JUDGMENT OF THE COURT

28 April 1998 (1)

(Freedom to provide services — Reimbursement of medical expenses incurred inanother Member State — Prior authorisation of the competent institution —Public health — Dental treatment)

In Case C-158/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the Cour deCassation (Luxembourg) for a preliminary ruling in the proceedings pending beforethat court between

Raymond Kohll

and

Union des Caisses de Maladie

on the interpretation of Articles 59 and 60 of the EC Treaty,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C. Gulmann, H. Ragnemalm(Rapporteur) and M. Wathelet (Presidents of Chambers), G.F. Mancini,

J.C. Moitinho de Almeida, P.J.G. Kapteyn, J.L. Murray, D.A.O. Edward,J.-P. Puissochet, G. Hirsch, P. Jann and L. Sevón, Judges,

Advocate General: G. Tesauro,

Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

—    Mr Kohll, by Jean Hoss and Patrick Santer, of the Luxembourg Bar,

—    Union des Caisses de Maladie, by Albert Rodesch, of the Luxembourg Bar,

—    the Luxembourg Government, by Claude Ewen, Social Security Inspector,First Class, in the Ministry of Social Security, acting as Agent,

—    the German Government, by Ernst Röder, Ministerialrat in the FederalMinistry of Economic Affairs, and Sabine Maaß, Regierungsrätin in thatministry, acting as Agents,

—    the Greek Government, by Vasilios Kondolaimos, Assistant Legal Adviserin the State Legal Service, and Stamatina Vodina, specialist technicalassistant in the Community Legal Affairs Department, Ministry of ForeignAffairs, acting as Agents,

—    the French Government, by Catherine de Salins, Deputy Director in theLegal Affairs Directorate of the Ministry of Foreign Affairs, and PhilippeMartinet, Foreign Affairs Secretary in that directorate, acting as Agents,

—    the Austrian Government, by Michael Potacs, of the Federal Chancellor'sOffice, acting as Agent,

—    the United Kingdom Government, by Stephanie Ridley, of the TreasurySolicitor's Department, acting as Agent, and David Pannick QC andPhilippa Watson, Barrister,

—    the Commission of the European Communities, by Maria Patakia, of itsLegal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Mr Kohll, represented by Jean Hoss andPatrick Santer, the Union des Caisses de Maladie, represented by Albert Rodesch,the Luxembourg Government, represented by Claude Ewen, the GreekGovernment, represented by Vasilios Kondolaimos, the French Government,represented by Jean-François Dobelle, Deputy Director in the Legal AffairsDirectorate of the Ministry of Foreign Affairs, acting as Agent, and Philippe

Martinet, the United Kingdom Government, represented by Richard Plender QCand Philippa Watson, and the Commission, represented by Jean-Claude Séché, ofits Legal Service, acting as Agent, at the hearing on 15 January 1997,

after hearing the Opinion of the Advocate General at the sitting on 16 September1997,

gives the following

Judgment

1.

    By judgment of 25 April 1996, received at the Court on 9 May 1996, theLuxembourg Cour de Cassation (Court of Cassation) referred to the Court for apreliminary ruling under Article 177 of the EC Treaty two questions on theinterpretation of Articles 59 and 60 of that Treaty.

2.

    Those questions arose in proceedings between Mr Kohll, a Luxembourg national,and the Union des Caisses de Maladie (hereinafter 'UCM‘), with which he isinsured, concerning a request by a doctor established in Luxembourg forauthorisation for his daughter, who is a minor, to receive treatment from anorthodontist established in Trier (Germany).

3.

    By decision of 7 February 1994 following a negative opinion of the social securitymedical supervisors, the request was rejected on the grounds that the proposedtreatment was not urgent and that it could be provided in Luxembourg. Thatdecision was confirmed on 27 April 1994 by a decision of the UCM board.

4.

    Mr Kohll appealed against that decision to the Conseil Arbitral des AssurancesSociales (Social Insurance Arbitration Council), arguing that the provisions reliedon were contrary to Article 59 of the Treaty. The appeal was dismissed by decisionof 6 October 1994.

5.

    Mr Kohll appealed against the latter decision to the Conseil Supérieur desAssurances Sociales (Higher Social Insurance Council), which by judgment of 17July 1995 upheld the contested decision on the ground that Article 20 of theLuxembourg Codes des Assurances Sociales (Social Insurance Code) and Articles25 and 27 of the UCM statutes were consistent with Council Regulation (EEC) No1408/71 of 14 June 1971 on the application of social security schemes to employedpersons, to self-employed persons and to members of their families moving withinthe Community (see the version amended and updated by Council Regulation (EC)No 118/97 of 2 December 1996, OJ 1997 L 28, p. 1).

6.

    It appears from Article 20(1) of the Code des Assurances Sociales, as amended bythe Law of 27 July 1992, which entered into force on 1 January 1994, that with theexception of emergency treatment received in the event of illness or accidentabroad, insured persons may be treated abroad or approach a treatment centre orcentre providing ancillary facilities abroad only after obtaining the priorauthorisation of the competent social security institution.

7.

    The terms and conditions for granting authorisation are laid down by Articles 25to 27 of the UCM statutes, in the version which entered into force on 1 January1995. Article 25 prescribes in particular that authorisation may not be given forservices which are not reimbursable under the national rules. Article 26 states thatthe cost of duly authorised treatment is to be reimbursed in accordance with thetariffs applicable to persons insured under the social security system of the Statein which the treatment is provided. Under Article 27, finally, authorisation will begranted only after a medical assessment and on production of a written requestfrom a doctor established in Luxembourg indicating the doctor or hospital centrerecommended and the facts and criteria which make it impossible for the treatmentin question to be carried out in Luxembourg.

8.

    Article 22 of Regulation No 1408/71 provides in particular:

'1.    An employed or self-employed person who satisfies the conditions of thelegislation of the competent State for entitlement to benefits, taking account whereappropriate of the provisions of Article 18, and:

...

(c)    who is authorised by the competent institution to go to the territory ofanother Member State to receive there the treatment appropriate to hiscondition,

shall be entitled:

(i)    to benefits in kind provided on behalf of the competent institution by theinstitution of the place of stay or residence in accordance with theprovisions of the legislation which it administers, as though he were insuredwith it; the length of the period during which benefits are provided shall begoverned, however, by the legislation of the competent State;

(ii)    to cash benefits provided by the competent institution in accordance withthe provisions of the legislation which it administers. However, byagreement between the competent institution and the institution of theplace of stay or residence, such benefits may be provided by the latterinstitution on behalf of the former, in accordance with the provisions of thelegislation of the competent State.

2.    ...

The authorisation required under paragraph 1(c) may not be refused where thetreatment in question is among the benefits provided for by the legislation of theMember State on whose territory the person concerned resides and where hecannot be given such treatment within the time normally necessary for obtainingthe treatment in question in the Member State of residence taking account of hiscurrent state of health and the probable course of the disease.

3.    The provisions of paragraphs 1 and 2 shall apply by analogy to members ofthe family of an employed or self-employed person.

...‘

9.

    Mr Kohll appealed against the judgment of the Conseil Supérieur des AssurancesSociales, arguing in particular that it had considered only whether the national ruleswere consistent with Regulation No 1408/71, and not whether they were consistentwith Articles 59 and 60 of the Treaty.

10.

    Since it considered that that argument raised a question concerning theinterpretation of Community law, the Cour de Cassation stayed the proceedingsand referred the following two questions to the Court for a preliminary ruling:

'1.    Are Articles 59 and 60 of the Treaty establishing the EEC to be interpretedas precluding rules under which reimbursement of the cost of benefits issubject to authorisation by the insured person's social security institution ifthe benefits are provided in a Member State other than the State in whichthat person resides?

2.    Is the answer to Question 1 any different if the aim of the rules is tomaintain a balanced medical and hospital service accessible to everyone ina given region?‘

11.

    By those questions, which should be taken together, the national court essentiallyasks whether Articles 59 and 60 of the Treaty preclude the application of socialsecurity rules such as those at issue in the main proceedings.

12.

    Mr Kohll submits that Articles 59 and 60 of the Treaty preclude such national ruleswhich make reimbursement, in accordance with the scale of the Member State ofinsurance, of the cost of dental treatment provided by an orthodontist establishedin another Member State subject to authorisation by the insured person's socialsecurity institution.

13.

    UCM and the Luxembourg, Greek and United Kingdom Governments contend thatthose provisions are not applicable, or, in the alternative, do not preclude the rules

in question from being maintained. The German, French and AustrianGovernments agree with the alternative submission.

14.

    The Commission submits that the rules constitute a barrier to the freedom toprovide services but may be justified, under certain conditions, by overridingreasons relating to the general interest.

15.

    Having regard to the observations submitted, the questions to be consideredconcern first the application of the principle of freedom of movement in the fieldof social security, then the effect of Regulation No 1408/71, and finally theapplication of the provisions on freedom to provide services.

Application of the fundamental principle of freedom of movement in the field ofsocial security

16.

    The Luxembourg, Greek and United Kingdom Governments submit that the rulesat issue in the main proceedings do not fall within the scope of the Communityprovisions on freedom to provide services, in that they concern social security, andso should be examined solely from the point of view of Article 22 of Regulation No1408/71.

17.

    It must be observed, first of all, that, according to settled case-law, Community lawdoes not detract from the powers of the Member States to organise their socialsecurity systems (Case 238/82 Duphar and Others v Netherlands [1984] ECR 523,paragraph 16, and Case C-70/95 Sodemare and Others v Regione Lombardia [1997]ECR I-3395, paragraph 27).

18.

    In the absence of harmonisation at Community level, it is therefore for thelegislation of each Member State to determine, first, the conditions concerning theright or duty to be insured with a social security scheme (Case 110/79 Coonan vInsurance Officer [1980] ECR 1445, paragraph 12, and Case C-349/87 Paraschi vLandesversicherungsanstalt Württemberg [1991] ECR I-4501, paragraph 15) and,second, the conditions for entitlement to benefits (Joined Cases C-4/95 and C-5/95Stöber and Piosa Pereira v Bundesanstalt für Arbeit [1997] ECR I-511, paragraph36).

19.

    As the Advocate General observes in points 17 to 25 of his Opinion, the MemberStates must nevertheless comply with Community law when exercising thosepowers.

20.

    The Court has held that the special nature of certain services does not removethem from the ambit of the fundamental principle of freedom of movement (Case279/80 Webb [1981] ECR 3305, paragraph 10).

21.

    Consequently, the fact that the national rules at issue in the main proceedings fallwithin the sphere of social security cannot exclude the application of Articles 59and 60 of the Treaty.

Effect of Regulation No 1408/71

22.

    UCM and the Luxembourg Government submit that Article 22 of Regulation No1408/71 lays down the principle that prior authorisation is required for anytreatment in another Member State. To challenge the national provisions relatingto reimbursement of the cost of services obtained abroad amounts to calling intoquestion the validity of the corresponding provision in Regulation No 1408/71.

23.

    In the proceedings before the Court, Mr Kohll submitted that he soughtreimbursement by UCM of the amount he would have been entitled to if thetreatment had been carried out by the only specialist established in Luxembourgat the material time.

24.

    On that point, UCM considers that the principle that a person is subject to onesocial security tariff only would indeed be complied with if the Luxembourg tariffwere applied, but claims that Regulation No 1408/71 would compel it to reimburseexpenditure according to the tariffs in force in the State in which the service wasprovided.

25.

    It must be stated that the fact that a national measure may be consistent with aprovision 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 provisionsof the Treaty.

26.

    Moreover, as the Advocate General observes in points 55 and 57 of his Opinion,Article 22(1) of Regulation No 1408/71 is intended to allow an insured person,authorised by the competent institution to go to another Member State to receivethere treatment appropriate to his condition, to receive sickness benefits in kind,on account of the competent institution but in accordance with the provisions of thelegislation of the State in which the services are provided, in particular where theneed for the transfer arises because of the state of health of the person concerned,without that person incurring additional expenditure.

27.

    On the other hand, Article 22 of Regulation No 1408/71, interpreted in the lightof its purpose, is not intended to regulate and hence does not in any way preventthe reimbursement by Member States, at the tariffs in force in the competent State,of costs incurred in connection with treatment provided in another Member State,even without prior authorisation.

28.

    Consequently, the Court must examine the compatibility of national rules such asthose at issue in the main proceedings with the Treaty provisions on freedom toprovide services.

Application of the provisions on freedom to provide services

29.

    The dispute before the national court concerns treatment provided by anorthodontist established in another Member State, outside any hospitalinfrastructure. That service, provided for remuneration, must be regarded as aservice within the meaning of Article 60 of the Treaty, which expressly refers toactivities of the professions.

30.

    It must therefore be examined whether rules such as those at issue in the mainproceedings constitute a restriction on freedom to provide services, and if so,whether they may be objectively justified.

Restrictive effects of the rules at issue

31.

    Mr Kohll and the Commission submit that the fact that reimbursement of the costof medical services, in accordance with the legislation of the State of insurance, issubject to prior authorisation by the institution of that State where the services areprovided in another Member State constitutes a restriction on freedom to provideservices within the meaning of Articles 59 and 60 of the Treaty.

32.

    The Member States which have submitted observations consider, on the contrary,that the rules at issue do not have as their purpose or effect to restrict freedom toprovide services, but merely lay down the conditions for the reimbursement ofmedical expenses.

33.

    It should be noted that, according to the Court's case-law, Article 59 of the Treatyprecludes the application of any national rules which have the effect of making theprovision of services between Member States more difficult than the provision ofservices purely within one Member State (Case C-381/93 Commission v France[1994] ECR I-5145, paragraph 17).

34.

    While the national rules at issue in the main proceedings do not deprive insuredpersons of the possibility of approaching a provider of services established inanother Member State, they do nevertheless make reimbursement of the costsincurred in that Member State subject to prior authorisation, and deny suchreimbursement to insured persons who have not obtained that authorisation. Costsincurred in the State of insurance are not, however, subject to that authorisation.

35.

    Consequently, such rules deter insured persons from approaching providers ofmedical services established in another Member State and constitute, for them and

their patients, a barrier to freedom to provide services (see Joined Cases 286/82and 26/83 Luisi and Carbone v Ministero del Tesoro [1984] ECR 377, paragraph 16,and Case C-204/90 Bachmann v Belgium [1992] ECR I-249, paragraph 31).

36.

    The Court must therefore examine whether a measure of the kind at issue in thiscase may be objectively justified.

Justification of the rules at issue

37.

    UCM and the Governments of the Member States which have submittedobservations submit that freedom to provide services is not absolute and thatreasons connected with the control of health expenditure must be taken intoconsideration. The requirement of prior authorisation constitutes the only effectiveand least restrictive means of controlling expenditure on health and balancing thebudget of the social security system.

38.

    According to UCM, the Luxembourg Government and the Commission, the risk ofupsetting the financial balance of the social security scheme, which aims to ensurea balanced medical and hospital service available to all its insured, constitutes anoverriding reason in the general interest capable of justifying restrictions onfreedom to provide services.

39.

    The Commission adds that the refusal of the national authorities to grant priorauthorisation must be justified by a genuine and actual risk of upsetting thefinancial balance of the social security scheme.

40.

    On the latter point, Mr Kohll submits that the financial burden on the budget ofthe Luxembourg social security institution is the same whether he approaches aLuxembourg orthodontist or one established in another Member State, since heasked for medical expenses to be reimbursed at the rate applied in Luxembourg.The rules at issue therefore cannot be justified by the need to control healthexpenditure.

41.

    It must be recalled that aims of a purely economic nature cannot justify a barrierto the fundamental principle of freedom to provide services (see, to that effect,Case C-398/95 SETTG v Ypourgos Ergasias [1997] ECR I-3091, paragraph 23).However, it cannot be excluded that the risk of seriously undermining the financialbalance of the social security system may constitute an overriding reason in thegeneral interest capable of justifying a barrier of that kind.

42.

    But, contrary to the submissions of UCM and the Luxembourg Government, it isclear that reimbursement of the costs of dental treatment provided in otherMember States in accordance with the tariff of the State of insurance has nosignificant effect on the financing of the social security system.

43.

    The Luxembourg Government also relies on grounds based on the protection ofpublic health, arguing, first, that the rules at issue are necessary to guarantee thequality of medical services, which in the case of persons going to another MemberState can be ascertained only at the time of the request for authorisation, and,second, that the Luxembourg sickness insurance system aims to provide a balancedmedical and hospital service open to all insured persons.

44.

    Mr Kohll submits, on the other hand, that there is no scientific reason to concludethat treatment provided in Luxembourg is more effective, now that the pursuit ofthe medical professions is the subject of mutual recognition between MemberStates. He further submits that the reference to a balanced medical and hospitalsector open to all must above all be categorised as an economic aim intended toprotect UCM's financial resources.

45.

    It should be noted, first of all, that under Articles 56 and 66 of the EC TreatyMember States may limit freedom to provide services on grounds of public health.

46.

    However, that does not permit them to exclude the public health sector, as a sectorof economic activity and from the point of view of freedom to provide services,from the application of the fundamental principle of freedom of movement (seeCase 131/85 Gül v Regierungspräsident Düsseldorf [1986] ECR 1573, paragraph 17).

47.

    The conditions for taking up and pursuing the profession of doctor and dentist havebeen the subject of several coordinating or harmonising directives (see CouncilDirective 78/686/EEC of 25 July 1978 concerning the mutual recognition ofdiplomas, certificates and other evidence of the formal qualifications ofpractitioners of dentistry, including measures to facilitate the effective exercise ofthe right of establishment and freedom to provide services (OJ 1978 L 233, p. 1);Council Directive 78/687/EEC of 25 July 1978 concerning the coordination ofprovisions laid down by law, regulation or administrative action in respect of theactivities of dental practitioners (OJ 1978 L 233, p. 10); and Council Directive93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and themutual recognition of their diplomas, certificates and other evidence of formalqualifications (OJ 1993 L 165, p. 1)).

48.

    It follows that doctors and dentists established in other Member States must beafforded all guarantees equivalent to those accorded to doctors and dentistsestablished on national territory, for the purposes of freedom to provide services.

49.

    Consequently, rules such as those applicable in the main proceedings cannot bejustified on grounds of public health in order to protect the quality of medicalservices provided in other Member States.

50.

    As to the objective of maintaining a balanced medical and hospital service open toall, that objective, although intrinsically linked to the method of financing the socialsecurity system, may also fall within the derogations on grounds of public health

under Article 56 of the Treaty, in so far as it contributes to the attainment of ahigh level of health protection.

51.

    Article 56 of the Treaty permits Member States to restrict the freedom to providemedical and hospital services in so far as the maintenance of a treatment facilityor medical service on national territory is essential for the public health and eventhe survival of the population (see, with respect to public security within themeaning of Article 36 of the Treaty, Case 72/83 Campus Oil v Minister for Industryand Energy [1984] ECR 2727, paragraphs 33 to 36).

52.

    However, neither UCM nor the Governments of the Member States which havesubmitted observations have shown that the rules at issue were necessary to providea balanced medical and hospital service accessible to all. None of those who havesubmitted observations has argued that the rules were indispensable for themaintenance of an essential treatment facility or medical service on nationalterritory.

53.

    The conclusion must therefore be drawn that the rules at issue in the mainproceedings are not justified on grounds of public health.

54.

    In those circumstances, the answer must be that Articles 59 and 60 of the Treatypreclude national rules under which reimbursement, in accordance with the scaleof the State of insurance, of the cost of dental treatment provided by anorthodontist established in another Member State is subject to authorisation by theinsured person's social security institution.

Costs

55.

    The costs incurred by the Luxembourg, German, Greek, French, Austrian andUnited Kingdom Governments and by the Commission of the EuropeanCommunities, which have submitted observations to the Court, are not recoverable.Since these proceedings are, for the parties to the main proceedings, a step in theaction pending before the national court, the decision on costs is a matter for thatcourt.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Luxembourg Cour de Cassation byjudgment of 25 April 1996, hereby rules:

Articles 59 and 60 of the EC Treaty preclude national rules under whichreimbursement, in accordance with the scale of the State of insurance, of the costof dental treatment provided by an orthodontist established in another MemberState is subject to authorisation by the insured person's social security institution.

Rodríguez IglesiasGulmann Ragnemalm Wathelet Mancini Moitinho de Almeida Kapteyn Murray Edward Puissochet Hirsch Jann Sevón

Delivered in open court in Luxembourg on 28 April 1998.

R. Grass

G.C. Rodríguez Iglesias

Registrar

President

1: Language of the case: French.