QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| The Queen (on the application of)
Dr Ikhlaq Hussain
Dr Bindu Patel
Dr Wernan Muller
|- and -
|The Secretary of State for the Health Department (Acting through the NHS Litigation Authority)
Philip Coppel QC and Saima Hanif (instructed by Bevan Brittan LLP) for the Defendant
David Lock (instructed by Weightmans LLP) for the Interested Party
Hearing dates: 7, 8 December 2010
Crown Copyright ©
Mr Justice Cranston:
"General Dental Services – New Contract
Dental List for North East Warwickshire PCT
We have processed a request we received recently for a new contract for the following dentist to provide General Dental Services as your assistant/vocational dental practitioner
Mr KW Poon
I am pleased to inform you that a new contract has been created and will take effect from 23/08/2004. The contract number is
Mr I Hussain £264,905
Miss B Patel £254,672
Mr Chan £174,706
Mr Mthewetha £101,225
Mr I Hussain £97,931
Mr Mthewetha £102,367
Mr Chan £37,767
Miss Moloto £238,570"
There is no mention of Dr Poon.
"This appeal appears to be a further attempt by Dr Hussain to gain control over the UDAs which were properly allocated to other dentists under the GDS [General Dental Services] contracts in the reference period and which he now seeks to appropriate. The PCT's position is that the UDAs have already been allocated to dentists who are delivering the services to the public and it should not be under a compulsion to contract twice for the same UDAs."
"3.3 The crux of the contractors claim appears to be that the activity carried out by Dr C and Dr M during the baseline period should have been included in his individual contract value. I understand that the PCT has entered into individual contracts with Dr C and Dr M respectively for the activity that they undertook as employees of the contractor during the baseline period."
"3.9 Neither Dr C nor Dr M are parties to the individual contract between the PCT and the contractor [Dr Hussain]. There is no entitlement that the activity undertaken by them during the baseline period is included within the individual agreement between the contractor and the PCT … The NACV [Negotiated Annual Contract Value] is to be negotiated and agreed between the parties. No information has been placed before me which states that the activity undertaken by employees (if they were deemed to be employee and not partners of the contractor) of the person with whom the contract is entered into and undertaken during the baseline period must be included in a NACV between the contractor and the PCT (emphasis in original). "
(a) The previous and new regimes
"35(1) It is every Area Health Authority's duty, in accordance with regulations, to make as respects their area arrangements with dental practitioners under which any person in the area for whom a dental practitioner undertakes in accordance with the arrangements to provide dental treatment and appliances shall receive such treatment and appliances. The services so provided are in this Act referred to as "general dental services".
Section 36(a) provided a regulation making power as to the arrangements to be made under section 35 and were to include provision for the preparation and publication of lists of dental practitioners who undertook to provide general dental services. Lists were prepared under the regulations made under this subsection, the National Health Service (General Dental Services) Regulations 1992, SI 1992 No 661, called the dental list, of dentists who undertook to provide general dental services in a locality and who were not disqualified for inclusion. Under the system of the 1977 Act dentists were paid according to a fee-for-item of service system, with remuneration being based on each individual treatment, e.g. a filling, a crown etc.
"[A] ...Primary Care Trust ...must, to the extent that it considers necessary to meet all reasonable requirements, exercise its powers so as to provide primary dental services within its area, or secure their provision within its area."
Of the two different sorts of dental services agreement to be made between a PCT and dental practitioners, the one relevant to this litigation is the GDS contract, essentially for persons who were, prior to 31 March 2006, included in the dental list of a PCT and who were providing NHS dental services under section 35 of the 1977 Act. Section 28K of the 1977 Act (now National Health Service Act 2006, s.100) provides:
"(1) A Primary Care Trust ...may enter into a contract under which primary dental services are provided in accordance with the following provisions of this Part.
(2) A contract under this section is called in this Act a 'general dental services contract'.
(3) Subject to any provision made by or under this Part, a general dental services contract may make such provision as may be agreed between the Primary Care Trust... and the contractor in relation to -
(a) the services to be provided under the contract...
(b) remuneration under the contract, and
(c) any other matters."
"(1) Subject to paragraphs (2) and (3), if, in the course of negotiations intending to lead to a contract, the prospective contracting parties are unable to agree on a particular term of the contract, either party may refer the dispute to the Secretary of State to consider and determine the matter in accordance with the procedure provided for in paragraphs 55(2) and (3) of Schedule 3.
(3) Before referring the dispute for consideration and determination under paragraph (1), both parties to the prospective contract must make every reasonable effort to communicate and co-operate with each other with a view to resolving it.
(4) Disputes referred to the Secretary of State in accordance with paragraph (1), or section 4(4) of the 1990 Act, shall be considered and determined in accordance with the provisions of paragraphs 55(4) to 55(13) and 56(1) of Schedule 3, and paragraph (5) (where it applies) of this regulation.
(5) In the case of a dispute referred to the Secretary of State under paragraph (1), the determination—
(a) may specify terms to be included in the proposed contract;
(b) may require the Primary Care Trust to proceed with the proposed contract, but may not require the proposed contractor to proceed with the proposed contract; and
(c) shall be binding upon the prospective parties to the contract."
"The Secretary of State shall give a copy of any representations received from a party to the other party and shall in each case request (in writing) a party to whom a copy of the representations is given to make within a specified period any written observations which it wishes to make on those representations."
Paragraph 55 of Schedule 3 also permits the Secretary of State to appoint an adjudicator to determine the dispute.
"Contracts with individuals practising in partnership
13 - (1) Where the contract is with two or more individuals practising in partnership, the contract shall be treated as made with the partnership as it is from time to time constituted, and the contract shall make specific provision to this effect.
Regulation 12 goes on to provide that where the contract is with two or more individuals practising in partnership, the contractor must be required by the terms of the contract to ensure that any person who becomes a member of the partnership after the contract has come into force is bound automatically by the contract.
(b) Transitional provisions: existing NHS dentists
"The Transitional Order gives legal rights to the dentists in para 2.1, but the legal rights, unless otherwise stated in the Order, are in force only at the point of transition. Therefore, in order to be protected by the conditions of the Order a dentist or PDS contractor providing services under the GDS or a PDS pilot scheme must sign a new contract no later than 31 March 2006."
"For the purposes of section 173(2) of the 2003 Act, the circumstances in which a Primary Care Trust must enter into a general dental services contract with a person who, on 31st March 2006, is providing services under section 35 of the 1977 Act are prescribed in articles 4 and 5."
Article 3(2) then goes on to provide that "nothing in this Order shall require a PCT to enter into a general dental services contract with any person, whether as an individual or as a member of a partnership, on more than one occasion.
"4. – Individual dental practitioner
(1) Subject to paragraphs (2) and (3), a Primary Care Trust must, if a person so wishes, enter into a general dental services contract with him as an individual dental practitioner if –
(a) on 31 March 2006 or, if earlier, on the date on which the contract is to be signed, he is included in the dental list of that Primary Care Trust;
(b) on the date on which the contract is to be signed, he is practising as an individual dental practitioner and –
(i) no other dental practitioner, or
(ii) no other person providing services under section 35 arrangements, practises in partnership with him …"
"(6) Where the contracting parties are unable to agree on a particular term of the general dental services contract and the dispute is referred to the Secretary of State for determination in accordance with section 4 of the 1990 Act (NHS contracts) or regulation 8(1) of the GDS Contracts Regulations (pre-contract disputes), the determination may if it is made after the contract has been entered into—
(a) vary the terms of the contract; or
(b) bring the contract to an end."
"6.2 If the parties cannot reach provisional agreement potential contractors are strongly advised to complete their Standard Contract with the PCT on a "Subject to Dispute" basis."
"The adjudicator may, when determining the appeal require the Primary Care Trust to enter into a general dental services contract with the prospective contractor on terms to be agreed between the parties, or where necessary, determined under the pre-contract dispute resolution procedure in section 4(4) of the 1990 Act (NHS contracts) or under regulations 8 of the GDS Contracts Regulations (pre-contract disputes) (whichever is applicable) but may not require the prospective contractor to proceed with the contract."
Article 7(14) provides that the determination of the adjudicator shall be binding upon the parties.
"(1) The number of units of dental activity to be provided by the contractor under a general dental services contract entered into under Chapter 1 shall be determined in accordance with —
(a) paragraphs (2) to (8) in the case of entitlement to a general dental services contract under article 4 or 5;
Central to this litigation is Article 10(2):
"(2) The Primary Care Trust shall, by—
(a) analysing the data it holds in respect of the care and treatment provided under section 35 arrangements during the year 1st October 2004 to 30th September 2005 by the person or persons with whom the contract is to be entered into;
(b) categorising that care and treatment in accordance with Schedules 1 to 4 of the NHS Charges Regulations, and the principles set out in regulation 4(2) to (5) of those Regulations; and
(c) reference to the conversion criteria to units of dental activity specified in Part 1 of Schedule 2 to the GDS Contracts Regulations,
calculate how many units of dental activity is the equivalent to the care and treatment provided by that person or persons during the year 1st October 2004 to 30th September 2005."
The reference to "Section 35 arrangements" is defined in article 2(1) as "arrangements made under section 35 of the 1977 Act." "NHS Changes Regulations" is also defined in that article, as meaning the National Health Service (Dental Changes) Regulations 2005, SI 2005 No 3477.
"(5) Where –
(a) data does not exist for the period specified in paragraph 2(a); or
(b) data does not exist, but it is appropriate to adjust the data,
the contractor and the Primary Care Trust shall agree the number of units of dental activity to be provided."
Article 10(6) sets out that where the contractor and the PCT cannot agree the number of units of dental activity as provided for in paragraph (5), the general dental services contract shall state this and specify a number of units of dental activity determined by the PCT. Paragraph (7) reads:
"In determining the number of units of dental activity to be specified under paragraph (6), the Primary Care Trust shall have regard to any data it holds regarding the amount of care and treatment provided under section 35 arrangements, or, as the case may be, the pilot scheme agreement by the person or persons with whom the general dental services contract is to be entered into in the period since 1 October 2004."
The General Dental Services Statement of Financial Entitlements ("the SFE")
"A Calculated Annual Contract Value ("CACV") is an amount based essentially on historic earnings derived from fees and allowances under the Statement of Dental Remuneration ("SDR") which were received by the dentists who are employed or engaged by the contractor. It is intended that calculations based on this amount will be used to protect income levels for a three year period, starting on 1st April 2006. The arrangements set out in this Section are therefore due to end on 31st March 2009."
"At various points in this SFE, reference is made to a dental practitioner being 'employed or engaged' by a contractor…In this SFE, employed or engaged, in relation to a dental practitioner's relationship with a contractor…includes, in addition to dental practitioners who have a contract of service or for services with the contractor –
a dental practitioner who is the contractor;
a dental practitioner who is a partner in a contractor that is a partnership…"
"Entitlement to a Calculated Annual Contract Value [CACV]
2.2 A contractor is only entitled to payments based on a CACV if–
(a) it is entitled to a GDS contract by virtue of Part 2 of the First Transitional Provisions Order;
(b) its GDS contract is entered into pursuant to that Part and the number of
(i) of dental activity to be provided by the contractor is determined in accordance with article 10(2) to (7) of the First Transitional Provisions Order, and
(c) its GDS contract takes effect for payment purposes on 1st April 2006; and
(d) thereafter (as a continuing entitlement condition), its GDS contract is not varied to change the number of units of dental activity … to be undertaken by the contractor"
"2.3 Each GDS contract must specify the number of units of dental activity to be provided by the contractor… (regulations 17 and 18 of the GDS Contract Regulations…").
In the case of contractors who are entitled to payments based on a Calculated Annual Contract Value ("CACV"), for the start of the financial year 2006 to 2007 a calculation must be made of a baseline number of units of dental activity, which is to be calculated in accordance with article 10 (2) to (7) of the Transitional Order. The total number of units of dental activity determined in accordance with article 10 (2) to (7) is the contractor's Baseline Number of Units of Dental Activity (BNUDA).
"2.4 Once the contractor's BNUDA…have been established…the PCT will need to establish the first value of the contractor's CACV. The first value of the contractor's CACV is the amount that is properly attributable…to the contractor's BNUDA…subject (where appropriate) to the adjustments that are set out below. This amount is to be determined by as follows."
2.5 Firstly, the PCT is to establish the earnings received by the dentists who are employed or engaged by the contractor, (that is the gross amounts paid to them)…pursuant to the following provisions of the SDR…"
Paragraph 2.6 continues that this initial baseline value is subject, potentially, to four types of adjustment so as to produce the first value of the contractor's CACV. One is a vocational trainee earnings adjustment: para 2.7. Another is a practice configuration adjustment, dealt with in paragraphs 2.8-2.9.
"In determining the contractor's BNUDA…the PCT may take into account changes to the configuration of the dental practice which the contractor was, or which the dentists who are employed or engaged by the contractor worked for, during the baseline year. Examples of factors that may be taken into account include: vacancies or absences during the baseline period….Where a PCT adjusts a contractor's BNUDA…a parallel adjustment must also be made to the baseline value of the contractor's CACV…"
Time lag adjustments are covered by paragraphs 2.10-2.11, and an adjustment for 2006/7 is dealt with in paragraph 2.13. Paragraph 2.14 concludes:
"2.14 The contractor's initial baseline value for its CACV, as adjusted (as appropriate) in accordance with paragraphs 2.7 to 2.13, is the first value of the contractor's CACV. "
"3.1 Except where the contractor remains entitled to a CACV and is paid on that basis, payments under the a GDS contract in respect of the agreed number of units of dental activity and orthodontic activity specified in the contract is to be based on a Negotiated Annual Contract Value (NACV)"
Nature of the claimants' contracts
Calculation of contract values