Legal update
Care UK’s research showed that the representatives of a prospective resident would, on average, visit their preferred choice of Care UK home around three times before deciding to enter into a contract. That research also showed that over 60 per cent of self-paid customers visited at least two other homes in the area, and around 40 per cent visited at least three other homes in the area, before making a final decision. The judge found that the ‘average consumer’ was able to make a rational and carefully considered decision for a prospective resident and that they were able to understand the information they were given as to pricing and structure of a care home.
On the issue of unfairness of the
contractual terms, the CMA argued that the substantial upfront administration fee created the risk of a disproportionate burden if the resident’s stay turned out to be relatively short, and the fee was charged at a point where Care UK had provided no or only minimal services. Care UK’s response was that significant
services were provided in consideration for the administration fee including, in particular, the pre-admission assessment of care needs and the preparation of a detailed care plan for each resident.
Court findings
The judge found that the question of whether the administration fee was an unfair term would turn on the question of whether or not Care UK provided more than minimal services to residents in return for the payment of the administration fee, and which services were distinct from the provision of accommodation and care services.
The judge found that, after the initial marketing, the services provided were quite different and that before a self-funded resident could be admitted to a care home it was necessary to carry out an assessment of their needs.
The assessment carried out by Care
UK was found in the case of a self-funded resident to be very detailed. The assessment involved a detailed report as to the resident’s life history, daily routine, medical history, and medication including detailed comments on how the medication is taken, allergies, specific behavioural problems or needs, dietary requirements and preferences, sleeping routines and support needs, communication abilities, personal care requirements and end of life care plan. The judge found that Care UK did carry
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out very significant activities prior to the admission of a new self-funded resident. The judge also found that there was no reason why an ‘average consumer’ would expect the overhead of admission work to be ‘subsumed’ within the weekly residential fees for a care home, rather than it being billed separately.
For this reason, the judge found that
a separate charge for the pre-admission procedure should not be regarded as causing a ‘significant imbalance’ in the parties’ rights and obligations. She found that Care UK had a legitimate interest in imposing the administration fee. There was also no evidence that the
administration fee was regarded as unreasonable or exorbitant by the ‘average consumer’, and that the average consumer was able to understand the information that they had been given as to the pricing structure. Care UK’s training documents recognised that contracts would be signed at what was a difficult time for customers and that it took its responsibilities to its customers seriously.
Conclusion
Whether or not other providers could face challenges to their administration fees will depend on the individual facts of each case. In this instance, it seems that Care UK’s adoption of staff training and doing its best to inform decision makers at an early stage as to the level and purpose of the administration fee weighed on the judge’s mind when reaching her decision. The fact that Care UK also used a ‘mystery shopper’ programme shows that it went above and beyond to ensure standards were maintained. The CMA has said that
Tom Lumsden
Tom Lumsden is a partner at Royal Tunbridge Wells-based solicitors CooperBurnett LLP, specialising in commercial property. He has particular expertise in the sale and purchase of care homes, including acquiring land for care home developments.
it would not be looking to appeal this decision, as the case turned on its specific facts, although the CMA is not proceeding with a similar claim against Barchester Healthcare.
Care home providers who currently charge an administration fee and who do little or nothing to explain the contractual terms to decision-makers, or who do not have robust staff training in place, should think carefully about revising their policies and procedures.
Disclaimer The above article is not intended as legal advice and must not be relied upon as such.
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www.thecarehomeenvironment.com January 2022
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