When do receivables for provided services arise for health care providers?

• Netherlands

• Other

25-08-2016

The court, and subsequently, the court of appeal in Amsterdam have rendered judgements with regard to the question when receivables against patients and/or health insurers arise for services that have been provided by healthcare providers.

In case a pledgor enters into insolvency (and thus loses the power to dispose of its assets) it is important that a pledgee can determine whether a receivable that was pledged to him (in advance) existed and whether it was thus possible for the pledgor to grant a valid right of pledge over the receivables. If the receivable did not already exist at the moment that the pledgor entered into bankruptcy, the receivable cannot be pledged.

In the Netherlands, both the Treatment Contract and the Billing Contract (with health insurers) and the (repealed) Billing Regulation influence the moment when a receivable arises for a healthcare provider against a (in this case) health insurer.

So what did the court and the court of appeal decide?

Background

Better Life B.V. (hereafter Better Life) was a healthcare provider who offered treatment processes of which consisted of multiple consults. Better Life was financed by Famed B.V. (hereafter Famed). Better Life gave Famed a (valid) right of pledge over all current and future receivables which Better Life had or would acquire against health insurers in relation to the consults that Better Life provided.

As said, various agreement play a part in this. Next to the factoring agreement between Famed and Better Life, there are treatment contracts between Better Life and her patients (hereafter Treatment Contracts) and contracts between Better Life and several health insurers with regard to the manner in which, and the moment that, Better Life can bill her fees for consults she provided under a Treatment Contract (hereafter Billing Contracts). Pursuant to such Billing Contract, healthcare providers can directly bill there fees from the health insurer (instead of the patient).

The (repealed) Regulation Expenses scheme DBC’s in the curative Mental Healthcare (hereafter Billing Regulation) was applicable to the contractual relation between Better Life and the health care providers by operation of law. As mentioned earlier, the treatment processes of Better Life consisted of multiple consults. According to the Billing Regulation, Better Life could only invoice her fees from the health insurers, after finishing the entire treatment process.

Better Life went bankrupt and a substantial part of the treatment processes was not yet finished. The question was therefore if Better Life receivables has arisen against the health insurers with respect to the consults that Better Life already performed during the process but for which she had not yet submitted her invoice to the health insurers in accordance with the Billing Contract and the Billing Regulation.

The bankruptcy trustee was of the opinion that for consults that Better Life had already provided, but for which the entire treatment was not yet finished (and therefore not yet billed), no receivables against the health insurers had arisen for Better Life. Therefore - according to, still, the bankruptcy trustee – these receivables did not exist (yet) and could therefore not have been pledged (in advance) to Famed. Of course, Famed was of the opinion that the receivables arose directly after Better Life had provided the consult, regardless of the fact that they hadn’t been billed yet. So what did the court and the court of appeal decide?

The judgement

The court of first instance

According to the judgement of the court in Amsterdam, the receivables of Better Life against the various health insurers arose in three phases. The first phase would be the entering into of the Billing Contract. The second phase would be the entering into of Treatment Contracts with patients. According to the court, the entering into of a Treatment Contract lays down the foundation of payment obligations. The third phase would be the actual treatment of a patient. According to the court, after each consult a payment obligation arises for the patient and thus, pursuant to the Billing Contract, for Better Life arises a receivable against the relevant health insurer.

The court therefore ruled that with respect to the Treatment Contracts which were entered into before the bankruptcy and for which treatments have actually been performed before bankruptcy, receivables arose against the health insurers. These receivables may not have been due and payable in accordance with the Expenses Contract, but nevertheless existed and could therefore be made subject to a right of pledge (whether or not in advance) to Famed.

Court of appeal

The court of appeal did not share the judgement of the court of first instance. In the view of the court of appeal. the receivables do not arise pursuant to the Treatment Contracts, but pursuant to the Billing Regulation they only arose/existed from the point in time that the entire treatment could be invoiced  to the relevant health insurer. According to the court of appeal, the receivables of Better Life against the health insurers arose, from the moment that all requirements of the Billing Contract and the Billing Regulation were met. As long as such was not the case, Better Life could not invoice their fees for the separate consults and – in view of the court of appeal – therefore did not have any receivables against the health insurers that could be validly encumbered with a right of pledge.

So what?

The factual issue in this case is that nothing was specifically agreed with respect to the moment when receivables would arise against the health insurers and/or the patients. The only thing that was agreed, was the moment that the fees for the consults could be billed. Because there was no agreement as such, it depends on the interpretation of the different contracts whether and, if so, when the receivables would arise for Better Life.

We expect that this case will be submitted to the Supreme court because of its significance for financing of health providers. Until then, financers of healthcare providers are advised to demand clear agreements from their clients with their patients and health insurers with respect to the moment that receivables arise for consults and/or treatments, as well as demand from them that it is clear for all parties when these receivables are due and payable.