The French government could be taken to the European Court of Justice for failing to recognise private health insurance policies taken out in other European Union member states by students who are not French citizens.
The European Commission is threatening to ask its judges to stop Paris from insisting that students either take out French insurance or cover themselves with an E111 form, which allows them to claim basic healthcare cover in France.
For anything more comprehensive, the French authorities have been insisting on policies being taken out in France, which the Commission considers a breach of EU law on the freedom of movement of citizens across the European Union.
The Commission's action has been supported by Britain's National Union of Students. A spokeswoman said: "We support students in this predicament. It seems unfair that students could be refused treatment."
Under the terms of the directive on the right of residence for students (93/96/EEC), students from one member state wishing to study in another member state should get guaranteed health treatment if they possess "proof that they have health insurance covering all risks".
A report from Brussels said: "Numerous complaints have brought to the Commission's attention the fact that students from other member states applying for a residence permit in France are obliged, as regards health insurance, to provide either Form E111 or to subscribe to the French social security scheme for students.
"In other words, the French authorities do not recognise other forms of health insurance, notably private health insurance and health insurance to which some students are entitled by virtue of their parents' contributions to a specific social security scheme."
The effect of this, says the Commission report, "is that many students must be insured twice".
"The financial penalty is all the greater as the contributions to the French student social security scheme are for full-year coverage, even if the student only remains in France for a number of months, as is often the case."
The Commission has issued France with a Reasoned Opinion, which is a formal note that it considers a breach of European law to have taken place and that if nothing is done to rectify the situation within two months, a referral to the European Court of Justice is likely.
A spokesman for British student insurers Endsleigh said that he had not experienced problems with operating policies in France, but had had difficulties in the US, where some universities have insisted that overseas students take out in-house health policies.
The news follows the resignation last year of Oliver Spithakis, the director general of the Mutuelle Nationale des Etudiants de France - one of the country's biggest social insurance societies - following allegations of embezzlement and cronyism.