Crime & LawAnalysis

Law, money and morality at issue in nursing home charges legal strategy

Solicitor says State should introduce ex-gratia scheme for those who paid for private nursing home beds because no public beds available

Varadkar Nursing Home

When the State was seeking to avoid refunding long-stay nursing home residents’ maintenance charges which it accepted were unlawfully imposed on them, it told the Supreme Court in 2004 that it might have to repay some €500 million.

Then chief justice John Murray said that was a “substantial” burden on the State but it could not be described as “catastrophic”. It would require “extraordinary” circumstances to extinguish the property rights of vulnerable people in the sole interests of the State’s finances, he said.

He made the remarks when delivering the seven-judge court’s judgment concerning the constitutionality of a 2004 Bill referred by then President Mary McAleese to the court.

In February 2005, the court ruled those parts of the Bill seeking to have the State avoid paying compensation to medical card holders over being required to pay nursing home charges over some 40 years without lawful authority for such charges was a constitutionally impermissible attack on property rights.


“The patients in question necessarily belong to the most vulnerable sectors of society,” chief justice Murray said. “They are, for the most part, old or very old; they are, in many cases, mentally or physically disabled; they are also, very largely, in poor financial circumstances. They are most unlikely to have been aware of the provisions of the health Acts or their rights to services or the terms on which they are provided.”

On the other hand, the relevant organs of State and the health boards were “fully informed” of the terms of the health Acts, including the charging provisions, he said. He was referring to provisions of the Health Act 1970, which granted people with medical cards full eligibility for inpatient services.

The court upheld the constitutionality of other provisions of the 2004 Bill, which provided the minister for health “shall” impose future charges aimed at having long-stay nursing home residents contribute towards their maintenance. That has since been done via the Nursing Home Support Scheme and, latterly, the Fair Deal scheme.

Now, 18 years after the Supreme Court decision, the Government is embroiled in a controversy over a legal strategy devised before 2011 and still being pursued, aimed at minimising the State’s liability concerning charges paid up to 2004 by people who obtained private nursing home beds because of a shortage of available public beds.

Some €486 million was paid out under a health repayment scheme to compensate people in public nursing homes who were unlawfully charged. Some €120 million of that was claimed by the Health Service Executive for the benefit of residents in its care, many with no family.

The Supreme Court judgment did not specifically address the State’s liability towards those who paid for private beds because there were insufficient public beds. The weekly cost of a private bed at the time was some three times more than a public bed and the State’s potential liability has been variously estimated at between €1.5 billion and €5 billion.

The litigation strategy adopted by the State involved it defending claims for refunds of charges paid to private nursing homes until discovery is sought, at which point claims are settled, meaning the courts have not to date decided the issue of the State’s liability.

Taoiseach Leo Varadkar this week defended the strategy as a “legitimate” one, reflecting a “sound policy approach”. It was never Government policy to have the State meet the entire costs of private nursing home care to medical card holders, he said.

Opposition politicians, including Sinn Féin leader Mary Lou McDonald, who accused the Government of “heartlessly” pushing vulnerable people to the “breadline”, have criticised the strategy. All sides are waiting for a report by Attorney General Rossa Fanning on the matter, which is due next week.

The controversy raises issues of law, money and morality, the State’s duty to protect its most vulnerable citizens and its obligation to prudently manage public finances.

It also raises issues about the options available now to address the position of those who paid charges for private nursing home care in the absence of enough public beds.

Solicitor Ernest Cantillon, who represented Louise O’Keeffe in her long-running battle with the State over liability for her being sexually abused in primary school, said the State should take a compassionate view in such cases and he regarded the litigation strategy as “improper”.

There is a genuine issue in other categories of cases about whether the State should be obliged to pay “top dollar” and where the line should be drawn, he said.

“I think the nursing home cases are of a different order. I find it difficult to say it was morally correct to on the one hand say there is a liability but then defend the cases and say there is no merit and only when pushed to, say, the point of discovery, where possibly weaknesses will be found in the defence, to cave in. That means those who have suffered and sought compensation are doubly hit, the wrong has happened and then they are subject to an improper litigation strategy.

“There is a moral obligation to these vulnerable citizens, as Minister [for Children, Equality, Disability, Integration and Youth] Roderic O’Gorman has acknowledged. The State should have refunded these people years ago; it can still do so.”

The option of legal action remains, but any proceedings initiated now might face arguments from the State of being statute barred, out of time, he said. If met with a statute point, a plaintiff might decide to allege fraudulent concealment of the true position concerning charges, he said.

Because of the lapse of time, he considered the State’s obligations towards those affected would be best met via an ex-gratia scheme where time considerations would not be a factor.

A senior HSE source, who spoke on condition of anonymity, said it was “totally unfair” to say that people had been charged “illegally” for private nursing home beds when the courts had not adjudicated that issue as all cases concerning it had been settled.

He believed the State had erred in never allowing a case to run so as to have a court judgment concerning whether the State had any legal liability over the issue.

“The problem was the person who could not get a public bed and had to go private paid €600/700 a week and did not get that back, while the person who paid the lesser €175 public charge was refunded in full.

“The issue is not whether the charge by a private operator was illegal, the issue is whether there was an obligation on the State to provide more support. There is nothing untoward about what was done and about the legal strategy. Legal strategies by their nature are done in private, it is about trying to reduce exposure for the taxpayer.”

He estimated the total cost of a compensation scheme could be €4-5 billion and believed there would be difficulties in putting such a scheme in place for reasons including most of the potential claimants are dead. Any compensation would go to their estates and there may be issues between family members over who paid for the nursing home, he said.

A legal source who has represented the HSE said the State was entitled to take into account the pressure on public funds during the financial crisis and is obliged to “prudently” manage public funds. Some of those who got refunds over nursing home charges donated the refunds back into the health system, she added.

The Nursing Home Support Scheme/Fair Deal had evolved because of the charging issues, she said. “The scheme is not about the HSE footing the bill for people’s care, it is the individual’s bill and the HSE contributes to the cost. My view is the State cannot pay for everything and people should make a contribution.”