CQC has prosecuted an unregistered provider for the first time under the Health and Social Care Act 2008. What is significant is the level of fine: guilty pleas in relation to two charges generated a fine of £40,000. On top of this, the company – Northern Clinic.com which was providing unregulated liposuction out of clinics in Wakefield and London – was ordered to pay £22,548 in costs plus a £15 victim surcharge. This compares to a fine of £2,500 awarded against a different provider for providing liposuction without registration under the Care Standards Act 2000 in June 2011. The reason for the dramatic increase in the quantum of the fine is that under the Health and Social Care Act 2008 courts can impose a fine of up to £50,000 per offence for carrying on an unregistered service, compared to a previous maximum of £5,000 under the Care Standards Act 2000.
The aggravating factors in the Northern Clinic.com prosecution were that the unregistered provider had been carrying out liposuction for a significant period of time and was paid substantial sums by the patients who had undertaken the procedure. Apparently CQC had warned the company three times that it should not carry on the regulated activity – cosmetic surgery – without being registered. The total bill of £62,500 is also notable when judged against the company’s assumed turnover. A bank statement for the company for February 2012 showed income in the region of £14,000. If this is a typical month then the company will have an annual turnover of around £170,000. Immediately, one can see that the fine plus costs would amount to over a third of turnover and almost certainly extinguish any profit.
We understand that CQC took action after receiving an anonymous tip-off from a member of the public. On the back of this successful prosecution, CQC issued a press release stating, “The result of this case sends out a very clear message to providers that we will act on information we receive about unregistered services and will not hesitate to take tough enforcement action wherever necessary to ensure the safety of patients.”
Over many years, anecdotal evidence has pointed to there being a significant number of private healthcare services operating without registration, particularly in London. The threat of prosecution is real and should not be ignored. CQC has undertaken a number of successful prosecutions of unregistered services since its inception in April 2009, including:
- A Mayfair business offering medical services illegally which was ordered to pay £15,000 in fines and legal costs (June 2009)
- Owners of a chain of clinics operating hair removal lasers without registration who were obliged to pay £13,000 in fines and legal costs (November 2009)
- A company which carried on an unregistered private hospital on an island off the Essex coast which was fined £8,000 and made to pay £30,000 in CQC legal costs (November 2010)
CQC has also prosecuted a number of registered providers for breach of regulations, including the operator of a Yorkshire-based mental health hospital who was ordered to pay £17,015 in relation to five charges concerning the administration of medication (March 2010). Prosecutions in relation to failures concerning medicines management were also mounted successfully by CQC against care home providers in May 2009 and February 2010. All these prosecutions were brought under the Care Standards Act 2000 at which point the maximum fine for a breach of a regulation was £2,500 per offence. Under the Health and Social Care Act 2008, a breach of a regulation can lead to a fine of up to £50,000 per offence.
A director or other officer of a company should be aware of the personal risk of prosecution where CQC judges that the offences were committed with the consent or connivance of the particular director or officer, or attributable to his or her neglect. This is not a theoretical risk. The Healthcare Commission successfully prosecuted a company that ran an orthopaedic hospital for breach of conditions of registration leading to a fine of £5,000 and an award of costs against it of £10,000 in July 2008. At the same time it successfully prosecuted the sole director of the company. The magistrates sentenced the director to a conditional discharge of 18 months and ordered him to pay £5,000 towards the Healthcare Commission’s costs. Again, this was under the old Care Standards Act when the maximum fine for a breach of condition was £5,000 per offence. Under the Health and Social Care Act 2008 it is now a maximum of £50,000 per offence.
Healthcare services that are operating without registration should take urgent legal advice to determine whether registration with CQC is required. The regulations surrounding registration are complex and often far from clear. There are exemptions to the exemptions! Furthermore, new regulations are in the process of being passed which will add new categories of services requiring registration while removing others. The risk is that a member of the public notifies CQC about a service without registration leading to a CQC investigation and possible prosecution.
For those services currently registered, there is a risk of prosecution if a warning notice is not complied with or a condition of registration is breached. CQC’s enforcement policy was revised from 1 April 2012 to introduce what is called a “Regulatory response escalator table” linked to whether the perceived risk is minor, moderate or major. CQC states that it will “no longer allow extensions to the timescales we give to providers to meet the standards, and if a provider fails to respond we will usually escalate the action we take.” The indication is that there will be a lot more enforcement action, particularly around the use of warning notices. As a consequence, one can anticipate an increase in the number of prosecutions of registered providers.
At Ridouts we have considerable experience of advising care providers about CQC enforcement activity. Please feel free to contact us for a free consultation if faced with regulatory action or if you want preventative advice aimed at avoiding enforcement in the first place. We are here to help.