Legal expenses insurers try it on again

Some people never give up. In this case, ‘some people’ refers to legal expenses insurers (LEI). There has been a string of cases brought against them over the years before the Court of Justice of the European Union on the basis of the insured’s right to choose a lawyer. The LEI constantly want to restrict that free choice, in order to keep down costs, and the Court usually upholds the insured’s right, which is guaranteed in the Legal Expenses Insurance Directive 87/344/EEC. It has happened again in two further cases.

By way of history, here is what the LEI have tried to impose on the insured so far – no right to choose your own lawyer in a class action (Eschig C‑199/08); no right to choose a lawyer who lives outside the local jurisdiction of the Court (Stark C‑293/10); and no right to choose a lawyer when the LEI offers one of its own staff to conduct the case (Sneller C‑442/12). The LEI won only one of these cases – Stark.

In the two cases recently decided by the Court, both arising in the Netherlands, the dispute was over the nature of the bodies where the cases would first be brought. The relevant clause in the law relating to right to choose your own lawyer is Article 4(1)(a) of the 1987 Directive, which states that:

‘Any contract of legal expenses insurance shall expressly recognize that: (a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person’.

The question in both cases was what does ‘any inquiry or proceedings’ mean? We know that a court falls within the definition, but what else?

The first case is Massar v DAS C‑460/14. Mr Massar’s employer sought authorisation from the Employee Insurance Agency, a public body independent of the central administration, to be able to terminate Mr Massar’s employment on grounds of redundancy. Mr Massar, not unnaturally, wanted a lawyer to represent him before the Agency, but DAS refused to pay for that. The legal background was that no objection could be made, or appeal brought, against the Agency’s decision once made, whether before a public administrative body or an administrative or civil court. (The employee could, at most, bring an action afterwards for damages for manifestly unjustified dismissal before the civil courts).

So the question was whether the Agency would conduct an ‘inquiry’ within the meaning of Article 4(1)(a) of the Directive. The Court found that it would. It grounded its reasoning on a number of factors: the aim of the Directive was broadly to protect the interests of the insured; it had already been found in Eschig that this aim militates against a restrictive interpretation of Article 4(1)(a); the rights of Mr Massar would be affected by the decision of the Agency; and the Sneller case had also concerned the termination of employment, in which the Court had agreed that he could have his own lawyer.

The second case is Büyüktipi v Achmea Case C‑5/15. The underlying structure is rather similar to the Massar case, except that here Mr Büyüktipi, who suffered from various mental and physical disorders, asked the Care Assessment Centre to authorise care under the General Law on Exceptional Medical Expenses. When his request was refused, he wanted to lodge an appeal against the same body, and wanted a lawyer of his choice to represent him – but Achmea refused to pay up for it under the policy.

So was the Care Assessment Centre’s appeal process an ‘inquiry’ within the meaning of Article 4(1)(a) of the Directive? The legal background was that the factual assessment would be made during the Centre’s administrative stage, and that assessment of facts would then constitute the basis of the decision made in the context of subsequent judicial administrative proceedings. So, even if an appeal was possible through the court system, it would always be on the basis of the facts found by the Centre. On these grounds, and on some of the same grounds listed above under the Massar case, the Court found that the Centre’s proceedings did constitute an ‘inquiry’ under the Directive.

Now the score stands at four decisions by the Court of Justice in favour of the insured person, and one against. Will the LEI ever give up on its efforts to restrict the insured’s right freely to choose a lawyer under the Directive?

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs