CQC prosecutions: latest on how the Courts decide level of fine

Key takeaways

• The focus on applying the sentencing guidelines for health and safety cases in CQC prosecutions means we are seeing the size of fines going up, especially for larger organisations
• Previous warnings and/or knowledge of risk from previous CQC inspections is likely to be a key factor for the Court when assessing level of culpability
• Another significant factor influencing the level of fine is the number of people put at risk of harm (as opposed to actually harmed)
• Although an ‘NHS reduction’ of 50% was applied to the fine here, the Court’s approach on this varies from case to case

Background

The penalty for offences under the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 (“the CQC Regulations”) - including the requirement to provide care and treatment in a safe way under Regulation 12 - is a fine.  Importantly, however, the level of fine is unlimited, and the Magistrates Courts have imposed some hefty fines to date.

The largest of these so far was recently imposed against The Dudley Group NHS Foundation Trust in a case involving the CQC prosecuting the Trust on two charges of breaching Regulation 12 following the deaths in 2018 of two patients from sepsis - a 33 year old woman and a 14 year old girl.

The Trust entered guilty pleas to both offences.  This follows the pattern in all CQC Regulation 12 prosecution cases concluded so far, none of which have been defended to trial, illustrating the substantial burden providers face in demonstrating to the Court that all reasonable steps have been taken and all due diligence exercised to prevent a breach of the safe care and treatment requirement.

Helpfully, the District Judge who sentenced the Trust in this case has published written sentencing remarks, which explain the thinking behind the level of fine imposed.

Court’s approach to sentencing

Given that there have only been a handful of concluded CQC prosecutions against NHS Trusts (5 including this latest case, and only 2 of those involving acute hospital providers), sentencing these cases means treading relatively new ground.

Whilst there are no sentencing guidelines specific to breaches of the CQC Regulations, the Courts are required to consider the overarching principles published by the Sentencing Council and also the closest analogous published guidelines, which are those used for health and safety offences.  These provide a framework for deciding on the appropriate level of financial penalty for both individual and organisational defendants, including assessing the seriousness of the offence by looking at the defendant's degree of culpability and the level of harm/potential harm involved. The guidelines apply a systematic step-by-step approach to reaching a suggested range of sentence to be applied in each case, dependent on the particular circumstances. In this case, the judge adopted the following approach:

Step 1 - Determining the offence category by reference to culpability, harm risked and likelihood of that harm arising

• Culpability - The judge found the level of culpability in this case to be ‘high’ because the Trust “fell far short of the required standards of care”. A significant factor in the judge’s decision on level of culpability was that the CQC had carried out a series of unannounced inspections in the 3 months preceding the deaths which found the hospital’s ED department to be in crisis, leading to concerns about patient safety, including in relation to detecting potential sepsis in patients.  In his sentencing remarks, the judge said of this: “The warnings were clear and unambiguous from the CQC and the failure to take immediate robust action to protect the public is clearly relevant to the determination of culpability”.
• Seriousness of harm risked - Given the harm risked in this case was death, the judge said it fell within the highest category, harm level A.
• Likelihood of harm - The judge concluded that any failure to correctly identify potential sepsis and react swiftly must lead to a high likelihood of level A harm occurring.

Given the high likelihood of level A harm, the judge placed this case for sentencing purposes in harm category 1 - i.e. the highest category of harm.

In addition, the guidelines require consideration of two further factors which impact the starting point for the fine:

• Whether the offence exposed a number of members of the public to the risk of harm - on this point the judge found that, with as many as 25,000 people coming through ED at the hospital in the period since the CQC initially raised concerns, there were significant numbers of the public exposed to the risk of harm. For this purpose, the relevant question is in relation to risk of harm, as opposed to actual harm, meaning that the high number of patients cared for in ED is a very relevant consideration, even in the absence of evidence of other patients sustaining actual harm.
• Whether the offence was a significant cause of actual harm - this issue was not straightforward because, whilst the Trust accepted a causal link between the failings in care and the death in one of the cases, it was not agreed that there was any such link in relation to the other. The judge nevertheless decided that, in this case, the starting point for the fine should be the same for both cases.

Where one or both of these factors apply (and in the case of one of the patients, it was both), the guidelines stipulate that the Court must consider whether the suggested starting point for the fine - as determined at step 2 below - should be increased.

Step 2 - Identify starting point and range for the fine

When dealing with organisations, the starting point for the fine is identified by looking at annual turnover, or equivalent.  As the judge acknowledged, an NHS Trust does not have an annual turnover in the normal sense.  However, he decided that the proper approach to fixing a starting point in this scenario was to equate income with turnover.  Looking at the Trust’s average income over the last 3 years, which was in excess of £400 million per annum, this placed the Trust in at least the ‘large’ organisation category (defined in the guidelines as having a turnover of £50 million or more). 

The judge also then had to consider whether this starting point might have to be adjusted upwards in light of aggravating features listed in this part of the guidelines or whether there were any mitigating factors that could justify a downward adjustment.  There were none of the specific aggravating features present, but there were some of the mitigating factors, namely - lack of previous convictions, a good health and safety record previously and the fact that the Trust had accepted responsibility in the case. 

For a high culpability, harm category 1, large organisation case, the guidelines give a starting point of £2.4 million, with a suggested sentencing range between £1.5 million and up to £6 million. 

On the facts of this case, given the size of the organisation and its income and the additional concerns relating to the number of members of the public exposed to risk and the fact that the risk led to, ‘at the very least’, the death of one of the patients, the judge found that the starting point in this case should be higher than the suggested starting point in the guidelines, even taking account of the mitigating factors.  Were this anything other than a public body, the judge said, he would put the starting point for the fine at £4.8 million for each of the two offences.

Step 3 - Is the proposed fine, based on turnover or equivalent, proportionate to the overall means of the organisation?

The Trust in this case had provided detailed financial information showing that, whilst the ‘turnover’ figure is high, the Trust was actually at ‘break even’ point, with a slight net deficit over the last four years.  The Trust also highlighted that any substantial penalty would impact on its ability to deliver care.  On this basis, the judge adjusted the starting point for the fine downwards to £3.8 million for each offence, albeit this is still higher than the usual starting point fine within the relevant category of the sentencing guidelines.

Step 4  - Consider other factors that may warrant adjustment of the proposed fine 

The judge noted that, since these deaths, the Trust has taken “…significant steps to make long lasting improvements particularly in their Emergency Department. Extra staff and resources are now in place”.

In addition, the guidelines provide for fines falling to a public body to be ‘substantially reduced’ if the offending organisation is able to demonstrate that the proposed fine would have a significant impact on the provision of services.  The all-important question though, is how substantial a reduction should be made on this basis?

In his sentencing remarks, the judge described this issue as a ‘dilemma’ because, whilst fines in cases such as this need to be ‘significant and meaningful’, they must at the same time not produce such a ‘dramatic effect’ on the defendant Trust that future patients are potentially put at risk of harm. As the judge observed, previous sentencing decisions have applied different levels of reduction for public bodies.  However, the judge decided to adopt the approach taken by the Court in a 2017 HSE prosecution involving an NHS Trust, where an ‘NHS reduction’ of 50% had been applied.   Applying this 50% reduction here took the starting point figure for the fine to £1.9 million for each offence. It is however, important to note that there is no agreed or standardised approach to how (or indeed, if) such a discount should be applied and it remains for each sentencing judge to consider each case.

Reduction for guilty pleas

In criminal sentencing, credit is given for entering a guilty plea.  In this case, the Trust entered guilty pleas to the charges at the earliest realistic opportunity.  As such, the judge found that the Trust was entitled to full credit, meaning a reduction of one third in relation to each fine, bringing the figure to £1,266,666 for each.

Totality Principle

Finally, given the Trust was being fined for two offences, the Court was required to consider whether the aggregate amount was ‘just and proportionate’ and, if not, whether to proportionately reduce each fine.  However, the judge said he could find no reason to reduce the fine on this basis.

Hence, the Trust was ordered to pay a total of £2,533,332 (i.e. £1,266,666 for each offence), plus an agreed contribution of £38,000 towards the CQC’s costs.

What next

The number of successful prosecutions completed by CQC is continuing to rise, and it remains part of CQC’s enforcement strategy to continue this focus on criminal sanctions, where it is deemed appropriate. With each conviction to date, the approach taken to sentencing by the Court has varied but we can certainly now see some patterns emerging.

It is increasingly clear that Courts will give close consideration to the Sentencing Council guidelines and particularly to the guidelines which apply to health and safety cases and this is having a direct impact on the size of fine likely to be imposed, particularly for larger provider organisations.

The observations of the Court in this most recent case in relation to the extent of risk and the number of people exposed to a risk of harm is also important. It will very often be the case that given the nature of services provided in health and social care settings, whether that is by a busy NHS Trust Emergency Department, an inpatient ward, or a residential care setting, the number of people using the service will be high (or certainly more than one or two people involved in specific incidents cited in the prosecution proceedings). It will be interesting to see if we are moving towards a position where it will be increasingly common for Courts to infer that a number of people have been exposed to risk of harm, unless the defendant can demonstrate the contrary.

Perhaps one of the most significant points to draw from this most recent case is the emphasis placed on previous warnings and/or knowledge of risks as a result of findings from previous CQC inspections. This demonstrates even more than ever before the importance of CQC routine inspections, including the detailed commentary and findings of those reports, as well as ratings awarded. In situations where providers are aware of performance issues and are working to address them, it will be really important that this is clearly communicated and evidenced to CQC to avoid inferences being drawn in the event of incidents occurring. This is particularly pertinent in the case of longer term or more complex risk issues which cannot be fixed immediately. The current staffing pressures across the health and social care system would seem to be a good example of such an issue.

The final message to draw from this case, and which is highlighted by the Court’s detailed and methodical explanation of sentence is that, even in situations where the breach is clear and a guilty plea is to be entered, there is much that a defendant organisation must consider in reviewing the case as presented by the CQC and preparing for sentencing, as decisions made by the Court as part of this process can have a real and significant impact on the financial consequences and reputational impact of the case.

How we can help

We can provide expert support to independent and public sector providers in the event of CQC enforcement action, from responding to Warning Notices through to defending criminal prosecutions, with our team being able to offer specialist criminal expertise in this area. 

Our experience includes:

• Advising and supporting providers during criminal investigations by the CQC and during concurrent investigations by other enforcement authorities and the Coroner
• Providing 24/7 emergency support, including attendance and advice at interviews under caution with the CQC
• Strategic advice to reduce the risk of prosecution, including advice on drafting representations in response to Warning Notices and responding to factual accuracy checks
• Defence of criminal prosecutions if charges are brought
• Training to Board members and managers on dealing with adverse incidents, health and safety legislation, CQC prosecutions and corporate manslaughter