , paragraph 29), there being no need to distinguish between care provided in a hospital environment and care provided outside such an environment ( Vanbraekel , paragraph 41; Smits and Peerbooms , paragraph 53; Müller-Fauré and van Riet , paragraph 38; and Inizan , paragraph 16).
87. It has also been held that the freedom to provide services includes the freedom for the recipients of services, including persons in need of medical treatment, to go to another Member State in order to receive those services there (see Joined Cases 286/82 and 26/83 Luisi and Carbone  [1984] ECR 377, paragraph 16).
89. The fact that reimbursement of the hospital treatment in question is subsequently sought from a national health service such as that in question in the main proceedings does not mean that the rules on the freedom to provide services guaranteed by the Treaty do not apply (see to that effect Smits and Peerbooms , paragraph 55, and Müller-Fauré and van Riet , paragraph 39). It has already been held that a supply of medical services does not cease to be a supply of services within the meaning of Article 49 EC on the ground that the patient, after paying the foreign supplier for the treatment received, subsequently seeks the reimbursement of that treatment from a national health service (see Müller-Fauré and van Riet , paragraph 103).
90. It must therefore be found that Article 49 EC applies where a patient such as Mrs Watts receives medical services in a hospital environment for consideration in a Member State other than her State of residence, regardless of the way in which the national system with which that person is registered and from which reimbursement of the cost of those services is subsequently sought operates.
92. Wh ilst it is not in dispute that Community law does not detract from the power of the Member States to organise their social security systems, and that, in the absence of harmonisation at Community level, it is for the legislation of each Member State to determine the conditions in which social security benefits are granted, when exercising that power Member States must comply with Community law, in particular the provisions on the freedom to provide services (see, inter alia, Smits and Peerbooms , paragraphs 44 to 46; Müller-Fauré and van Riet , paragraph 100; and Inizan , paragraph 17). Those provisions prohibit the Member States from introducing or maintaining unjustified restrictions on the exercise of that freedom in the healthcare sector.
94. It should be noted in this connection that according to well-established case‑law, Article 49 EC precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within a Member State (Case C-381/93 Commission  v France  [1994] ECR I-5145, paragraph 17; Kohll , paragraph 33; and Smits and Peerbooms , paragraph 61).
98. It must therefore be found that the system of prior authorisation referred to in paragraph 95 of the present judgment deters, or even prevents, the patients concerned from applying to providers of hospital services established in another Member State and constitutes, both for those patients and for service providers, an obstacle to the freedom to provide services (see to that effect Smits and Peerbooms , paragraph 69, and Müller-Fauré and van Riet , paragraph 44).
100. In applying the case-law set out in paragraph 94 of the present judgment, the conditions for the NHS’s assuming the cost of hospital treatment to be obtained in another Member State should not be compared to the situation in national law of hospital treatment received by patients in private local hospitals. On the contrary, the comparison should be made with the conditions in which the NHS provides such services in its hospitals.
103. The Court has already held that it is possible for the risk of seriously undermining the financial balance of a social security system to constitute an overriding reason in the general interest capable of justifying an obstacle to the freedom to provide services ( Kohll , paragraph 41; Smits and Peerbooms , paragraph 72; and Müller-Fauré and van Riet , paragraph 73).
104. The Court has likewise acknowledged that the objective of maintaining a balanced medical and hospital service open to all may also fall within the derogations on grounds of public health under Article 46 EC in so far as it contributes to the attainment of a high level of health protection ( Kohll , paragraph 50; Smits and Peerbooms , paragraph 73; and Müller-Fauré and van Riet , paragraph 67).
105. The Court has also held that Article 46 EC permits Member States to restrict the freedom to provide medical and hospital services in so far as the maintenance of treatment capacity or medical competence on national territory is essential for the public health, and even the survival, of the population ( Kohll , paragraph 51; Smits and Peerbooms , paragraph 74; and Müller-Fauré and van Riet , paragraph 67).
106. It is therefore necessary to determine whether the restriction at issue can in fact be justified in the light of such overriding reasons, and if such is the case to make sure, in accordance with settled case-law, that it does not exceed what is objectively necessary for that purpose and that the same result cannot be achieved by less restrictive rules (see Smits and Peerbooms , paragraph 75, and the case-law cited).
107. As regards hospital medical services, the Court has already made the following observations in paragraphs 76 to 80 of Smits and Peerbooms .
108. It is well known that the number of hospitals, their geographical distribution, the way in which they are organised and the facilities with which they are provided, and even the nature of the medical services which they are able to offer, are all matters for which planning, generally designed to satisfy various needs, must be possible.
109. For one thing, such planning seeks to ensure that there is sufficient and permanent access to a balanced range of high-quality hospital treatment in the State concerned. For another thing, it assists in meeting a desire to control costs and to prevent, as far as possible, any wastage of financial, technical and human resources. Such wastage would be all the more damaging because it is generally recognised that the hospital care sector generates considerable costs and must satisfy increasing needs, while the financial resources which may be made available for healthcare are not unlimited, whatever the mode of funding applied.
110. From those two points of view, the requirement that the assumption of costs by the national system of hospital treatment provided in another Member State be subject to prior authorisation appears to be a measure which is both necessary and reasonable.
111. As regards specifically the Netherlands system of health insurance, in issue in the cases giving rise to the Smits and Peerbooms judgment, the Court acknowledged in paragraph 81 thereof that, if patients were at liberty, regardless of the circumstances, to use the services of hospitals with which their health insurance fund had no agreement, whether those hospitals were situated in the Netherlands or in another Member State, all the planning which goes into the system of agreements in an effort to guarantee a rationalised, stable, balanced and accessible supply of hospital services would be jeopardised at a stroke.
113. In the light of the foregoing, and in answer to Question 1(c), Community law, in particular Article 49 EC, does not therefore preclude the right of a patient to receive hospital treatment in another Member State at the expense of the system with which he is registered from being subject to prior authorisation.
114. Nevertheless, the conditions attached to the grant of such authorisation must be justified in the light of the overriding considerations mentioned above and must satisfy the requirement of proportionality referred to in paragraph 106 of the present judgment (see to that effect Smits and Peerbooms , paragraph 82, and Müller-Fauré and van Riet , paragraph 83).
115. It is settled case-law that a system of prior authorisation cannot legitimise discretionary decisions taken by the national authorities which are liable to negate the effectiveness of provisions of Community law, in particular those relating to a fundamental freedom such as that at issue in the main proceedings (see Smits and Peerbooms , paragraph 90, and Müller-Fauré and van Riet , paragraph 84, and the case-law cited in those paragraphs).
116. Thus, in order for a system of prior authorisation to be justified even though it derogates from a fundamental freedom of that kind, it must in any event be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion, so that it is not used arbitrarily. Such a system must furthermore be based on a procedural system which is easily accessible and capable of ensuring that a request for authorisation will be dealt with objectively and impartially within a reasonable time and refusals to grant authorisation must also be capable of being challenged in judicial or quasi-judicial proceedings ( Smits and Peerbooms , paragraph 90, and Müller-Fauré and van Riet , paragraph 85).
117. To that end, refusals to grant authorisation, or the advice on which such refusals may be based, must refer to the specific provisions on which they are based and be properly reasoned in accordance with them. Likewise, courts or tribunals hearing actions against such refusals must be able, if they consider it necessary for the purpose of carrying out the review which it is incumbent on them to make, to seek the advice of wholly objective and impartial independent experts (see to that effect Inizan , paragraph 49).
121. As regards the factors mentioned in Questions 1(a) and 3(d), to the findings set out in paragraphs 59 to 77 of the present judgment should be added the point that, although Community law does not detract from the power of the Member States to organise their social security systems and decide the level of resources to be allocated to their operation, the achievement of the fundamental freedoms guaranteed by the Treaty nevertheless inevitably requires Member States to make adjustments to those systems. It does not follow that this undermines their sovereign powers in the field (see Müller-Fauré and van Riet , paragraphs 100 and 102).
125. It should, first of all, be noted in this regard that the patient who, having requested authorisation under Article 22(1)(c)(i) of Regulation No 1408/71, was granted that authorisation or received a refusal to authorise subsequently held to be unfounded must, according to the express terms of that provision, be entitled to the benefits in kind provided on behalf of the competent institution by the institution of the host Member State, in accordance with the provisions of the legislation of that State, as if he were registered with that institution (see Vanbraekel , paragraph 32; Inizan , paragraph 20; and Keller , paragraph 65).
126. It follows that, in such a case, the rules for reimbursement laid down by the legislation of the host Member State are to be applied, while the competent institution remains responsible for subsequently reimbursing the institution of that State, as provided for in Article 36 of Regulation No 1408/71 (see Vanbraekel , paragraph 33).
129. It should be noted in that connection that the Court has already held that the fact that the legislation of the competent Member State does not guarantee a patient covered by that legislation, who has been authorised to receive hospital treatment in another Member State in accordance with Article 22(1)(c) of Regulation No 1408/71, a level of payment equivalent to that to which he would have been entitled if he had received hospital treatment in the competent Member State is an unjustified restriction of the freedom to provide services within the meaning of Article 49 EC (see Vanbraekel , paragraphs 43 to 52).
131. By contrast, where the legislation of the host Member State does not provide for the reimbursement in full of the cost of hospital treatment in that State, in order to place the patient in the position he would have been in had the national health service with which he was registered been able to provide him free of charge, within a medically acceptable period, with treatment equivalent to that which he received in the host Member State, the competent institution must in addition reimburse him the difference between the cost, objectively quantified, of that equivalent treatment up to the total amount invoiced for the treatment received in the host Member State and the amount reimbursed by the institution of that State pursuant to the legislation of that State, where the first amount is greater than the second.
133. It should further be noted that in the context of legislation which, like that in the main proceedings, contains, according to the order for reference (see paragraph 22 of the present judgment), rules for calculating the amount of the costs which must in principle be invoiced to particular foreign patients, and recovered from them, for treatment in a hospital covered by the national health service, those rules may be useful reference tools in determining, for the purposes of the calculation referred to in paragraph 131 of the present judgment, the cost in the competent Member State of treatment in a hospital covered by that service, equivalent to that provided to the patient in the host Member State.
135. As is confirmed by the second subparagraph of Article 22(2) of Regulation No 1408/71, the sole purpose of Article 22(1)(c)(i) of that regulation is to confer on patients covered by the legislation of one Member State and granted authorisation by the competent institution the right to have access to ‘treatment’ in another Member State on conditions for reimbursement as favourable as those enjoyed by patients covered by the legislation of that other State (see Vanbraekel , paragraph 32, and Inizan , paragraph 21).
137. The essential characteristic of ‘benefits in kind’ within the meaning of Regulation No 1408/71 is that they are ‘designed to cover care received by the person concerned’ by the direct payment or reimbursement of ‘medical expenses’ incurred by that patient’s state (see, in the context of a statutory scheme of social insurance against the risk of reliance on care, Case C-160/96 Molenaar [1998] ECR I-843, paragraphs 32 and 34).
138. Since its purpose is thus not to settle the question of ancillary costs, such as the cost of travel and any accommodation other than in the hospital itself, incurred by a patient authorised by the competent institution to go to another Member State to receive there treatment appropriate to his state of health, Article 22 of Regulation No 1408/71 does not make provision for, but also does not prohibit, the reimbursement of such costs. In those circumstances, it is necessary to consider whether an obligation to reimburse such costs might arise under Article 49 EC (see, by analogy, Vanbraekel , paragraph 37).
142. If that is the case, the patient who was authorised to go to another Member State to receive there hospital treatment or who received a refusal to authorise subsequently held to be unfounded is entitled, as the Belgian Government stated in its written observations and as Advocate General Geelhoed stated in point 118 of his Opinion, to seek reimbursement of the ancillary costs associated with that cross-border movement for medical purposes subject to the same objective and transparent limits as those set by the competent legislation for the reimbursement of the ancillary costs associated with medical treatment provided in the competent Member State (see to that effect Case C-8/02 Leichtle  [2004] ECR I-2641, particularly paragraphs 41 to 48).
143. In the light of the foregoing, the answer to the sixth question must be that:
– Article 49 EC must be interpreted as meaning that where the legislation of the competent Member State provides that hospital treatment provided under the national health service is to be free of charge, and where the legislation of the Member State in which a patient registered with that service was or should have been authorised to receive hospital treatment at the expense of that service does not provide for the reimbursement in full of the cost of that treatment, the competent institution must reimburse that patient the difference (if any) between the cost, objectively quantified, of equivalent treatment in a hospital covered by the service in question up to the total amount invoiced for the treatment provided in the host Member State and the amount which the institution of the latter Member State is required to reimburse under Article 22(1)(c)(i) of Regulation No 1408/71 on behalf of the competent institution pursuant to the legislation of that Member State.
– Article 22(1)(c)(i) of Regulation No 1408/71 must be interpreted as meaning that the right which it confers on the patient concerned relates exclusively to the expenditure connected with the healthcare received by that patient in the host Member State, namely, in the case of hospital treatment, the cost of medical services strictly defined and the inextricably linked costs relating to his stay in the hospital.
– Article 49 EC must be interpreted as meaning that a patient who was authorised to go to another Member State to receive there hospital treatment or who received a refusal to authorise subsequently held to be unfounded is entitled to seek from the competent institution reimbursement of the ancillary costs associated with that cross-border movement for medical purposes provided that the legislation of the competent Member State imposes a corresponding obligation on the national system to reimburse in respect of treatment provided in a local hospital covered by that system.
The seventh question
146. Next, it should be noted that, according to Article 152(5) EC, Community action in the field of public health is to fully respect the responsibilities of the Member States for the organisation and delivery of health services and medical care.
147. That provision does not, however, exclude the possibility that the Member States may be required under other Treaty provisions, such as Article 49 EC, or Community measures adopted on the basis of other Treaty provisions, such as Article 22 of Regulation No 1408/71, to make adjustments to their national systems of social security. It does not follow that this undermines their sovereign powers in the field (see to that effect Müller-Fauré and van Riet , paragraph 102, and, by analogy, Case C‑376/98 Germany  v Parliament and Council  [2000] ECR I-8419, paragraph 78).