The CMA’s case against Care UK to be heard in July
Since then the CMA has been active in enforcing its guidance. In December 2018 it launched court action against Care UK in respect of the charging of a “compulsory upfront administration fee” to over 1,600 residents.
After asking Care UK to refund these fees to avoid facing legal action, the CMA issued proceedings to secure refunds for the affected residents (Care UK had agreed to stop these charges going forward but not to refund previously affected residents).
A date has been set for the Summer for the High Court to hear the CMA’s case. We watch with interest to see whether the Court will find that Care UK is breaching consumer law, if it will be required to refund all of the affected residents and the extent to which (if at all) the Court will impose a fine.
Of particular interest to the sector will be how much weight the Court places on the CMA’s guidance in assessing Care UK’s compliance with consumer law. The guidance is not statutory guidance so does not automatically create legally binding obligations on providers. However this does not mean that a Court will not give significant weight to it in its judgment. Whilst parts of the guidance are, in our opinion, welcome in helping to improve the fairness of contract terms between providers and residents, many parts are arguably overly prescriptive and not necessarily reflective of the commercial realities of running a care home. The outcome of this case could set an interesting precedent.
What does this mean for me and my business?
Whatever the judgment, the CMA is clearly flexing its muscles in the care arena with powers to enforce directly and impose fines. Providers should review their contracts to avoid potentially substantial financial and reputational damage. With so much publicity, we are seeing an increased numbers of challenges from families and residents on contract terms and it is vital that providers have a sound contractual basis from which to defend their position.
We are here to help you
We would encourage all providers to review their service user contracts, admissions and complaints documents to ensure that they are compliant with consumer law. If you are currently charging any up-front fees the amount and reasons for making such charges need to be carefully considered, communicated and documented.
We have developed model documentation which complies with the CMA 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.