Cats, dogs and CQC registration

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Neil Grant and Michael Curtis QC reflect on the Care Quality Commission’s imminent proposal to widen the definition of a registered provider to include parent companies and management companies, asking: is CQC, a statutory agency, trying to be a law maker?

The Care Quality Commission (CQC) is a bold organisation with grand ambitions. There was a time when regulators just registered and inspected individual services and saw that as their primary function. However, in the world of modern regulation, that is not enough. CQC has set out a vision for itself as the regulator of local systems in its recent Beyond Barriers report. Additionally, over recent years, CQC has expanded its regulatory reach in a number of dramatic ways. For example, it has adopted a market-shaping role in respect of the registration of learning disability services, requiring new services to be small in size, located in residential settings and meeting local needs. One sees it, as well, in the special measures regime which is driven by policy and has no basis in law. However, these two examples pale in comparison to CQC’s proposition regarding provider registration.

Carrying on a regulated activity

Currently, CQC regulates the organisation that directly provides the service to the client. However, CQC wants to register and inspect any related organisations that may direct and/or control systems of care, such as parent companies and care management companies. CQC says it doesn’t need a change to legislation to register these associated organisation – it is enough for it to apply a new interpretation to ‘carrying on a regulated activity’ and widen the scope of provider registration.

Flaws in CQC’s approach

There is no express statutory provision stating that any related organisations that direct and/or control systems of care must be registered. To the contrary, the legislation repeatedly talks about the ‘service provider’ in the singular and, in the context of a registered company, requires a nominated individual to supervise the carrying on of each regulated activity.

Secondly, CQC and its predecessors have always registered the legal entity providing the service, not the parent company or some other third party such as a management company. As CQC’s Scope of Registration document currently states, ‘Where a provider is a subsidiary of a bigger company it will need to register in its own right if it is the legal entity responsible for the service’.

In theory, there could be two organisations working in partnership in carrying on a service but that is very different from what CQC is proposing.

Cats and dogs

As there is no judicial authority to support CQC in its wider interpretation of ‘carrying on’, one has to fall back on statutory interpretation.

Of course, legislation can be interpreted differently as time passes. The following quote from Lord Bingham of Cornhill in R (Quintavalle) v Secretary of State for Health [2003] is apposite, ‘There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now. The meaning of ‘cruel and unusual punishments’ has not changed over the years since 1689, but many punishments which were not then thought to fall within that category would now be held to do so.’

Until now, CQC has been registering providers on a particular basis, just like the example of dogs in the above quote. It is now saying that it needs to register other entities as providers as well, not just the immediate service providers. In other words, CQC wants to apply its regime to cats, not just dogs. However, it can’t be reasonably argued that parent or management companies are the equivalent to the above example of animals that were not previously considered to be dogs but now are. That is because these associated organisations are not directly providing the care service which has always been the basis for registration in this country. 

The Old Village

CQC’s case is further undermined by the outcome of a Tribunal case called Old Village Care Limited v CQC [2015]. In that case, the provider engaged an external consultancy to assist in bringing about necessary improvements to its service and appointed an individual from the external consultancy as nominated individual. CQC argued that this meant that the external consultancy would be carrying on the home and that it should therefore be registered. The Tribunal firmly rejected this submission, a decision on the law (that CQC did not attempt to challenge) which is clearly inconsistent with the scheme CQC now proposes to adopt.

Old Village Decision PDF

Consultation  

In the Summer of 2017, CQC consulted on widening the scope of provider registration, proposing criteria to help ‘determine when an entity has responsibility for quality and so should be registered with [CQC].’

CQC said, ‘At the beginning of June 2017, there were 30,868 providers registered with CQC delivering services across 49,394 locations. We estimate that 2,300 of these providers are part of around 350 wider groups, for example ‘corporate providers’…These wider groups run services from approximately 11,300 locations and own around a third of all care homes in England.’   

The proposed changes will therefore potentially affect a significant number of providers, particularly the larger groups. It would allow CQC to enter and inspect the offices of parent and management companies and take enforcement action against them. This would have major implications for the sector.         

Response to the consultation

CQC reported in October 2017 that ‘the majority of respondents, including members of the public, providers and community sector representatives, supported [CQC’s] proposals to register all organisations with accountability for care.’

The regulator then stated that it would be working with providers to ‘develop more detailed criteria and indicators to describe what it means to “direct and control care”.’ The intention was to publish these in Spring 2018, however, this timetable has not been met and CQC is still working with a small number of providers on the detailed criteria. Despite this, CQC has indicated that the following overarching indicators will define accountability:

  1. Do you manage and/or deliver assurance and auditing systems and/or processes that assess or monitor the quality and safety of the delivery of regulated activity, and which impact on people using services? In this regard, are other entities that deliver, direct or control care accountable to you?
  2. Do you have significant influence over the development and/or enforcement of common policies on matters such as staffing levels, clinical policy, governance, health and safety, pay levels and procuring supplies that must be adhered to by other entities that deliver, direct or control regulated activities?
  3. Do you have the right to make decisions concerning the appointment and removal of:
    • Those who work or are seeking to work in delivery or support of the regulated activity?
    • Those who run, or who seek to run, individual settings that deliver regulated activity, for instance registered managers?

Is this proposed change necessary?

CQC is required to operate as a risk-based regulator. The public is protected by CQC’s current regulatory duties – there will always be a registered entity that is the direct service provider which will be fully accountable for any regulatory failures. It is not the same as, for example, an online doctor service, where some providers avoid regulation by basing themselves outside of the jurisdiction. With the finite resources that CQC has available, it should focus on regulating current registered providers more effectively and efficiently, rather than trying to draw the registration net wider.

Surprisingly, CQC says that the proposals will be cost neutral. We are awaiting a regulatory impact assessment to let us know for certain, but, in all likelihood, ‘additional’ providers will have to pay fees which will cover the extra cost of this further regulation. The only alternative is for CQC to cut back other aspects of its current regulation which seems highly unlikely.

Conclusion

CQC cannot write its own legislation. Only Parliament can do that. If CQC believes that a wider group of entities should be registered, it should lobby the Department of Health and Social Care and seek a change to the legislation. It needs to accept that it cannot forge ahead with this without a change in law, otherwise there is the real risk of truly putting the cat among the pigeons.

About the authors…
Neil is an expert in the regulation and funding of care services and only acts for providers. He has a wealth of experience in this field, having acted in the past for inspectorates and other public bodies at a very senior level. Before joining Gordons in July, Neil worked at Ridouts Solicitors for seven years. Michael Curtis QC works out of Crown Office Chambers in London. He has 30 years’ experience in the registered care arena, going back to the seminal case of Lyons v East Sussex County Council [1988]. In the Old Village case mentioned in this article he represented the provider whose appeal was successful.