Recent months have seen a number of legal cases which affect the State’s position in relation to paying for long term care which have important implications for those working in the financial services industry. Both prospective and active customers will have heard or read about these cases and will need to be kept informed.
The highest profile case was the Court of Appeal judgement Regina v North & East Devon ex parte Coughlan
on July 16,1999.
The plaintiff in this case was a severely disabled person who had been in hospital since 1971. In 1993 she and seven other patients were moved, with their agreement, from the hospital to a purpose built NHS facility, Mardon House. The health authority had made a promise that this would be her home for the rest of her life. In 1998 the health authority made a decision to close this facility and she was expected to move into a nursing home.
Coughlan appealed to the High Court, which found that she should continue to be the responsibility of the NHS. In coming to that decision the court found that general and specialist nursing care was the “sole responsibility of the NHS” and that nursing is “healthcare” and can never be “social care”. The court also found that the promise made to Coughlan could not be broken, as it was one that could only be broken “where the overriding public interest demanded it”.
The health authority appealed to the Court of Appeal, and the Department of Health joined in “given the importance of clarifying the judgement and making the legal position clear”. The Royal College of Nursing was given leave to put in a submission on two issues: whether nursing care is required to be provided free of charge in nursing homes, and whether the distinction made by the Health Authority between general and specialist care is contrary to the law.
The Court of Appeal found that:
Nursing is not the sole responsibility of the NHS, and there will be times that some nursing services can be provided as a social or care service. There can be no precise legal line drawn. As a general indicator, social services can provide nursing services if they are “merely incidental or ancillary to the provision of accommodation” which local authorities are under a duty to provide under Section 21 of the National Assistance Act 1948. The service also has to be of a nature that an authority whose primary responsibility is to provide social services can be expected to provide. Each case needs to be looked at individually, focusing on the overall quantity of the nursing services and the quality of those services.
North & East Devon’s eligibility criteria placed a responsibility onto social services for cases whose health care which went “far beyond” that which Section 21 permits.
The court ruled: “The fact that the resident at a nursing home does not require in-patient treatment in hospital does not mean that his or her care should not be the responsibility of the NHS.”
Where the demands “for nursing attention are continuous and intense”, but the person does not need to be in hospital, it said: “The nursing care which is necessary may still exceed that which can be properly provided as part of social services care provision.”
Coughlan had been promised a “home for life”. The decision to move her was unfair because “it frustrated her legitimate expectation of having a home for life at Mardon House”. It was an unfairness that amounted to an abuse of power. It was also in breach of Article Eight of the European Convention on Human Rights.
So Coughlan won her case and, given the extent of her needs, remains the responsibility of the NHS and the NHS run home she is in will not be closed.
But where does this leave other people?
Although the court found that the guidance issued by the Department of Health was lawful, North & East Devon Health Authority clearly placed too rigorous limits on what it would provide as a health service. Each health authority has come up with its own local guidance with the agreement of the social services department, and many more criteria may prove to be unlawful.
A press release by the Secretary of State stated that the guidance issued by the Department of Health would be reviewed in the light of this judgement. It aims to publish these updated recommendations later this year.
In the meantime the Department of Health has issued a circular setting out immediate action health and local authorities should take.
They should satisfy themselves that their continuing and community care policies and eligibility criteria are in line with the judgement and existing guidance.
Where they revise their eligibility criteria following any review, they should consider what action they need to take to reassess service users against the revised criteria.
The authorities are reminded that patients have the right to have the decision reviewed under the hospital discharge review procedures if the proper procedures are not followed in reaching a decision about the need for continuing fully funded NHS care. This does not alter any rights to make a complaint under the NHS and local authority complaints procedures. No treatment or care should be refused or delayed because of uncertainty or ambiguity about funding.
The second set of interesting cases related to Section 117 of the Mental Health Act 1983. The High Court found in favour of four applicants who were being charged by their local authorities (Richmond, Redcar and Cleveland, Harrow and Manchester) for residential care when it was part of their Section 117 (Mental Health Act 1983) aftercare services. There is a joint duty on health and social services under section 117 for people who have been detained in hospital under section 3, 37, 47 or 48 for treatment. There is no power to charge for Section 117 services.
Local authorities had been arguing that Section 117 was merely a gateway provision and that the residential care was actually provided under Section 21 National Assistance Act 1948 and had to be charged for. The Court found that this is not the case and Section 117 is a stand-alone duty.
The judge also commented that if someone had been sectioned for their dementia and needed residential care then it was unlikely their condition would improve and so their need for after-care services would be likely to remain.
The four authorities have agreed to pay back the individuals, but the question of what they will do about other residents who have been charged still remains. In their evidence the authorities said that about 50 per cent of the authorities in England currently charge. Although leave was given to the Court of Appeal it was not on a question of law but of public policy.
For older people who, according to this judgement, should have been receiving free care the costs could be immense.
What does all this mean for the long-term care (LTC) insurance market?
In theory, if the State is admitting at least some more responsibility for providing care or care services, than is the generally accepted case, then it would be possible to reduce the cost of LTC insurance by excluding those claims where the condition merited free State care. In practice this will be difficult to achieve and could be construed by policyholders to be unfair. Consequently the judgements are likely to have little or no effect on either the design or pricing of LTC insurance which means that policyholders would continue to receive the expected benefits from their insurance policy irrespective of whether they were eligible for “free care “ from the State.
Perhaps the most useful outcomes from these cases for the market is that they should lead to a more rapid clarification of the whole situation regarding funding of LTC than would otherwise have been the case. The onus is firmly on the Department of Health to set the record straight as soon as possible. It is in nobody’s interest for an avalanche of court cases to be brought against local authorities or the NHS.
As we can appreciate from the complexity of some of the cases it is important that product providers give IFAs quality information so that they can fully understand the issues involved when talking to their customers. One of the reasons that the market for LTC insurance has remained relatively small, with only a handful of active IFAs, is that the issues surrounding the provision of LTC are not clear and have not been communicated to IFAs in an easy to understand way.
There is much to be done by both product providers, advisers and distributors to build awareness of the issues surrounding the provision of LTC in a simple and easy to understand way.