The Welsh government lacks the power to pass a bill making employers who pay compensation to asbestos victims directly liable to it for the cost of their NHS care, the Supreme Court has ruled.
The Supreme Court unanimously found that the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill fell outside the legislative competence of the Welsh Assembly and was incompatible with the European Convention on Human Rights.
Giving the leading judgment, Lord Mance said the bill would impose a “novel statutory” or ‘quasi-tortious’ liability on compensators and a new contractual liability on their insurers.
Lord Mance, with whom Lord Neuberger and Lord Hodge agreed, said the bill was not sufficiently related to the organisation and funding of the NHS under the Governance of Wales Act 2006 (GOWA), to come within the Assembly’s competence.
He said the bill was “not retrospective in the fullest sense” but it did “significantly restructure” both the consequences of actual or possible negligence or breach of statutory duty committed “long ago” by compensators and the terms of and liabilities attaching under insurance policies “also underwritten years ago”.
Ruling in Recovery of Medical for Asbestos Diseases (Wales) Bill: Reference by the Counsel General for Wales (applicant) and the Association of British Insurers (intervener)  UKSC 3 , Lord Mance said that any liabilities would have to be “more directly connected with the service provided and its funding”.
“The mere purpose and effect of raising money which can or will be used to cover part of the costs of the Welsh NHS could not constitute a sufficiently close connection.”
Lord Mance concluded: “As a matter of legislative policy it could be thought appropriate by the relevant legislature that the Welsh NHS should be able to recover hospitalisation costs from those whose breach of tortious or statutory duty caused them to be incurred.
“But that is, as I have noted, a provision which could have been made by the United Kingdom when or at any time since the NHS was introduced. It is a provision which would no doubt have been proportionate if introduced in relation to future exposure to asbestos and future insurance contracts.
“But rewriting historically incurred obligations to impose it in relation to future Welsh NHS costs is a quite different step.”
He ruled that the bill was outside the legislative competence of the Welsh Assembly under the 2006 Act and breached the right of compensators and insurers to the peaceful enjoyment of their possessions under the European convention.
Lord Thomas and Lady Hale agreed that the bill was beyond the competence of the Welsh Assembly, but on narrower grounds centred on its retrospective effect.
He added that in his view, insurers had “no legitimate interest which prevents a state changing its charging policy for health care and replacing care free at the point of delivery with the imposition of charges.
“If insurers have, contrary to my view, a legitimate interest, then the ambit of their interest would need further analysis, as a state has, particularly in times of budgetary stringency, a real interest in amending its charging policy – as it does, for example, in relation to prescriptions.”