Public law and Judicial Review (known as ‘JR’ amongst lawyers) hold enormous potential significance for health authorities/PCBs/ PCTs and those who deal with them, given the range of potential applicants able to use the process, such as NHS Trusts, pharmacists, GPs, consultants and patients (not to mention local authorities!).
There have been over 50 instances of Judicial Review applications against health service bodies since 1990 and it seems that JR is being used more readily and speculatively than ever before. An application for permission to bring the proceedings is a novel, high profile and relatively inexpensive means of increasing bargaining power, or of bringing matters to a head. The following areas have been the subject of challenge:-
- a) Procedural propriety enforced for patients and the community
Ex p POW and Others involved a challenge to a decision of a HA to instruct a Trust to close in-patient services at a local hospital, without proper prior consultation with a Community Health Council. When the application for leave came on, just one month before the closure date, the judge granted expedition of the proceedings, and abridgement of the time for service of the respondent’s affidavit evidence. The Trust was served as a person ‘directly affected’. Thus it can be seen that JR procedure can be both speedy and flexible.
The applicant alleged that the proposal had been firm enough, in early April, rather than mid-May, to count as a proposal. The Court held that a proposal must be developed enough to be capable of identification as a substantial variation, and be capable of consideration by those concerned, in order to trigger the consultation duty. But by very definition, a ‘proposal’ must still be at a formative stage. It was wrong to assume that no duty to consult arose until an idea had actually been agreed with the Trust. The failure to consult vitiated the decision to close, because it would seriously undermine the purpose of the Regulations if a HA could allow time to pass to the point where matters were so urgent that there was no time left for consultation. In addition, the affidavit evidence was capable of being read as suggesting that there would be no point in consultation, and to offer it might provoke unnecessary anxiety. Such an approach was obviously undesirable (even if true!) because it would be inconsistent with the statutory requirement for proper consultation. A quashing remedy was therefore granted, despite the fact that another round of talks would inevitably make it even harder to achieve savings.
More recently, In Merton, Sutton and Wandsworth Health Authority, ex p Perry, a long stay hospital was due for closure but judicial review was used to prevent that from happening as planned. The court said it was necessary to consider the individual circumstances of each resident of a long-stay hospital for people with profound learning disabilities before making a decision to close the hospital. It was also necessary to look at all that the health authority had said to the residents and their families in the past in assessing whether or not the authority had really guaranteed a home for life. In failing to have any regard to the promises and previous statements of policy concerning a home for life, the health authority had failed to take into account a highly material consideration. So they had to think again, although closure in the long term was not ruled out.
In North and East Devon Health Authority, ex p Coughlan, the court held that there could be an unlawful breach of a legitimate expectation, and a breach of article 8 of the European Convention on Human Rights, if a health authority broke a promise to provide a resident with a home for life at a particular establishment, unless there were overriding competing public interests which had been weighed in the balance at the right time.
- b) Eligibility Criteria
In the Court of Appeal, in North and East Devon Health Authority, ex p Coughlan, on the question of eligibility criteria, it was famously held that local authorities do not have the sole legal responsibility for funding nursing home care. A patient may be provided by a local authority with some nursing care as a social service and may be liable to meet the cost of that care according to the patient’s means. It was not necessarily unlawful for a Health Authority to transfer responsibility for general nursing care to the local authority. But whether what was required should be seen as specialist or general nursing care in a particular case depended on whether the nursing services were (i) merely incidental or ancillary to the provision of the accommodation which a local authority was under a duty to provide, and (ii) of a nature, intensity, continuity or range which an authority whose primary responsibility was to provide social services could be expected to provide.
Harrow Education Authority went to court to allege that the local HA owed a duty to fund speech therapy service provision, because it was HA employees who had been involved in the special educational needs assessment. This failed because of the particular wording of the Education Act 1993, but that precedent does not prevent challenges to HAs’ approaches to their own criteria for health service provision, based, perhaps, on legitimate expectation. It is not suggested that HAs cannot change their criteria for eligibility for particular services, but only that when they do so, they must act lawfully, procedurally fairly and rationally, and must actually adhere to their own criteria, whilst any given set remains in force.
- c) Patient power
In Fisher, a decision not to authorise the supply of a new drug called Beta Interferon (‘BI’), for certain Multiple Sclerosis sufferers, was quashed. This was because the decision had been taken in blatant and disingenuous disregard of government guidance.
In 1995 the NHS Executive had issued a Circular letter to all HAs, asking authorities and providers to develop and implement local arrangements to manage the entry into the NHS of the drug. When the applicant was referred to one of the local Trust’s hospitals, a consultant assessed him as suitable for the drug, but the Trust declined to fund his treatment when the HA declined to make any further funding available.
The HA was sceptical about the merits of the drug anyway, and despite the government guidance, of which they were aware, officers told the Trust that their policy was to consider funding only for patients participating in a randomised control trial. When the HA finally realised that any trial was still 18 months away, it reconsidered the options, including release of £50,000 it had identified as a last resort, but decided to maintain its current policy until it was “no longer sustainable”. Even when the NHS Executive again emphasised that there was no further reason for delaying the introduction of local purchasing policies for the drug, the HA decided it could not ban the use of the drug, but that it would not provide any “new money” for it.
Whilst not being absolutely obliged to follow the policy in the Circular, if a HA decided to depart from it, then it had to give clear reasons for so doing, and if it failed to understand the guidance, its policy would be defective anyway.
This policy was plainly not in accordance with the Circular. The within-a-trial policy revolved around testing the efficacy of the drug, not treating people with it. The policy was not a reasonable way of giving effect to the Circular and it was not open to the Authority to fail to implement it just because it disagreed with it altogether. In practice, the existing block contract sums would not be able to fund BI, even in appropriate cases, and the judge said it was disingenuous to suggest that this purely theoretical possibility meant that the ban was not in fact a blanket ban. He granted relief in the form of a declaration, certiorari and mandamus to formulate and implement a policy, taking full account of the national policy.
- d) Interests related to livelihood and competition
In Moore, a doctor successfully challenged an FHSA for its refusal to accept written representations about a pharmacist’s application to open a chemist’s shop nearby. This was so even though regulations required the authority to have regard to any available information which it considered relevant. A further regulation gave to anyone who thought that they might be affected by such sales, a right to make written representations. The Court held that the FHSA had acted unreasonably, and procedurally unfairly. It was so obvious that the doctor’s views would be relevant to its decision-making functions, that any opinion otherwise, might well be regarded as perverse. Given the fact that the doctors would lose the right to provide a pharmacy themselves, if the application was accepted, no-one with any sense of fairness could have refused to consider their representations.
In Boots the Chemist Ltd, the applicant company succeeded in challenging an FHSA’s appeal committee’s decision refusing it inclusion in a list of pharmaceutical services in a shopping-centre. The committee had concluded that ‘a neighbourhood’ must include a residential element, and the Court said that this was an error of law which invalidated the decision.
- e) Review of HAs’ employment functions
There are some aspects of the running of HAs which are not themselves public law functions amenable to review – employment, for example. In Jones, an authority rejected a consultant surgeon’s application for a post. The subsequent legal challenge failed because there was insufficient statutory underpinning, at that time, to attract the supervisory jurisdiction of the Court. Even where statute has required the inclusion of particular terms in a public body’s employee’s contract, a claim for breach of those terms will not be reviewable (see Walsh). Actual regulation of the employer’s freedom to contract will be necessary to constitute the necessary statutory underpinning to attract review. In other words, it is only where a statute has required the inclusion of a particular term and the challenge is based on an allegation that that term has not actually been incorporated in the contract, that a challenge might get off the ground.
On the other hand, JR was granted in Goodwin to quash the closure of a hospital, for failure to have regard to the terms of GPs’ contracts providing for 3 months’ notice. In Trivedi, when a medical practitioner had been found in breach of his terms of service, the Court quashed the dismissal of his appeal by the RHA’s appeal unit. The appeal unit had made findings on matters which had not been the subject of the complaint, nor of any finding by the authority itself against the applicant, nor of the appeal. So although issues of employment and remuneration were concerned, the level in the process at which the challenge is directed can sometimes mean that the application succeeds.
- f) Compensation for loss of office
Although the decision to enter into an employment relationship is not generally judicially reviewable, other aspects of the employment contract may well be, where there is statutory underpinning of the relationship. Thus HAs may be making unlawful compensation payments to employees, or have already entered into contracts of employment which are ultra vires.
The problem with regard to unlawful contracts arises because, in practice, managers’ contracts frequently provide for as much as 24 months’ notice, for all reasons other than misconduct. As a matter of principle, HAs can only incur expenditure for which they can identify express or implied statutory authority, or authority under regulations made lawfully pursuant to statute. Further, where a discretion is permitted to an authority, it must be exercised reasonably. So not only is it not open to a health authority to agree to pay sums in excess of those which it is specifically required or empowered to pay to an employee; it is not lawful to offer a contract which contains a term for notice which is unreasonable, and thus provide for a large pay-off by another means. It is not possible, in our view, to argue that a 24 months’ notice period is a reasonable period of notice. The payment of salary for that whole period at the taxpayers’ expense, for an employee found incapable of carrying out his/her duties in a satisfactory manner (albeit not for reasons serious enough to amount to gross misconduct), must surely be an unreasonable exercise of discretion.
Further, regarding severance payments, it follows from the Court of Appeal’s judgment in Allsop v North Tyneside MBC, that such payments as a HA may lawfully make in respect of loss of employment are limited to those specifically authorised by Regulations or Directions made within the scope allowed by parent legislation, or by primary legislation itself. The relevant Regulations require HAs to comply with directions given by the Secretary of State under powers conferred on him or her by paragraph 10 of Schedule 5 to the NHS Act 1977. Paragraph 10 says:
“Subject to and in accordance with regulations and such directions as may be given by the Secretary of State, an authority may employ such officers as it may determine … on such conditions of service as it may determine…“
The paragraph is concerned with the terms on which a person may hold employment, not with the payments that may be made when a person ceases to be employed by a HA, and is therefore relevant to the legality of severance payments. In Allsop, the contention was made that power to fix the terms and conditions upon which an appointee shall hold office, implicitly included a power to dismiss and to fix terms for dismissal, including terms for payment in the event that dismissal was on the ground of redundancy. This argument failed. Consequently any direction purportedly made under this paragraph which deals with severance payments, will be unlawful in itself.
By a Direction accompanying government guidance HSG(94)18, the Secretary of State purported to direct HAs that the contracts of employment of certain officers should be amended to include a discretion on dismissal to pay to the employee an extra amount. That sum should be calculated, in part, by reference to the amount of remuneration which would have been payable to the employee in respect of the unexpired period of the contract. This was clearly a condition relating to compensation for loss of office and is therefore ultra vires Paragraph 10.
Any overpaying authority has a right (and we would say a duty to consider doing so, as well) to take recovery proceedings against ex-employees who have received unlawful sums. However, authorities are entitled to weigh up the merits of pursuing such proceedings, bearing fully in mind that there is a defence of ‘change of position’ in restitution which is very likely to be used by such persons to assert that an order for repayment would be inequitable.
It can be seen that challenges to aspects of a HA’s affairs can be useful to the community, providers and individual patients. NHS Auditors have a duty to issue a report if they think there has been unlawful expenditure on the part of a health authority, and they apply the same principles, when discharging this duty, as arise in JR cases. Public Authorities should therefore appreciate that decisions of most kinds will now be amenable to review, and that it is a fast developing field.