NATIONAL HEALTH SERVICE (PMS AGREEMENTS) REGULATIONS 2004

Transcription

1 21 October 2010 FILE REF: CARE TRUST : PMS PROVIDER : # (PCT) # (CONTRACTOR) PREMISES : # NATIONAL HEALTH SERVICE (PMS AGREEMENTS) REGULATIONS 2004 RE : EMPLOYER SUPERANNUATION 1. Introduction 1.1 As PMS Providers, the above contractor has referred the matter of employer superannuation for dispute resolution under the provision of Paragraph 95, Schedule 5 of the NHS (Personal Medical Services Agreements) Regulations 2004 ("Regulations"). 1.2 On behalf of the Secretary of State for Health, the NHS Litigation Authority ("NHSLA") is directed to exercise the functions of dispute resolution. I, as an authorised officer of the NHSLA, have determined this application. 2. Application for Dispute Resolution 2.1 In a letter received by the NHSLA Family Health Services Appeals Unit ("FHSAU") on 1 July 2010, the contractor, applied to the NHSLA for Dispute Resolution ("Application Letter"). 2.2 I have had regard to the following documents made available to me in consideration of this matter: Application Letter with the following attachments: Letter from the contractor's accountants to the FHSAU, dated 29 June 2010; Copy of contractor's PMS agreement, dated 1 April 2004; Letter from #, Deputy Director, Primary Care Commissioning and Contracting, of the PCT to the contractor, dated 12 March 2008, together with enclosure: A. Paper entitled "Adjustments to GP Partners 14% Employers Superannuation contributions 2006/ /08"; Letter from #, Senior Primary Care Accountant, of the PCT to the contractor, dated 12 August 2007, together with enclosure: A. Paper entitled "Explanatory Notes on Appendices 1 to 7 of Calculations of GP

2 Partners 14% Employer's Superannuation Contributions (PCT Ceiling) and associated Superannuable Remuneration (Notional Salary) from 2004/05 onwards"; Letter from the contractor's accountants to the PCT's representatives (Capsticks Solicitors LLP ("Capsticks")), dated 18 August 2010, together with calculations tables; Response letter from Capsticks to FHSAU, dated 28 September 2010 with the following attachment ("Response Letter"): the PCT's representations, dated 28 September 2010; Letter from FHSAU to PCT, dated 14 July 2010; Letter from FHSAU to contractors, dated 14 July 2010; Letter from PCT to FHSAU, dated 15 July 2010; Letter from Capsticks to FHSAU, dated 29 July 2010; Letter from FHSAU to Capsticks, dated 30 July 2010; Letter from FHSAU to contractors, dated 30 July Letter from Capsticks to contractor, dated 13 August 2010; Letter from the contractor's accountants to Capsticks, dated 18 August 2010; Letter from Capsticks to FHSAU, dated 20 August 2010; Letter from FHSAU to Capsticks, dated 24 August 2010; Letter from FHSAU to contractors, dated 24 August Letter from the contractors to FHSAU, dated 31 August 2010; Letter from Capsticks to FHSAU, dated 1 September Letter from Capsticks to FHSAU, dated 3 September 2010; Letter from FHSAU to contractors, dated 14 September 2010; from Capsticks to FHSAU, dated 10 September 2010; (chain) relating to extension of submission deadlines from Capsticks to FHSAU, dated 14 September Letter from the contractor's accountants to the FHSAU dated 13 October Parties Representations Contractor Application 3.1 The Application Letter states that there is a dispute between the contractor and the PCT in relation to "payments for superannuation" (as purportedly explained

3 within the Application Letter itself). However, a letter from the contractor's accountants (see document at paragraph above) is referred to for an explanation of the dispute, and states the following: the 6% principle superannuation deduction was shown in the paperwork sent to the Practice but the 14% was not shown on the statement and although this was set aside to be paid on behalf of the Practice it was not specifically allocated to them ; the contractor contends that it is due a refund as a result of the change in structure by reducing the number of principle partners and instead employing salaried doctors ; this does not seem to be fair to them as a Practice as they have obviously had to fund employer contributions for the salaried doctors they have employed as a result of reducing the number of partners ; the sums involved amounts to # for 2004 and 2005 combined and practices due a refund as a result of a change in structure should not be penalised ; and the application is within the three year limit, as explained in # letter of 3 June The PCT s advisors, Capsticks, requested further clarification of the actual dispute detailed in the Application Letter, by a letter of 13 August 2010, addressed to the contractor. Capsticks stated the following in this letter: you consider that the practice should receive funds from the PCT in respect of employers superannuation contributions for, we believe, financial year 2004/2005, however, you have failed to explain the amount you consider to be payable and the basis on which the PCT should pay you those funds under the terms of your Contract or related legislation. Your accountants simply say that you consider the present position unfair ; Capsticks asked the contractor for clarification below: (i) (ii) (iii) (iv) confirmation of the total sum claimed; calculation breakdown, explaining how the figure was reached; the legal basis for the claim under contract or legislation; change in practice structure referred to in the accountants letter attached to the Application. 3.3 The contractor s accountants responded to points (i) to (iv) in paragraph 3.2 above as follows: (i) (ii) (iii) amount of Employer Superannuation overpaid by the practice for 2005/06 and 2006/07 is #; copies of calculations with short explanatory paragraph as to make up the calculations; a belief that the funds are repayable to the Practice as the amount deducted from their income [during 2005/06 and 2006/07] exceeded the amount due and therefore this refund should be given to the Practice ;

4 (iv) a reduction from 6 equity partners to 4 in year ended 30 June 2004 and a belief that this is part of the reason for the excess deductions being made. 3.4 The PCT asserts within its response that a telephone conversation took place between # of the PCT and # of the contractor s accountants on 27 August 2010, and that: the Practice was in fact seeking to claim the difference between: (i) the employers superannuation contributions paid by the PCT to the NHS Pensions Agency on behalf of the contractor in the financial years 2004/05 and 2005/06; and (ii) the ceiling figure proposed by the PCT in August 2007 as a variation to the PMS agreement which would set a maximum figure for the sum payable by the PCT to the NHS Pensions Agency in respect of PMS contractors employers superannuation contributions; as the variation was proposed on the basis that any surplus between the ceiling and actual contributions by the PCT could be retained by the contractors from 1 April 2008 onwards, that the contractor is entitled to claim the notional surplus figure in the earlier financial years 2004/2005 and 2005/2006; the actual figure claimed is #. PCT Representations 3.5 The PCT makes the following representations in response to the above contractor claims: no payments or deductions were made by the PCT to sums paid to PMS contractors in respect of employers superannuation contributions for the financial years 2004/2005 and 2005/2006; the PCT actually paid the full amounts of employers superannuation contributions to the NHS Pensions Agency for the financial years 2004/2005 and 2005/2006. The contractor did not make any payments in this regard; the contractor has suffered no loss which can be claimed from the PCT as the PCT has not sought to recover sums it mistakenly paid to the NHS Pensions Agency for the financial years 2004/2005 and 2005/2006; the contractor has not provided a legal or contractual basis of claim for the difference between the PCT s contributions for the financial years 2004/2005 and 2005/2006 and the ceiling figure which was to be agreed (by contract variation) commencing on 1 April 2008; the 2008 ceiling figure has no bearing to the PCT s liability for contributions in the financial years 2004/2005 and 2005/2006; there is no legal basis for the contractor to claim the difference; 3.6 The PCT also submits that the Application is out of time because: Clause 469 of the PMS agreement states that: Any party wishing to refer a dispute as mentioned in clause 486 must send the request

5 under clause 488 within a period of three years beginning with the date on which the matter giving rise to the dispute happened or should reasonably have come to the attention of the party wishing to refer the dispute The sums in question relate to the financial years 2004/05 and 2005/06. Funding disputes would need to have been referred to NHS dispute resolution by latest June 2009, the Application was made after that deadline; The contractor previously made an application for dispute resolution in relation to employers superannuation contributions in The FHSAU closed the file on the matter in the absence of a statement from the contractor setting out the nature and circumstances of the dispute. The current Application seeks to resurrect this previous claim, two years later after the expiry of the time limit. 3.7 The PCT submits that the Application is an abuse of process and submits that: 4. Consideration the Application is out of time; and no sums are payable by the PCT to the contractor in respect of employers superannuation contributions for financial years 2004/2005 and 2005/ The Application(s) provided by the contractor is/are unclear and inconsistent and the grounds for claim and/or the sums claimed actually differ on each occasion the contractor is asked to clarify: The initial Application states that: the amounts involved amount to # for 2004 and 2005 combined ; the reason for the claim is because the contractor is due a refund as a result of the change in structure by reducing the number of principle partners and instead employing salaried doctors ; this does not seem to be fair to them as a Practice as they have obviously had to fund employer contributions for the salaried doctors they have employed as a result of reducing the number of partners ; and practices due a refund as a result of a change in structure should not be penalised In the contractor letter to Capsticks of 18 August 2010, conflicting claims are made: The overpayment of Employer Superannuation is for different years to those detailed in the Application, being stated as # for 2005/06 and 2006/07; The reason why the contractor believes the # is repayable to the contractor is because the amount

6 deducted from their income exceeded the amount due and therefore this refund should be given to the Practice ; and the reduction of equity partners from 6 to 4 in the year ended 30 June 2004 is a reason why excess deductions have been made In a telephone conversation between the PCT and the contractor s accountants on 27 August 2010 it was further represented that: the Practice was in fact seeking to claim the difference between: (i) the employers superannuation contributions paid by the PCT to the NHS Pensions Agency on behalf of the contractor in the financial years 2004/05 and 2005/06; and (ii) the ceiling figure proposed by the PCT in August 2007 as a variation to the PMS agreement which would set a maximum figure for the sum payable by the CPT to the NHS Pensions Agency in respect of PMS contractors employers superannuation contributions; as the variation was proposed on the basis that any surplus between the ceiling and actual contributions by the PCT could be retained by the contractors from 1 April 2008 onwards, that the contractor is entitled to claim the notional surplus figure in the earlier financial years 2004/2005 and 2005/2006; the actual figure claimed is #; In relation to paragraph above, the contractor did not, by way of a formal response to the PCT's representations, dispute the factual nature of the evidence provided by the PCT relating to the telephone conversation in question However, I have not seen any correspondence between parties evidencing an opportunity for the contractor to respond to the PCT s representations, or any such response. 4.2 It appears from the PCT's representations (at paragraph 15 - see document referred to at paragraph above) that the contractor has previously tried to claim for employers superannuation contributions in 2008 and that the FHSAU closed the file due to failure by the contractor to properly set out the nature and circumstances of the dispute. In the absence of any contractor dispute, it appears that the contractor is attempting to use the same arguments in its current Application. 4.3 Referring to paragraph above, without the contractor refuting or commenting on any of the PCT's representations, I can only assume that they are factually correct (and that the contractor has no issue/comments in relation to such representations) and that paragraph 11 of the PCT's representations is correct and applies, namely: The PCT did not make any payments or deduction to the sums paid to the contractor in respect of employers superannuation contributions for the financial years 2004/2005 and 2005/2006. This refutes the

7 5. Determination overpayment/deduction argument raised by the contractor in the contractor's accountants' letter of 18 August 2010; The contractor itself did not make any employer's superannuation contributions for the financial years 2004/2005 and 2005/2006 (because the PCT mistakenly paid on its behalf meaning the contractor has actually gained from this error to the sum of such payments made by the PCT and for which the PCT has not attempted to recoup); In relation to the principle of claiming the surplus difference between the ceiling figure applied by the PCT and actual contributions by the PCT which apply to from 1 April 2008 onwards (as explained within the letter from the PCT to the contractor dated 12 August 2007 and to be effected by a contract variation which did not take place), the contractor appears to be attempting to retrospectively (and unilaterally) apply that principle to the financial years 2004/2005 and 2005/2006, without any contractual or legal basis for the claim. 5.1 I determine as follows: the contractors have not adequately and properly set out, in a logical and legible manner, the basis of their claim. Each time clarifications have been sought, a different argument or angle has been presented; the above inconsistencies, coupled with an apparent first claim failing on the same or similar grounds, indicates that there is little to no grounding for the claim; the contractor has been given a number of opportunities to present a thought out claim, to include the contractual and/or legal basis of the claim, but has failed to do so; I therefore find for the PCT and conclude that no sums are payable by the PCT to the contractor in respect of employer's superannuation contributions for the financial years 2004/2005 and 2005/ In light of the determination at paragraph 5.1 above, I have not commented on the time limit argument raised by the PCT. Lisa Hughes Appeals Manager