The Emergence Of Fee Disputes Between Care Home Providers And Local Authorities

Topics covered: Care Act 2014, Care Home Providers, challenging local authorities, fee dispute

Ridouts has seen an emergence of fee disputes between care home providers and local authorities in recent times. These disputes are arising out of the Care Act 2014 in respect of financial needs assessments or annual fee increases, where the local authority (“LA”) has refused to pay. Disputes particularly centre around the aspect of “financial needs assessment” for adults who are eligible under the Care Act 2014 criteria. To summarise, if you have less than £23,250 in assets or savings the government, via the LA will contribute and help support and pay for the cost of care for fees to a contracted care home provider. This article will outline why these disputes are occurring at an increased rate, and discuss what providers should do if they find themselves in this situation.

Why Are Disputes Arising?

The Care Act 2014 is a piece of legislation that is 9 years old. As the population grows in the UK and the average life expectancy increases, it means a higher percentage of the population can eventually fall eligible under the criteria of the Care Act 2014. This, paralleled with the rising cost of care home fees, means peoples finances can depreciate at a quicker rate and fluctuate at a higher frequency than previously. For all of these reasons disputes are emerging.

What Does The Care Act 2014 Say?

Section 14 of the Care Act 2014 states if an adult is identified as having needs for care and support by the LA, they must also meet the eligibility criteria that is outlined in section 18. Under s18(1) of the Care Act 2014 the authority must give regard to the following:

(a) the adult’s capital (excluding any capital which is disregarded for the purposes of this section);

(b) the adult’s income;

(c) the adult’s needs; and

(d) the adult’s ability to contribute to the cost of care.

The purpose of this act is to ensure that everybody receives care and is looked after, regardless of social status and personal finances. This ensures even the most vulnerable of people, even with a lack of financial resources, can still receive support from the LA. The financial threshold limit of £23,250 will be the limit until October 2025 when this will be reviewed.

What Are The Disputes About?

The disputes are centred on points of law such as who is responsible for the payment of fees, and crucially at what point does the LA become responsible? A financial needs assessment is a dynamic process, it fluctuates. For example, people’s financial situation can change and they can go from being privately funded to being supported by the local authority. However, if there is a delay in assessing the service user for a financial needs assessment, who incurs the cost during the period when a service user can no longer pay? Does the provider and private business accept the loss? Does the LA incur the cost, as outlined in the Care Act 2014?

It is a complex scenario and providers often find themselves in a difficult “lose lose” situation. Providers often do not have a realistic alternative. Evicting a vulnerable person, often with complex needs, in default of payment would be morally incomprehensible. This option is not, in any way, a realistic or viable option and LAs know this. Providers may feel they are at the mercy of the LA, whose interests in this situation are very different to the provider. LAs are not in a hurry to assess somebody who has potentially fallen within the means testing threshold. This is another person that the LA maybe liable for paying for when funds may already be limited. Providers can find themselves fronting the bill for care for service users who, in theory, should be covered by the LA. This often leads to disputed figures and can, in certain situations, lead to prolonged litigious claims. No provider wants to have a legal dispute with one of their main sources of income, potentially harming this commercial relationship. This is, in a nutshell, the dilemma that many health and social care providers are facing up and down this country.

What Can A Provider Do – Practical Advice?

Providers can try and hurry up the process of means testing by doing the following:

  1. The main priority for any provider in situations such as this, is to ensure accurate record keeping of all service users who require assistance from the LA under the financial needs assessment.
  2. Ensure a good dialogue is kept with the family or friends of the service user, and ensure that timely and prompt notifications are made to the LA alerting them to the fact that a resident needs to undergo a financial needs assessment.
  3. Keep a clear record of when this request for an assessment was sent, and ensure weekly chasers are sent to speed up this process as much as possible and keep on top of this.
  4. Understand and know your rights, pursuant to the contract with the LA. This will often be known as a standard spot placement contract.

If all of the above fails, and a service user is falling behind on care fees as a result of the LA not conducting a means test or providing financial assessment ensure that an accurate record is kept of the principal amount owed. This fee can build up to a substantial figure quickly. As a provider you want to ensure an accurate record is kept and appropriate interest is accrued on this figure. At Ridouts, we suggest to all providers that 8% over the current bank of England base rate is applied, pursuant to Late Payment of Commercial Debts (Interest) Act 1998. Currently at the time of writing this, interest rates are 5.25%, with the 8% interest over base it would 13.25% on the figure outstanding and owed to your service (August 2023). This should be accruing from the date of the first failure to pay and consistently updated throughout the process and dispute with the LA until this is resolved. Informing the LA that you are doing this may also help further incentivise them to conduct the financial means assessment promptly.

How Can Ridouts Help?

If you, as a provider, experience any problems with the LA in respect of unpaid fees in part of whole, please do not hesitate to contact our experienced team of solicitors on 0207 317 0340 who can discuss this with you and offer practical-based solutions tailored to your situation.

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