%DOCUM ENT%
1 Trevelyan Square
Boar Lane
Leeds
LS1 6AE
7 March 2016
PRELIMINARY DETERMINATION
Tel:
Fax:
Email:
0113 86 65500
0207 821 0029
fhsau@nhsla.com
FILE REF:
SHA/18233
DECISION MAKING BODY:
NHS ENGLAND NORTH (LANCASHIRE &
GREATER MANCHESTER) ("NHS E")
GMS CONTRACTOR:
DR GUPTA
PREMISES:
KING ST MEDICAL CENTRE, 43 KING ST,
ACCRINGTON, BB5 1QE.
DISPUTE RESOLUTION:
NHS
(GENRAL
MEDICAL
CONTRACT) REGULATIONS
Regulations")
DIRECTIONS:
NHS (GENERAL MEDICAL SERVICES –
PREMISES
COSTS)
(ENGLAND)
DIRECTIONS 2004 ("the Directions")
RE:
PREMISES COSTS: NOTIONAL RENT
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SERVICES
2004 ("the
Introduction
1.1
As a GMS Provider, the Contractor has referred the dispute of reimbursement of
premises costs as at 1 June 2013 for dispute resolution under the provision of
Schedule 6, Part 7 of the Regulations. The dispute relates to the reimbursement of
notional rent under Part 5, and in particular paragraphs 41 and 42 of the
Directions.
1.2
The Secretary of State for Health has directed that the NHS Litigation Authority
(“NHS LA”) exercises the functions of dispute resolution on his behalf. I, as Head
of the Family Health Services Appeal Unit, and authorised officer of the NHS LA
have made this determination.
Background
2.1
In a letter of 11 December 2015 the Contractor through its representative GP
Surveyors Limited ("GPS") applied for Dispute Resolution. The letter stated that it
was a current market rent dispute, although as the Contractor is an owner
occupier, any reimbursement would be of notional rent.
2.2
The letter also stated that NHS E had not appointed a representative to enter into
Local Dispute Resolution ("LDR") to try to determine the rent. After seeking
representations it became clear that the Contractor's position was that LDR had
been blocked by NHS E's refusal to engage with GPS when that company
replaced the Contractor's original representative.
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2.3
Therefore I exercised my discretion under paragraph 101(14) of Schedule 6 of the
Regulations to determined that the question of whether the parties have made
every reasonable effort to resolve the dispute before referring it for determination
in accordance with the NHS dispute resolution procedure should be dealt with by
preliminary determination, a requirement under paragraph 99 of Schedule 6 of the
Regulations.
2.4
I have had regard to the following documents made available to me in
consideration of this matter (with their relevant enclosures):
2.4.1
Copy general correspondence passing between NHS LA, GPS and NHS E
- various dates.
2.4.2
Letter GPS to NHS LA 11 December 2015.
2.4.3
Letter NHS LA to GPS 14 December 2015.
2.4.4
Email GPS to NHS LA 22 December 2015.
2.4.5
Letter NHS LA to both parties 6 January 2016.
2.4.6
Letter GPS to NHS LA 25 January 2016.
2.4.7
Letter NHS England to NHS LA 3 February 2016.
2.4.8
Letter GPS to NHS LA 15 February 2016.
Statutory Framework
3.1
3.2
I note the Regulations apply in this case. Schedule 6, Part 7, paragraph 101 of the
Regulations, indicates with some exclusions, that the NHS dispute resolution
procedure applies in the case of “any dispute arising out of or in connection with
the contract which is referred to the Secretary of State –
(a)
in accordance with section 4(3) of the 1990 Act (where the agreement is
an NHS contract); or
(b)
in accordance with paragraph 100(1) (where the agreement is not an NHS
contract).
I note however that parties do not dispute that Part 5 of the GMS Statement of
Financial Entitlements applies in this case and this indicates that recurring
premises costs such as rent payments are dealt with in the Directions.
Part 5, paragraphs 41 & 42 of the Directions state:
"Recurring Premises Costs
Notional rent payments
41. Subject to the following provisions of this Part, where a contractor that is an
owner-occupier of its practice premises—
(a) either(i) has repaid the loans secured on its practice premises, or
(ii) incurs borrowing costs as a result of purchasing, building or significantly
refurbishing practice premises (or would have incurred such costs had the
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contractor not funded the project with its, or its partners' or shareholders',
own resources) but elects not to receive any payments from its PCT in
respect of those borrowing costs; and
(b) makes an application to its PCT for notional rent payments,
the PCT must consider that application and, in appropriate cases (having regard,
amongst other matters, to the budgetary targets it has set for itself), grant that
application…
Amount of notional rent payments
42. Where a PCT grants an application of the type mentioned in direction 41,
subject to the following provisions of this Part, the amount that it must pay to a
contractor in respect of notional rent is the current market rental value of the
practice premises, as determined in accordance with Parts 1 and 3 of Schedule 2.
The PCT must review this amount as part of a three yearly review of the
contractor's notional rent, although this review may be brought forward if—
(a) there is a change to the purpose for which the premises are used;
(b) there is further capital investment in the premises, and payments are to
be made to the contractor in respect of that investment under its GMS
contract."
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Regulations & Protocol
4.1
Schedule 6 Part 7 of the Regulations at paragraph 99 requires that in "any dispute
arising out of or in connection with the contract, the contractor and the Primary
Care Trust [now NHS E] must make every reasonable effort to communicate and
cooperate with each other with a view to resolving the dispute, before referring the
dispute for determination in accordance with the NHS dispute resolution
procedure…".
4.2
In order to guide the parties on what will be considered to be "every reasonable
effort" NHS LA produced the Protocol for Local Dispute Resolution for the
Determination of Current Market Rent (current version April 2014) (“the Protocol”).
The Protocol sets out best practice for the negotiation of notional rent, as the
recommended steps in the valuation process are the same (see paragraph 2.3 of
the Protocol).
4.3
I confirm that the Protocol should always be followed where rent is not agreed
between the Contractor and NHS E before a dispute is referred to this body.
Consideration
5.1
On 1 October 2013 NHS E informed the Contractor that the notional rent of the
Premises would be £13,115 from 1 June 2013. Immediately before this date the
notional rent had been £15,350. The District Valuer ("DV"), the appointed valuer for
NHS E, calculated this reduction on the basis of a perceived lack of recent
investment in the Premises and a reduction in the number of parking spaces
deemed to be available.
5.2
The Contractor did not accept this reduction and in October 2013 indicated to NHS
E that he had appointed Trevor Dawson & Co as a representative to deal with the
valuation on his behalf.
5.3
Peter Conroy of Trevor Dawson & Co contacted the NHS E on 11 October 2013
and again on 14 February 2014 stating that he had not heard anything from the
DV. I have also seen a letter from NHS E of 29 April 2014 instructing the DV to
liaise with Mr Conroy. However, there is also a letter dated 29 January 2014 from
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the DV to NHS E stating that negotiations had been entered into with Peter Conroy
and that they had reached an impasse, with only measurements having been
agreed. Either the DV was mistaken about the existence of these negotiations or
the DV's letter of 29 January 2014 is misdated.
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5.4
It is not clear from the submissions how many, if any, of the Protocol step had
been taken between Trevor Dawson and the DV by the time of the "impasse" to
which the DV refers.
5.5
On 27 January 2015 the Contractor wrote to NHS E informing it that he had
replaced Trevor Dawson with GPS.
5.6
The repeated requests by GPS from April 2015 to NHS E to instruct the DV to
engage in LDR were met with a refusal from NHS E which instead sent a letter to
the Contractor on 17 June 2015 stating that LDR process had been concluded and
increasing the offer of reimbursement to £13,225, having, it said, taken into
account the evidence provided by GPS. No further details were given.
5.7
In terms of the stages in the Protocol, it appears from the submissions that the first
steps of the Contractor objecting to NHS E's assessment and putting forward its
own evidence have been complied with but nothing further. There is no statement
of agreed facts, no exchange of valuation reports, no meeting at the Premises and
no schedule of comparables.
5.8
GPS confirms in its letter of 25 January 2016 that no Protocol documents exist. It
submits that it has made every reasonable effort to engage in LDR but has been
blocked by NHS E's refusal to appoint a suitably qualified representative to
negotiate the terms in dispute.
5.9
It is NHS E's position that it has followed the "required processes" to reach a
locally agreed resolution. In particular, as the Contractor appointed Trevor Dawson
and negotiations between that firm and the DV had reached an impasse, local
processes had been adhered to and NHS E was not obliged to enter into
negotiations with a second representative, namely GPS.
Determination
6.1
I determine that it is just, expeditious and economical for me to proceed with a
preliminary determination as to whether (as required by paragraph 99 of Schedule
6 of the Regulations) the parties have made every reasonable effort to resolve the
dispute before referring it for determination in accordance with the NHS dispute
resolution procedure. I note that GPS, in its letter of 25 January 2016, states that it
welcomes a preliminary determination on the issue of LDR and NHS England has
not commented on this.
6.2
I also indicated that in determining whether every reasonable effort had been
made, I would take into account the extent to which the parties had complied with
the Protocol for Local Dispute Resolution for the Determination of Current Market
Rent.
6.3
In my determination NHS E has failed to engage properly with the LDR process
and has not made every reasonable effort to resolve the dispute at a local level.
6.4
It is not reasonable in this case for NHS E to refuse to engage with GPS just
because some negotiation had taken place with Trevor Dawson previously. If NHS
E's representations of 3 February 2016 at paragraph 3.2 is evidence of a policy
that there will never be engagement with a second agent then this policy would be
unreasonable. Any kind of blanket rule of this kind which does not take into
account the facts of the dispute in question is unreasonable.
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6.5
There is no evidence that NHS E has tried to comply with the Protocol with either
Trevor Dawson or GPS. This is also unreasonable.
6.6
I direct NHS E to appoint a properly qualified valuer as its representative within the
next 30 days to negotiate with GPS in line with the provisions of the Protocol to try
to agree the notional rent to be reimbursed from 1 June 2013.
Lisa Hughes
Head of FHSAU
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