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Have older people in private nursing homes received a fair deal from the State?

Ombudsman logoThe Ombudsman yesterday published Who Cares? An Investigation into the Right to Nursing Home Care in Ireland. The gist of the Report is that the State is failing in its legal obligations to in need of nursing home care. Moreover, the Ombudsman was sharply critical of the refusal of the Government and State agencies to co-operate with her inquiry. However, in today’s Irish Times, the Minister for Health Mary Harney strongly rejected that criticism, saying the Attorney General had advised the that the Ombudsman was overstepping her mandate. On the other hand, an opposition spokesperson said the Report showed that the Government had failed older people, and Report has been very warmly welcomed by Age Action (a charity which promotes positive ageing and better policies and services for older people in Ireland):

Age Action is anxious that there is clarity about the eligibility and entitlements of older people, and that the rights of older people are protected … It is therefore timely that the Ombudsman’s investigation is published.

It’s déjà vu all over again“. We have been here before. From 1976 to 2004, the State had invalidly charged many older people for care in public nursing homes. When this came to light, the Government attempted to legislate away any claims to recover such invalid charges. However, the Supreme Court struck that provision down on constitutional grounds, and no such limitation appeared in the subsequent legislation enacted in 2005 providing for the validity of such charges thereafter. Yesterday’s Report considers the related problem of older people who couldn’t access public nursing home care, and were forced to pay for private nursing home care instead. The whole issue is now substantially governed by the Nursing Homes Support Scheme Act, 2009 (also here), which the Department says represents a Fair Deal for older people. But that is for the present and the future; it doesn’t address the problems in the past which are the focus of the yesterday’s Report.

The Report was formally submitted to the Dáil and Seanad yesterday in accordance with section 6(7) of the Ombudsman Act, 1980 (also here); and it concerns an investigation by the Ombudsman based on more than 1,000 individual complaints made, since 1985, on behalf of older people who were unable to get the long-term nursing home care to which they were entitled from their health boards or, latterly, the Health Service Executive (HSE). This entitlement flowed from section 52(1) of the Health Act, 1970 (also here) which provides that a health board – now the HSE – “shall make” such services available. Chapter 5 of the Report considers the extent of the obligation imposed by this section, and chapter 7 of the Report argues that the 2009 Act doesn’t alter this obligation, which continues to have full force and effect.

Notwithstanding this obligation, many eligible older people were not provided with public nursing home care by the health boards or the HSE, and they had no choice but to avail of private nursing home care. While some got some State support for the costs of private care, this support was inadequate. Indeed, many of the complainants to the Ombusdman said that having to avail of private care, even with State support, created huge financial and other problems both for the older person and for the wider family. As a consequence, several hundred legal actions against the HSE have been initiated. Indeed, the Report says that there are more than 300 cases currently before the High Court in which people are seeking to recover the costs incurred in having to avail of private nursing home care where they should have had care provided by a health board or the HSE. Chapter 8 of the Report analyses those claims. In an article I wrote about the 2004 case in the Supreme Court, I briefly discussed these claims as well, and I concluded that they have a reasonable chance of success (see “The Nature and Limits of Claims to Recover Unlawful Health Charges” in O’Dell (ed) Older People in Modern Ireland. Essays on Law and Policy (FirstLaw [now Bloomsbury Professional], Dublin, 2005) 450).

In particular, I think that those who were entitled to public care but were denied it and compelled to seek private care have a claim to restitution of unjust enrichment. In Dublin Corporation v Building and Allied Trade Union [1996] 1 IR 468, Keane J for the Supreme Court identified four enquiries on which such claims are founded: (i) is there an enrichment of the defendant; (ii) is it at the expense of the plaintiff; (iii) does it arise in circumstances in which the law provides a cause of action (ie, is it ‘unjust’); and (iv) are there any defences. If these four enquiries are answered in favour of the older people rather than the government, it could prove not only embarrassing for the government but also very expensive indeed.

Here, (i) the state was enriched, because it was saved the otherwise inevitable expense of meeting its obligations under s52 of the 1970 Act. Moreover, (ii) that enrichment was at the expense of the older people who were forced into private nursing homes, as it was this private care which saved the government the expense of meeting its s52 obligations. (iii) There are several possible causes of action in this context. First, many older people made private arrangements because they had no other choice; the acted under a practical compulsion or necessity in the circumstances; and such practical compulsion amounts to a cause of action in the law of restitution of unjust enrichment. Second, many older people made private arrangements in the mistaken belief that they were not entitled to access public care (indeed, that mistaken belief was induced by the state); and such a mistake also amounts to a cause of action in the law of restitution of unjust enrichment. For either of these reasons, therefore, it can be said that the state’s enrichment at the expense of the older people is an unjust enrichment. If these three enquiries are answered in the affirmative, it would mean that the plaintiffs have prima facie claims against the State. (iv) The final question then is whether the state has any defences to such claims. The Report says that a dozen such claims have already been settled by payments from the State, though the terms of such settlements are confidential. As to the remaining claims, the Report says that one of the matters being relied upon by the State is that, “in the circumstances prevailing, it would be inequitable to require the defendants to make restitution at this stage”. This sounds like a quote from the passage in the judgment of Henchy J in Murphy v AG [1982] IR 241 dealing with the defence of change of position. However, that defence requires that the state have received the benefit in good faith. The Travers Report concluded (see s7.2; p87) in 2005:

(1) The Department of Health and Children was well aware that legal concerns surrounded the practices of charges for long term care in health board institutions from the outset of the introduction of these practices in 1976.

(2) Such legal concerns persisted and continued to be articulated anew on many occasions over the years right up to the present. These concerns were expressed by legal opinion external to the Department, by legal opinion provided to the health boards, by officials within the Department itself and, not least, by the Department’s own Legal Advisors.

Given that they knew of these legal concerns, it is difficult to see how their actions could satisfy these requirement of good faith. For these kinds of reasons, I concluded that these kinds of claims have a reasonable chance of success. I am interested to learn from the Report that such claims in train, and I look forward to their resolution in due course. In the meantime, the State needs to understand and accept the nature of its obligations to older people in modern Ireland.

Update (15 November 2010): from today’s Irish Times, How fair is the Fair Deal?

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2 Responses to “Have older people in private nursing homes received a fair deal from the State?”

  1. […] This post was mentioned on Twitter by Bosca, Rossa McMahon and efdel, Eoin O'Dell. Eoin O'Dell said: Have older people in private nursing homes received a fair deal from the State? http://ht.ly/37cRf My new blogpost […]

  2. Niamh Cleary says:

    (1) Enrichment: Although the state has probably been saved a necessary expense in that it would otherwise would have had to provide nursing home care for these elderly people, it will be able to rely on the subjective devaluation principle in order to avoid paying the full costs of the nursing home care. The subjective devaluation principle allows a defendant to diminish the value of an enrichment by arguing that, although the enrichment could be considered objectively valuable, it had no value for him. In the case of nursing home charges, the state may be able to argue that it was in a position to ‘bulk-buy’ nursing home services and so it would not have paid the full cost of the nursing home charges incurred by private patients. Although the subjective devaluation principle has not been explicitly adopted in Irish law, the argument that the state could make would be comparable to those successfully relied upon by the Revenue Commissioners in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34, [2008] 1 AC 561 who subjectively devalued the use value of money over time by demonstrating that the state could borrow money at lower rates than those available on the commercial market.

    (2) Causation: The success or failure of a possible restitution claim will be the standard of causation required to link the cost of private nursing home care with the unjust factor in a restitution claim. This in turn depends on whether the payment for private nursing home care can be characterised as an enrichment received by the state, or as a consequential loss incurred by the plaintiffs. In Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2008] EWHC 2893 (Ch), Henderson J rejected that the ‘but for’ standard of causation adopted in mistake cases was applicable to consequential losses incurred by a claimant. Such a standard was confined to establishing the necessary link between the mistake and the payment sought to be recovered. In that case the payment characterised by Henderson J as a ‘consequential loss’ involved enhanced dividends paid to shareholders to compensative them for the fact that tax credits were not available to them in respect of those dividends. The Revenue Commissioners could not be said to have been enriched by that payment. In the case of the nursing home charges, the state was enriched insofar as it was not required to provide nursing home care to those who obtained it privately, and so this is a direct enrichment to the state, rather than a consequential loss incurred by the plaintiffs. As a result, there seems no reason in principle to require a stricter standard of causation linking the plaintiffs’ mistakes to the payment for private nursing home care.

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Me in a hatHi there! Thanks for dropping by. I'm Eoin O'Dell, and this is my blog: Cearta.ie - the Irish for rights.

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