Practices have the option of electing to be an NHS body or a non-NHS body when entering into a contract.
Londonwide LMCs have previously advised practices to opt for non-NHS body status as this allows practices to pursue remedy via the civil court.
In light of recent changes in case law, the decision has become more nuanced in that practices who have elected to be a non-NHS body will not be able to pursue a judicial review in the event that they are unsuccessful in appealing a contract termination via NHS Resolution (NHSR).
The relevant case is currently the subject of an appeal hence this guidance examines the options as things stand.
Brief Case Summary
R (Sashi Shashikanth) v NHS Litigation Authority, NHS Commissioning Board (aka NHS England) is a landmark case on the ability to use judicial review – a public law process – to challenge contractual decisions made by public bodies.
The claimant is a GP (whose practice holds non-NHS body status) who challenged the termination of his contract by the Second Defendant, NHS England. In order to terminate the contract, NHS England relied on the GP’s alleged breach of the GMS contract.
The First Defendant was the NHS Litigation Authority (NHSLA) (now known as NHS Resolution [NHSR]) which acted as contractual adjudicator, upholding NHS England’s decision to terminate the contract under the contract’s dispute resolution process.
The court was required to decide whether the decision by the NHSLA to uphold NHS England’s termination of the contract could be challenged through judicial review in circumstances where the practice had opted to be a non-NHS body. There is no doubt that an NHS body could have pursued a challenge by judicial review in similar circumstances.
The court decided that a non-NHS body, such as the GP in this case, was bound by the decision of the NHSLA even though that decision was based on an error of law.
In simple terms this means that even though the court found that there had been no breach of the contract, and thus no lawful basis for the termination, the GP contractor had no legal remedy by way of judicial review. As a non-NHS body which had chosen to use the contractual dispute resolution procedure, the GP practice was bound by the outcome.
The court acknowledged the possibility that judicial review might be available to challenge a decision of the adjudicator where their decision was fraudulent or made in bad faith. However, that was not the issue in this case, so the claim was unsuccessful.
Considerations in light of the judgment
GP contractors should consider the following points:
- Practices need to give careful consideration as to whether they elect to be an NHS body, with no private law rights, or a non-NHS body, with private law rights and obligations enforceable through the civil courts. A contract between NHS England and an NHS body is not a contract in the traditional sense because it does not give rise to any private law rights or obligations.
- Practices who have elected to be an NHS body have access to the NHSR as a dispute resolution mechanism but cannot pursue a civil claim through the courts.
- An NHS body can challenge the lawfulness of NHSR’s decision in judicial review proceedings, subject to the requirement to obtain the court’s permission.
- Practices who have elected to be a non-NHS body need to carefully consider whether to refer a contract dispute to NHSR or to seek remedy via the civil court.
- Once a practice that has elected to be a non-NHS body has referred a contract dispute to NHSR, it is now not possible to pursue remedy by way of a judicial review in relation to the same dispute unless they can demonstrate fraud or bad faith.
- This demonstrates the importance of getting specialist legal assistance in preparing arguments for NHSR – in other words, it is important to get it right first time.
Options for contract dispute resolution
When a non-NHS body is considering whether to refer a contract dispute with NHS England to NHSR or to pursue remedy via the civil court, the following considerations are relevant:
- The Primary Care Appeals process (NHSR) is a relatively low-cost option. The parties pay their own legal costs whether they win or lose, and the process is relatively efficient.
- Significantly in the case of a contract termination, timely referral of the dispute to NHSR will usually stop the termination from having effect until the dispute is resolved.
- If NHSR do not uphold the appeal, then – as matters stand – practices who have opted to be non-NHS bodies have no recourse to pursue judicial review, unless the challenged decision was fraudulent or made in bad faith (which would be rare).
It would be open to a practice that had opted to be a non-NHS body not to use the Primary Care Appeals process (NHSR) and to pursue remedy via the civil court instead. However, this carries risks:
- The case would not usually be heard for at least several months.
- The contract termination would not be stayed [put on hold], which means that commissioners could still terminate the contract. Unless the commissioners agreed not to terminate the contract, it would be necessary to obtain an injunction preventing the termination until the outcome of the breach of contract claim.
- There are significant costs associated with pursuing such an action. The financial risk is compounded by the fact that the Court may make a costs order against the practice in the event that their case is unsuccessful (which means that the practice would be liable for NHSE’s costs).
- There is no guarantee that the action would be successful.
The High Court’s decision in this case is the subject of an appeal, hence the above analysis would need to be re-considered once the decision of the Court of Appeal is known.
Practices should give careful consideration (based on the matters set out in the above section entitled Considerations in light of the judgement) to whether they elect to be an NHS body or a non-NHS body.
Practices which have elected to be a non-NHS body should seek specialist legal advice before referring a dispute with NHS England to NHSR.
Once a practice that has elected to be a non-NHS body has referred a contract dispute to NHSR, it is now not possible to pursue remedy by way of a judicial review in relation to the same dispute (unless they can demonstrate fraud or bad faith).
Any practice which refers a contractual dispute to NHSR should seek specialist legal advice to ensure their case is argued effectively and promptly. Legal advice is particularly important where the dispute relates to breach notices or termination notices.
Whilst it would be a matter for a practice to choose whom to instruct, our Enterprise Associates are all experienced in the field.
We would like to thank Stewart Duffy at Weightmans solicitors for his assistance in drafting this guidance.