Directors' liability in health and social care

As the Government and various regulators map out the steps they are putting in place in response to the failings highlighted by the Mid Staffs Inquiry and the appalling mistreatment of residents at Winterbourne View, one of the key themes emerging is the focus on accountability for poor standards of care not just at corporate level but also for individual board members.

Criminal liability

In theory, at least, there already exists a range of mechanisms by which directors in care settings can be held accountable in criminal proceedings for care failings.  However, the mechanisms are subject to certain limitations, whether technical or practical:

• Gross negligence manslaughter – in extreme circumstances there are instances of directors being found guilty of gross negligence manslaughter for failings in working practices leading to deaths.  However, this requires there to be personal involvement by the director in the events in question, which may be unlikely to arise except in the case of the smallest providers.  Clearly, also, the offence only arises in cases resulting in death.
• Section 127 of the Mental Health Act 1983 – makes it an offence for any manager of, or officer or member of staff employed in, a care home (or a hospital or independent hospital) to ill-treat or wilfully neglect a patient receiving treatment for a mental disorder.  The offence is punishable, upon conviction on indictment, by imprisonment for up to five years and/or an unlimited fine.  However, the offence only arises in the case of harm caused to residents suffering from mental disorder and it is 'hit and miss' whether investigations for this offence, which are conducted by the Police rather than regulators, take place at all.
• Section 44 of the Mental Capacity Act 2005 – creates a similar offence for ill-treatment or wilful neglect of persons under their care, who lack, or are reasonably believed to lack, capacity.  Again, the offence is punishable, upon conviction on indictment, by a prison sentence of up to five years and/or an unlimited fine.  However, again, the offence can only be committed in respect of a person who lacks, or is reasonably believed to lack, mental capacity.
• Health & Safety at Work Act offences – whenever a Health & Safety at Work Act offence is committed (whether in respect of the safety of service users or staff), directors can also be liable, under section 37 of the Act, if the offence is proved to have been committed with their consent or connivance, or due to any neglect on their part.  However, the HSE’s Priorities for Enforcement of Section 3 of the HSWA indicates that the HSE will give lower priority to areas subject to specialist regulatory regimes.  The HSE guidance also indicates that it will not, in general, investigate matters of clinical judgement or related to the level of provision of care.  For these reasons, Health & Safety investigations in relation to injuries to service users in healthcare settings have tended to focus upon issues such as falls from hoists and windows, accidents due to poorly maintained equipment, burns in baths and from radiators, and Legionella exposure. 
• Prosecution by the Care Quality Commission (“CQC”) – failure to comply with any of the regulations which underpin CQC’s 16 key outcomes is an offence under the Health & Social Care Act 2008 (Regulated Activities) Regulations 2010.  The offence is punishable upon conviction by a fine of up to £50,000 and, as with Health & Safety offences, directors can also be prosecuted if the offence is found to have been committed with their consent or connivance, or due to neglect on their part.  However, in practice, CQC has not sought to investigate individual incidents but, instead, has used those incidents as evidence of non-compliance with the essential standards.  Further, CQC is not able to bring a prosecution for non-compliance with the Regulations without first serving a Warning Notice, and if the provider brings about compliance following service of such a notice, no prosecution can be brought. 

All of this has led to what Robert Francis QC, in the Mid Staffs Inquiry, referred to as a “regulatory gap”, where serious patient safety incidents did not result in enforcement action being taken.  The resolve of the Government, and regulators, following the Inquiry has been to close this regulatory gap.  The current Department of Health consultation 'Strengthening corporate accountability in health and social care' and the CQC consultation 'A new start' make it clear that the intention is to 'close the gap' not only for corporate bodies but also for individual directors. 

The major changes proposed are:

• Closer working between CQC and HSE – the Government’s initial response to the Mid Staffs Inquiry stated that where CQC identifies criminally negligent practice it “will refer the matter to the HSE to consider whether criminal prosecution of providers or individuals is necessary”.  The Government has indicated that it will make sufficient resources available to the HSE to undertake such prosecutions.  This response was specifically in relation to poor practice in hospitals.  However, the Government’s response indicates that people have the right to expect fundamental standards of care in all care settings, including care homes and domiciliary care.  It seems the courts may be getting tougher in health and safety prosecutions as in the recent prosecution of Ashbourne Group UK Ltd (albeit a prosecution of the company rather than directors) relating to death of a service user following a slip from a hoist in a care home, the judge indicated he would have been minded to impose a fine of £100,000 but for the fact the company had gone into liquidation. 
• Enhanced CQC powers – in addition, CQC is currently consulting upon a new set of 'fundamentals of care' standards.   These will enable the CQC, itself, to take enforcement action directly, without the need to serve a warning notice, whenever 'fundamentals of care' are breached.  CQC’s proposed 'fundamentals of care' include:

• Cleanliness of environment; 
• Lack of abuse and discrimination; 
• Administration of prescribed medication; 
• Assistance with washing and toileting; 
• Provision of sufficient food and drink and assistance to eat and drink where required; 
• Not victimising people raising complaints.

The Department of Health consultation states (at para.34) that the changes will “make it easier for CQC to prosecute both corporate bodies and individual directors for providing poor and harmful levels of care, in effect giving CQC the power to prosecute for criminal neglect”.

In addition to all of this, Professor Don Berwick's National Advisory Group report 'A promise to learn – a commitment to act' has recommended the government introduce a new offence of wilful or reckless neglect or mistreatment, which will be applicable to both organisations and individuals.  Again, if introduced by the Government, it would appear that this may impact on all health and social care providers.

Non-criminal sanctions

One of the other concerns resulting from the Mid Staffs Inquiry was the ability of directors who had presided over poor standards of care, to move to new posts in alternative providers. 

The current reforms propose to crack down on a director's ability to transfer between posts and ensure more individual accountability: the CQC consultation states that, in addition to registered providers and managers, “named directors or leaders of organisations are personally held to account” for a commitment to deliver safe, effective, compassionate, high-quality care. 

This will be backed up by a power to remove board members from their posts.  CQC will have the power to deem directors not to be 'fit and proper'.  The Department of Health consultation makes it clear that regulations and guidance (likely to be introduced by April 2014) will define what is meant by a 'fit and proper' person, but states this could include not only concerns relating to general or financial background and honesty and integrity, but also issues regarding the individual’s competence and capability and previous history as a director.  The proposal is that, where an individual is deemed to be unfit, CQC would be able to insist upon their removal as a director by way of imposing conditions upon the provider’s registration.  In theory, CQC has always had the power to issue whatever conditions it thinks fit.  However, the recent consultations signal an intention to use these powers in the context of directors' fitness.      

In addition to CQC’s proposed powers to deem directors not 'fit and proper' persons, directors also need to be aware of the possibility that enforcement action before a criminal court may result in the court imposing a disqualification order on them under the Companies Directors’ Disqualification Act 1986.  Such orders can prohibit individuals from acting as a director of any company during the period of disqualification (which may be up to 15 years). 

Conclusion

It is clear that, in the care sector, the prospect of enforcement action for failings in standards is increasing; this is not only the case for providers generally but also particularly for directors.  In terms of potential prosecution by CQC, those directors identified as “nominated individuals” are perhaps the most likely to face enforcement action.  However, any director could be at risk of prosecution if the circumstances in which a risk arises are under their direction or control.  In the light of this, directors need, more than ever, to have proper governance and assurance systems in place so as to protect not only their organisations, but also themselves, from potential liabilities.