Court of Appeal finds GP contract dispute amenable to judicial review

The Court of Appeal has ruled that the determination of an NHS Resolution adjudicator carrying out statutory primary care contract dispute resolution functions on behalf of the Secretary of State is amenable to judicial review. The judgment overturns the decision at first instance and the precedent set in the High Court case of R (Haffiz) v NHS Litigation Authority [2020] EWHC 3792 (Admin).

Case background

The appellant, Dr. Shashikanth, held two General Medical Services (GMS) contracts administered by NHS Hillingdon Clinical Commissioning Group (CCG). The CCG terminated the contracts, alleging a breach of the obligation to cooperate with a primary care network, as stipulated by paragraph 15A of Schedule 3 to the National Health Service (General Medical Services Contracts) Regulations 2015 (as amended) (2015 Regulations).  

Rather than challenging the notices through the civil courts, Dr. Shashikanth chose to exercise his contractual right to refer the dispute to the Secretary of State (SoS) for determination under the statutory NHS dispute resolution process. The SoS delegated the dispute resolution function to the NHS Litigation Authority (NHS Resolution).  

The NHS Resolution adjudicator upheld the terminations and Dr. Shashikanth applied for judicial review, challenging both the adjudicator’s determination and the termination notices.

Decision at first instance

The High Court judge found that the adjudicator had erred in law by proceeding on the mistaken basis that paragraph 15A created an immediately effective requirement of co-operation and that Dr Shashikanth’s failure to comply with it constituted a breach of the contracts entitling the CCGs to terminate. However, he held that neither the adjudicator’s determination nor the termination notices were amenable to judicial review and so dismissed the claim.

Dr Shashikanth was granted permission to appeal the ruling on the adjudicator’s decision but not on the termination notices.

Court of Appeal 

The Appeal Court, led by Lord Justice Lewis, found in favour of the appellant.

Giving judgment, Lord Justice Lewis initially observed that judicial review is only available against a body exercising public functions and only then in respect of public law matters. He set out at paragraphs 43-44 that there are, broadly, two approaches to the question of whether a person or a body is exercising a public function:

1. Source of power: if a person or body is exercising power derived from statute (or the prerogative, if the matter is justiciable) then the person or body is generally assumed to be exercising a public function.
2. Nature of decision: the court may have regard to the nature of the function being performed to determine whether that function has a “sufficient public element” as to make it amenable to judicial review. Relevant considerations include but are not limited to:
   1. the extent of government or other public authority involvement in the function
   2. whether and to what extent the exercise of the function is performed against a background of statutory powers, and
   3. the nature and importance of the function

The Court concluded that in the current case, the source of the SoS’s power is statutory, derived from regulations 82(1)(b) and 83(5) of the 2015 Regulations, making the function inherently public.  

Next, the Court considered if there was anything in the facts that would rebut that presumption. It found there was not. That the appellant was choosing to use the statutory dispute resolution procedure rather than being compelled to didn't matter and, though the dispute concerned private law rights derived from a contract, that was not a bar either.

Furthermore, it was relevant that here the private law rights arose in a statutory context, namely from arrangements for the health service made pursuant to the National Health Service Act 2006.

The irresistible conclusion of the Court’s analysis was that the decision of the adjudicator was amenable to judicial review.

The issue of variation

Having determined as such, the Court went on to consider the issue of contract variation.

Regulation 32 of the 2015 Regulations mandates that GMS contracts must include provisions equivalent to those in specified parts of the 2015 Regulations, including paragraph 15A. However, the Court of Appeal agreed with the judge at first instance that this stipulation did not mean paragraph 15A gave rise to an immediately effective requirement, or that a failure to comply with paragraph 15A constituted a breach of contract.

Rather, the Court concluded that the contracts needed to be varied to incorporate the requirements at paragraph 15A. Though the CCG had sent the appellant a letter informing him of the requirements of paragraph 15A, the Court concluded that the letter had not constituted a contractual variation because it did not conform to the clauses of the contracts governing a variation. The CCG had, therefore, failed to vary the contracts, meaning the termination notices issued by it were based on a breach of a non-existent contractual obligation.  

Relief

Lord Justice Lewis proposed that the appropriate relief was to quash the determination of the adjudicator and to remit the matter to NHS Resolution to determine in accordance with the Court’s judgment, ie on the basis that there had been no breach by the appellant of any obligation to co-operate with the primary care network because the two contracts had not been amended to include obligations equivalent to paragraph 15A. 

Comment

This case confirms that the NHS dispute resolution process is amenable to judicial review. It also underscores the importance of understanding the statutory context and the nature of the functions being performed when determining the amenability of decisions to judicial review more generally.

It also serves as a cautionary tale about the importance for primary care commissioners of adhering to contractual procedures for variation to incorporate new legislative obligations into contracts.

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