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17 February 2016

A healthy right of review: NHS England found compliant with Patient Choice and Procurement Regulations but reminder that these regulations do bite

R (on the application of QSRC Limited ("QSRC")) v National Health Service Commissioning Board ("NHS England") and another [2015] EWHC 3752 (Admin)

The challenge: what was at stake?

QRSC provides gamma knife services, for the treatment of lesions within the brain, at the National Hospital for Neurology and Neurosurgery ("NHNN") in London. It recently brought an unsuccessful judicial review application against the National Health Service Commissioning Board ("NHS England"), which has responsibility for commissioning clinical services (including gamma knife services) throughout England.

In this case, QSRC sought to bring a claim under the National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (the "Regulations"), which regulate the fairness and transparency of NHS commissioning practices, as weighed against the imperatives of ensuring continuity of access to high quality patient care. This is the first case in which the application of the Regulations has been considered by the Courts.

The Administrative Court dismissed the Claimant's application for judicial review of the Defendant's decision not to conclude an interim contract for the provision of gamma knife treatment pending completion of an NHS national procurement exercise.

The legal backdrop: commissioning under scrutiny

When procuring health care services for the purposes of the NHS, NHS England (or the relevant Clinical Commissioning Group) is required under the Regulations to act in a transparent and proportionate way, treating providers equally and without discrimination.

The National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 ("Regulations") came into force on 1 April 2013. The purpose of the Regulations was to impose requirements on NHS England and Clinical Commissioning Groups in order to ensure that, when commissioning health care services, they:

  • adhere to good practice in relation to procurement;
  • protect and promote the right of patients to make choices with respect to treatment or other healthcare services provided for the purposes of the NHS; and
  • do not engage in anti-competitive behaviour adverse to the interests of people who use such services.

Guidance on the application of the Regulations was published by Monitor, the sector regulator for health services in England, in April 2014.

Prior to the establishment of NHS England and the Regulations noted above on 1 April 2013, clinical services (including gamma knife services) were commissioned by Primary Care Trusts working collaboratively through Specialised Commissioning Groups.

This case only addressed the position from 1 April 2013 until the completion of the NHS's national procurement exercise, and not the on-going issue of whether gamma knife treatment should be funded by NHS England to be provided by QSRC at NHNN. This case arose at a time of impending changes in the process of NHS commissioning.

What happened – why did QRSC feel wronged?

QSRC entered into negotiations with University of London College Hospitals NHS Trust in February 2011 to become the provider of gamma knife surgery services at NHNN. Owing to these upcoming changes, QSRC were informed in November 2012 that a new contract for provision of gamma knife services would not be awarded until 1 April 2013. In the meantime, funding for individual treatments for NHS patients was still provided in exceptional circumstances using the 'Individual Funding Request' process.

For any interim contract, NHS England stated that it would not award a new contract to any 'new entrant'. NHS England considered BUPA's Cromwell Hospital and St Bartholomew's Hospital to be existing providers as they had each held NHS contracts in the previous year and therefore continued to fund gamma knife treatments at these sites. However, NHS England did not consider QSRC to be an existing provider (despite the treatments it had been carrying out under the individual Funding Request process) so declined to fund the same treatments provided by QSRC at NHNN.

QSRC challenged this decision on the ground that NHS England had failed to comply with the Regulations by not acting in a transparent and proportionate way and, it alleged, by treating some providers of gamma knife services more favourably than others.

QSRC brought a formal complaint before Monitor, claiming a breach of the Regulations. On the basis of a similar complaint, Monitor issued further guidance as to the commissioning procedure ("Guidance"). The Guidance stated that:

"if the commissioner's decision had the effect of excluding some existing providers from being able to provide a service (because they had provided direct services to NHS patients under other arrangements than an NHS standard contract) commissioners would need an objective justification for this".

Further, the Guidance went on to provide that:

"if commissioners did not have a well-reasoned objective justification based on evidence, we would normally expect them to also procure services from the other existing providers (those that had provided services under other arrangements than an NHS standard contract), under their interim commissioning position".

QSRC argued that it ought to be awarded an interim contract with NHS England on the basis of this Guidance until the services were fully re-commissioned. However, NHS England considered that such action would in itself breach the Regulations as it could be considered preferential treatment to QSRC, since there were other providers who had provided the services in question under arrangements other than a standard NHS contract.

QSRC brought an application for judicial review of the decision.

The questions for the court, and the judge's answers...

Was QSRC an existing provider?

The High Court concluded that QSRC was an existing provider of gamma knife services within Monitor's guidance and that it should not have been excluded from consideration for the commissioning of services in the interim period. Having concluded that QSRC was an existing provider, it would then be for NHS England to provide objective justification for not awarding an interim contract. The onus then fell on NHS England to provide positive reasons for not awarding a contract to QSRC.

Was there was an objective justification for the decision not to award an interim contract?

Following Monitor's guidance, a decision by commissioners not to commission services from an existing provider could be objectively justified if well-reasoned and based on evidence.

The High Court examined whether NHS England's decision not to award an interim contract in March 2015 contained an objective justification or not. One reason given by NHS England for not granting an interim contract was that to do so would in fact entail giving QSRC preferential treatment compared to other providers of the same service.

This decision was supported with other reasons: awarding a contract to another supplier in London would add to a problem of oversupply; there were no known problems with quality of services in London; and there was no justification for procuring a short-term contract pending the national procurement of the services.

The High Court considered that the reasons given amounted to objective justification and that, as such, there was no illegality in NHS England's approach to the interim contract.

Comment: NHS bodies are amenable to review under the regulations

This case is of particular interest as it is the first time the Courts have considered a claim brought for breach of the Regulations. Further, it turns on the interpretation of guidance by Monitor on the application of the Regulations in relation to the commissioning of specialist services. Albeit QSRC's challenged ultimately failed, the case demonstrates how the Regulations can provide a clear legal basis for challenging NHS procurement practices and that Monitor has the appetite to apprehend apparent transgressions where they are capable of depriving economic operators of their rights.

This article was written by Tanya Wilkie. For more information please contact Tanya on +44 (0)20 7203 5058 or at