Mammoth battle of NHS ping pong leads to successful restitution claim by Council

The case, Surrey County Council v NHS Lincolnshire Clinical Commissioning Group [2020] , highlighted a shift in approach by the courts where significant funds are involved.

Background

JD, born in Surrey at the end of the 1980s, was placed by Surrey County Council (SCC) in specialist ASD accommodation in Lincolnshire in 2006, in discharge of the Council's statutory duties to him under the Children Act 1989.  Just over six months later, JD turned 18 and SCC continued to fund his care as an adult pursuant to the National Assistance Act 1948.

In 2008, the Council asked Lincolnshire PCT (LPCT) to assess JD’s eligibility for NHS Continuing Healthcare (CHC).  LPCT refused because it believed that Surrey PCT (SPCT) had retained commissioning responsibility for JD by virtue of the placement by SCC into Lincolnshire.  LPCT repeated this assertion when a further request was made in 2010.  Although the ‘Functions Regulations’ of 2002 had indeed been amended in 2007 to secure that commissioners could not unburden themselves of financial responsibility for minors by placing them in another PCT’s area, JD had been placed in Lincolnshire by SCC before the new rule kicked in.  Commissioning responsibility had, accordingly, switched to LPCT in 2006.  For the purposes of the litigation, LPCT (or, rather, its successor body, the CCG) conceded that these decisions to refuse to assess had been unlawful.

In the meantime, and in the face of LPCT’s stance, SCC asked SPCT to assess JD for CHC eligibility.  SPCT found JD eligible for CHC but refused to fund because it (correctly) asserted that it was not the responsible commissioner.

Three years then passed without SCC managing to persuade either PCT to take responsibility, until the Lansley reforms reconfigured the commissioning landscape, enabling pressure to be brought to bear on Lincolnshire CCG (LCCG).  Finally, LCCG confirmed that it would be responsible for a fully-funded care package for JD with effect from 1 February 2015.  Twelve months later, SCC wrote to LCCG, requesting payment for the period 1 August 2008 to 31 January 2015 in the sum of just over £1.5m plus interest. Some three fruitless years later, SCC issued proceedings to recover the monies.  By the time of the hearing SCC had accepted that, by virtue of the six year limitation period, its claim was restricted to restitution of monies paid after 31 July 2013, amounting to £310,587.25 plus interest.

The nature of the claim?

Those of you who have resisted the temptation to ‘rest your eyes’ for just a moment after following these shenanigans may well be asking how a public law body like SCC could be suing another public law body in a private law claim: “When public bodies fight in court, don’t they do this by way of judicial review?”  And, indeed, this was the first argument put up by the CCG:

• Both sides agreed that the ‘exclusivity principle’ established that, as a general rule, it would be contrary to public policy and an abuse of the court process for a claimant complaining of a public authority's infringement of his public law rights to seek redress by way of a private law claim.  But they also agreed that a number of exceptions had developed over the years, to the extent that an inflexible procedural divide between public and private law claims was no longer tenable.
• The Court concluded that this was a case where the exclusivity principle should be ‘kept in its proper box’.  Allowing it to apply in this type of case would create a perverse incentive for health bodies to unlawfully delay the carrying out of assessments and eligibility decisions to protect their own budgets by allowing local authorities to carry on picking up the bill for the care of individuals who were properly the legal responsibility of the NHS, in the knowledge that local authorities had no financial redress in law.  There were, the Court said, no reasons why justice required the claim to be brought by way of judicial review; it was common ground that the decisions taken in 2008 and 2010 were unlawful.  Nor was the Court persuaded that this was a case where SCC had flouted the protection provided by the stringent time limits for judicial review; Thornton J found that there was a lack of clarity over resolution of these sorts of disputes at the relevant time and that both parties bore responsibility for the protracted dispute resolution process.

Having decided, then, that the claim could proceed as one of unjust enrichment, the Court had to consider whether it should extend the existing categories. Both sides agreed that a claim by one public body against another:

a) in relation to care services provided to a third party

b) where both public bodies had distinct statutory caring responsibilities

c) where the basis of the claim was said to be an unlawful public law decision to refuse to accept responsibility for the care of the third party, was novel

• The CCG raised multiple policy reasons against making such an extension (including that the three month limitation period in judicial review was designed to stop public bodies being exposed to stale claims years down the line when budgets had long since been spent), while SCC sought to play down the significance of such assertions in a case where, as here, the public law breaches had been admitted
• The Court decided that SCC had only found itself with statutory responsibility for JD's care because of LPCT's unlawful decision that it was not responsible for commissioning services for him and its consequent failure to assess his eligibility for CHC.  This occurred in circumstances where it was highly likely that the PCT would have been responsible for JD's care, had it not acted unlawfully.  On that basis, the Court considered that SCC’s legal obligations to JD during the relevant period were outweighed by the unjust factors at play in the case

Unjust enrichment made out?

Onto the home straight, then, the final question for the Court was whether the individual elements of a cause of action in unjust enrichment were satisfied.

• The CCG’s focus was on the requirement of enrichment; it argued that any money ‘saved’ on JD’s care would have been spent on other patients and that the PCT/CCG had not, therefore, been enriched
• The Court concluded that SCC had discharged a liability to JD which, but for the PCT’s unlawful decision, would have been owed by the PCT. In doing so the PCT had been enriched to the extent of the cost of the care fees paid by the SCC to JD's care home. The PCT had been freed to spend an equivalent sum on other patients
• That, however, in turn gave rise to a potential defence of ‘change of position’; this may be available where a defendant's circumstances have changed so detrimentally that it would be unjust to require them to repay monies received at the claimant's expense.  In this case, however, the Court concluded that LCCG’s evidence amounted to no more than ‘assertion and speculation’; as a result, the evidential burden required to mount such a defence had not been discharged

The Council’s claim against LCCG in unjust enrichment was therefore allowed.

Conclusion and key takeaway

Although the courts have generally not been slow to criticise the unedifying spectacle of one publically-funded body resorting to litigation against another to resolve disputes, this case may signal a shift in approach where significant sums are involved, not least when the NHS is viewed as ‘the favoured one’, protected by a ring-fenced budget, while its local authority counterpart plays the poor relation.  CCGs should ensure they have local dispute resolution procedures in place and make concerted efforts to utilise these where appropriate (especially where admissions are made in a timely way) and before matters get out of hand.  This is all the more important now that the new Who Pays? allows local authorities to seek formal support from NHS England where they are unable to persuade CCGs to engage.