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Litigation and arbitration: Trials of local governments with the State Treasury will begin to cover hospital debts

Litigation and arbitration: Trials of local governments with the State Treasury will begin to cover hospital debts

Pursuant to the judgment of the Constitutional Tribunal of November 20, 2019 (K 4/17), as of May 29, 2021, art. 59 sec. 2 in connection with art. 55 sec. 1 point 6 and art. 61 of the act of 15 April 2011 on medical activity lose power to the extent to which it obliges a local government unit, which is an entity that creates an independent public health care institution, to cover the net loss constituting the economic result of the introduction of generally applicable provisions that have obligatory financial consequences for operation of an independent public health care facility.

In the above judgment, it was found that this statutory provision is inconsistent with art. 167 sec. 4 in connection with art. 166 sec. 2, art. 68 sec. 2 and art. 2 of the Constitution of the Republic of Poland.

It is worth recalling here that, in accordance with the above-mentioned provisions of the act on medical activity, which were covered by the judgment of the Constitutional Tribunal, an independent public health care institution may obtain funds to cover the net loss, and these funds were to be paid by the entities that created them within 9 months from the expiry of the deadline for approval of the financial statements of an independent public health care institution in an amount that could not be covered by the hospital itself, but not higher than the sum of the net loss and depreciation costs.

Alternatively, the entity establishing the hospital was obliged, within 12 months from the expiry of the deadline for approval of the financial statements, to issue an ordinance, decision or adopt a resolution on the liquidation of an independent public health care facility, if the net loss for the financial year could not be covered in the manner specified above and after adding depreciation cost is negative.

After its liquidation, the liabilities and receivables of an independent public health care facility become liabilities and receivables of the State Treasury or a medical university, or the relevant local government unit.

In the judgment of the Constitutional Tribunal cited above, it was found that shifting the burden of financing healthcare services from the National Health Fund to the local government is constitutionally unacceptable. It was pointed out that the cause of indebtedness of local government units is the defective financing by the National Health Fund, because it pays for services less than the amount of costs incurred. Thus, the funds transferred to hospitals by the National Health Fund are inadequate to the actual expenditure.

In connection with the judgment of the Constitutional Tribunal, resulting in the loss of binding force of the provisions of art. 59 sec. 2 in connection with art. 55 sec. 1 point 6 and art. 61 of the act on medical activity, to the extent specified by the Constitutional Tribunal, local government units which covered the hospital's net loss have a claim to the State Treasury (NFZ) for the reimbursement of these funds.

Contact us if you need more informations about litigation law in Poland.



Michał Puk

Lawyer

Michał Puk

Barrister, Counsel

Michał Puk

Contact:

Rondo ONZ 1
00-124 Warsaw