ECJ on Award Obligation of Statutory Health Insurance Funds and Social Services

Procurement Law Captures Ever More Service Areas: Now It Also Covers the Field of Social Services.

In its judgment dated June 11, 2009 (C-300/07), the European Court of Justice unequivocally decided for the first time that even statutory health insurance funds as public contracting authorities are subject to the application of the provisions of procurement law. This is not surprising. By its judgment of December 01, 2008 (X ZB 31/08), the German Federal Court of Justice had already subjected contracts of emergency ambulance services and patient transport services to obligatory procurement. The legislative bodies were proactive and already last year assigned the legal process for award procedures under social law in first instance to the award councils, cf. Act on the Advancement of Organizational Structures in Statutory Health Insurance Funds (GKV OrgWG) entering into force on December 18, 2008.

Since the ECJ explains the public contracting authority capacity of statutory health insurance funds by the fact that they are financed by contributions payable by members, which are calculated and collected according to rules of public law, this may in the future also apply to other corporations governed by public law which are financed by contributions laid down by law, such as professional organizations or trade associations.

However, the ECJ judgment is of importance and certainly surprising for a number of communities and social service funding agencies in that it extends the scope of application of procurement law to social services.

The ECJ thus settles the dispute that has been going on for many years whether contracts between funding agencies and service providers in the services sector need to be entered into under the rules of procurement law. "The ruling brings legal clarity and is therefore to be welcomed. While municipalities are now required to quickly change their previous practice, the procurement law also entails advantages in the area of social services. Increasing costs with reduced funds at the same time requires efficient acting. This cost pressure can only be absorbed by competition," says Dr. Ute Jasper, procurement law expert at law firm Heuking Kühn Lüer Wojtek.

The ECJ ruled in favor of an orthopedic footwear company, Hans & Christophorus Oymanns GbR, in its litigation versus AOK Rheinland/Hamburg. The company complained that AOK Rheinland/Hamburg had failed to invite tenders on a Europe-wide basis for a framework agreement for the manufacture and supply of footwear for the integrated provision scheme within the meaning of Sections 140 a et seqq. Social Security Code SGB V to the insured. OLG Düsseldorf referred the question to the ECJ for a preliminary ruling whether statutory health insurance funds are public contracting authorities within the meaning of procurement law and whether such framework agreements are service agreements subject to procurement law. The ECJ followed the view of the Advocate General and answered both questions in the affirmative.

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