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CQC updates guidance on notifying councils of impending failure of “difficult to replace” adult social care providers, following High Court ruling

The Care Quality Commission (CQC) has updated its guidance on when it will inform local authorities of the likely failure of a care provider, after a High Court judge found the regulator had unlawfully attempted to use new guidance to lower the threshold for notification.

The move comes after Advinia Health Care successfully claimed a revision to the guidance from the CQC, the independent regulator of health and social care services in England, breached section 56(1) of the Care Act 2014.

Section 56(1) of the 2014 Act says: "This section applies where the Care Quality Commission is satisfied that a registered care provider to which section 55 applies is likely to become unable to carry on the regulated activity in respect of which it is registered because of business failure as mentioned in section 48."

Advinia claimed that the CQC's change to the guidance in 2020 erroneously stated the word 'likely' in "likely to become unable to carry on the regulated activity in respect of which it is registered because of business failure" meant 'real possibility'.

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In Advinia Healthcare Limited) v Care Quality Commission [2022], Mrs Justice Butcher agreed with Advinia's argument that the word "likely" in section 56 means "more probable to occur than not".

Last month, the CQC updated its guidance as a result of the April 2022 judgment.

A footnote in the revised Market Oversight guidance states: "In May 2022, regarding notification to local authorities, we changed our definition of 'likely' from 'a real possibility of business failure' to business failure being 'more likely than not'".

The relevant section of the guidance now reads:

"There are two conditions that have to be satisfied in order to trigger this duty to notify local authorities:

1. It is likely that business failure will occur; and

2. It is likely that a regulated activity will cease to be carried out as a result of business failure (which may require the local authority to carry out its duty under s.48(2) of the Care Act 2014).

We do not have to prove conclusively that business failure will occur, and regulated activity will cease as a result. The primary purpose of CQC's duty is to give local authorities advance warning that they may be required to discharge their duties under the Act. CQC will need to be satisfied that both conditions are 'likely', i.e. more likely than not."

Barristers at 39 Essex Chambers, Fenella Morris QC and Jack Anderson acted on behalf of the claimant. They were instructed by Browne Jacobson.

Adam Carey

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