October 12, 2020

Care UK ordered to refund £1 million in fees to its residents

The CMA has been active in enforcing its Guidance against providers and issued legal proceedings against Care UK earlier this year in respect of how it charged fees relating to CHC funded residents.

In its residents’ contract, Care UK asked residents to pay the shortfall between its fees and the amount paid in respect of CHC funding, as a condition of remaining at its homes. The shortfall did not specifically attach to additional services provided by Care UK outside of the assessed healthcare needs of the residents and, in contravention of the Guidance, specifically stated that the shortfall would be invoiced as if an enhanced room were provided, when it might not be. This fee arrangement applied to over 1000 residents.

CHC funding rules state that a provider cannot require residents to pay towards their assessed healthcare needs. In addition, the Guidance specifically states that residents cannot be asked to pay for additional private services to “top up” CHC funding when these services are not in fact provided.

The Court’s decision

The High Court has decided that the additional fees charged to CHC funded residents were in breach of consumer law (by virtue of being unfair), and contravened the NHS funding rules. It has ruled that Care UK must refund the affected residents.

This decision makes it clear that it is not enough for providers to change their practices going forward, once the CMA has been in contact. When previously contacted by the CMA, Care UK had agreed to stop these charges but they did not agree to refund previously affected residents. Care UK has had to provide a legal undertaking to the Court to refund previous residents and ensure that they do not charge the fees to their residents in the future.

What are the implications of this decision?

The Court has made an example of Care UK, as a large provider, and is sending a message to the sector that such fees cannot be charged in this way.

If providers take CHC funded residents and wish to “top up” fees then residents contracts should be reviewed carefully to ensure that the wording reflects the legal position. Any top ups relating to CHC funding need to be openly communicated to the resident in advance, voluntary, and referred to the relevant funding body before being put in place.

The government has also previously given powers to the CMA to directly enforce their Guidance and to impose fines, read here - so they have other avenues in which they may pursue smaller providers who are not compliant with consumer law.

We are here to support you

If you have CHC funded residents, and are charging them additional fees, we would encourage you to review your contract to ensure that it is complaint with consumer law. Please do get in contact with one of our social care team for advice.

We would encourage all providers to review their service user contracts, admissions and complaints documents to ensure that they are compliant with consumer, law in any event. We have developed model documentation which complies with the Guidance whilst protecting your business. We can also provide you with bespoke advice and documentation.

If you are already facing compliance action by the CMA, demands for refunds from service users or relatives, or criticism by CQC, our healthcare dispute resolution team are here to help. We are experts in contentious matters relating to care contracts and we can help to limit the damage and preserve your reputation.

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