Clinical Commissioning Group (CCG) Governing Body (PART 1) Date of Meeting: 15 th March 2013 Agenda Item: Paper 8 Subject: Briefing Paper Transfer of Claims and Liabilities Guidance Reporting Officer: Denise Dawson Head of Patient Experience & Engagement, Claims & Legal Services Purpose of the Paper: To provide the Governing Body with an update in relation to the guidance on the transfer of claims and liabilities currently held by NHS Heywood, Middleton and Rochdale (HMR), which under the Health and Social Care Act 2012 will be abolished on 31 st March 2013. Governance: Link to PCT Strategic Objectives 4.03.1 Produce an integrated transition plan for NHS HMR transition to 2013 incorporating GP Clinical Commissioning and NHS Commissioning Board Resolution: To approve To support Recommendation The Governing Body is requested to note the guidance for sender and receiver organisation in respect of claims and liabilities which will transfer under the Transfer Scheme (section 300 to 302, schedules 22 and 23 of the Health and Social Care Act 2012) Key implications for the following: Financial Value for Money Key Financial Implications: Has this paper been approved by the Finance Department? If YES: Name and Job Title of member of the Finance Department If NO what process has been agreed for financial sign off? The financial consequences for each claim are contained within the Part 2 Governing Body Board Paper - Legal Activity and Liabilities Report 15th March 2013. The overall spend on legal advice is also detailed within this paper. N/A Risk Specific high level risks are: Failure to comply with the Department of Health Guidance will carry reputation and litigation risks. Page 1 of 5
Legal Handover and Closedown Guidance produced by Department of Health Workforce N/A Equality Impact Assessment: Included in yes no n/a Paper Comments Not Applicable Patient and Public Involvement Clinical Engagement Parties/ Committees consulted Not Applicable Not Applicable Dr Susan Savage Director of Quality & Safety / CCG Executive Nurse Karen Hurley Director of Operations and Engagement Briefing Paper Transfer of Claims and Liabilities Guidance 1. Introduction 1.1 This briefing paper details the principles for the transfer or discharge of claims, liabilities and potential liabilities currently held by NHS Heywood, Middleton and Rochdale (HMR), which under the Health and Social Care Act 2012 will be abolished on 31 st March 2013. 1.2 The detail in this briefing paper is consistent with that contained in the guidance published by the Department of Health. 2. Body of report 2.1 Background 2.1.1 Strategic Health Authorities and Primary Care Trusts will be abolished on 31 st March 2013 as a result their assets and liabilities must be identified and disposed of, agreed for transfer or discharged prior to this date. 2.1.2 The majority of assets and liabilities (including all land and buildings) will transfer by way of the Sender organisations Transfer Schemes. A Transfer Scheme is an instrument in writing made by the Secretary of State under sections 300 to 302 of the Health and social Care Act 2012. It can deal with the transfers of staff, property and liabilities between those entities as specified in Schedules 22 and 23 of the Act but unlike Transfer Orders does not need to be laid before Parliament. 2.1.3 For the purpose of a Transfer Scheme the liabilities of a sender include any outstanding obligations, disputes, claims by third parties (including legal claims and enforcement notices) under a contract. The liabilities of a sender can also include liabilities arising in respect of obligations under expired contracts, particularly where there is an ongoing or potentially contingent liability in respect of that contract 2.2 Policy and Principles 2.2.1 Where a function transfers to another organisation any claim or liability which relates to that function will follow. There are some exceptions to this, for example there will be instances where the NHS Commissioning Board (NHSCB) take historical NHS Litigation Authority (NHSLA) indemnified clinical negligence claims, including those incurred but not reported (IBNR) relating to new functions of CCG s or Local Authorities. Page 2 of 5
2.2.2 In light of the Act, the following principles have been established to assist PCTs and SHAs in respect of claims and liabilities: Liabilities that can and should be discharged or terminated should be completed by 31 st March 2013 Liabilities that correspond to an asset which relate to a particular function should transfer with that asset Employer liabilities will transfer to the new employer, where an individual s employment is transferred to a receiver organisation. Where employment of staff ceases prior to 1 st April 2013, the employer liabilities related to those staff members will transfer to the Department of Health. 2.2.3 The following are specific examples that illustrate the principles: Continuing Health Care (CHC). Transfer with function. CCGs will be responsible for managing and funding historic claims. Terminated/expired contracts (e.g. continued obligations such as holding records, payment of funds, etc) Transfer with function. If not related to a continuing function the responsibility will transfer to the Department of Health. Employee related claims and disputes. Follow the individual if they transfer to a receiver organisation. If the individual does not transfer and ceases to be employed the responsibility will transfer to the Department of Health. Fraud. Transfer with function. If not related to a continuing function the responsibility will transfer to the Department of Health. 2.2.4 For liabilities that are covered, or partly covered, by the NHS Litigation Authority (NHSLA) schemes the arrangements below will apply. This covers all claims relating to incidents up to 31 st March 2013, including those where the claim is made after this date: Clinical negligence claims relating to PCT public health function. The liability will be distributed between Public Health England and the NHSCB. Clinical negligence claims relating to liabilities held by PCTs relating to contracts with the independent sector (IS). In most instances the responsibility for commissioning this activity will transfer to CCGs, but responsibility for funding claims arising from incidents under these contracts will transfer to NHSCB. The Department of Health position is that the IS will secure its own indemnity cover from NHSLA or another indemnifier where the current indemnities should expire in 2013/14. Clinical negligence claims relating to liabilities held by PCTs relating to historic providers functions. Where these liabilities, including those IBNR did not transfer to the provider sector the liability will transfer to the NHSCB. Property related claims (partially covered by the NHSLA Property Expenses Scheme (PES)). These liabilities will go to the new owner of the property. The receiver organisations for NHS HMR property are listed below: o Community clinics and health centres Pennine Care NHS Foundation Trust o LIFT Buildings Community Health Partnerships Ltd. o Remaining premises NHS Property Services Ltd. Liabilities to third parties scheme (LTPS). This is predominantly employer liability and public liabilities claims. Employer liabilities for staff that remain employed in the system will be transferred to the new employer. For all other liabilities covered by the LTPS (including IBNR up to 31 st March 2013 unless the exception above applies), the liabilities will transfer to the Department of Health. Since the NHSLA scheme only covers a proportion of the cost of claims, there will be provision in the balance sheets of the SHAs and PCTs, and these provisions should be transferred along with the liabilities. 2.2.5 Current claims and liabilities for NHS HMR. There are currently five active/open clinical negligence claims against NHS HMR which will transfer to NHSCB and two active/open LTPS cases which will transfer to the Secretary of State for Health. Further specific detail on these cases is contained in the CCG Governing Body Board Paper Legal Activity and Liabilities Report March 2013. Page 3 of 5
2.3 Funding Liabilities 2.3.1 The majority of claims and liabilities that transfer to receivers will relate to the ongoing operating costs associated with delivering the functions that have transferred, so receivers will fund any claims and liabilities from the operating budgets relating to those functions. 2.3.2 Commissioners will receive the annual cash allocations derived from their operating budget, which will reflect the funding for functions transferred. Therefore, they will have sufficient cash to fund liabilities recognised on their balance sheets. 2.3.3 The exception to this is the short term balances in SHAs and PCTs transferred to the Department of Health to settle. Settlement of these will be made by local finance teams. Cash limits of commissioners will be reduced in order to provide the Department of Health with sufficient cash funding to cover these costs. 2.4 Limitation Periods 2.4.1Limitation periods, relevant to the majority of claims/disputes, specify a maximum time period allowed by a claimant to bring a claim or dispute. Annex A sets out the indicative basic rule of limitation periods by claim/dispute category. However, the facts of each case may alter the limitation period but not necessarily the destination of liabilities. It is important to note that the Court always has discretion to waive limitation if it sees fit, for example: Limitation for Personal Injury does not start to run for a child until that child reaches 18, therefore, a child can bring a claim for Personal Injury up to the age of 21 2.4.2 It is therefore important that were required legal advice is taken from retained legal providers on an individual case by case basis and senders and receivers agree on any alterations. 3. Assessment of risk 3.1 NHS HMR CCG must be assured that the Greater Manchester Patient Services (who will provide the operational activity relating to claims and liabilities) has robust guidance for staff in the appropriate transfer of any new claims that relate to transferred functions, historic provider functions or incurred but not reported IBNR liabilities. 4. Next steps 4.1 All current/open claims existing in the PCT have been allocated to the receiving organisation appropriate to the guidance issued by the Department of Health and will transfer at an agreed time prior to 31 st Match 2013. 5. Recommendations/Resolution required 5.1 The Governing Body are requested to note the detail provided in this briefing paper. Reporting Officer: Denise Dawson Head of Patient Experience and Engagement, Claims and Legal Services Handover and Closedown Guidance Page 4 of 5
ANNEX A GENERAL LIMITATION PERIODS Negligence (other than personal injury or death) within 6 years of the negligent act or omission Tort (generally, including conversion and trespass) within 6 years of the date the cause of action accrued Product liability claims within 10 years of the relevant time defined by the Consumer Protection Act Personal injury or death within 3 years of accrual of the negligent act or omission or knowledge if later Fraud within 6 years of the date the cause of action accrued. Time does not begin to run until the fraud has, or with reasonable diligence would have been, discovered, if the defendant deliberately conceals any fact relevant to the cause of action Libel, slander and malicious falsehood within 1 year of the cause of action accruing Contract within 6 years of the date of breech. The cause of action occurs as soon as the contract is breached Contract under seal (deeds) within 12 years of the breach of contract or deed A claim for the recovery of land, proceeds of sale of land or money secured by a mortgage or charge within 12years of the right accruing (after that time, the title of the person is extinguished) A claim for arrears of rent within 6 years of the date the rent became due An action for non-fraudulent breach of trust within 6 years of the date on which the right of action accrued An action for a contribution within 2 years of the right accruing. A contribution here refers to a defendant s entitlement to claim against another party with whom they may be jointly liable for the claimant s loss To enforce a judgement within 6 years of the date upon which the judgement became enforceable Defective Product under the Consumer Protection Act 1987 is 10 years or section 6 (1) (a) of the Consumer Protection Act 1987 (death caused by defective product) is 6 years 3 Years 1 Year 12 Years 12 Years but the Limitation Act 1980 contains a number of exclusions Basic limitation period is 2 years Page 5 of 5