Contractual disputes – how can care providers avoid them? Here, Henrietta Frew, Dispute Resolution Lawyer at Ellis Jones Solicitors, sets out some tips for avoiding contractual disputes.
The current economic climate presents significant challenges for care providers and having to deal with any type of contractual dispute only serves to add additional pressure. A simple way to prevent disputes is to have robust contracts in place at the outset of a relationship. This ensures that all parties understand what is expected of them and sets out a clear framework if something goes wrong.
Care Home Contracts
Providers should ensure that existing residents have contracts and that there are clear processes in place for signing contracts with new residents, before they move into the home. Residents/relatives should be given an opportunity to read and understand all the terms they are being asked to sign, ideally before moving in and being bound by those terms.
As part of the signing up process, it is important to be clear on who exactly the contracting parties will be. Some care providers require another person to co-sign as a guarantor for example, to add an extra layer of protection if a resident stops paying. In all instances, terms should be as user-friendly, clear and simple as possible.
Here’s some top tips:
- When discussing the terms of a contract, make sure all parties properly understand their rights and obligations;
- Use ordinary language and clearly define any specialist care terminology;
- Have a ‘key terms’ section at the beginning of the document, which highlights any particularly important or onerous terms. This will help to ensure the contract is transparent and fair;
- Consider having a highlighted term that clearly sets out what will happen if the contract is not signed, but the resident resides in the care home. For example, that the terms will be deemed as accepted and enforceable, providing no concerns have been raised about them within a defined period;
- Consider the need for a Power of Attorney and/or Guarantor as appropriate, to ensure that fees can continue to be paid throughout a resident’s stay;
- Be clear on what circumstances will permit you to terminate a placement if necessary. The contract should at the very least set out the notice period, how notice should be served and on who, plus the effect of any agreed extensions.
- Keep a record of contracts, decision-making processes (including assessments), communications and any actions taken. These sorts of records can be invaluable if a dispute does arise.
Contracts with Suppliers
Care providers regularly need to enter contracts for the provision of goods and services. To reduce the likelihood of a potential dispute arising with suppliers, providers should:
- Carry out basic checks on new suppliers via Companies House and the Individual Insolvency Register, to ensure financial standing;
- Make sure you are entering into written, as opposed to verbal, contracts. Keep copies and any variations to them, plus all communications with your suppliers;
- If your supplier is in breach, address the issue in writing as soon as possible. If a supplier is able to continue breaching a contract or if there is a delay in raising the issue, there could be problems when trying to enforce terms later;
- Make sure the contract covers termination and if you do want to exit later, be sure to follow the process set out within the same. Providers may wish to seek legal advice on the issue, to avoid a claim for wrongful termination.
Funding Agreements with Local Authorities (LA’s)
Many providers have had to increase fees to keep their business viable, but a lack of funding uplift from LA’s has meant that many residents need to pay top-up fees, to keep their place in a home.
Providers may be able to request more funding from an LA, but a strong business case is normally required. Providers should:
- Try to submit any request before the LA’s annual review;
- Be clear on what uplift is reasonably required to maintain a placement;
- Provide as much supporting evidence as possible e.g. showing fees paid to similar providers in the area.
Given that many care homes rely on funding from LA’s to meet the cost of care for residents that cannot self-fund, it is important to maintain a good working relationship. A way of achieving this is for providers to meet with their LA, to put forward their business case and negotiate funding in person. This can be much more effective that exchanging emails or letters.
How can Ellis Jones Solicitors help?
Our Healthcare Team have the requisite expertise to ensure there are no pitfalls in your contracts and prevent disputes occurring, to protect your position and your business. If a dispute does arise, we have specialist expertise in dealing with a wide range of disputes concerning healthcare, banking and finance, debt recovery and insolvency.
If you require assistance in relation to any of the matters discussed above, please do contact Ellis Jones on 01202 525333 or by email at healthcare@ellisjones.co.uk.