Care Provider News: Important New Ruling for Adult Social Care Funding by Local Authorities
The current economic climate presents a number of different challenges for care providers. Having significant unpaid care fees is a common one which places care providers in the very difficult position. If significant debts mount up, providers have a choice to make – do they continue to deliver high quality care without funding, or do they serve a termination notice on the resident?
Most care providers are understandably very reluctant to evict vulnerable residents for whom a care home has become a place of genuine sanctuary, simply because they have exhausted private funds. Where a resident’s funds fall below the statutory threshold, there is an obligation on the Local Authority to fund their care, but what happens if the Local Authority does not pay the necessary funds to deliver care and forces the cost onto a provider instead?
This was the situation that The Julie Richardson and Banbury Heights Nursing Home found themselves in. The Homes issued a claim against their Local Authority, Oxfordshire County Council, in August 2021 seeking recovery of the unpaid fees in the sum of almost £200,000. However, they later sought permission to amend their claim to allege unjust enrichment by the Local Authority. The Local Authority sought to have the claim struck out, arguing that there was no merit to the claim.
Unjust Enrichment
In order to establish unjust enrichment, the claimant needs to show the following:
- The defendant received a benefit;
- The benefit was unjust; and
- The benefit was received at the expense of the claimant.
A benefit can take the form of money, services or goods. For enrichment to be ‘unjust’ the court will consider factors such as duress, undue influence, mistake, a defendant being enriched as a result of their own wrongdoing, and failure to provide consideration i.e. where the claimant has taken action that benefits the defendant in anticipation of there being a contract, but this does not happen.
In this case, the care homes argue that the Local Authority has been unjustly enriched for the accommodation and care services provided to two residents in the sum of almost £200,000.
The result of an unjust enrichment claim is normally restitution. The defendant will usually be ordered to pay to the claimant the value of the enrichment which the defendant has obtained at the claimant’s expense.
Decision
On 17 December 2024, the High Court found in favour of the care homes and granted permission to amend the claim. The court did not therefore agree with the Local Authority that the claim had no merit – in fact, the Judge said she was satisfied that it was “strongly arguable” that the Local Authority had been unjustly enriched by reason of the care homes fulfilling the statutory duties of the council. The Judge therefore affirmed that Local Authorities need to make sure a person’s needs are met at a reasonable cost in accordance with their determined care needs.
The effect of this decision is that the care homes will now be able to progress their claim to the High Court and will be seeking to rely on sections 8, 13 and 18 of the Care Act 2014, which deal with the statutory duties of Local Authorities to provide care funding for eligible individuals.
This is an important case for care providers to keep an eye on, particularly in light of a report by Care England, which suggests that there is a £2.2bn shortfall in funds for residential care.
How can Ellis Jones help?
Our Healthcare Team understand the importance of maintaining a strong reputation within the highly scrutinised healthcare sector. As such, our aim is always to reach the best possible commercial resolution in an efficient manner and without recourse to court proceedings wherever possible. If you have found yourself in a similar situation with a Local Authority, we will work closely with you to provide specialist and tailored advice to suits your needs, in order to protect your position and your business.
If you wish to discuss a potential dispute, please contact Henrietta Frew by email at Henrietta.Frew@ellisjones.co.uk or phone 01202 057863.
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