Judge’s innovative ruling against Lancs County Council recognises that privatisation of one service threatens whole local NHS

Could it be that the tide is starting to turn against the fragmentation of the NHS  by cuts and privatisation – which is the real agenda of Accountable Care, now rebranded as Integrated Care?
Update 26 June 2018 – This report (March 2018) is about an interim ruling on the legal challenge that two Lancashire NHS hospitals brought against Lancashire County Council for awarding a £100m children’s service contract to Virgin Care, so threatening “the disruption and damage to the provision of the whole range of healthcare” 
The High Court judge has now made the final ruling that  has overturned Lancashire County Council’s  contract with Virgin Care.   The two NHS hospitals trusts’ legal challenge was successful! Woohoo!!!!

A Public Sector Executive report says that the final ruling was based on the Judge’s finding that the scoring of Virgin’s bid more highly than its rivals did not match up with relevant notes. The Judge ruled that this meant “the decision of the council to award the contract to Virgin must be set aside.”

It’s not clear what will happen at the end of March 2019 when the current children’s services contract with the two NHS hospitals runs out.

An interesting legal commentary on the interim ruling by Bryan Cave Leighton Paisner (BLP) clarifies that procurement law is the area of law used in the ruling and makes these points:
 
  1. “there can be few areas of law which are made use of by public sector bodies to take action in the civil courts against other public sector bodies – and fewer still where special precedents for public sector vs public sector emerge putting the public sector in an arguably better position than the private.”
  2. The legal commentary supports the ruling as “a necessary application of the law in an era where public bodies are increasingly encouraged to turn to commercial contracts and arrangements to generate income to cross-subsidise mandatory services (mostly from other public bodies). If they are to be encouraged to compete on an even playing field with private sector competitors, they do need appropriate remedies that take into account their special circumstances.”
  3. However, they say that this is never what procurement law was intended to be for: “ procurement law was never intended to provide a forum to deal with internal nation state issues around the structure or funding of public services provided by public bodies…It was about allowing access to free trade and genuine competition for economic operators across European borders.In more recent years, the European Commission has also explained it is about ensuring the public gets value for money from the contracts it chooses to put to tender.”
  4. The commentary then asks: Might it [the ruling] provide ammunition to anti-procurement law agitators post-Brexit?”
The whole question of procurement law and its goal of using the NHS as a way of attracting international companies into the NHS is disturbing. We are already seeing how US private health companies like Centene have wormed their way into the EU via their purchase of a 50% share in Spain’s Ribera Salud – and from there into the UK. This is why we urgently need the NHS Reinstatement Bill which would restore the NHS to full public ownership, management, provision and funding and end the government’s use of it as a pawn in their international trade games.
March 2018 report starts here:

Recently in the courts, a judge has made an innovative ruling against Lancashire County Council based on a point about the integrity of NHS services, that he says has not been considered judicially before, as far as he knows.

The problem is that this is ONLY a judgement that refuses an application to lift a temporary suspension of  a  contract the Council has awarded Virgin  PENDING a full hearing in April of 2 NHS Trusts’ legal challenge to the award of the contract.

But it is very useful on setting out the points about the damage to local NHS services as a whole from privatising individual services

Cutting through the legalese, the Judge’s ruling is about what would happen if he were to lift the suspension now. IF he lifted it, then the loss to the 2 NHS Trusts would be enormous, and irremediable really.

His ruling says that paying damages to the 2 NHS Trusts that have challenged the lawfulness of Lancashire County Council’s award of a £100m children’s service contract to Virgin Care would not make up for “the disruption and damage to the provision of the whole range of healthcare” that pulling the children’s services brick out of the whole NHS building would cause.

This ruling recognises that the NHS stands or falls on the basis of providing the whole range of healthcare.

It also points out that this disruption and damage  was not adequately factored in by the council in deciding to award the contract to Virgin Care.

In contrast, the Judge found that, if at the FULL hearing in April, the Council is  deemed right to have given the children’s services contract to Virgin, the Council could EASILY be compensated in damages for the extra wait due to the automatic suspension of the contract with Virgin.

The judge’s written ruling, published in February, is a detailed explanation of his refusal of Lancashire County Council’s application to lift an automatic suspension of the award of a £100m children’s services contract.

This automatic suspension kicked in as a result of a legal case brought to the court by the two NHS Foundation Trusts in Lancashire that currently hold the contract. They claim that Lancashire County Council failed to apply rules governing the award of public contracts. They also claimed the decision would cost them more than £2m and result in 160 staff losing their jobs.

The judge’s ruling is based on a point about whether whether damages would be an adequate remedy to the harm suffered by the 2 NHS Trusts that have challenged the lawfulness of the Council’s decision to transfer the children’s health services from them to Virgin Care. The judge has concluded that damages would be inadequate because:

“The impact upon the provision of healthcare as a whole to those in the catchment areas of the two Trusts is said to be considerable and I accept that.”

On the morning of 25 January 2018, the judge heard Lancashire County Council’s application to lift the automatic suspension of the Virgin Care childrens’ services contract that resulted from the NHS Trusts’ legal challenge to the Council. He gave an oral ruling to the parties that afternoon.

The judge’s more detailed written ruling is interesting and it’s a new take on outsourcing /privatisation being ‘disruptive’ with negative effects on the whole NHS service.

For the NHS Trusts, losing the children’s services would  mean significant turnover in the staff supporting these patients, many of whom are also involved in other services.

The ruling against Lancashire came weeks after  Surrey NHS Commissioners made an undisclosed out of court settlement to Virgin Care, which had planned to go to court to challenge the award of  the Surrey children’s services contract to the NHS.

In this context, it is interesting that the judge’s written ruling says

“There is one point in particular that has not, so far as I am aware, been considered before judicially and that is the point at [19] below.”

Point 19 turns out to be about a legal precedent that says that a claimant (in this case the 2 NHS Trusts) doesn’t have an automatic right to damages in respect of the harm it suffers as a result of the lifting of an automatic suspension – although it must be legitimate that the claimant is left with an effective remedy.

The Judge says this applies to the current case and that

“the issue of whether damages will be an adequate remedy remains a central part, in my judgment, of the task upon which the court is engaged on an application such as this one.”

The Judge’s analysis starts at point 38 and includes the info that

“The Trusts argue that damages in their cases would not be an adequate remedy, and indeed in all the circumstances would be what Mr Williams their counsel described as a ‘weak remedy’.”

Point 39 is the clincher in terms of the new point that has not been considered before judicially:

In my judgment, the fact that the incumbent providers of the Services are NHS Trusts is an important factor.

Any incumbent provider of any service who is then unsuccessful in a procurement competition for those services will face inevitable reorganisation of its business as a result of that lack of success. Such reorganisation will (very often but not invariably) involve redundancies.

However, here, the reorganisation is not just to the staff, or even in relation to the provision of Services to children. The evidence served for the Trusts makes it clear that the Trusts only recently restructured their operations to deliver these Services, and if they lose the procurement the Trusts will have significantly to restructure their operations a second time.

This is a restructuring of delivery of healthcare across the population, and what are called “pathways” which are delivery routes through which healthcare is supplied.

In addition to the cost and disruption that will cause – which I find would be considerable — the loss of the Contract will make it more difficult for the Trusts to deliver other similar public services which they are contracted to deliver, and these will require new pathways to care to be developed.

All of this reorganisation is different to the staff situation, which in a sense is inevitable (or to put it another way, is an inevitable consequence for any incumbent bidder of having lost the bid).

The impact upon the provision of healthcare as a whole to those in the catchment areas of the two Trusts is said to be considerable and I accept that.”

points 41 and 43 are further clinchers:

“I find that damages would not be an adequate remedy for the Trusts. This is the same result whether that question is considered first in isolation, or whether the same point is approached as an issue of the justness, in all the circumstances, of the Trusts being confined to their remedy of damages. The answer is one favourable to the Trusts on this application whichever way it is framed.”

And

“I consider the inadequacy of damages to the Trusts to be conclusive on this application.”

If this new ruling establishes a precedent – I’m not a lawyer, I don’t know – this looks really important.

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One comment

  1. Thanks for a very helpful explanation of the significance of this ruling. I read the whole ruling but was less able to understand its implications. Thanks again.

    Like

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