On 19 December 2012, CQC published a press release indicating that it had issued a fixed penalty notice on a provider for failing to comply with the medication regulations. On the face of it this may not seem that significant a development but on closer scrutiny it may amount to something of a watershed moment in terms of CQC enforcement.
In defined circumstances, CQC can serve a penalty notice on a provider identifying an offence under the CQC statutory framework and stipulating a financial penalty (essentially a fine) which if paid by the provider has the effect of disposing of liability for the offence, thus avoiding prosecution. The recent press release is the first time that we at Ridouts have heard of CQC using this enforcement power. Indeed, in the latest annual report on CQC’s enforcement activity, CQC confirmed that it had not served any penalty notices between April 2011 and March 2012.
The most likely situation that CQC may decide to serve a penalty notice on a provider is if an offence is deemed to be continuing after the timescale in a warning notice has expired. That was the situation CQC says it encountered with the provider served with the penalty notice referred to above. Rather than proceed to a prosecution, CQC gave the provider the option of paying £4,000 in lieu of prosecution. The provider chose to pay the fine, £4,000 being the maximum penalty for a failure to comply with regulations about quality and safety.
Given that the maximum court fine could have been £50,000, accepting a penalty of £4,000 or less would seem to make commercial sense. However, a provider on whom a penalty notice is served should consider the position carefully as there may be grounds for challenging the notice or at the very least only paying a fine on the express written understanding that payment does not amount to an admission of the offence. It should be remembered that the alleged offending might be relied upon by CQC in future civil enforcement activity such as cancellation proceedings so one should not automatically pay up as this might come back to bite you at a later date. Furthermore, penalty notices might be served in relation to several alleged offences so the fine could be sizeable.
A provider will have 28 days from receipt of a penalty notice to pay the fine or risk prosecution, or other enforcement activity. However the regulations specify that CQC may withdraw a penalty notice – even after the 28 day period and even if the payment has been made – if it appears to CQC that it should not have been served or there are material errors in the penalty notice. If a penalty notice is withdrawn, any amount paid has to be repaid by CQC and any published information taken down. If a penalty notice is withdrawn, CQC cannot prosecute unless it serves a new one and that is not paid within the 28 day period.
CQC has not published any detailed guidance on how it will exercise this particular enforcement power. All it says in its Enforcement Policy is that the evidence has to meet the standard for criminal prosecution before a penalty notice can be served. The reason for serving a penalty notice is that CQC considers, “that swiftly achieving compliance without beginning lengthy and costly proceedings is a realistic alternative to prosecution.” In particular, CQC has not issued any guidance as to how a provider might go about making representations on a penalty notice, perhaps occasioned by the fact that until now it has not exercised the power. In contrast, CQC has issued guidance on making representations on warning notices, albeit that the process is convoluted and arguably flawed.
A major reason for actively considering whether there are grounds to challenge a penalty notice is that CQC is obliged to publish details of any penalty notice served for a breach of the quality and safety regulations. There may be good commercial and reputational reasons for wishing to challenge a penalty notice (assuming that is possible) to avoid inappropriate and potentially damaging publicity. Equally, in certain cases there may be good reason for accepting a fine but on terms that protect the interests of the provider and manage any adverse publicity.
If at all possible, providers should endeavour to challenge the content of any warning notices served on them given that CQC is far less likely to consider issuing a penalty notice (or embark on a prosecution) where a provider has identified material errors in the original notices, whether evidential or procedural. Even if CQC persists with a warning notice, a provider will be in a far stronger position to challenge any allegations of continuing breach if they have taken active steps to contest the original notice (again, of course, assuming that is possible).
The law surrounding warning notices, penalty notices and prosecutions is highly technical and providers should seriously consider obtaining specialist legal advice when faced with such enforcement action. At Ridouts we have considerable experience of advising providers on such matters. Please feel free to call us. We’re here to help.
