Care home briefing 107 – Judicial reviews and care home fees: the latest position

There are two more judicial review cases to report since our last briefing (103). At the end of the last briefing we suggested that… ‘possibly, the flow rate of these [judicial review] type of cases will now diminish.’ It seems we were wrong! Mavalon Care Limited and others took the Pembrokeshire County Council to court (again) on 16th December 2011 and won (again). On 17th February 2012 Bevan and Clarke LLP and other care home operators applied to the Administrative Court in Cardiff for judicial review of a decision by the Neath Port Talbot County Borough Council. The care home operators lost.

Mavalon Care Ltd et al v Pembrokeshire Council Council

Regular readers of our notes will recall that Pembrokeshire County Council lost in the Forest Care Home Limited judicial review case on 21st December 2010. At that hearing, the Judge directed that the Council was to go away and reflect on his judgment and remake the decision on a lawful basis setting the weekly rate to be paid to local care homes by 31st January 2011. Surprisingly perhaps, on 28th April 2011, some of the care homes involved in the earlier case felt it necessary to start another application for judicial review on the ground that the Council’s re-determination of the rate at a figure of £464 per resident, was unlawful (like its earlier decision to set the rate at £390 per week).

On 16th December 2011, Mr Justice Beatson decided that the higher rate set by the Council had been re-determined by a process that was, like the previous one, unlawful. He quashed the unilateral decision by the Council to proceed on the basis that an ‘appropriate’ rate of return on capital employed by the care homes was not to be 12%, used previously, but would instead be 6%.

Apart from this, the Judge had to consider the care homes’ assertions that (1) the Council had acted improperly in ignoring an accumulated deficit in the care homes’ capital reserves which needed to be addressed because of its impact on the sustainability of their homes; (2) the Council had failed to consider the interests of residents; and (3) the Council had failed to take account of relevant UK Government and Welsh Ministers’ Guidance.

The Judge decided that an important part of the judgment in the Forest Care Homes case had been ‘lost sight of’ with the result that the Council had not carried out properly the determination of the weekly fee. He noted that the care homes had been given no opportunity to comment on the Council’s intention to reduce the capital return figure from 12% to 6%. Although the Judge expressed concern at the Council’s response to the accumulated deficit issue, he was not persuaded by the care homes’ submissions on the point. He said that “The importance of finality in public law decision-making is well established.” However, he rejected the Council’s submission that the result would have been the same whether or not they had considered properly the rate of return point and was lawful because the increase was a 19% increase on the previous year’s fee. He said that there had to be a rationale for the Council’s approach to fee setting. He did not accept that the Council met the so-called ‘Rixon Test’ i.e. the Council could only depart from ministerial guidance for good reason.

It remains to be seen whether there will be a third application for judicial review of Pembrokeshire County Council’s process of setting fee levels for care home places paid for by the Council.

Neath Port Talbot County Borough Council

On 17th February 2012, Mr Justice Beatson (who had decided against Pembrokeshire County Council in the Mavalon case) determined another judicial review case (at Cardiff) in favour of the Neath Port Talbot County Borough Council. He dismissed the application for judicial review made by the 9 claimants who were all operators of residential homes in the area of the Council. The arguments made in support of the application were familiar ones, not least that the Council had unlawfully failed to set a rate which reflected the actual costs of providing care.

The Judge considered the history of the Council’s efforts to determine what would be a fair price for care and to narrow areas of dispute about the Laing & Buisson toolkit. On 15th February 2011 the Council had met with providers to discuss the process of setting the fee for 2011/2012. There was a further meeting in March 2011. The recommendation to the Council’s Cabinet Board was a fee of £457.32 per week together with a commitment to minimum annual increases of 4% for the next 3 years. The Judge reminded the parties that, on a judicial review application, it was not his job to consider the merits of the decision made by the Council. His task was to ensure that the process applied in arriving at the decision was a correct one on public law grounds. The Judge noted that in this case the Council had decided not to apply the ‘toolkit’ model for determining the new rate. The Judge concluded that the claimants had not shown any error of process on the part of the Council with the result that he dismissed the care home operators’ application.

There have now been (at least) 7 judicial review cases concerning Care Home fees since the Forest Care Home case of 21st December 2010. Of these, 1 has settled, 2 have been lost by care home operators and 4 have been ‘won’. How many more are to come?


CARE HOME FEES DISPUTES

Care homes are facing increasing difficulties with Commissioners seeking to reduce or to freeze fees. In some cases this is in breach of contract.

There have now been several challenges through the courts.

If you are faced with demands by Commissioners to reduce or freeze fees, RadcliffesLeBrasseur offer a fixed fee of £250 plus VAT to provide preliminary advice on the legality of this and a response to the Commissioners.

For further details, please contact
Andrew Parsons
andrew.parsons@rlb-law.com


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur 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.