Court of Appeal confirms that primary care providers who have claims resolved in their favour before the NHSLA can claim interest on damages

News | Thu 26th Nov, 2020

The Court of Appeal has handed down a judgment which will have considerable significance for anyone involved with the NHS Dispute Resolution system.  The Court has confirmed for the first time that the powers of the NHSLA, which adjudicates NHS provider disputes involving GPs, Dentists and Pharmacists has powers to award interest on sums found to be owing and ought to exercise that power to do so.

In SSP Health Ltd v The National Health Service Litigation Authority (Primary Care Appeals Service) and others [2020] EWCA Civ 1574, SSP challenged the lawfulness of a decision by the NHSLA adjudicator, Ms Lisa Hughes, to follow usual NHSLA practice by not awarding interest. 

Following a dispute between the contracting parties in respect of money owed to SSP in the sum of £587,808.00 by NHS England under 20 APMS NHS Contracts, the contractor referred the dispute to the Secretary of State for Health.  SSP had taken on 20 NHS GP practices in the Liverpool area and had turned them around in a short period to the benefit of the local NHS.  Simon Butler made representations to the adjudicator in respect of the claim for damages for breach of contract and the award of interest.  The adjudicator agreed that NHS England had breached the contracts and awarded SSP damages in the sum of £587,808.00. 

By the date of the award, SSP had been wrongly kept out of its money by NHS England for a period of over 4 years.  SSP submitted that it was entitled to interest on the award of damages. The adjudicator held that because the contract was not a contract at law, she did not have the power to award interest.  Simon disagreed and prepared all necessary documents for judicial review proceedings.  Permission was granted to proceed.

Cockerill J held that SSP was entitled to claim interest but the adjudicator had refused to award interest and therefore the decision was binding on the parties.  SSP disagreed with Cockerill J’s judgment.  The Court of Appeal disagreed with the Secretary of State, at first instance, and Cockerill J’s construction of the determination.  Lord Justice Stuart-Smith, who gave the lead judgment confirmed that the powers of the adjudicator included the power to award interest and then said:

“Whatever the pre-existing practice, I can see no justification for a blanket policy or decision not to include an award of interest as a constituent part of the appropriate resolution of a dispute where a party has been kept out of sums of money to which it was rightfully entitled.  Put another way, if a party to a dispute has been kept out of their money, it is prima facie appropriate that the resolution of that dispute should include provision to reflect and compensate the party for that fact”

Providers of primary care services will welcome this decision as it will ensure that they are properly compensated for any delay in paying them monies they are owed under primary care contracts.  Those acting for primary care contractors will need to ensure:

a)    The claim to the NHSLA includes a claim for interest;

b)    The period over which interest is claimed and the amount of the claim is clearly stated; and

c)    The basis upon which level of interest claimed is properly explained.  Hence, for example, if the failure to pay sums caused the provider to pay interest on sums borrowed from its bankers to fund the primary care business, that level of interest can be claimed as part of the award.

David Lock QC of Landmark Chambers and Simon Butler were instructed by Katherine Millray of Acklam Bond solicitors, on behalf of SSP.

Link: www.bailii.org/ew/cases/EWCA/Civ/2020/1574.html

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