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Landmark judgement by the EFTA Court: the financing of public e-health solutions is not state aid

Kluge has assisted the Ministry of Health and Care Services and the Directorate for e-health in creating a robust legal basis, including under state aid law, for the the development, delivery and financing of public e-health solutions such as helsenorge.no, e-prescription and the health network.

As part of this work, Norway notified the financing of e-health solutions operated by the Norwegian Health Network (NHN) and the Directorate for e-health to ESA in May 2019. ESA confirmed in July 2019 that public financing of these solutions, as well as various health registers and support services for the health administration did not constitute state aid. The decision was brought before the EFTA Court, which recently upheld ESA’s decision.

The Court’s judgement in case E-9/19 Abelia and WTW AS v ESA entails important clarifications about the EEA member states’ room for maneuver under state aid law concerning the health service, digital public services and services performed in-house.

Background

E-health can be defined as the use of information and communication technology (ICT) to improve efficiency, quality and safety in the health and care sector. Especially due to the fragmentation in the Norwegian health care system where many independent actors, both within the primary health service and the specialist health service have developed their own ICT systems, digital collaboration across the actors today is difficult and inefficient, and entails disadvantages for both health professionals and patients. The public sector therefore wants to facilitate – and offer – nationwide electronic services that are part of the system for e-health in Norway. These make health services more accessible, ensure equal standards for all and increase health security. Furthermore, the operation of health registers and support services for the health administration, for example in ICT and procurement, has been centralized in NHN for efficiency reasons.

Given the importance of e-health solutions for the Norwegian healthcare system today and to an even greater extent in the years to come, the Norwegian authorities chose to obtain a confirmation from ESA that these services were not to be regarded as economic activity, and that their hence not as state aid. ESA shared this assessment (see ESA’s decision from July 2019). The decision was then brought before the EFTA Court.

Judgement of the EFTA Court in Case E-9/19

The Court upheld ESA’s decision. The judgement is relatively brief, but still contains two important clarifications.

First, in paragraph 92, the Court concluded that:

“It is evident that the Health Network, Helsenorge.no, e-prescription and the SCR form part of a national eHealth solution provided by NHN, a public  corporation charged with the provision of nationwide eHealth solutions in Norway, and NDE as a developing part of the Norwegian healthcare system. These different activities are based on, and are intended to further the objectives of the relevant Norwegian and EEA legislation referred to in the contested decision. In so doing, NHN and NDE are exercising their powers in order to fulfil their duties towards the population of Norway in the field of public health.“

Norway has a health care system that is publicly funded and built on the principle of solidarity, and its funding does therefore not normally raise state aid issues. The court considered e-health solutions as part of the Norwegian health care system as such, or as a way of fulfilling obligations towards the population. The Court’s findings are clearly inspired by the EFTA Court’s judgement in E-5/07 Private Kindergartens National Association v ESA where the Court regarded the financing of kindergartens as a fulfillment of ‘’duties towards the[ir] population’’, and thus not as an economic activity, despite the fact that there was competition in the market to offer such services.

With regard to support services, the Court concluded in paragraphs 95 to 96 that:

“NHN cannot and does not offer these services on the market. These services are provided by NHN only within the Norwegian state healthcare system […] The nature of the provision of services must be determined according to whether or not the subsequent use of the services provided amounts to an economic activity”.

Since the recipients of NHN’s services do not carry out economic activities, the support services are not economic l either. The Court’s reasoning can possibly be regarded as an acceptance by the Court that activities carried out in-house by public entities are usually not to be regarded as economic activity. It remains to be seen how ESA interprets and applies this principle in future decisions.

Kluge through Arne Torsten Andersen, Clemens Kerle and Frederik Nordby have been legal advisers to the Ministry of Health and Care Services and the Directorate for e-health throughout the process.