Report on Nursing Home Subventions

Between 1993 and 1999 the subvention scheme operated more or less on the basis of family assessment; and for much of that same period it operated with the "pocket money" provision effectively in abeyance. Although the subvention scheme appears not to have commanded much direct Oireachtas attention after September 1993, the scheme was otherwise the subject of some debate and, from 1995 onwards, became the subject of a veritable deluge of legal advice. At the same time, the financial constraints on the Department in funding the scheme remained significant and this must have restricted its capacity to respond to the growing evidence that the scheme, as operated, was not satisfactory.

Funding Constraints

In all its contacts with the Ombudsman's Office, from 1992 onwards, the Department always made it clear that the health boards' capacity to meet their obligations to people in need of nursing home type care was severely curtailed by the inadequate finances available. Whereas the Department hoped that the new subvention scheme would improve matters, it acknowledged that securing adequate finances remained a problem. Some measure of the extent of the funding difficulty it faced can be gauged from exchanges it had with the Department of Finance as recently as 1997

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In July 1996 the Minister made a regulation (SI No. 225 of 1996) which increased the allowances available to family members whose incomes were being assessed as part of the subvention application process. Full details of these changes are given in Chapter Four. That regulation also purported to authorise health boards to make contractual arrangements ("contract beds") with private nursing homes to look after health board patients where such arrangements would be in accordance with the subvention Regulations generally. In December 1996 the Department changed its advice in relation to the "pocket money" issue. These developments had cost implications and in May 1997 the Department of Finance posed a series of searching questions in relation to them.

In relation to the "contract beds" the Department of Health was effectively asked to justify its actions. The reality was that the use of "contract beds", within the context of the 1990 Act, amounted to a dilution of patients' existing entitlements under the Health Act, 1970. This is because the charging regime under the 1990 Act is much more onerous than that under the Health Act, 1970. In fact, the contracting provision under SI No. 225 of 1996 is quite likely to be invalid (ultra vires) as it creates an arbitrary distinction between two groups of patients in a manner not envisaged in the parent legislation (the Health Acts). The Department of Health would have been aware of this in making the regulation (see legal advice quoted opposite). Nevertheless, even where the Department had made an arrangement which actually saved money, it was still required to defend its actions on purely financial grounds.

Questions were also raised about the wisdom of having eased the means test on family members. This was put as follows: "In a time of rampant demand, why was the threshold made less onerous at a cost of �1.5m per year?" In its reply the Department of Health effectively acknowledged that the State was failing in its obligations to elderly people in need of long-stay care; it recognised that the subvention scheme was a cheaper option than that of meeting people's statutory entitlement to long-stay care. Notions of entitlement and legal propriety were not in evidence on either side in this dialogue. The Department of Health's reply, in part, was:

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Department of Health Internal Minute, 11 February 1993

"The State is currently unable to meet the demand for long-stay places. If the nursing home legislation became unworkable, the State would have to pick up the pieces by means of huge capital investment for the provision of new long-stay accommodation for elderly people. The capital cost alone ... would be well over �200m. Since the Act commenced to the 31st December 1996, 10,106 people have been approved for a subvention. Of this number, 5,639 people are actually being paid subvention at a cost of �17,124,000 to the State. There is no way in which the State could support that number of people in health board long-stay units (assuming those units existed) for �17m a year."

Implicit in the Department of Finance questions was an assumption that family members could, and should, be required to contribute. One question was put as follows: "The Regulations are readily policeable in terms of requiring people to produce a P60 ... Why is this not included as a requirement for the operation of the Scheme?" Another question was: "What arrangements are in force to enforce and police the regulations?" To this latter question, the Department of Health rather enigmatically replied: "It is not clear what is meant by this question as the Act and Regulations are self-explanatory - applicants either qualify or do not qualify."

It will be clear from the tone of the above exchanges that, for the Department of Health, acquiring funding from the Department of Finance for its subvention scheme was an on-going struggle. The latter Department, for its part, was ever conscious of that aspect of its role which requires it to act as the custodian of the public finances.

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Ms. Ita Mangan - address to 1997 Conference of the National Council on Ageing and Older People.

Commentators

The Ombudsman was among a number of commentators who drew attention to some of the inherent defects in the operation of the subvention scheme. The Ombudsman's Annual Report for 1996 highlighted the failure to operate the "pocket money" provision:

"... complainants pointed out that some health boards were not applying this provision [Article 8.2] in determining the rate of subvention and consequently an amount equivalent to one fifth of the NCOAP rate was not being disregarded. This resulted in a reduction in the level of subvention otherwise payable by the health board. The consequence of this was that the patient - or frequently the patient's family - was required to meet the shortfall created by the failure to pay a higher subvention. " The Ombudsman returned to this issue in his 1997 Annual Report. However, it was the operation of the family assessment provisions which was the subject of the Ombudsman's most detailed public commentary on the scheme.

In November 1997, in an address to the Institute of Public Administration's National Conference on the theme of Governance and Accountability, the Ombudsman expressed serious concerns that secondary legislation was being misused by the inclusion within regulations of provisions (including penalties) which were not authorised by the parent Act. The Ombudsman detected "an attitude which sees delegated legislation as a means of fine tuning in areas which might prove controversial if included in the primary legislation." One of the two detailed examples the Ombudsman gave was the inclusion of the family assessment provisions in the nursing home subvention regulations. The Ombudsman's description of the scheme in operation is given opposite. However, the kernel of the Ombudsman's concern in principle was expressed as follows:

"It may, or may not, be desirable that children should support their elderly parents. I believe that in Germany, for example, there is some such obligation. Whether or not we should have such a provision is a matter for the Oireachtas. What concerns me here is, that the Minister, and his Department, appear to have created a de facto obligation to support as between children and their elderly parents without any discussion on this issue in the Houses of the Oireachtas thereby avoiding effective accountability."

A number of other commentators also drew attention to the likely invalidity of certain features of the Regulations. One of the first in this regard was Mel Cousins BL. Writing in the Irish Social Worker (Summer/Autumn 1992) before the subvention scheme got off the ground, Mr. Cousins speculated that Section 7 of the 1990 Act appeared "to be intended to provide a legislative basis for the current practice ... [of] making nursing home grants". He pointed out that the 1990 Act did not supersede the existing general statutory entitlement to nursing home care. Accordingly, Mr. Cousins concluded that a subvention under the 1990 Act was not a satisfactory alternative to the existing right to long-stay care under the Health Act, 1970. In a later article following the commencement of the subvention scheme, and published in the Law Society's journal The Gazette (January/February 1994), Mr. Cousins developed his theme. He highlighted some very specific defects:

• A person who enters a nursing home without having first claimed a subvention is generally debarred for two years from making such a subvention claim. This provision is arguably invalid (ultra vires).
• As regards the family assessment provisions, these also seem invalid.
• Separate regulations - the Health (In-Patient Services) Regulations, 1993 [SI No. 224 of 1993] - made under the 1990 Act purport to amend Section 52 of the Health Act, 1970. The effect is that where a health board provides nursing home services for a public patient in a private nursing home "it shall do so in accordance with the provisions" of the 1990 Act rather than under the Health Act, 1970. The charging arrangements under the 1990 Act are more onerous than those under the Health Act, 1970. Mr. Cousins suggests that SI No. 224 of 1993 is "almost certainly unconstitutional" representing "an attempt by the Minister to amend primary legislation contrary to article 15.2.1 of the Constitution".1

In relation to SI No. 224 of 1993, the Ombudsman's Office had discussed the substance of the regulation informally with the Department as far back as November 1991. The Department outlined its plans to deal with the difficulty created by the fact that everybody in need of long-stay care was already entitled to it under the Health Act, 1970. It explained that it intended, by way of a regulation to be made under Section 72 of the Health Act 1970, to distinguish between patients provided with care in health board homes and patients placed by health boards in private homes. The stricter charging regime of the 1990 Act would apply in the latter cases while those fortunate to have got a place in a health board home would enjoy an easier charging regime. The Ombudsman's Office suggested that any such arbitrary distinction in charging could hardly be said to have been intended by the Oireachtas and that any regulation to that effect would be likely to be invalid.

Ms. Ita Mangan of the National Social Service Board (now known as Comhairle) has commented on several occasions both on the legality of the family assessment arrangements generally as well as on the detail of how the assessment operated. Speaking at the 1998 AGM of the Irish Association of Older People, Ms. Mangan commented:

"There is a need for a clear-cut and unequivocal statement of rights for older people. ... Changes need to be made, for example, in the way the nursing home subvention is calculated - in particular, in the way in which the income of children is assessed as if the parent had a right to that income. If society wishes to place a legal obligation on children to support their parents then this should be done in a proper legal manner and should not be done surreptitiously and without any legal recourse for the parent."

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Ombudsman Address to Institute of Public Administration's National Conference, 7 November 1997

Negative Legal Advice

Both the "pocket money" issue and the family assessment issue were the subject of detailed and repeated legal advice in the period 1995 - 1998. Some of these advices were requested by individual health boards and some by the Department. Whereas the health boards were always quick to inform the Department (and generally the other boards) of such advice, the Department appears not to have circulated the advice it was receiving. Given that the Department had itself made the Regulations, and had sought legal advice in the process, it is difficult to see why it should have needed legal advice, after the event, to clarify what its own Regulations meant.2

The "Pocket Money" Issue

In 1995 two of the health boards (WHB and SHB) separately received legal advice that the approach to the "pocket money" issue advocated by the Department was incorrect. (See Chapter Five for details.) Not all the health boards changed their practice consequent on this advice; and the WHB in particular, continued its practice for a considerable period despite the explicit advice it had received.

In November 1997 the Attorney General's Office, in response to queries from the Department, commissioned legal advice from an independent Senior Counsel in relation to the operation of the "pocket money" provision (Article 8.2). The Department had already conceded that its original advice to the boards was incorrect. This legal advice was sought in the context of demands for the retrospective restoration of Article 8.2 and the payment of appropriate arrears. The Senior Counsel agreed with the advice received by the two health boards which, in turn, was consistent with the position already adopted by the Ombudsman's Office. He pointed out that the position argued by the Department could only be correct if one took the view that Article 8.2 had no relevance at all, a scenario which the rules of statutory interpretation clearly exclude.

The Senior Counsel dealt specifically with the question of liability for the payment of arrears. He advised that any person who, as a result of a misinterpretation of the Regulations, had in the past received a lower level of subvention than would otherwise be the case, would be entitled to be compensated accordingly unless the health board in question could show that, in the exercise of its discretion (assuming it was a case where such discretion existed), it could not have paid the applicant any more than was actually paid. The Senior Counsel's view was that this might be difficult to show in many cases and perhaps even in all cases.

Following receipt of this advice, the Department accepted the need to pay arrears in the "pocket money" cases and provided the health boards with a specific allocation for that purpose (see Chapter Five).

Legal Adviser to Department of Health, 18 November 1997

The Family Assessment Issue

In July 1997 the SEHB sought legal advice on its application of the family assessment provisions. This was in the context of points made by the Ombudsman in relation to a complaint made against the Board. The SEHB would already have been aware of major question marks over the validity of the provisions arising from a detailed subvention appeal submitted in May 1994 by a solicitor acting for a particular claimant.

While offering the SEHB as much support for its position as possible, its legal adviser's overall assessment in July 1997 was that the Regulations would be open to challenge on a number of points. He advised that several of the items raised by the Ombudsman had undoubted merit and, in his view, were likely to be considered favourably by a Court. The legal adviser observed that this should rightly be a matter of concern on the part of the Board and of the Minister. He felt in no doubt but that a properly mounted challenge, both on the basis of the legislation and on the basis of constitutionality generally, could be made with considerable chances of success.

This advice was passed on to the Department on 10 July 1997. On 13 November 1997 the Department asked its own legal adviser for a view. The Department's adviser agreed with the position articulated by the SEHB legal adviser. This should not have been surprising given that a previous Departmental legal adviser had cautioned against including family assessment provisions in the Regulations before they were made. Because of the possibility of retrospective payments being sought, the legal adviser suggested the Department consult with the Office of the Attorney General (AG).

The Department had a consultation with the AG's Office on 3 December 1997 at which the AG 's Office agreed with the position already articulated by the advisers of both the SEHB and of the Department. On 2 February 1998, the AG 's Office gave the Department written advice. This pointed to the requirement that secondary legislation must comply with the policy and principles of the parent Act. The AG's official concluded that, in this instance, the Minister had acted ultra vires the 1990 Act in defining the term 'circumstances'. The AG's official felt that, if the matter were to be determined by a Court, it was likely the Court would come to a similar conclusion.

It appears the fairly definitive advice provided by the AG's Office was not shared with the health boards as, in May 1998, the SEHB commissioned further advice on the family assessment provisions from a Senior Counsel3. This very detailed advice was provided on 18 May 1998 and a copy was promptly provided to the other boards and to the Department. The key points made in this advice were as follows:

• There is no obligation in common law on children to support their parents and the 1990 Act does not impose such an obligation.
• The Minister cannot by regulation impose such an obligation in the absence of a clear authority in the 1990 Act.
• The Regulations do not impose an obligation on children of claimants to provide details of their own means.
• "In my view, key features of the Regulations are plainly and unarguably ultra vires." Primarily, this refers to the definition of "circumstances" (the capacity of a son or daughter to contribute).
• The fact that the "circumstances" definition captures only adult sons and daughters "residing in the jurisdiction" is haphazard and is not a principle or policy to be found in the parent Act.
• In relation to the liability to make restitution, i.e. pay arrears, in the event of the Regulations being found by the Courts to be ultra vires, such a liability would, in principle, arise. What might happen in practice on this front would depend on a number of considerations.

Senior Counsel advice to the South Eastern Health Board, 18 May 1998, as circulated to the health boards and the Department of Health

Conclusion

A key objective in any programme of public service modernisation is the improvement of the responsiveness of the public service to client needs. There is an obvious failure in responsiveness when a particular scheme gives rise to a significant number of complaints from clients or from groups, including politicians, which articulate their constituents' concerns. Such failure is compounded when, by a failure in accountability, obvious defects or illegalities are met with inaction.

It is clear in relation to both the "pocket money" issue and the assessment of family circumstances that the positions adopted by the Department, and generally accepted by the health boards, never had the support of any of the legal advisers. The decision to define "circumstances" as it was defined appears to have been contrary to clear legal advice received. It is an inescapable conclusion that the Department presided over a set of practices for a period of more than five years in the knowledge that those practices were legally indefensible.4

There is no doubt that by reference to Section 4 of the Ombudsman Act, 1980 maladministration had occurred on a significant scale. The actions or inactions of the Department and the health boards were "taken without proper authority", were "improperly discriminatory" and were generally "contrary to fair or sound administration". Inevitably the question must be raised of to whom, or to what, is this maladministration to be attributed and consideration must be given to whether or not there were mitigating circumstances. It is the Ombudsman's view that any attempt simply to apportion blame, without regard to the complexities of the framework within which government in Ireland operates, runs the risk of the central message in this report being overlooked. Accordingly, these issues are addressed in some detail in Chapter Eight. With regard to mitigating circumstances, it has to be accepted that, as a result of the cut-backs of the 1980s and the rationalisation of the hospital system, the Departmen could no longer deliver on the entitlements provided for in earlier legislation. In addition, as mentioned earlier, serious funding constraints continued to apply. The question remains as to whether or not these difficulties could have been faced up to in ways which would not have involved maladministration.

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