The Welsh Ombudsman has recently published his decisions (Report references 200701321 and 200701329) in relation to two complaints made by the mother of a young learning disabled woman, C, who required accommodation and care and the manager of a small, independent supported housing provider that provided accommodation, help and care to her and to other vulnerable individuals. The complaints arose from a unilateral decision of Cardiff Local Health Board (LHB) to cease making payments under a jointly funded arrangement between it and the local council for accommodation and continuing care required by C.

Not surprisingly the ombudsman made a number of findings of maladministration against the LHB as a result of its unilateral decision to withdraw funding because the decision was not based on any up to date assessment of C’s needs and was made without proper consideration as to C’s eligibility for NHS continuing healthcare.

However, there was an additional issue arising from these decisions which is of special interest to those NHS bodies responsible for funding care and accommodation.

Following the withdrawal of LHB funding, the housing provider continued to cover the cost of C’s placement on the basis that the loss of the placement would be most detrimental to C. The ombudsman observed that LHB’s decision placed the housing provider in “an invidious position of either asking C to leave … or continue her placement, in essence, at its own cost (which it could ill afford) pending resolution of the dispute ...” between the LHB and the local council about their respective funding responsibilities.

Although the LHB paid the arrears to the housing provider and restored payment of its half of the funding during the ombudsman’s investigation, the ombudsman recommended that, if the manager of the housing provider provided evidence of additional costs (ie, overdraft charges and interest) incurred as a result of covering LHB’s payments for the seven months that the LHB had not paid its share, then the LHB should reimburse the housing provider for such costs.

The impact of the ombudsman’s recommendation should put NHS bodies on notice that inappropriate decisions to withdraw funding may result in liability not only to reimburse other public sectors bodies that cover the costs pending the outcome of any dispute but also to compensate private or third sector providers of services who incur losses in the meantime.