April 2018 – The following page has been updated and is highlighted in red on this page:
Breach, Remedial Notices, Suspensions and Contract Terminations
This article has been written by Kent LDC to help dentists understand what breach and remedial notices are, when and why they are issued, some of the consequences of them and hopefully to help dentists reduce the risk of incurring them. Breach and remedial notices impact negatively on contracts in areas such as incorporation, practice sales and tenders and so it is in the best interests of contract holders to avoid them if at all possible. It has been reviewed by the NHS England South (South East) Local Office for accuracy.
What are Breach and Remedial Notices?
NHS Dental Regulations identify two types of notice that can be issued to providers where there is concern about contract performance:
1. Remedial notice (for contract failures that can be put right)
2. Breach notice (maybe for a repeat of (1) or a contract failure that cannot be remedied)
It is important to understand that the emphasis is on the word notice and not breach or remedial as in all cases of these notices there has been a breach or failure in some aspect of the NHS contract. The reason why a breach and remedial notices are so important is because once a contract has been issued with 2 notices then in theory the contract can be terminated. However the Local Office of NHS England South (South East) is mindful that any action it takes can be legally challenged and so the regulations lay out that such action must be “reasonable and proportionate”. Although a notice in itself does not convey the severity of such notice it is clear that some notices are more serious than others. For instance a breach notice issued for fraud is going to count for much more than one for a contract underperformance.
Performance Issues that may lead to a Contract Breach
There are basically two types of performance issue that may give rise to a breach:
1) Behaviour that gives cause for concern, which may (or may not) lead to;
2) Failure to deliver the contract
Behaviour that gives cause for concern might include inappropriate clinical behaviour such as poor record keeping, failure to provide appropriate treatment; inappropriate professional behaviour such as splitting courses of treatment or fraud; inappropriate administrative behaviour such as not responding to the Local Office with requested information. Failure to deliver the contract could be under performance outside the tolerance allowed or not complying with legislation or guidance.
Scenarios that Local Offices might encounter include:
- Contract failure (either a breach of the GDS/PDS contract regulations and/or
locally agreed contract terms) that is capable of being rectified
- Contract failure and the Local Office has concerns
- Contract failure leading to serious risks to patient safety such that it is reasonable for the contract to be terminated immediately
- The contractor’s financial situation is such that the Local Office considers that it is at risk of material financial loss, and therefore that it is reasonable for the contract to be terminated immediately
Types of breach
The GDS and PDS Regulations distinguish between breaches of contract which can be remedied and those which cannot. There are also a number of circumstances where a contract may be terminated immediately.
- Breaches which can be remedied
The Regulations require that, where there has been a contract breach and the situation may be remedied, that the Local Office must issue a Remedial Notice BEFORE taking any action it is entitled to under the contract to remedy the breach. In other words, the contractor must be given an opportunity to remedy the situation before any penalties are imposed or other adverse action is taken by the Local Office. Unless action to terminate the contract is needed urgently, it may be safer for Local Offices to give contractors a second opportunity to remedy the breach. This provision obviously does not preclude Local Offices attempting to sort the problem informally, ie through local resolution.
- Breaches which cannot be remedied
A breach notice may be served where a breach has occurred which is not capable of
remedy. An example of a non-remediable breach would be if a contractor had been convicted of a crime and received a prison sentence greater than 6 months. The most common breach that cannot be remedied is an underperformance of the contract value since this cannot be altered once year end is reached.
- Situations in which a contract may be terminated immediately by
giving written notice to the contractor
A Local Office may terminate a contract immediately if:
- the contract was entered into pursuant to National Health Service Act 2006 Chapter 41, Part 5, Paragraph 102 (persons eligible to enter into GDS contracts) and;
- the contractor is no longer a dental practitioner, or ceases to be a dental Corporation
- the Local Office becomes aware that the contractor has supplied written information to it that is inaccurate or untrue in a material respect. This applies to information supplied to the Local Office (either prior to the contract being signed or subsequently) regarding the status of a single contractor, partner or corporate body. The Local Office should note that suspension is not automatic grounds for termination, unless:
- the contractor concerned is unable to satisfy the Local Office that he/she has in place adequate arrangements for the provision of dental services under the contract for so long as the suspension continues;
- the Local Office is satisfied that there are serious patient safety issues or a risk of it
suffering material financial loss if the contract is not terminated immediately.
- Failing to use a registered lab for lab work. This comes under clause 261. The type of situation that has thrown this up is ‘same day band 3’s’. the contract team are especially on the lookout for band 3 claims that are started and finished on the same day as these require lab work. Such things as mouthguards may be turned around in a day and evidence of the lab work docket may well be asked for. They will then check if the lab used is registered and if not, the contract will be automatically breached as this is not remediable. Make sure you use a registered lab.
- Failing to adhere to the contract hours of opening of the practice in so far as refusing to see NHS patients in those times that have been agreed in the NHS contract. When signing the GDC contract the NHS contract holder is required to enter the practice hours of opening. Subsequently the dentist may then choose to only provide NHS treatment at other more restricted times. Any amendments to the contract hours must be agreed by NHS England. Any evidence that a provider is refusing to see an NHS patient in any of the quoted hours of opening will receive a breach notice against the contract under clause 75 of the contract which is listed as failing to provide adequate cover as once evidenced this cannot be remedied.
- Failing to send off a claim for completed treatment with the correct date entered. The contracts team are very aware that come year end contracts may be at risk of falling short of the required 96% target of delivered UDAs. This can result in the practice carrying out a flurry of NHS activity. One of the classic last minute claims is for mouthguards which are turned around in 1 day. In some cases, these may be for the staff and are not even fitted as the patient collects the appliance from reception without seeing the dentist. If record cards are reviewed and the claim date entered on the form is in advance of the lab work being fitted with completion of treatment, the contracts team are well within their rights to breach the contract.
Benefits in Kind
Providers must be very careful with respect to the treatment of practice staff and the provision of NHS dentistry when an NHS claim is made for the UDAs but no patient’s charge is collected. This can be viewed by HMRC as “a benefit in kind” for the employee which is taxable at the tax rate they are on. As the contract team may see the record cards and the fact that a patient charge has not been collected, they could refer the provider to HMRC as it is the responsible for the employer to collect their staff’s tax on their earnings.
The Local Office can only terminate the NHS contract and therefore cannot prevent the dentist from seeing patients under private contract. However where there are serious patient safety concerns or otherwise the Local Office will automatically advise the CQC of its decision and the latter would consider whether to impose sanctions or cancel registration which would result in the practice closing.
The Local Office for NHS England South (South East) recently provided what the common reasons are for breaches and remedial notices and these are listed below.
Common breach notices:
- Under performance greater than 4%
- Information Governance – usually sending patient identifiable information via non nhs.net email (there have to be 2 pieces of information to identify a patient, ie name and dob or name and address)
- Purchase of counterfeit equipment
- Incorrect claiming
- Failure to obtain two clinical references
- Failure to comply with IRMER regulations
Common remedial notices:
- Failure to address issues identified at practice inspections (this is only issued after repeated chases)
- Failure to provide information requested in clauses 211 and 212 (this could be for a variety of issues)
- Underperformance and Information requests are now covered in more detail.
Breach notices should not be issued for contract failures that can be remedied with out there first being a remedial notice that gives the contract holder a reasonable amount of time to remedy the failure. The one exception to this is underperformance. A contract must deliver 96% of its value and anything less will automatically result in a breach notice being issued. This is a directive from NHS England to all Local Offices though some in the country are quicker off the mark with this than others. NHS England South (South East) routinely issue breaches notices for this and it is the most common reason for breaches here in Kent. A breach notice for underperformance can be avoided in the circumstances of “Force Majeure”.
- Force Majeure
This is a Latin phrase often used in legal documents and its direct translation is “superior force”. More loosely it means a chance occurrence or unavoidable accident. Common examples of force majeure would be wars, strikes, riots or acts of god. Appendix 1 gives the circumstances when Force Majeure would be initiated but it is important to note that the timing of the occasion will have an impact on the decision. So circumstances occurring earlier in the contract year which have a better chance of being mitigated as far as the delivery of the contract value goes are less likely to be considered under Force Majeure than those occurring towards the year end. In all dealings the local office needs to make sure that it can defend a legal challenge so in cases where the issue is potentially grey we would expect the local office not to issue a breach notice. Clearly the point is that there will not be many cases of Force Majeure that avoid a breach notice for an underperformance of the contract.
Local Office addition: “ Where a Force Majeure application is approved, for relief to be applied, the actual number of UDA’s associated with the Force Majeure event would be manually taken into account for year end performance and if the contract would still have been below 96% then a breach notice would still be issued.”
- Why are Breach Notices being issued for Underperformance without a Remedial Notice first?
NHS England announced in 2014 that Breach Notices would be issued for any underperformance greater than 4% of the contract value. This was to be implemented in 2015 for the 2014-2015 year. At the last minute this was revoked because of ambiguity in the original NHS England Policy. The Policy was amended to remove this ambiguity from 2014/15 onwards with Area Teams (as they were then known) advised not to issue breach notices for 2013/14 performance only. Therefore contract holders were given plenty of warning. As already stated it is not possible to issue a remedial notice when the underperformance has already been delivered. The main reason for issuing a breach is that although NHS England does claw back the overpayment the money returned to the NHS is not then spent on NHS dentistry and under current financial instruments there is nothing that can be done about it. So in effect an underperformance represents a loss of dental services for NHS patients. There are many cases where the lost UDAs could have been awarded to another contract if only the Local Office was advised by the contact holder. There are many cases of contracts serially underperforming their values when in effect contract holders are being given interest free credit and so the decision was made to award breach notices as a disincentive.
- How can I avoid a Breach Notice in an Underperformance?
Where a contract is clearly going to underperform, the contract holder must approach the Local Office to ask for a temporary or permanent reduction in the contract value. Temporary reductions are difficult to achieve as a contract holder must be able to demonstrate that there were exceptional circumstances resulting in the underperformance and it had not been possible to employ a locum tenens on a temporary basis to help make up the shortfall. It is advised that a contract holder who serially underperforms voluntarily asks for a permanent reduction in the contract value. 2 or more breach notices for underperformance does not give the Local Office the legal authority to apply a permanent reduction to the contract value unilaterally but it does have the legal authority to terminate the contract where the underperformance has been persistent and there has not been exceptional reason for this. However such terminations must be reasonable and proportionate. In such circumstances they would consider termination a last option and instead would strongly encourage the contract holder to renegotiate their contract to one that is deliverable. This would then allow the funding so released to be utilised on other dental services. If a contract holder refuses to renegotiate they may have no choice but to terminate. The Local Office does monitor the performance of the contract and where a contract has only delivered 30% of the contract value after 6 months the Local Office will require the contract holder to produce an action plan of how the shortfall will be made up. If the Local Office does not agree to the plan it has the legal authority to cease payments. The LDC strongly advises contract holders to be proactive with the Local Office. Those that do proactively interact have a profound affect on the decisions the management team make and it is much more likely to engage positively with the practitioner than the ones who bury their heads in the sand.
- Ceasing Payments
Where a contract is woefully short of its target after 6 months (30%) the Local Office does have the legal authority to temporarily cease monthly payments if it feels that the contract is going to underperform. This is normally done after discussions with the contract holder but not necessarily with an agreement from that person.
- Repayments of Underperformance
Once it is clear that a contract has underperformed by more than 4%, a breach notice is issued and the amount of underperformance has to be repaid to NHS England immediately and in full. Please note that there is no rounding up or down of percentages and even if a contract delivery is only 1 UDA short a breach notice will be issued and a full repayment is required. In exceptional circumstances where such an action is going to put the contract holder at such financial risk that continued NHS dental services are jeopardised the Local Office will consider allowing the staged repayment of the underperformance over the remainder of the financial year. However it will be necessary for the contract holder to demonstrate with clear evidence that they are unable to raise the finance by other means and they are at financial risk of continuing to deliver NHS dental services should a full repayment be made immediately. A Local Office may allow the 4% underperformance to be carried over but a business case will have to be made for how a contract will achieve a 104% delivery the following year when only 96% was achieved. This is in effect an 8% increase in delivery.
Contract holders under clauses 211 and 212 of the regulations are required from time to time to provide the local office with certain details of the NHS services they are providing or information that is considered reasonable. The word reasonable is not defined. An example of breaches that have been issued for a failure to respond to requests for specific information relates to the recent letter that came out before Christmas 2015 from David Geddes head of Primary Care NHS England requiring contract holders to provide their Local Office with their emergency arrangements over the Christmas period. There were 3 separate requests for the information from the Local Office and a small number of practitioners for whatever reason failed to respond. The well publicised pressure 111, A&E and other healthcare services have faced in previous Christmas periods prompted the requests for individual practices to provide information on their emergency services. This information would then be given to the emergency services so that patients with dental emergencies could be better directed. Whilst the LDC does not endorse the decision to issue breach notices for this it can understand the frustration that the Local Office may feel.
Purchase of Counterfeit Equipment
Contract holders must make sure that any equipment purchased is properly CE marked for use in dentistry. There is a lot of equipment, especially made in places like China that has not been properly CE marked and legally licensed for use in the UK. This includes handpieces that look identical to the original product. Be careful of your source as even some supply companies have been caught out and have sold equipment unknowingly. Some clues can be found in way the enclosed literature is presented. Questions to ask yourself are; is the spelling correct and does it look like a photocopy? Other clues include whether the handpiece vibrates excessively or is overly noisy. The old adage “if the deal is too good to be true it probably isn’t legal”.
The complexity of claiming within the NHS regulations is well known but not knowing what you can claim for and what you can’t is not an acceptable defence for inappropriate claiming. Fraud is very high up on the list of the more important reasons for breach notices. Dentists who join the performer lists from abroad are required to attend rule and regs courses titled “An Introduction to Primary Care Dentistry in the NHS” to make sure they are familiar with the NHS regulations. These are run regularly in the section 63 postgraduate calendar across the south east. They are open to all dentists and not just those from abroad. A common mistake made by dentists is when providing a gold inlay. The regulations require that this be made up of 60% fine gold whereas a crown may only require as little as 2% fine gold. It is important that dentists ensure the lab they employ is using the correct amount of gold and in any record card check that identifies a gold inlay as an item of treatment the lab dockets will be looked at. It is recommended that periodically all practitioners who provide NHS services attend one of these courses to ensure they do not fall foul of regulations.
When completing the starter leaver form for a new performer the provider is required to obtain 2 clinical references for the new performer, which have been written in the last 2 years. Providers are ticking the box “yes” when they have carried this out. In the event of something going wrong or otherwise the contracts team are entitled to see these references. In instances when there have been no references obtained a breach notice will be issued for failure to comply with these contract regulations. These references are also a CQC requirement. Where it has not been possible to obtain 2 clinical references the KLDC strongly advise providers to raise the issue with the contracts team rather than simply ticking the “yes” box. You will find the contracts team very understanding if they have been involved from the start.
It is surprising to report that there are still dentists operating ionising radiation equipment who have let their core of knowledge certification lapse. Unfortunately there is no mechanism currently to advise a dentist of when their current certificate expires so it is very important that you take responsibility for knowing when this happens. IRMER 2000 regulations require any operator of ionising regulations to undertake this training once every 5 years. Whilst it is possible to do this on line it is normally a 5 hour (day) course and it is recommended that you attend this in person. Although part of the GDC core subjects that have to be completed annually include radiography, a one hour course done every year for 5 years and therefore amounting to 5 hours does NOT satisfy the Core of Knowledge requirement laid out by IRMER 2000. The one hour training each year in ionising radiation required by the GDC is in addition to the IRMER Core of Knowledge. This IRMER certificate expires after 5 years and it is incorrect to believe that the certificate applies to any 5 year period and so can be done at the beginning and end of a 10 year period. If a dentists or x-ray operators IRMER certificate is found to have lapsed and they have been taking x-rays then that NHS contract will automatically get a breach notice. The CQC have the power to fine a practice as well for the same omission and the contracts team could well advise the CQC of this failing. It is strongly recommended by your KLDC that all providers do check that their x-ray (IRMER) Practitioners and Operators have a current certificate.
T. P. Hogan – Chairman Kent LDC.
Updated April 2018