Rechtsanwalt Boris Zimmermann
This article is aimed at medical providers in Germany and Europe who treat foreign patients, especially from the Gulf region, and experience difficulties with regards to payment of invoices and communicating with the consulate, embassy or directly with the respective ministry of the foreign state, such as the Health Ministry, Ministry of Defence, their Health Office etc.
This advice is based on my own experience over the last 14+ years. If you have any further questions or if you would like to have our law firm draft contracts or settle or assert claims, please contact us at frontdesk@ra-zimmermann.net or +49-69-40031746.
1. Contracts With a Foreign State
Normally, the medical facility and a representative of the foreign state conclude a framework agreement. This representative can be a specially established health office which officially belongs to the consulate, but in fact reports to a ministry of the respective state. On the contracting side of the state there is then, for example, a consul or an attaché. This person can negotiate and sign the contract on behalf of the responsible ministry. The actual decision-makers are often never (personally) known to the medical facility.
Since the contracts are often concluded on a long-term basis, there may be personnel changes at several levels in the foreign state that are not apparent to the German party – but which can have a significant impact on the attitude towards the contract. Changes can lead to new responsibilities in the ministry for auditing the hospitals, previously accepted medical services or billing procedures may be more critically examined or even modified. For example, if a ministry sends a delegation to a consulate, this may lead to a re-examination of invoices and this may slow down or stop the payment process.
The treatment costs are often covered by a cost guarantee, and/or advance payments and a subsequent credit settlement are agreed upon.
What looks like an everyday contract for medical service providers in Germany, however, harbours pitfalls: Often, there are enormous differences between the contracting parties and different perceptions regarding the course of treatment and the treatments themselves. These differences are often not taken seriously enough into account, so that difficulties can start with the first contract drafts.
At this point, early clarification is very important. It is too easy to get the impression that the contract is clear and complete enough and sufficiently safeguards the claims of both parties. However, this is often not the case.
Note: When drawing up and negotiating the contract, pay very close attention to the views of all parties involved, ask who the responsible contact persons are and enquire about the decision-making structures in the foreign state. What is self-evident for a medical institution does not necessarily have to be so for a contractual partner from an Arab state – and vice versa.
2. Clarification of Jurisdiction With the Foreign Contracting Partner
In a health office, the (general) consulate is officially responsible, but in fact, the management is the responsible party, i.e. the attachés and thus the respective health ministry in the home country, which itself is not further represented in Germany.
In the case of outstanding payments, the Federal Foreign Office in Berlin (Auswärtiges Amt, “AA”) is therefore the only legally possible “access route”. A clinic whose invoices are not paid can obtain a note verbale (i.e. a formal message to the ambassador or the representation of the country) via the AA. It is doubtful however if this instrument will have an actual effect on the outstanding invoice.
I was myself on site at the Ministry of Health of an Arab state – there is a completely different understanding of contractual relationships and disputes with German institutions based on culture. The consul or attaché in Germany may be familiar with the German systems. However, this is usually not the case for those who actually decide on payments, namely the management of a health office or the responsible decision-makers of a consulate or the ministry.
In one case, a German physiscian, in an attempt to recover the payments for a disputed invoice, in addition to hiring a lawyer and sending a note verbale, also appeared in person at the respective office, met with the consul, met the patient concerned in the country of origin and appeared at the ministry of the foreign state. However, he achieved nothing with his approach because he disregarded any cultural differences and chose a completely wrong sequence for his approach – also a problem of competence.
Note: When drawing up the contracts, clarify the responsibilities and make sure that all parties involved are clear about these responsibilities. Here, too, take cultural differences and respective ideas into account!
3. Accurate Invoicing
During or after medical treatments, it often happens that foreign contract partners find fault with the hospital bills in terms of content and form. Individual items are said to be incomprehensible, and errors – even if they are accidental – have greater ramifications than are assumed on the German side, for example.
If the clinic, physician or, laboratory issues an invoice, cost guarantees and other agreements on prices, billable factor etc. must be taken into account. The form of the invoice also usually plays a significant role.
Always remember: the foreign institution uses tax money of the foreign state to pay the bills. This also means that unlike in the free market economy it it not easily possible to settle disputes out-of-court.
Note: Pay scrupulous attention to 100% correct invoices. This is of even greater importance when working with a foreign state. The expenditure of taxpayers’ money must be documented for the ministry. An attaché does not want to be accused of spending these funds thoughtlessly or – even worse – without receipts. Thus, correct invoices have a high priority.
4. Placement of Patients and Communication of the Parties
There is, of course, nothing wrong with Placement of Patients in itself. However, it harbours dangers that can unfold to such an extent that they can destroy or at least significantly disrupt the entire relationship between the medical institutions and the foreign state (or consulate, health office, ministry) – which, unfortunately, has already happened repeatedly, not only in Germany.
Some clinics have set up specific international departments, especially for Arab patients, which also maintain and cultivate contact with the foreign governments. Ideally, the staff of the clinics are specially trained and have cultural roots in both Germany and the region their patients come from.
Other medical service providers have their traditional departments doing this as part of their regular work. However, the value of culturally appropriate communication should not be underestimated. It is also of great importance to understand how the systems work in the country you are dealing with. Price agreements, cost guarantees, medical reports, invoices, other organisational clarification – how the parties deal with each other as well as the prevalent tone can be identified here.
Note: It is helpful to prepare those who are in contact with the foreign state and will be working with it with a briefing on the administrative and cultural peculiarities. This helps to avoid problems and to raise customer loyalty.
5. Cost Guarantee
Many a clinic or medical facility can tell you a thing or two about it – or three or four or more. The cost guarantees can put the contractual relationship to the test:
- Do they cover the whole treatment period that is billed?
- What about emergencies where no cost guarantee could be obtained?
- How are treatments dealt with that are clearly not covered by cost guarantees?
- What happens when a patient himself has received services that were not covered by the cost guarantee and the patient has long since returned to, for example, Qatar, Saudi Arabia, Kuwait or Bahrain?
- Was the correct guarantee for the service provided issued at all? What if it was not – and who is responsible for this?
- Is the issuing of a particular cost guarantee a matter of sovereignty?
Some foreign institutions use a number of complicated forms instead of a single, simple one. The mere existence of a cost guarantee therefore does not mean that the invoice can also automatically be based on it. It must be carefully checked if the cost guarantee actually covers the invoice.
Note: Carefully check cost guarantees and determine if they cover the individual case. React immediately should any variations or questions occur – even small ones.
7. The Patient
Foreign patients are not necessarily familiar with all the formalities and requirements of their medical treatments. They may not know which services are covered by their government and which are not. It has also happened in the past that patients, acting on their own authority – and without malicious intent! –, made use of additional services or had themselves treated in another facility at the same time. It becomes particularly problematic when two cost guarantees from two different facilities for the same period of time are in circulation. In case of doubt, there will be considerable difficulties in the settlement of accounts.
As a rule, the patient is not involved in cost settlement. Neither does he pay, nor is he entitled to receive money from the clinic. Here, too, there have already been considerable difficulties, because from the clinic’s point of view it was not clear to what extent the patient himself was authorized or not, especially since the treatment contract is legally concluded only between the patient and the clinic.
Note: If possible, clarify how and to what extent patients of the foreign state with which you conclude contracts should be informed about the content of these contracts. This can be very helpful in terms of preventing future problems.
8. Duration of Processes and Understanding of Time
Even if fixed payment terms are agreed for invoices (often 30 days), parties often tacitly tolerate that these will be exceeded. If invoices are disputed, the payment process will be delayed automatically.
Even if the invoices are in order, a payment release from a ministry is often necessary, and this can take a long time. Requests to the clinic such as “Please send us all the original invoices from last year again” are not uncommon. This is not necessarily done out of malice: if, for example, new guidelines on hospital invoices have been issued in the respective ministry, this can delay the process – the reason for the delay is not necessarily caused by the attachée or consul on site.
However, if there is a problem with even one invoice from a clinic, this can result in an automatic stop of payment of all (otherwise correct) invoices. The statute of limitations can play a subordinate role on both sides, especially if one wants to maintain the business relationship and, in addition, patients are still currently being treated: Both sides know about the attractiveness of the other partner and are basically interested in future cooperation. The citizens of the foreign state value high-quality medical treatment, the clinics value the additional sources of income and billing possibilities. Accordingly, the parties bring a higher degree of patience to the table, clinics rarely sue for payment – instead, the relationship is terminated quietly. It is understandable that neither party wants to risk publicly appearing in a negative light.
Note: Patience is important – just as it is important to find out who is the right contact person on the part of the government. Tact is needed here: standard reminders, standard calls from the clinic’s accounting or finance department often also lead to the opposite of what is actually intended. Even if the clinic feels entitled to assert the claim and is perhaps even actually “in the right,” proceeding with reference to the legal situation is not necessarily helpful. What helps is to understand the situation of the other party.
9. Legal Dispute with the Consulate (and thus the Foreign State)
Even if a situation seems stuck, one should try everything to avoid a time-consuming and expensive legal dispute, because a lawsuit against a foreign state presents a special challenge. Such lawsuits are rare, and it happens every now and then that, for example, the physician gives up and waives his right to a fee because the hurdles to enter a lawsuit are too high.
This is where the involvement of an experienced lawyer can be useful and saves time and money. We have seen a number of solicitors’ letters and lawsuits where German lawyers made a whole series of mistakes, did not inform their own clients about the risk of litigation – or did not realise this themselves.
One must always keep in mind: the clinic’s lawyer’s letter is received by foreign system and a foreign way of thinking and an understanding of the law that may differ greatly from the German one. Therefore, it may be worthwhile to be represented by specialised lawyers with appropriate cultural experience in order to make progress out of court – or, if necessary, in court – and to find a solution.
If you have any questions, please contact us at any time: frontdesk@ra-zimmermann.net or +49-69-40031746.
Lawyer Boris Zimmermann represented a department of an Arab state in Germany in dealings with clinics, doctors and other medical institutions as well as German authorities for many years.
He gained deep insights into the organisation of the structure of consulates, attachée management and the interaction with the medical institutions and the ministries of the foreign state.
Mandate subjects included open, disputed hospital invoices, problematic advance/credit settlements, missing or incomplete billing problems with excessive factor, difficult communication between the parties involved, instructions from ministries, dealing with verbal notes from the AA, actions relevant under criminal law, cultural obstacles and differences, settlement negotiations, extrajudicial and judicial activities, as well as accompanying talks between medical institutions and competent bodies of other states.