This case provides much-needed clarity regarding the position of most GP contract holders, as well as others, such as dentists, who hold 'non-NHS' contracts for delivering primary care services.
The Court of Appeal holds that the outcome of the NHS dispute resolution process is amenable to judicial review for all General Medical Services contractors, regardless of whether they hold their GMS contract as ‘NHS contracts’ or ‘non-NHS contracts’.
Context
Primary care medical services in England are predominantly provided through General Medical Services contracts, (‘GMS contracts’). Holders of GMS contracts can elect to be treated as an NHS body. If they so elect they cannot use the civil courts to enforce their rights under their GMS contract. Rather, their contract is treated more like an internal service level agreement between NHS entities. Such GMS contracts are referred to as ‘NHS contracts’.
In contrast, where contractors choose not to be an NHS body their GMS contracts give rise to rights which they can enforce in the civil courts. Somewhat confusingly, such contracts are referred to as ‘non-NHS contracts’. In short, a ‘non-NHS contract’ gives rise to private law rights enforceable in the courts whilst ‘NHS contracts’ do not.
The NHS dispute resolution procedure
In either case, the contract holder can refer disputes between them and the commissioners to the NHS dispute resolution process. Currently, the NHS Litigation Authority deals with such disputes which are determined by an adjudicator. Formally, the adjudicator acts on behalf of the Secretary of State. Where the contractor holds an ‘NHS contract’, their ability to challenge the outcome of the dispute resolution process through judicial review has not been contentious. The position for holders of ‘non-NHS contracts’ appeared to be different.
Correcting errors by the adjudicator
In the case of R (Haffiz) v NHSLA & NHS England [2020] EWHC 3792 (Admin) the High Court had held that a GP who holds a GMS contract as a ‘non-NHS contract’ could not use judicial review to challenge the decision of the adjudicator. In essence, the High Court held that a contractor who chooses to hold a ‘non-NHS contract’ has chosen a relationship with the NHS governed by private law and could not seek public law remedies through judicial review.
The inability to challenge the adjudicator’s decision is significant because, where a dispute relating to a ‘non-NHS contract’ is referred to the NHS dispute resolution process the contract holder loses their ability to sue for breach of contract.
Dr Shashikanth’s case
The difficulties for those who hold ‘non-NHS contracts’ came sharply into focus in the case of R (Shashikanth) v NHS LA. Dr Shashikanth held two GMS contracts as ‘non-NHS contracts’. He had been served termination notices in relation to each, on the grounds that he was in breach of contract. He disputed the terminations and referred the dispute to the NHS dispute resolution process. By referring the dispute in that way, he lost his ability to pursue private law remedies under the contract in relation to that dispute. The adjudicator rejected Dr Shashikanth’s challenge to the terminations. He held that Dr Shashikanth had breached an obligation in his GMS contracts such that termination was justified. In doing so, the adjudicator made an error of law by failing to identify that Dr Shashikanth’s contract did not, in fact, include the obligation which he was alleged to have breached.
Dr Shashikanth sought judicial review to quash the adjudicator’s decision arguing that the adjudicator made an error of law by finding he had breached his contracts. The High Court accepted that argument. However, agreeing with the earlier decision in Haffiz, the High Court held that because Dr Shashikanth held his GMS contracts as ‘non-NHS contracts’ he was not able to use judicial review to challenge the adjudicator.
Dr Shashikanth appealed that decision to the Court of Appeal. The British Medical Association intervened in support of the argument that judicial review should be available to holders of ‘non-NHS contracts’. In the same proceedings, NHS England cross-appealed the High Court’s finding that Dr Shashikanth was not in breach of his GMS contracts. To succeed in their cross-appeal NHS England would need to show that Dr Shashikanth’s GMS contracts had been effectively varied to include the contested obligation.
The Court of Appeal found in Dr Shashikanth’s favour. They held that the NHS dispute resolution for GMS contracts is a statutory process. As the source of the adjudicator’s powers is statute and not the contract, the decision has the necessary public law character to be subject to judicial review. The fact that ‘non-NHS contracts’ give rise to private law rights did not change that analysis. The court ordered that the adjudicator’s decision be quashed, having rejected NHS England’s argument that the contract had been varied to include the contested obligation.
The contract variation
Regulations impose certain obligations on commissioners in relation to the provisions which must be included in GMS contracts. From time to time amending regulations create new requirements. Such an amendment was introduced requiring commissioners to vary GMS contracts to include a duty to co-operate with the PCN in GMS contracts. However, rather than varying Dr Shashikanth’s contracts to include such an obligation, the commissioners proceeded on the mistaken basis that the regulations created an obligation directly on Dr Shashikanth, without the need for variation. In these proceedings the commissioners argued that Dr Shashikanth’s contracts had been varied by a letter which alerted him to the amended regulations and described the nature of the obligation to co-operate with the PCN. The High Court and Court of Appeal rejected that argument. That letter had not purported to vary the contract, as the author did not appreciate that the contract needed to be varied. The contract set out clear steps which were required to vary the contract and those steps had not been complied with.
Summary
This case brings much needed clarity to the position of the majority of GP contract holders, and to others such as dentists, who hold ‘non-NHS contracts’ for the delivery of primary care services. The judgment makes clear that if such contractors refer a dispute to the NHS dispute resolution procedure they will not be powerless if the adjudicator reaches an unlawful decision. The judgment also illustrates the importance of compliance with the process set out in the contract where the contract is to be varied.
For further information on the judgment, contact our expert healthcare lawyers.
