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Care homes fee update

Administration fees

Proceedings against Care UK to seek redress for residents who have been charged a compulsory upfront administration fee are scheduled to be heard in the High Court in July 2020.

In December 2018, the Competition and Markets Authority (CMA) issued proceedings against Care UK seeking refunds for approximately 1,600 residents who were charged a compulsory upfront ‘administration’ fee by the care home provider.

The CMA maintains that the company’s description of the charge was misleading and that residents were told about the fee too late in the admission process.

The case looks at breaches of consumer protection law and considers whether contract terms and practices were unfair.

The CMA’s investigation into fees charged by care home providers led to advice issued in November 2018 to underline responsibilities under consumer protection law and to suggest review of practices (Care Homes Briefing 186).

Top up fees

Local councils have been asked to review their procedures on top-up fees to ensure they are in line with the Care Act 2014.

The Local Government and Social Care Ombudsman’s (“LGO”) warning came after it discovered that two councils, Dudley Metropolitan Borough Council, and Lincolnshire County Council, were asking family members to pay fees directly to the care homes.

In the case of one council it found that no information was given to the resident’s family about ‘top-up’ fees nor were they given a choice of an affordable placement.

In the case of the other council, individuals were not given the option to pay the top-up fee to the council.

Michael King advised  that “Councils are encouraged to administer the top-up fees, and recoup the money from relatives, because it gives the best security for vulnerable people living in care homes should there be any problems with payments.

He warned that passing the responsibility for agreeing top up fee contracts to care providers opened up a risk of fee increases and passed a debt collection function to care homes.

Whilst councils argue that the cost of administration is prohibitive, the Care Act does not recommend using agents to carry out the function.

The LGO commented “At the heart of the matter, we have two councils absolving themselves of their responsibilities to offer the public its basic protections set out in law”

Both councils have been asked to review their procedures on top-up fees and were reminded that guidance was issued by the LGO to councils in 2015 on administration of the fees and that was quite clear that leaving the administration of top-up fees to care homes was wrong (see focus reports).

One of the submissions made by Dudley Council was that other councils continued to administer fees in the same way and therefore they were being unfairly singled out. This was rejected by the LGO.

The arrangements for administration of top up fees as described in the criticism of these two authorities is not unusual. This obviously exposes the care home providers themselves to the risk of scrutiny and adverse findings. Providers should review the arrangements which they have in place and be prepared to deal with questions if they come under the spotlight. Care homes should make sure that their contract terms and business practices are in line with best practice and guidance. Seeking legal advice at an early stage is recommended. We can advise and support where required.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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