Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CA/1342/2011

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge Robin C A White

 

Decision:  The decision of the tribunal of 23 March 2011 is erroneous in law, and I set it aside. It is appropriate that I remake the decision of the tribunal exercising my powers under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007.

My substituted decision: the respondent is not entitled to attendance allowance from and including 30 March 2009.

 

 

REASONS FOR DECISION

A Introduction

1.       For ease of understanding, I will refer in this decision to the appellant as “the Secretary of State”, and to the respondent as “the claimant”.

2.       A number of factual matters which were before the tribunal have been clarified in the submissions of the parties to me.

3.       This case turns on the proper interpretation of European Community law. Since the decision in issue pre-dates the entry into force of the Treaty of Lisbon, I refer generally to European Community law rather than European Union law.

B The issue in this appeal

4.       The issue in this appeal is whether the claimant could take his entitlement to attendance allowance with him when he moved permanently to Germany on 29 March 2009.

C The context

5.       The claimant, who was born on 19 August 1922, is an Irish national. He was born a German national with a Jewish father; he escaped from Germany on 22 August 1939, and acquired Irish nationality which he has retained.

6.       The claimant has had a distinguished academic career in the United Kingdom and Canada. He is retired and in receipt of a State retirement pension from both the United Kingdom and Germany, as well as a small pension from Canada.

7.       By a decision dated 1 December 2006, the claimant was awarded the lower rate of an attendance allowance from 16 November 2006. He has a serious disability which has been getting worse.

8.       The claimant and his wife moved to Germany on 29 March 2009 on a permanent basis in order to be close to one of their sons.

9.       On 3 June 2009 a decision maker superseded the decision of 1 December 2006 determining that the claimant was not entitled to attendance allowance from 30 March 2009. The decision says that this is because he no longer satisfied the residence conditions for the benefit, but the reasons appended to it allude to the United Kingdom no longer being the competent State since the claimant was in receipt of a retirement pension from the German authorities. This decision has been reconsidered several times, but has not been changed.

10.   In a number of communications prior to the tribunal hearing, the claimant said that all the help he had received in Germany was because the German authorities had been in touch with the United Kingdom authorities. He said he was not entitled to the monthly grant which German nationals resident there would receive nor to any benefits equivalent to an attendance allowance. He also said he received some money for home nursing from the AOK Pflegekasse (Nursing Office) which is paid directly to the nursing organisation providing the care. The claimant said that he was not entitled to any cash benefits from the AOK. All the benefits he received were, he said, provided for him because he could establish that he had the relevant NHS insurance form. The benefits he received were recharged to the United Kingdom.

11.   The appeal came before a tribunal on 23 March 2011. The claimant (understandably) did not attend and the Secretary of State was not represented. A combined decision notice and statement of reasons was issued. The decision was that the Secretary of State had no grounds for superseding the decision of 1 December 2006, and that the claimant’s move to Germany did not preclude his continued receipt of United Kingdom attendance allowance.

12.   The Secretary of State has appealed this decision, and the appeal now comes before me with the permission of a Judge of the First-tier tribunal.

D The grounds of appeal

13.   The Secretary of State argues that the tribunal erred on two grounds. Firstly, the tribunal misdirected itself as to the proper interpretation of Article 27 of Council Regulation (EEC) No 1408/71 (hereafter referred to as “Regulation 1408/71”). Secondly, the tribunal, in finding that the claimant had no entitlement to sickness benefits in Germany, made findings of fact which were inconsistent with the evidence.

E The common ground

14.   The claimant, as an Irish national who had worked for many years in the United Kingdom and had retired here, is within the personal scope of Regulation 1408/71. Furthermore, he remains within the definition of an “employed person” within Chapter 1 of Title III of Regulation 1408/71 since he is an insured person by reason of the contributions he had made as an employee.

15.   Attendance allowance is a sickness benefit within Article 4 of Regulation 1408/71.

16.   The claimant is in receipt of an old-age pension within the scope of Article 4 of Regulation 1408/71 from both the United Kingdom and Germany. He is a pensioner for the purposes of Section 5 of Chapter 1 of Title III of Regulation 1408/71.

F The relevant European legislation

17.   The relevant provisions of Regulation 1408/71 are as follows:

Article 12

Prevention of overlapping of benefits

1. This Regulation can neither confer nor maintain the right to several benefits of the same kind for one and the same period of compulsory insurance. However, this provision shall not apply to benefits in respect of invalidity, old age, death (pensions) or occupational disease which are awarded by the institutions of two or more Member States, in accordance with the provision of Articles 41, 43(2) and (3), 46, 50 and 51 or Article 60(1)(b).

2. Save as otherwise provided in this Regulation, the provisions of the legislation of a Member State governing the reduction, suspension or withdrawal of benefits in cases of overlapping with other social security benefits or any other form of income may be invoked even where such benefits were acquired under the legislation of another Member State or where such income was acquired in the territory of another Member State.

3. The provisions of the legislation of a Member State for reduction, suspension or withdrawal of benefit in the case of a person in receipt of invalidity benefits or anticipatory old-age benefits pursuing a professional or trade activity may be invoked against such person even though he is pursuing his activity in the territory of another Member State.

4. Omitted; relates to legislation in The Netherlands

Title II

Determination of the Legislation Applicable

Article 13

General rules

1. Subject to Articles 14a and 14f, persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. That legislation shall be determined in accordance with the provisions of this Title;

2. Subject to Articles 14 to 17:

(a)   a person employed in the territory of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State or if the registered office or place of business of the undertaking or individual employing him is situated in the territory of another Member State;

…

(f) a person to whom the legislation of a Member State ceases to be applicable, without the legislation of another Member State becoming applicable to him in accordance with one of the rules laid down in the aforegoing subparagraphs or in accordance with one of the exceptions or special provisions laid down in Articles 14 to 17 shall be subject to the legislation of the Member State in whose territory he resides in accordance with the provisions of that legislation alone.

Title III

Special provisions relating to the various categories of benefits

Chapter 1

Sickness and Maternity

…

Section 5

Pensioners and Members of their Families

Article 27

Pensions payable under the legislation of several States where there is a right to benefits in the country of residence

A pensioner who is entitled to draw pensions under the legislation of two or more Member States, of which one is that of the Member State in whose territory he resides, and who is entitled to benefits under the legislation of the latter State, taking account where appropriate of the provisions of Article 18 and Annex VI, shall, with the members of his family, receive such benefits from the institution of the place of residence and at the expense of that institution as though the person concerned were a pensioner whose pension was payable solely under the legislation of the latter Member State.

Article 28

Pensions payable under the legislation of one or more States, in cases where there is no right to benefits in the country of residence

1. A pensioner who is entitled to a pension under the legislation of one Member State or to pensions under the legislation of two or more Member States and who is not entitled to benefits under the legislation of the Member State in whose territory he resides shall nevertheless receive such benefits for himself and for members of his family, in so far as he would, taking account where appropriate of the provisions of Article 18 and Annex VI, be entitled thereto under the legislation of the Member State or of at least one of the Member States competent in respect of pensions if he were resident in the territory of such State. The benefits shall be provided under the following conditions:

(a)   benefits in kind shall be provided on behalf of the institution referred to in paragraph 2 by the institution of the place of residence as though the person concerned were a pensioner under the legislation of the State in whose territory he resides and were entitled to such benefits;

(b)   cash benefits shall, where appropriate, be provided by the competent institution as determined by the rules of paragraph 2, in accordance with the legislation which it administers. However, upon agreement between the competent institution and the institution of the place of residence, such benefits may be provided by the latter institution on behalf of the former, in accordance with the legislation of the competent State.

2. In the cases covered by paragraph 1, the cost of benefits in kind shall be borne by the institution as determined according to the following rules:

(a)   where the pensioner is entitled to the said benefits under the legislation of a single Member State, the cost shall be borne by the competent institution of that State;

(b)   where the pensioner is entitled to the said benefits under the legislations of two or more Member States, the cost thereof shall be borne by the competent institution of the Member State to whose legislation the pensioner has been subject for the longest period of time; should the application of this rule result in several institutions being responsible for the cost of benefits the cost shall be borne by the institution administering the legislation to which the pensioner was last subject.

G The arguments of the parties in a nutshell

The Secretary of State’s arguments

18.   The Secretary of State argues that the reference to “benefits” in Article 27 of Regulation 1408/71 means sickness benefits whether cash benefits or benefits in kind.

19.   Since the claimant was in receipt of sickness benefits in kind, he came within the terms of Article 27. As a pensioner in receipt of an old-age pension Germany, he was accordingly subject to the legislation of Germany in relation to his entitlement to all sickness benefits. This meant that his entitlement to attendance allowance ended on his permanent move to Germany.

20.   Suggestions in JS v Secretary of State for Work and Pensions (DLA) [2009] AACR 7 (cited by both the tribunal and the Secretary of State by the file number CDLA/2078/2005) that separate consideration should be given to the two categories of sickness benefits (cash benefits on the one hand and benefits in kind on the other hand) were not relevant in this case.

21.   In concluding that Article 27 did not apply, the tribunal had made a distinction between cash sickness benefits and sickness benefits in kind which was not warranted by the wording of Article 27.

The claimant’s arguments

22.   The claimant, who is without legal representation, has not, for perfectly understandable reasons, addressed the legal arguments in this case. He does concede that he received sickness benefits in kind in Germany, but points out that he has to spend considerable sums on health care; that he receives no cash sickness benefits; and that receipt of attendance allowance would help to defray the costs he incurs on healthcare. He also says that there is no link between his old-age pension in Germany and the benefits in kind that he receives.

H Matters which have been clarified since the tribunal hearing

The evidence before the tribunal

23.   The evidence in letters from the claimant before the tribunal was that he was receiving some sickness benefits in kind, including a contribution towards the cost of nursing care which was paid direct to the organisation providing the care.  He maintained that the cost of the healthcare provision was recharged to the United Kingdom authorities. The claimant also said that his claim for the German equivalent of attendance allowance had been rejected by the Allgemeine Orts Krankenkasse Rhein-Neckar-Odenwald (AOK).[1] He provided confirmation from the AOK (in a letter dated 27 August 2010) that he was only entitled to sickness benefits in kind.

24.   The claimant had registered with the AOK within days of his arrival in Germany.

25.   Put simply, the initial evidence suggested that the claimant was entitled only to sickness benefits in kind through the operation of Regulation 1408/71 and not through the application of German legislation.

The evidence before me

26.   In the submission to me, the Secretary of State says:

24. There is clear evidence that [the claimant] is in receipt of healthcare in Germany … . This includes money for home nursing care which is paid direct to the provider of the care … . The SSWP submits that [the claimant] is entitled to these sickness benefits under German legislation. Although Germany sought to invoice the UK for healthcare provided to [the claimant] for the period 1 March 2009 to 1 January 2010, the UK disputed responsibility and only paid until 3 June 2009. The German authorities have not disputed this action and it was understood by the UK that they accepted that they had responsibility for paying for [the claimant’s] healthcare under German legislation. The SSWP has contacted the German authorities to put the matter beyond doubt and is currently awaiting a response.

27.   The Secretary of State has subsequently put before me a translation of a German document dated 28 July 2011 from the AOK Baden-Württemberg stating as follows:[2]

The case has been re-evaluated based on DRV files.

The condition of previous insurance periods for membership in the pensioners’ health insurance (KVdR) is considered to be fulfilled.

We will carry out inclusion of [the claimant] in retrospect from 29/03/2009 (time of moving house to Germany/Heidelberg) into the KVdR.

We have already contacted [the claimant] by phone and we have discussed the case with him.

We will forward this information in writing to [the claimant] in the future.

In the following days we will also generate digital registry entries for the German pension insurance system.

28.   The acronym DRV is for Deutsche Rentenversicherung, which refers to the German statutory pension insurance scheme.

29.   The acronym KVdR is for Krankenversicherung der Rentner, which refers to the pensioners’ sickness insurance scheme.

30.   The position set out in paragraph 27 above appears to be confirmed in a letter from the claimant dated 26 December 2011. Put simply the later evidence showed that the claimant’s eligibility for sickness benefits was governed by German legislation following his retrospective registration in the pensioners’ sickness insurance scheme.

31.   I observe at this point that Decision No 175 of the Administrative Commission of 23 June 1999, [2000] OJ L47/32, provides:

2. The following shall also be regarded as benefits in kind  within the meaning of [Article 28(1)] of Regulation (EEC) No 1408/71:

(a) care insurance benefits in kind giving entitlement to full or partial direct payment of certain expenditure entailed by the insured person’s reliance on care and incurred for his or her direct benefit, for example nursing care and home help provided in the home or in specialised establishments, purchases of care equipment or work carried out to improve the home environment; benefits of this kind are essentially intended to supplement sickness insurance benefits in kind in order to improve the state of health and the quality of life of persons reliant on care; … .

I The Upper Tribunal’s assessment

32.   It is necessary to consider whether there was a change of competent State for the purposes of entitlement to sickness benefits when the claimant moved permanently from the United Kingdom to Germany in March 2009.

33.   The claimant’s circumstances would appear to be governed by Article 13(2)(f) of Regulation 1408/71 under which, prima facie, he became subject to the legislation of his State of residence.

34.   There are provisions on the operation of Article 13(2)(f) in the United Kingdom in paragraphs 19 and 20 of Annex VI of Regulation 1408/71.

35.   The operation of paragraph 19 would seem to result in the United Kingdom ceasing to be the competent State either from the first day following the transfer of residence to Germany under paragraph 19(a), or possibly 3 June 2009 under paragraph 19(c) since it appears that the payment of attendance allowance did not cease until the decision of 3 June 2009 was put into effect. I also note that the United Kingdom reimbursed certain healthcare costs until 3 June 2009.

36.   Paragraph 20(a) does not prevent the application of United Kingdom legislation in relation to the sickness benefit provisions of Title III notwithstanding the fact that the claimant had become subject to the legislation of another Member State. But paragraph 20(a) is not a mandatory rule, and must be read in the light of the provisions of Title III Chapter 1 Section 5 of Regulation 1408/71.

37.   Articles 27 and 28 of Regulation 1408/71 make special provision for pensioners in relation to entitlement to sickness benefits. Article 27 concerns a pensioner who is entitled to draw pensions under the legislation of two or more Member States, while Article 28 concerns a pensioner who is entitled to a pension under the legislation of one Member State or to pensions under the legislation of two or more Member States.

38.   Since the claimant was entitled to old-age pensions under the legislation of the United Kingdom and of Germany, he is potentially covered by the provisions of both Articles 27 and 28.

39.   What is meant by the term “benefits” in both Articles 27 and 28? Article 27 refers to a pensioner who is entitled to benefits under the legislation of the Member State of residence, while Article 28 refers to a pensioner who is not entitled to benefits under the legislation of that Member State.

40.   The term “benefits” must have the same meaning in Articles 27 and 28. Article 27 is concerned with the position of a person who is entitled to draw a pension from two or more Member States; so is Article 28 (though it also brings within its ambit a person entitled to a pension only under the legislation of a single Member State). Reference to the titles of the two articles shows that they are designed to cover cognate situations. Article 27 is concerned with the situation “where there is a right to benefits in the country of residence”; and Article 28 is concerned with the situation “where there is no right to benefits in the country of residence”.

41.   This meaning of the term “benefits” has been considered in JS v Secretary of State for Work and Pensions (DLA), [2012] AACR 7 in relation to Article 28 of Regulation 1408/71.

42.   The Judge in JS v Secretary of State for Work and Pensions (DLA), [2012] AACR 7, had this to say about the interpretation of the word “benefits” in Article 28:

19. Then the most general point is what is meant in the main part of Article 28(1) by “benefits” in the phrase “is not entitled to benefits under the legislation of the Member State in whose territory he resides”. Article 28 deals with both cash benefits and benefits in kind and the main part of Article 28(1) contains conditions that apply to both of sub-paragraphs (a) and (b) dealing with each type of benefit in turn. Does the word “benefits”, used without any qualification, then cover both sorts of benefits? I do not think that the answer matters as at the date to which my decision must formally be restricted (24 January 2002). If the claimant was then entitled to health treatment from the relevant German institution, that was not under German legislation, but the result of the operation of Article 28(1)(a) itself. But, in view of the submissions received, I ought to say how I see the position as from 1 August 2002 (in case the Secretary of State wishes to supersede the award of the care component of DLA that I have concluded continues in effect from and including 24 January 2002).

20. I find the Article difficult to interpret and have not got much help from searching in the ECJ case law. However, in my judgment the reference to not being entitled to benefits is to the type of benefit provision which is being considered. Thus, in so far as provision of sickness benefits in kind under sub-paragraph (b) is being considered, the condition is whether the claimant is entitled to sickness benefits in kind under the legislation of the State of residence. In so far as provision of cash sickness benefits is being considered, the condition is whether the claimant is entitled to cash sickness benefits under the legislation of the State of residence. That seems to me consistent with the words of Article 28(1) read as a whole and to avoid what would be illogical differences in outcome if entitlement to one type of benefit excluded the operation of Article 28(1) in relation to the other type.

43.   I note that the decision from which I have quoted is a reported decision. The practice of the Social Security Commissioners was to treat reported decisions with particular respect. The Upper Tribunal has adopted the same practice.

44.   The Secretary of State notes that the comments in paragraph 20 are obiter dicta, and seeks to attack their reasoning:

The SSWP submits that the reasoning in paragraph 20 … does not accord with the provisions of the Regulation and should not have been followed by the Tribunal.

45.   The Secretary of State goes on to note what he considers to be the anomalous position which might arise if the interpretation is correct in that the legislation of one Member State might govern cash sickness benefits and that of a different Member State might govern benefits in kind.

46.   I do not need to resolve this issue in the light of the retrospective decision by the German authorities to include the claimant within the pensioners’ sickness insurance scheme with effect from 29 March 2009.

47.   I note that the wording of Article 27 refers to a pensioner who is “entitled” to benefits under the legislation of the Member State of residence. It does not require that the benefits are in payment. Entitlement to benefits is not the same as receipt of benefits.

48.   Under Article 27, a pensioner whose circumstances fall within its terms shall receive sickness benefits from the institution of the place of residence and at the expense of that institution as though he were a pensioner whose pension was payable solely under the legislation of the Member State of residence. The reference to Article 18 ensures that periods of insurance, employment or residence in a different Member State are to be regarded as having been completed in the Member State of residence.

49.   Once the German authorities had decided that the claimant is to be included within the pensioners’ sickness insurance scheme with retrospective effective from 29 March 2009, he would become entitled to claim all the benefits for which the German scheme provides whether benefits in kind or cash benefits. In determining whether he met the conditions of entitlement, the German authorities would be required to have regard to the co‑ordinating rules in Regulation 1408/71.

50.   The claimant complains that he is in a worse position in terms of the expenses he incurs for his healthcare in Germany than was the case when he was resident in the United Kingdom. However, as the Secretary of State rightly notes, the scheme in Regulation 1408/71 is one of co-ordination not harmonisation.

51.   The Court of Justice has consistently stressed the distinction between co‑ordination and harmonisation in its judgments concerning the provisions of Regulation 1408/71. For example, in Case C-222/07 Petersen, [2008] ECR I-6989, the Court said:

41. It must be pointed out, however, that Regulation No 1408/71 does not set up a common scheme of social security, but allows different national social security schemes to exist and its sole objective is to ensure the coordination of those schemes (Case 21/87 Borowitz [1988] ECR 3715, paragraph 23, and Case C‑331/06 Chuck [2008] ECR I‑1957, paragraph 27).

52.   The purpose of the co-ordinating regulations has always been to build bridges in order to allow connections to be made between different social security systems. The objective is to minimise the obstacles to free movement of persons which might otherwise arise. Each Member State remains free to set the level of the benefits awarded under its scheme, and to organise benefits in the manner of its choosing, subject to a requirement of equal treatment within its own system and in respect of benefits falling within the material scope of Regulation 1408/71 of citizens of the European Union.

53.   In relation to sickness benefits, Regulation 1408/71 makes a distinction between cash sickness benefits and sickness benefits in kind, but each Member State remains free to determine how it will deliver sickness benefits. The result is that there are situations in which for the same need one Member State provides a sickness benefit in cash but another Member State provides that benefit in kind.

54.   Entitlement to benefits in the sense in which that term is used in Article 27 of Regulation 1408/71 does not mean that the claimant should be paid benefits equivalent to those to which he had been entitled when he was subject to the legislation of the United Kingdom. It means that he is entitled to be paid those sickness benefits for which the German scheme makes provision.

55.   There is no breach of European Community law arising simply because a particular claimant has, for example, to pay a contribution towards the cost of prescribed medication or a visit to a doctor, or indeed to make contributions from income in order to be covered in one Member State where corresponding costs and contributions would not arise in another Member State.

56.   In this case, I conclude that the legislation of the United Kingdom ceased to apply to the claimant when he moved permanently from the United Kingdom in March 2009 on the application of the rule in Article 27. As has now been acknowledged by the German authorities, he became wholly subject to German legislation in relation to all sickness benefits through the operation of that provision from 29 March 2009, and so eligible to claim benefits under the German system.

J Did the tribunal err in law?

57.   When the tribunal dealt with this case, the circumstances before it indicated that the claimant was in receipt of sickness benefits in kind in Germany (probably through the operation of Regulation 1408/71), but not in entitled to any cash sickness benefits. That was the basis on which the First-tier tribunal decided the case. However, it has subsequently been established that the claimant was entitled from 29 March 2009 to benefits under the German pensioners’ sickness insurance scheme covering all sickness benefits.

58.   Does section 12(8)(b) of the Social Security Act 1998 which prohibits the taking into account of circumstances not obtaining at the date of the decision under appeal preclude my taking account of the acknowledgement in July 2011 by the German social security authorities that the claimant was entitled to be included in the pensioners’ sickness insurance scheme with effect from 29 March 2009?

59.   I do not think that it does for two reasons.

60.   Firstly, the decision in July 2011 of the German authorities was to make a retrospective decision to include the claimant in the pensioners’ sickness insurance scheme so that I can treat the position as at the date of the decision as being that the claimant was affiliated to the German pensioners’ sickness insurance scheme and that his eligibility for benefits was governed by the German legislation.

61.   If I am wrong on that and the determination of entitlement to benefits under German law was a question of fact, then I consider that I can rely on the limited exception to a challenge to a finding of fact set out in E v Secretary of State for the Home Department, [2004] EWCA Civ 49 in that the material evidence (whether the claimant was entitled to sickness benefits under German law) could, with reasonable diligence, have been obtained and adduced before the tribunal. That strikes me as plainly the case here, since subsequent enquiries by the Secretary of State have provided the answer to just that question.

62.   It follows that the tribunal erred in law, but through absolutely no fault of its own. It has only been the result of subsequent enquiries prompted by the appeal to the Upper Tribunal which has shown that the First-tier tribunal proceeded on the wrong basis.

63.   Since the tribunal has erred in law, I set its decision aside. This is a case in which it is appropriate for me to remake the decision of the tribunal, and I do so. My formal decision in substitution for that of the tribunal is set out at the head of this decision.

64.   The outcome is that the decision of the Secretary of State made on 3 June 2009 to the effect that the claimant’s entitlement to United Kingdom attendance allowance ended with effect from 30 March 2009 following his departure from the United Kingdom on a permanent basis on 29 March 2009 was correct. In the circumstances of this case, the claimant cannot export his entitlement to attendance allowance.

 

 

Signed on the original Robin C A White

on 25 January 2013 Judge of the Upper Tribunal