Summary: Mr X complains that the Care Provider asked for a lump sum because it had not increased Mrs Y’s fees for two years. It then asked for a 25% increase although the contract allowed for only 5% and threatened to give notice if Mrs Y did not pay. The Ombudsman finds the Care Provider caused Mr X injustice and should stop asking for the increase and withdraw the threat of notice.

The complaint

1. The complainant, whom I shall refer to as Mr X, complains on behalf of his mother, Mrs Y. He says Foxley Lodge Care Limited (the Care Provider):
• Increased Mrs Y’s fees contrary to the agreed contract.
• Demanded a lump sum payment because it had not applied annual increases previously.
• Advised Mr X that Mrs Y would have to leave the home if she did not pay the increased fees.
2. Mr X says a move would be upsetting for Mrs Y and he expects the Care Provider to keep to the agreement they signed.

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The Ombudsman’s role and powers

3. We investigate complaints about adult social care providers and decide whether their actions have caused an injustice, or could have caused injustice, to the person making the complaint. I have used the term fault to describe such actions. (Local Government Act 1974, sections 34B and 34C)
4. If an adult social care provider’s actions have caused an injustice, we may suggest a remedy. (Local Government Act 1974, section 34H(4))
5. If we are satisfied with a care provider’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
6. We may investigate a complaint on behalf of someone who has died or who cannot authorise someone to act for them. The complaint may be made by:

• their personal representative (if they have one), or
• someone we consider to be suitable.

7. (Local Government Act 1974, section 26A(2), as amended)

In this case, Mr X holds powers of attorney for property and finance for Mrs Y and is therefore her personal representative in this matter.

8. Under the information sharing agreement between the Local Government and Social Care Ombudsman and the Care Quality Commission (CQC), we will share this decision with CQC.

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How I considered this complaint

9. I considered information from the Complainant and from the Council.
10. I sent both parties a copy of my draft decision for comment and took account of the comments I received in response.

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What I found

11. The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 (the Regulations) set out the fundamental standards those registered to provide care services must achieve. The Care Quality Commission (CQC) has issued guidance on how to meet the fundamental standards below which care must never fall.

The Care Quality Commission

12. The Care Quality Commission (CQC) is the statutory regulator of care services. It keeps a register of care providers who show they meet the fundamental standards of care, inspects care services and issues reports on its findings. It also has power to enforce against breaches of fundamental care standards and prosecute offences.
13. Regulation 16 of the Regulations says “Any complaint received must be investigated and necessary and proportionate action must be taken in response to any failure identified by the complaint or investigation”.
14. CQC’s guidance for providers says:
• “Complainants must not be discriminated against or victimised. In particular, people’s care and treatment must not be affected if they make a complaint, or if somebody complains on their behalf”.
• “Appropriate action must be taken without delay to respond to any failures identified by a complaint or the investigation of a complaint”.
• “Information must be available to a complainant about how to take action if they are not satisfied with how the provider manages and/or responds to their complaint. Information should include the internal procedures that the provider must follow and should explain when complaints should/will be escalated to other appropriate bodies”.
• “Where complainants escalate their complaint externally because they are dissatisfied with the local outcome, the provider should cooperate with any independent review or process”.

The Competition & Markets Authority

15. In November 2018, the Competition & Markets Authority (CMA) issued guidance “Helping care homes comply with their consumer law obligations”. The guidance says:

Fees

• “For your contracts to be considered fairly balanced, residents should be entitled to receive the service they expect, on the agreed terms and not something that is, in any significant respect, different”.
• “Fee increase terms need to be treated with great care, in particular so that they do not allow you to increase your fees arbitrarily. To ensure compliance with consumer law, your fee variation terms must set out clearly the circumstances in which the resident’s fees may change and the method of calculating the change”.
• “we consider that general fee reviews should be limited to once a year”.
• “Simply stating that your fees may go up as a result of ‘increased costs’, ‘local market conditions’ or ‘the wider national economic picture’, will not make your terms fair.
• “Whilst it is not the only way to comply with the law, we consider that care homes are more likely to ensure compliance where they review existing residents’ fees on an annual basis by reference to a relevant, objective and verifiable published price index, clearly specified and explained in the contract”.
• “your terms are likely to be unfair where they…Require residents to pay interest on outstanding fees at a rate above your clearing bank’s base rate”.
• “You risk infringing consumer law if your policies, practices or terms have the effect of discouraging someone from making a complaint or from escalating it if they are unhappy with how it has been dealt with”.

Complaint handling

• “You must never ask a resident to leave or restrict a resident’s right to have visitors or threaten to do so in retaliation to a complaint”.
• “You should acknowledge complaints quickly”.
• “You should set out clear and reasonable timescales within which residents can expect to hear back about their complaint at each stage of the procedure”.
• “You should clearly explain your decision in writing (so there is a record), giving details of the outcome of the complaint and any action taken”.
• “You should clearly explain how and when the complaint can be escalated to the…relevant Ombudsman”. “you should explain the Ombudsman’s role and remit”.
• “Failing to follow your complaints handling procedure in practice (for example, by failing to respond to complaints or not properly investigating them)…is likely to mean that you are not acting in accordance with the standards of ‘professional diligence’ required under consumer law”.

What happened

16. In August 2015, following a stay in hospital, Mrs Y moved into a care home run by Foxley Lodge Care Ltd (the Care Provider). The contract, signed by the Care Provider in September 2015, and by Mr X in October 2015 says:
• The weekly charge would be £600 per week paid each calendar month, one month in advance.
• “The monthly residential fee shall remain unchanged unless four weeks’ written notice is given by the Care Provider or this Agreement is jointly amended by all parties to this Agreement. Fees will be revised only under the following circumstances”:
1. “The Home shall be entitled to increase the weekly residential fee by 5% as a result of increases in running costs such as staff wages, utilities gas/water/electricity/rates, maintenance costs, registration fees or others as relevant. This increase will take place upon the first and subsequent anniversaries of this agreement”.
2. “As required, solely due to increased care needs on the part of the resident following full consultation with the resident and his/her representative. In these circumstances, a full assessment will be carried out with consultation and advice from other health care professionals and the Home’s “Assessment Tool” will be used to determine the level of fees”.
• The Care Provider may give notice “requiring the Resident to leave the Home” for non payment of fees.
17. In March 2018, the Care Provider invoiced Mrs Y for £3,207.21 payable within 14 days. This was the backdated increase for 2016 and 2017, which it had not previously requested. It said it would charge 2% interest daily if it remained outstanding for longer. It asked Mr X to increase the standing order to £2874.37, an increase of around 10% on the £600 Mrs Y had been paying.
18. Mr X wrote to the Care Provider. He said he had never received a receipt for fees paid, an annual statement, or any communication, until the letter in March. He said it was not his responsibility to pay the increase each year and the agreement did not mention this. He said he would increase the payment by 5% on the anniversary of Mrs Y’s admission in September if he received four weeks’ notice. He asked the Care Provider to treat this as a complaint.
19. On 30 March 2018, the Care Provider told Mr X of an increase to Mrs Y’s fees to £750 per week (25% increase), to take effect from 1 April.
20. On 25 September, the Care Provider wrote to Mr X. It said, “You were informed in March 2018 that the home did not increase any fee since admission even though all expenses has gone up”. It also said it was giving four weeks’ notice that the fees would increase to £700 (almost a 17% increase) per week from 25 October.
21. Mr X increased the standing order by 5% in accordance with the contract.
22. The Care Provider did not respond to Mr X’s complaint other than by these various demands for increased fees.

Did the Care Provider’s actions cause injustice?

23. The Care Provider should have given four weeks’ notice of an increase in 2016 and again in 2017 had it wished to increase its fees as allowed for by the contract. It was not entitled to demand backdated increases later, either by a lump sum, or by increases more than the 5% agreed. This caused Mr X avoidable and significant distress, time and trouble. Fortunately, at this stage, it has not caused injustice to Mrs Y because Mr X is dealing with the matter on her behalf. Mr X has increased the fees in accordance with the contract since becoming aware that the Care Provider wanted to apply an annual uplift. The Care Provider is not entitled to more than this.
24. Mr X was entitled to complain about the fee increase demands and the Care Provider should have responded properly to his complaint. It should also have signposted him to the Ombudsman when it could not resolve the matter. The Care Provider’s failure to deal properly with the complaint was a potential breach of regulation 16 (see paragraph 13). The Care Provider caused Mr X further distress when it threatened to give notice if Mrs Y did not pay the increase. It should not use threats to enforce conditions which are contrary to the contract it agreed.
25. The Care Provider’s contract terms are not in accordance with the CMA guidance and need to be reviewed. However, Mr X is content to continue with the agreement to increase by 5% in, or around, September each year, provided the Care Provider gives four weeks’ notice. I have concluded this is an acceptable position and the Care Provider should accept this.

Recommended action

26. To remedy the injustice identified above, I recommended the Care Provider take the following action:
1. Stop asking Mrs Y for a backdated increase.
2. Withdraw its threat to give notice if Mrs Y does not pay the backdated increase.
3. Review its contract and ensure it complies with the CMA guidance, particularly around how much it may increase the fees, and by what measure.
4. Review its complaints handling and ensure complaints are responded to properly and in accordance with the regulations and the CMA guidance.
• Complete actions a) and b) immediately, and actions c) and d) within two months of the final decision.
• Provide the Ombudsman with evidence of these actions; suitable evidence would include a copy of a letter to Mr X confirming actions a) and b). Also, details of the reviews and action taken, and a copy of the revised contract.

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Final decision

27. I have completed my investigation and uphold Mr X’s complaint that the Care Provider:
• Increased Mrs Y’s fees contrary to the agreed contract.
• Demanded a lump sum payment because it had not applied annual increases previously.
• Advised Mr X that Mrs Y would have to leave the home if she did not pay the increased fees.

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Investigator's decision on behalf of the Ombudsman