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Monitor responds to outcome of judicial review

11th December 2009

The Administrative Court has today delivered its ruling on the judicial review of Monitor’s interpretation of legislation to limit NHS foundation trust income derived from private patient charges (the private patient income cap). The judicial review was prompted by a legal challenge to Monitor’s interpretation of the cap by Unison.

Mr Justice Cranston has ruled that Monitor’s current interpretation of the legislation is not lawful and determined that the cap should apply to a wider range of income sources.

Monitor accepts the Court’s decision and welcomes the clarification; the regulator will now amend its approach accordingly.

Commenting on the Court’s decision, Monitor’s Executive Chairman, William Moyes, said:

“Monitor’s intention has always been to apply the cap in a way that is fair and reasonable. This is a complicated issue as was demonstrated by the various arguments in Court and the divergence of views we received when we consulted on our interpretation of the cap. We accept the outcome of this judicial review and will now focus on amending the regulatory framework in line with the ruling of the court.

“It will be important that, taking appropriate advice and working co-operatively, we produce a framework that is compliant with the judgment today and is also as far as possible practical and workable in its application. We are also hopeful that Government’s review of this piece of legislation will address any remaining concerns or doubts that may exist regarding the application of the cap.”

The judgment did not support Unison’s argument that NHS foundation trust accounts for earlier years should be unravelled and recalculated, seeing this as a ‘waste of public resources’.  Mr Justice Cranston also acknowledged that Monitor’s approach had been operating for several years - during which time it had been open to public consultation - before it was challenged by Unison in 2007.

Provided the statutory test is applied, the judgment states that Monitor is not expected to undertake ‘endless tracing exercises’ to determine whether the original source of a foundation trust’s income was derived from private charges or otherwise. The regulator has discretion in the way it exercises its powers in applying the cap and may be justified, for example, in setting a ‘de minimis threshold’ or ‘high-level approximations’ so that the cap is not exceeded.

In conclusion, Mr Justice Cranston referred to the Department of Health’s position that some reform to the cap is desirable, and noted that if aspects of his judgment cause practical difficulties, these may be addressed in the Government’s current review.

Monitor will now address and revise the definitions which apply to the cap as set out in the NHS foundation trust Financial Reporting Manual (the FReM) to reflect the Court’s judgment today. The regulator will communicate its intentions in this respect to all interested parties as soon as practically possible.

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Article Information

Title: Monitor responds to outcome of judicial review
Author: Martine Hamilton
Article Id: 13502
Date Added: 11th Dec 2009

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