Date Decided: 10th February 2020
Mrs P complained on behalf of her parents, Mr and Mrs Q.
Mr Q had dementia and moved into a residential care home which the Council arranged for, in 2016.
An assessment determined Mr Q should pay £135 a week towards his care, and Mrs Q would pay £30 a week towards Mr Q’s care as a ‘top up’.
Over the years these charges remained more or less the same, with small annual increases.
In December 2018 Mrs P became aware that Mrs Q had not been paying the top up fee, or done what was necessary for arranging Mr Q’s contribution. Over £20,000 was outstanding in non-paid fees for Mr Q’s care. The council had not paid the home, assuming that the contribution and top up would have been being remitted regularly, directly.
Mrs P began ‘representing’ Mrs Q in communicating with the care provider and tried to sort out the outstanding payments.
The care provider said it had set out the charges to be paid when Mr Q moved into the residential home, and had been sending out invoices to Mrs Q. These facts were not disputed; however Mrs Q said she found the care provider’s invoices unclear and thought they were for information only as she believed the Council had agreed to pay for all Mr Q’s care.
Mrs P highlighted that over the two years at no point did the care provider speak with her or Mrs Q about the outstanding sums, despite them both visiting the care home often. Nor did the care provider write specifically about the arrears or send any cumulative invoice before December 2018.
The care provider told Mrs P that the contract they had with the Council “allowed” them to recover direct from users of services and their representatives, any unpaid charges for care that had been owed for more than 60 days.
There was no evidence that the care provider entered into any negotiation with Mrs P as to a time scale of when or how the ‘debt’ could be repaid. The company instructed solicitors, who threatened recovery action through the Courts and asked Mrs Q to give the care provider a voluntary legal charge over her home.
At that point, in March 2019 Mrs P made a complaint to the Council.
In correspondence with the Council, a contract manager said that when the Council learnt a user of care home services was in arrears it would “pay the provider 60 days’ contributions”. But “it is expected the provider will be responsible for collecting any further amounts due”.
The LGO set out the contract between the Council and care provider:
- That Care Providers will collect both the resident’s contribution and top-up fees “on behalf of the Council”.
- Care Providers will chase for payments one month after any sum falls due and then send reminders at least once a fortnight for up to 60 days.
- A Care Provider can only obtain payment from the Council after 60 days.
- The Care Provider must tell the Council of within seven days of it falling due. If it does not the Council can deduct from any sums it pays to the Care Provider any further debt falling due after that date.
- The Council can terminate a placement if a debt is unpaid for 60 days.
Mrs P then sought legal advice, which cost her £700.
By the end of May 2019 the Council accepted that Mrs Q no longer had the financial means to pay any top-up for Mr Q’s care and began meeting that cost and paying the Care Provider directly the top-up amount.
Mrs P said the Council failed to show how it explained Mr Q’s care charges to Mrs Q. She also said that the Council failed to intervene with the Care Provider about how it pursued the debt, until the LGO started making enquiries.
From January 2019 onward Mrs P arranged correct payment of Mr Q’s contribution.
It also came to light through the LGO’s investigation that two payments Mrs Q made to the care provider in November 2016 and January 2017, for respite care, had not been applied to Mr Q’s account. The Council also made a payment of three months for reasons not set out in the report for Mr Q’s care charges.
Therefore the LGO concluded that the arrears of care charges were properly calculated as £17,340.
The Council’s senior officers were ‘not aware’ of Mrs P’s complaint until the LGO began its investigation, however they stated that they had since considered the complaint.
The Council said it should have ensured Mrs Q received information about charges for Mr Q’s care in “a clearer [and] more timely” way. It also said the Care Provider acted “unreasonably and inappropriately […] falling short of the standards we expect” in how it tried to collect the debt.
The Council therefore offered the following remedies:
- It would apologise to Mrs P
- It would pay Mrs P £300 in recognition of her time and trouble pursuing the complaint.
- It would continue to pay the third party top up that it previously asked Mrs Q to pay and would not require payment of any “arrears” relating to that top up.
- It would discharge the outstanding debt to the provider of £17,340
- It would pay £700 to Mrs P towards her incurred legal costs.
- It would address the Care Provider’s “unreasonable behaviour”.
What was found?
The LGO agreed that information given by the Council in 2016 ‘fell short of best practice’ and most likely would have found fault. However, because of the Council’s proposed remedies, it stated it did not consider it needed to make a ‘definitive finding’, as any injustice had already been remedied.
The LGO further found fault with the way the care provider acted in collecting the debt. It stated it failed to account for:
- How the debt arose and the consequence of poor information at the outset
- Its own administration; it miscalculated the debt and failed to identify the full amount of debt until two years after the beginning of the contract.
- The need to consider any proposals put forward for repayment by Mrs P over time.
This amounted to fault, and as they were acting (regardless of the contract as to who would collect the charges; in a wider way altogether because contracted to do what the council would otherwise have had to have done to meet the man’s needs) on behalf of the Council, the Council was also at fault. Again, the LGO considered that the remedies suggested by the Council were sufficient in addressing the injustice caused.
The LGO went on to consider the wider public interest raised by this complaint: it highlighted four main problems within current council contractual agreements seen within the sector which inappropriately increase the risk that Care Providers will engage in inappropriate debt collection practices.
- Arrangements provide that users of services or third parties must go at least 60 days into arrears before the Council will begin to pay sums to providers owed to these providers.
- This leaves a gap in funding which Care Providers may urgently try to fill without any scrutiny from the Council.
- If a Care Provider fails to tell the Council of a debt that has accrued within a specified timescale, the contract provides that the Council does not have to pay any further debts that arise.
- So effectively, the Care Provider has provided a service (which the law requires the Council to pay for), yet the contract does not oblige the Council to pay for it!
- A Care Provider in those circumstances faces significant financial loss and may choose, as in this case, to recover sums from the user of services or their representatives.
- This is something the Council accepts care providers can do.
- Therefore there is a gap in what the Council expects from providers should they fail to tell the Council of a debt in the specified timescale.
- The contract takes no account of the statutory guidance
- The guidance explains that “ultimately the Care Act enables a local authority to make a claim to the county court for a judgment in order to recover the debt”. But before doing so it “will wish to consider the full range of options in order to secure the contributions owed to them”.
- The LGO stated firmly that “local authorities must consider the potential vulnerability of the client base they are dealing with. They must further ensure they act reasonably and do not resort to the sanction of Court proceedings until they have tried and exhausted other possibilities. It is unacceptable the Council should have arrangements for delegating debt collection that do not take account of this guidance.”
- Contract arrangements leave open the possibility that residents may receive notice to leave their placements with the Council having no prior involvement in collecting sums owing.
Considering these points, the LGO added that in addition to the agreed remedies suggested by the Council, it should review its current arrangements for care providers to collect client contributions on its behalf.
That review should address as a minimum the following matters and whether the Council proposes any changes to its policy in these areas:
- The clause in its contract to Care Providers that means it will not pay for care it has arranged unless the care provider tells it of arrears within a specific timescale. It needs to consider where that leaves the user of the service and if they may be exposed to debt recovery from the care provider.
- How its arrangements take account of the statutory guidance that look to safeguard those in debt for care charges from oppressive debt collection practices.
- It should ensure care providers acting for the Council in debt collection take account of this guidance.
Points for the public, contracts officers, care providers, care home associations, lawyers etc
This report goes a long way in flagging up the widespread apparent ignorance on the part of those supposedly competently contracting for the provision of adult social care services in care homes, of public law principles which constrain what would otherwise be the rule: contract is a matter of agreement and choice – but when what is being contracted for is a public body’s duty, there may be aspects that make the contracts that are acceptable by care homes, unlawful in public law terms.
That legal framework doesn’t just say that councils must be sensitive in debt recovery when pursuing unpaid charges. The Guidance says as follows:
8.33 Where a local authority is meeting needs by arranging a care home, it is responsible for contracting with the provider. It is also responsible for paying the full amount, including where a ‘top-up’ fee is being paid. However, where all parties are agreed it may choose to allow the person to pay the provider directly for the ‘top-up’ where this is permitted. In doing so it should remember that multiple contracts risk confusion and that the local authority may be unable to assure itself that it is meeting its responsibilities under the additional cost provisions in the Care Act. Local authorities must ensure they read the guidance at Annex A on the use of ‘top-up’ fees.
18.22 Another example is the local authorities’ function which allows them discretion over charging people for care and support. The Act does not allow delegation of this decision to other organisations. As such the local authority itself must decide its charging policies. However, local authorities may commission an external agency to carry out the administration, billing and collection of fees for care and support on its behalf. These activities may not be classed as care and support functions under the Care Act, even though they are related to the charging function. It should be noted that the care and support function relating to financial assessments (section 17 of the Act) may be delegated.
Being allowed to do this by the Guidance does not mean imposing it on a provider, even by the device of tendering for a framework agreement on those terms: commissioners are not ALLOWED to ignore the law and guidance – news to some commissioners, one might think, but the answer is simple: make sure that commissioners are included in Care Act refresher training, if you don’t want to embarrass yourself as a council!
More from the Guidance annex on choice:
50) In securing the funds needed to meet the additional cost, one of the following will apply:
- a local authority may agree with the person and the provider, and in cases where a third party is paying the ‘top-up’, agree with that third party, that payment for the additional cost can be made directly to the provider with the local authority paying the remainder
- the person or the third party pays the ‘top-up’ amount to the local authority. The local authority then pays the full amount to the provider
Note the focus on AGREEMENT here, which of course also connotes capacity – ignored by many a local authority, even when there is no finance attorney or an unwilling finance attorney, in place.
More from the annex on choice:
53) Where a ‘top-up’ arrangement is being entered in to, all parties should fully understand their responsibilities, liabilities and the consequences of the arrangements. A local authority must provide the third party with sufficient information and advice to support them to understand the terms of the proposed written agreement before entering in to it. Local authorities must also have regard to the general guidance on Information and Advice set out in Chapter 3.
From the 2014 regulations on choice and top-ups:
(3) The written agreement must include— (a) the additional cost; (b) the amount specified in the adult’s personal budget in relation to the provision of accommodation; (c) the frequency of payments; (d) details of the person to whom the payments are to be made; (e) provision for review of the agreement; (f) provisions about the matters specified in paragraph (4).
(4) The specified matters are— (a) the consequences of ceasing to make payments; (b) the effect of increases in charges made by the provider of the preferred accommodation; (c) the effect of changes in the payer’s financial circumstances.
Decades of guidance under the old law, on choice and top ups, has always made it clear that the client and third party cannot be MADE to pay their share to the home; this contribution is the charge by the authority, and the contract with the care home must provide for the whole of the cost to be recoverable from the council, for it to be an arrangement that actually meets the need.
It’s all very well to say that this provider agreed to be the council’s debt collector, and was its own worst enemy through failure to communicate that something had gone very wrong – but that does not transfer the debt to the client, or the client’s wife, as a direct obligation, in terms of contract law! The council cannot impose a collection structure on the care home and third party and client that is against the letter of the regulations and the spirit of the guidance.
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The full Local Government Ombudsman report of Essex Lincolnshire County Council’s actions can be found here