European Union: Medical Devices And Compulsory Insurance In The EU

Opinion of the CJEU Advocate-General in Case C-581/18 RB v TÜV Rheinland LGA Products GmbH, Allianz IAED SA: application of the principle of non-discrimination on grounds of nationality in a medical device case.

Background

The effects of the Poly Implant Prothèse SA ('PIP') defective breast implant scandal continue to be felt almost ten years since it first came to light that PIP had fraudulently used cheaper, industrial grade silicone in the implants that it manufactured. Due to PIP's insolvency, those affected have attempted to obtain compensation from other sources, including the relevant notified body, TÜV Rheinland¹, on the basis that this body had negligently certified PIP's products and the French regulatory authorities.

Case against PIP's insurer

The Opinion of Advocate-General Bobek in Case C-581/18 RB v TÜV Rheinland LGA Products GmbH, Allianz IARD SA concerns a German claimant (RB) who pursued a case for compensation in respect of defective breast implants in Germany against Allianz², the insurers of the now-defunct PIP in France. Medical device manufacturers were required under French law to have insurance cover for harm suffered by third parties arising from their activities. PIP had a policy of cover with Allianz, but the cover was limited to damage caused in France. Allianz relied on that territorial limitation. RB maintained that the territorial limitation of insurance cover to French territory was not lawful and constituted an infringement of free movement of goods.

The German court referred the case to the CJEU, asking whether the territorial limitation in the Allianz insurance policy constituted a violation of Article 18 TFEU, which prohibits discrimination on the grounds of nationality.

Within the scope of EU law

Allianz and the French Government argued that the case fell outside the scope of EU law on the basis that the issues involved a German patient who underwent surgery in Germany and were therefore purely internal to Germany. The Commission seemingly adopted a similar view.

Advocate-General Bobek disagrees, concluding that it is not possible to say that the situation in the present case falls outside the scope of EU law as the case involved the cross-border movement of goods (PIP implants) and provision of services (insurance) in the context of the partial harmonisation of medical devices and liability for defective products under EU law.

Regulatory diversity

Advocate-General Bobek's Opinion of 6 February 2020 notes that the referring court states that "The starting principle for the regulation of the internal market is respect for regulatory diversity in matters not explicitly harmonised by EU law."

However he rejects the suggestion that Article 18 TFEU should operate as a free-standing, substantive obligation, stating that this would extend beyond anything that the free movement case-law ever contemplated. He comments that, interpreted in that way, there would be no limit to the scope of Article 18 TFEU noting that "[i]n today's interconnected world, sooner or later, there is inevitably some sort of interaction with goods, services or persons from other Member States" and "[i]f that were enough to trigger the independent applicability of Article 18 TFEU, every single rule in a Member State would be caught by that provision". The fact that goods once came from another Member State is not a sufficient reason to suggest that any matter later concerning those goods is covered by EU law. Furthermore, the insurance arrangements in issue do not limit the freedom of companies such as Allianz to provide services within the EU, including the coverage of medical devices produced in France but used elsewhere.

No obligation to insure

The Opinion notes that EU law has not harmonised the issue of insurance against civil liability for the use of medical devices. The current regulatory framework for medical devices under Directive 93/42, requires notified bodies to take out civil liability insurance, but is silent as to manufacturers. Article 10(16) of the new Medical Devices Regulation (EU) 2017/745 only requires manufacturers "to have measures in place to provide sufficient financial coverage in respect of their potential liability under Directive 85/374/EEC, without prejudice to more protective measures under national law". The Advocate-General notes that this could "perhaps be interpreted, at a stretch, as potentially also including insurance against civil liability." However, he concludes that it is clear that the legislation was not intended to provide one harmonised solution, such as compulsory insurance for medical device manufacturers. This contrasts with the position with, e.g. motor insurance.

No discrimination

The Advocate-General finds that, in the absence of harmonisation, there is nothing to prevent Member States from taking steps at national level, as France had done, to improve the position of end users of medical devices by making it compulsory for manufacturers to have product liability insurance. Article 18 TFEU cannot be interpreted as precluding an arrangement whereby insurance coverage is limited to a single national territory.

The fact that PIP's insurance cover with Allianz contained a territorial limitation did not constitute direct discrimination on the grounds of nationality: German women receiving implants in France would also have benefited from the compulsory insurance cover. It could potentially be said to be indirect discrimination, and the "imperative of equal protection of all European citizen-consumers" might preclude a rule limiting insurance cover to those undergoing surgery on the territory of one Member State. The Advocate-General does not shut the door completely to the possibility that Article 18 TFEU might be used in this way, noting explicitly that "Certain rules of the Member States not previously harmonised by legislation might be declared incompatible with any of the four freedoms".

Ultimately, however, the Opinion recognises that to construe Article 18 TFEU in this way would make it a "limitlessly harmonising provision" that would upset the division of competences between the EU and Member States and create problematic conflicts between legal regimes within the internal market.

Comment

The Opinion is consistent with the position that insurance is not intended to be compulsory under Article 10(16) of the Medical Devices Regulation (EU) 2017/745. Given the highlighted risks of straying too aggressively into the competence of national legal systems, it seems likely that the Advocate-General's Opinion will be followed in substance in the CJEU's judgment. A finding to the contrary would be potentially far-reaching and could e.g. significantly interfere with insurers' rights under contracts of insurance which they had negotiated and concluded on the basis of a territorially limited exposure to liability.

Footnotes

1 Case C-219/15 Elisabeth Schmitt v TÜV Rheinland LGA Products GmbH

2 RB's claim was also brought against the implanting doctor and TÜV Rheinland LGA Products GmbH, however the questions posed by the German Court to the CJEU concerned only the potential liability of Allianz

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