Avis juridique important

Judgment of the Court of 5 March 1998. - Manfred Molenaar and Barbara Fath-Molenaar v Allgemeine Ortskrankenkasse Baden-Württemberg. - Reference for a preliminary ruling: Sozialgericht Karlsruhe - Germany. - Freedom of movement for workers - Benefits designed to cover the risk of reliance on care. - Case C-160/96. European Court reports 1998 Page I-00843

Summary Parties Grounds Decision on costs Operative part

1 Social security for migrant workers - Community rules - Scope ratione materiae - Benefits included and benefits excluded - Distinguishing criteria - Benefits under a national social security scheme covering the risk of reliance on care - Included as a sickness benefit

(Council Regulation No 1408/71, Art. 4(1)(a))

2 Social security for migrant workers - Sickness insurance - Benefits in kind - Definition - National social security scheme covering the risk of reliance on care - Care allowance in the form of financial aid enabling the standard of living of persons requiring care to be improved as a whole - Included

(Council Regulation No 1408/71, Arts 19(1), 25(1) and 28(1))

(EC Treaty, Arts 6 and 48(2); Council Regulation No 1408/71, Arts 19(1), 25(1) and 28(1))

5 A benefit such as the care allowance must therefore be regarded as a sickness insurance `cash benefit', as referred to in Articles 19(1)(b), 25(1)(b) and 28(1)(b) of Regulation No 1408/71. First, payment of the allowance is periodical and is not subject either to certain expenditure, such as care expenditure, having already been incurred, or a fortiori to the production of receipts for the expenditure incurred. Secondly, the amount of the allowance is fixed and independent of the costs actually incurred by the recipient in meeting his daily requirements. Thirdly, recipients are to a large extent unfettered in their use of the sums thus allocated to them. In particular, the care allowance may be used by recipients to remunerate a member of their family or entourage who is assisting them on a voluntary basis. The care allowance thus takes the form of financial aid which enables the standard of living of persons requiring care to be improved as a whole, so as to compensate for the additional expense brought about by their condition.

6 Articles 6 and 48(2) of the Treaty do not preclude a Member State from requiring persons working in its territory but residing in another Member State to contribute to a social security scheme covering the risk of reliance on care, although Articles 19(1), 25(1) and 28(1) of Regulation No 1408/71 do prevent entitlement to an allowance such as the care allowance, which constitutes a sickness benefit in cash, from being subject to the condition that the insured person resides in the territory of the Member State where he is insured.

First, an employed person residing in a Member State other than that in which he is employed is to receive, in the Member State in which he resides, benefits such as care insurance benefits in kind in so far as the legislation of that State, whatever the more specific name given to the social protection scheme of which it forms part, provides for the payment of benefits in kind designed to cover the same risks as those covered by care insurance in the Member State of employment. Secondly, a worker is to receive cash benefits such as the care allowance in the Member State in which he resides even if the legislation of that State does not provide for benefits of that type. The same is true with regard to unemployed persons and pensioners covered by the legislation of a Member State other than that in which they reside.

In Case C-160/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the Sozialgericht Karlsruhe (Germany) for a preliminary ruling in the proceedings pending before that court between

Manfred Molenaar,

Barbara Fath-Molenaar

and

Allgemeine Ortskrankenkasse Baden-Württemberg,

on the interpretation of Articles 6 and 48(2) of the EC Treaty,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C. Gulmann, H. Ragnemalm, M. Wathelet and R. Schintgen (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 (Rapporteur), G. Hirsch, P. Jann, L. Sevón and K.M. Ioannou, Judges,

Advocate General: G. Cosmas,

Registrar: H. von Holstein, Deputy Registrar,

after considering the written observations submitted on behalf of:

- Mr and Mrs Molenaar, by S. de Witt, Rechtsanwalt, Freiburg,

- the Allgemeine Ortskrankenkasse Baden-Württemberg, by K. Hirzel, Rechtsassessor, Justiziar,

- the German Government, by E. Röder, Ministerialrat at the Federal Ministry of the Economy, acting as Agent,

- the Austrian Government, by M. Potacs, Univ. Doz. DDr., Bundeskanzleramt, acting as Agent,

- the Swedish Government, by L. Nordling, Director General of Legal Affairs in the Legal Secretariat (EU) of the Ministry of Foreign Affairs, acting as Agent, and

- the Commission of the European Communities, by P. Hillenkamp, Legal Adviser, and M. Patakia, of its Legal Service, acting as Agents,$

having regard to the Report for the Hearing,

after hearing the oral observations of Mr and Mrs Molenaar, represented by W. Schirp, Rechtsanwalt, Freiburg, the Allgemeine Ortskrankenkasse Baden-Württemberg, represented by K. Hirzel, the German Government, represented by E. Röder, the Austrian Government, represented by G. Hesse, Magister at the Bundeskanzleramt, and the Commission, represented by P. Hillenkamp, at the hearing on 8 October 1997,

after hearing the Opinion of the Advocate General at the sitting on 9 December 1997,

gives the following

Judgment

1 By order of 28 March 1996, which was received at the Court on 13 May 1996, the Sozialgericht (Social Court) Karlsruhe referred to the Court for a preliminary ruling pursuant to Article 177 of the EC Treaty a question concerning the interpretation of Articles 6 and 48(2) of that Treaty.

2 The question was raised in proceedings between Mr and Mrs Molenaar, who are of Dutch and German nationality respectively, and the Allgemeine Ortskrankenkasse (General Local Health Insurance Fund) Baden-Württemberg (`the AOK'), concerning the couple's right to German social care insurance (`care insurance') benefits.

3 That insurance scheme was introduced, from 1 January 1995, by the Pflegeversicherungsgesetz (Care Insurance Law, hereinafter `the Law'), contained in Volume XI of the Sozialgesetzbuch (German Code of Social Law, hereinafter `the SGB'). It is designed to cover the costs entailed if insured persons should become reliant on care, that is to say, if a permanent need were to arise for those insured to resort, in large measure, to assistance from other persons in the performance of their daily routine (bodily hygiene, nutrition, moving around, housework, and so on).

4 Under the Law, any person insured, either voluntarily or compulsorily, against sickness must contribute to the care insurance scheme.

5 Care insurance gives entitlement, first, to benefits designed to cover the costs incurred for care provided in the home by a third person. Those benefits, designated as `home care', the amount of which depends on the degree of reliance on care on the part of the person concerned, may be provided, at the choice of the recipient, either in the form of care dispensed by authorised bodies or in the form of a monthly allowance, known as `the care allowance', enabling recipients to choose the form of aid they consider most appropriate to their condition.

6 Secondly, care insurance gives entitlement to direct payment of the cost of nursing home or hospital care provided to the insured person, to allowances designed to cover the absence on holiday of the third party who usually looks after the person insured and to allowances and payments for various costs entailed by the insured person's reliance on care, such as the purchase and installation of special equipment and work required to adapt the home.

7 Lastly, care insurance will, in certain circumstances, pay old age and invalidity insurance contributions, as well as accident insurance, for the third party assisting the insured person.

8 Pursuant to Paragraph 34(1)(1) of Volume XI of the SGB, insurance care benefits may be paid only to insured persons residing on German territory.

9 Mr and Mrs Molenaar are employed in Germany but resident in France. Both are voluntarily insured against sickness in Germany, and were required to take out care insurance from 1 January 1995.

10 However, in December 1994 and January 1995 the competent social security fund, the AOK, informed them that they were not entitled to care insurance benefits while they resided in France.

11 Mr and Mrs Molenaar thereupon brought proceedings before the Sozialgericht Karlsruhe for a declaration that they were not bound to pay contributions to the care insurance scheme so long as they were not entitled to benefits thereunder. They claimed that the residence condition, on which entitlement to those benefits depends by virtue of Paragraph 34(1)(1) of Volume XI of the SGB, was contrary to Articles 6 and 48 of the Treaty.

12 Taking the view that an interpretation of those provisions was necessary before it could reach a decision, the Sozialgericht Karlsruhe referred the following question to the Court of Justice for a preliminary ruling:

`Are Articles 6 and 48(2) of the EC Treaty to be interpreted as restricting the right of a Member State to set up a social security system covering the risk of reliance on care as part of statutory compulsory insurance arrangements under which persons residing in another Member State are liable to pay compulsory contributions, even though their entitlement to benefits is simultaneously excluded or suspended because of their place of residence?'

13 By its question, the national court is asking essentially whether Articles 6 and 48(2) of the Treaty preclude a Member State from requiring persons working in its territory but residing in another Member State to contribute to a social security scheme of the care insurance type while excluding payment of benefits thereunder in the Member State in which those persons are resident.

14 With a view to answering that question, it must be recalled that, according to the Court's case-law (see, inter alia, Case 368/87 Hartmann Troiani v Landesversicherungsanstalt Rheinprovinz [1989] ECR 1333, paragraph 20, and Case C-443/93 Vougioukas v IKA [1995] ECR I-4033, paragraph 30), in order to safeguard the effective exercise of the right to freedom of movement enshrined in Article 48 of the EC Treaty, the Council was required, under Article 51 thereof, to set up a system to enable workers to overcome obstacles with which they might be confronted in national social security rules. In principle, the Council carried out that duty by introducing Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ, English Special Edition 1971 (II), p. 416).

15 In the circumstances, it is necessary to examine the question raised in the light of the provisions of that regulation, as amended and updated by Council Regulation (EEC) No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6, hereinafter `Regulation No 1408/71'), and therefore to determine whether it covers a scheme such as care insurance.

16 All the interveners in the proceedings agree that a scheme such as that at issue in the main proceedings falls within the scope of Regulation No 1408/71.

17 The applicants in the main proceedings and the Austrian, German and Swedish Governments take the view, more specifically, that benefits provided under the scheme may be treated as `sickness benefits' referred to in Article 4(1)(a) of that regulation. The applicants in the main proceedings claim that those benefits could also be treated as `old-age benefits' referred to in Article 4(1)(c).

18 On the other hand, the Commission considers that, although benefits under the scheme are indeed covered by Regulation No 1408/71, they cannot be linked exclusively to any one branch of social security referred to in Article 4(1) of that regulation. In its view, those benefits display characteristics in common with the sickness, invalidity and old-age branches referred to in Article 4(1)(a), (b) and (c), but cannot be strictly identified with any one of them.

26 The question referred to the Court must therefore be examined in the light of the provisions of Regulation No 1408/71 concerning the grant of sickness benefits where the person concerned has his residence in a Member State other than the competent State. Under Article 19(1)(a) and (b) of Regulation No 1408/71,

`An employed or self-employed person residing in the territory of a Member State other than the competent State, who satisfies the conditions of the legislation of the competent State for entitlement to benefits ... shall receive in the State in which he is resident:

(a) benefits in kind provided on behalf of the competent institution by the institution of the place of residence in accordance with the provisions of the legislation administered by that institution as though he were insured with it;

(b) cash benefits provided by the competent institution in accordance with the legislation which it administers...'

27 The twofold mechanism resulting from those provisions applies equally to unemployed persons, pursuant to Article 25(1)(a) and (b), and to pensioners entitled to a pension under the legislation of a Member State other than the country of residence, pursuant to Article 28(1)(a) and (b) of Regulation No 1408/71.

28 The parties to the main proceedings and the Governments which have submitted observations to the Court differ as to whether the benefits at issue in the main proceedings, and in particular the care allowance, should be described as sickness insurance `benefits in kind' or `cash benefits'.

29 On the one hand, the German and Swedish Governments maintain that care insurance benefits that are aimed at allowing recipients to cover the payment of certain expenses entailed by their condition, inter alia medical expenses, are sickness insurance `benefits in kind', even though they are paid in the form of a monthly allowance such as the care allowance. The German Government points out in that connection that when the law was enacted the German legislature specified that the care allowance was a `benefit in kind' under the sickness branch.

30 On the other hand, the applicants in the main proceedings, the Austrian Government and the Commission consider that benefits such as the care allowance, which are not intended to cover any particular expenses, are sickness insurance `cash benefits'.

32 As stated above, in particular at paragraphs 5, 6, 7 and 23 of this judgment, care insurance benefits consist, first, in the direct payment or reimbursement of expenses incurred as a result of the insured person's reliance on care, in particular medical expenses entailed by that condition. Such benefits, which are designed to cover care received by the person concerned, both in the home and in specialised centres, purchases of equipment and work carried out, indisputably fall within the definition of `cash benefits' referred to in Articles 19(1)(a), 25(1)(a) and 28(1)(a) of Regulation No 1408/71.

33 However, although the care allowance is also designed to cover certain costs entailed by reliance on care, in particular those relating to aid provided by a third person, rather than to compensate for loss of earnings on the part of the recipient, it nevertheless displays features distinguishing it from sickness insurance benefits in kind.

34 First, payment of the allowance is periodical and is not subject either to certain expenditure, such as care expenditure, having already been incurred, or a fortiori to the production of receipts for the expenditure incurred. Secondly, the amount of the allowance is fixed and independent of the costs actually incurred by the recipient in meeting his daily requirements. Thirdly, recipients are to a large extent unfettered in their use of the sums thus allocated to them. In particular, as the German Government itself pointed out, the care allowance may be used by recipients to remunerate a member of their family or entourage who is assisting them on a voluntary basis.

35 The care allowance thus takes the form of financial aid which enables the standard of living of persons requiring care to be improved as a whole, so as to compensate for the additional expense brought about by their condition.

36 A benefit such as the care allowance must therefore be regarded as a sickness insurance `cash benefit', as referred to in Articles 19(1)(b), 25(1)(b) and 28(1)(b) of Regulation No 1408/71.

37 In those circumstances it follows, first, from the wording of Article 19(1)(a) of Regulation No 1408/71 that an employed person residing in a Member State other than that in which he is employed is to receive, in the Member State in which he resides, benefits such as care insurance benefits in kind in so far as the legislation of that State, whatever the more specific name given to the social protection scheme of which it forms part, provides for the payment of benefits in kind designed to cover the same risks as those covered by care insurance in the Member State of employment. Those benefits are to be paid by the institution of the place of residence in accordance with the provisions laid down by the legislation of the Member State of residence. The same is true with regard to unemployed persons and pensioners covered by the legislation of a Member State other than that in which they reside, pursuant to Articles 25(1)(a) and 28(1)(a) of Regulation No 1408/71.

Costs

On those grounds,

THE COURT,

in answer to the question referred to it by the Sozialgericht Karlsruhe by order of 28 March 1996, hereby rules:

Articles 6 and 48(2) of the EC Treaty do not preclude a Member State from requiring persons working in its territory but residing in another Member State to contribute to a social security scheme covering the risk of reliance on care, although Articles 19(1), 25(1) and 28(1) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EEC) No 2001/83 of 2 June 1983, do prevent entitlement to an allowance such as the care allowance, which constitutes a sickness benefit in cash, from being subject to the condition that the insured person resides in the territory of the Member State where he is insured.