Austin Thornton discusses regulation and risk management in the direct employment of care staff focussing on CQC registration and insurance problems.
On 7th March 2018, Wrigleys are holding a conference which will look at the regulatory structure underpinning the direct employment of carers to look after persons who are privately funding that care.
The conference will be of interest to:
- Litigators claiming care costs in personal injury cases.
- Experts providing evidence in care cases
- Case managers delivering direct employment arrangements
- Professional deputies responsible for implementing direct employment arrangements
The following article introduces the issues that this conference will address.
The regulation of direct employment
The requirement to register with the regulator
It is an offence to provide personal care without registering with the Care Quality Commission (CQC), unless the care arrangement is exempt from registration.[i]
The circumstances in which a provider of care must register with CQC are covered in regulations (the regulations).[ii]
Care provided by friends and relatives is exempt from registration. This exemption does not extend to friends or relatives who are the employers of staff.
Also potentially exempt are the following:
- The person being cared for (the adult)
- The parents of a minor child being cared for
- Attorneys and deputies who are individuals and whose power extends to commissioning care arrangements.
- Individuals who have other legal authority.
- The trustees of an Independent User Trust.
It is important to note that there is no exemption for any of the above potentially exempt persons, unless they meet the following conditions:
1.1 The management of the care package is wholly under their direction and control. This means that care packages involving a case manager will not be exempt unless the role of the case manager is advisory only. 1.2 There is no involvement of an employment agency or an employment business. An employment agency supplies staff to be employed by the employer. An employment business recruits staff to be employed by its own business and deployed to the care package. A case manager that assists with the recruitment of staff is an employment agency for these purposes. 1.3 There is no exemption for relatives generally. This means that husbands and wives, brothers and sisters and others who employ carers in direct employment arrangements are not exempt from registration in consequence of their relationship with the adult. 1.4 Attorneys and deputies who are trust corporations, and companies generally, cannot be exempt because they are not real individuals. Deputies and attorneys who are trust corporations and employing staff must register with CQC unless the responsibility to register with CQC falls to another person.
Registration of direct employment arrangements
In consequence of the regulations, the most common arrangement of care packages funded by personal injury compensation and which involves the use of a case manager to provide management assistance, must be registered with the CQC.
Who must register as the provider of the service? There seem to be 3 possibilities:
- The employer
- The staff
- The case manager
Wrigleys have obtained advice from Stephen Knafler QC who will be speaking at the March conference. His advice is that the provider in such arrangements will generally be the case manager rather than either the employer of the staff or the staff themselves.
Therefore, where a person is potentially exempt and the exemption is lost because other persons are involved in managing the package, it is the other person who becomes involved that will likely need to register rather and not the potentially exempt individual.
What is the consequence of registration?
A person who is registered with CQC must meet a set of "fundamental standards."[iii]
These standards cover:
- Fitness of persons to be providers
- The appointment of a registered manager and the fitness and qualification standards required of a registered manager
- Person centred care
- Dignity and respect
- The need for consent
- Safe care and treatment
- Safeguarding from abuse and improper treatment
- Meeting nutrition and hydration standards
- Premises and equipment
- Receiving and acting on complaints
- Good governance
- Fit and proper persons employed
- Duty of candour
Meeting the fundamental standards
The regulations prescribe a series of offences for failing to meet fundamental standards.
The regulations provide that it is not necessary for a provider of care duplicate what someone else is already doing in meeting these standards.[iv] So for example, a case manager does not have to meet these standards directly to the extent that the employer and the staff are already meeting them. However in so far as they are the registered provider, the case manager will have responsibility for ensuring that these standards are met. In practice this permits sensible delegation.
The consequence is that in so far as a case management company is involved in the direction and control of a care package at all, it is likely to have to take on the responsibilities of ensuring that the package meets the fundamental standards as a whole.
Many adults and their families have negotiated limits to case manager involvement, often on costs grounds. These arrangements may create significant risks for case managers who do not maintain adequate compliance supervision. This also creates insurance problems for the employer of the staff.
Problems insuring direct employment arrangements
The liabilities that must be insured
Employers of staff providing care have the following broad areas of legal liability with regard to their staff, customers and the wider public:
- Personal injury sustained by staff in the course of their work (employer liability claims in tort)
- Personal injury sustained by members of the public caused by staff (public liability claims in tort)
- Loss suffered by the adult cared for whether personal injury or otherwise (contract, tort)
- Losses to staff as a result of breaches of employment legislation such as unfair dismissal and unlawful discrimination.
There are also a number of health and safety at work and other offences that may be committed by an employer and employer insurance policies usually cover the costs of defending such prosecutions.
Although an employer in a care package may be exempt from compliance with regulatory standards under the care quality regulations, this does not exempt them from responsibility in negligence or in contract or under the criminal law in with regard to other legal responsibilities. For that reason, an employer will want to be fully insured with regard to those liabilities.
Insurance for liabilities to injured employees is compulsory.
Gaps in conventional insurance
A deputy employs staff acting as agent of the adult. The adult is therefore the employer. The most vulnerable person in the undertaking is the adult himself in consequence of errors and omissions made by the care staff.
As employer, the adult may not be insured if he is injured by a member of his staff. This eventuality falls outside the standard clauses in employer insurance policies. For the purposes of his insurance, the adult is not a member of the public as regards the undertaking, he is the employer. Therefore he is not covered by the public liability (PL) policy. Nor is the adult an employee and therefore cannot claim under the EL aspect of the policy.
Some insurance companies market insurance for carers in the event that they injure the person they are looking after. However it will be difficult for an employer to succeed in an action against their own staff because the responsibilities for employing competent staff under a safe system of work with adequate supervision and using the proper equipment, is with the employer themselves. A claim against a member of staff who is separately insured, may only succeed in full where everything has been done properly by the employer, the error is entirely that of the employee and the employee can be shown to have been negligent.
Such a claim is likely to meet a defence that the employer contributed because they did not meet their own responsibilities.
In the case of an adult who lacks capacity to employ staff, the actual person who failed to do everything properly, will be the attorney or deputy acting as the employer's agent. The adult may therefore maintain a claim against their representative in negligence. Such a claim is generally uninsured. Professional deputies and attorneys relying on their own professional indemnity insurance, may well find that their insurer does not consider this an insured risk.
If the arrangement is case managed, the employer could bring in the case manager as a contributor. The case manager will be insured. However the nature of the responsibilities delegated by the employer to the case manager will be a matter of agreement and it is by no means inevitable that such a claim would succeed, or succeed sufficiently to indemnify the employer in respect of their own liability.
In EL/PL policies, "reasonableness clauses" are standard across the insurance industry.
A reasonableness clause requires the employer to act reasonably in the course of their employment of staff. If the insurer decides that they have not acted reasonably, the insurer can refuse to indemnify them.
Since an employer who can be successfully sued for negligence will by definition not have acted reasonably, the effect of these clauses is to render all indemnity for compensation for negligence in EL/PL claims discretionary.
Insurance brokers that Wrigleys have spoken to are aware that the sweeping nature of these provisions would if widely used by insurers, damage confidence in the products themselves and the whole purpose of insurance. In consequence we think it unlikely that they would be used to avoid indemnity in cases of ordinary error. The policy behind these clauses is to ensure that employers do not simply ignore their responsibilities altogether and expect insurers to pick up the bill. So reliance upon the reasonableness clause is likely to be confined to cases where the employer is reckless with regard to their responsibilities, being unable to demonstrate a serious effort to comply.
Professional deputies may fall into his category. This is because as solicitors tied to a desk in a remote office, they may in practice be only nominal employers. Deputyship costs recovered in the settlement do not allow them to visit the package to meet a standard of risk management that would be acceptable to an insurer. The conventional practice s it has developed has been to delegate employer responsibilities.
Professional deputies commonly rely on case managers to risk manage the package. This approach suffers from the following problems:
- The extent of case manager involvement is often negotiated between the adult and their family and reduced on costs grounds.
- The role of case managers is primarily to advise and manage on the care needs requirements of the adult. Deputies do not establish the competence of case managers to manage risks in the areas of human resources and staff and public health and safety.
An even greater risk is faced by deputies who delegate risk management responsibility to family members who have neither the professional training nor any formalised responsibility to carry it out.
The view of the insurance industry
Both directly and through brokers, Wrigleys have approached what we regard as the major providers. These approaches have not produced comforting results. Wrigleys have received a constructive response from one insurer in particular and have been working with them to resolve these issues for the purposes of insuring our own direct employment arrangements. However their starting position is that it is not necessarily okay for deputies to rely on the delegation of risk management. To be acting reasonably, the reasonableness of that delegation must be proven.
This will often be a real problem in the context of a claim where something has already gone wrong. Therefore Wrigleys have been working with this insurer to establish an agreed basis on which the delegation of risk management to a third party will be considered reasonable so that the position is established on the inception of the policy.
Conclusion on insurance
If these problems are not addressed, many insurance policies taken out by professional deputies and others risk being voided by the insurer in the event of a claim.
Wrigleys consider that the following practice points arise from the above:
1.5 Professional deputies must clearly identify who is the provider for the purposes of CQC registration and must ensure that the provider is registered. If it is maintained that the package is exempt, the nature of the exemption must be clearly established from a proper understanding of the regulations.
1.6 Professional deputies must make comprehensive and demonstrable arrangements for risk managing care packages.
1.7 A deputy who unwittingly leaves the adult employer without capacity exposed to risk and uninsured risks being held negligent.
1.8 Risk management arrangements which are subordinate to cutting case management costs risk voiding the insurance.
1.9 The deputy must be able to demonstrate that the case manager is competent to assess risk across all areas covered by the insurance policy.
1.10 Professional deputies must check the limits of their own professional indemnity policies and/or use an insurer who will indemnify them against a claim by the person they represent.