PMS contract termination clauses - court case

Contract variations

Last year Bevan Brittan wrote an article Sharper teeth for PMS commissioners which clarified the rights of PCTs to terminate PMS agreements on notice, ‘without fault’. This stemmed from amendments to the PMS Agreement Regulations on by virtue of National Health Service (Primary Medical Services) (Miscellaneous Amendments) Regulations 2010 (the “2010 Regulations”) which came into force on 1 April 2010.

In recent months there has been press coverage about claims that "potentially unlawful variations" were being agreed in relation to PMS agreements which would allow PCTs to unilaterally terminate the contract or tie GP payments to efficiency measures.

On 8 June 2011, a Permission Hearing was heard by Mr Justice Nicol at the Royal Courts of Justice. The hearing was to decide whether to allow an application for judicial review to be made in relation to this practice.

Many PCTs have written variations into their PMS agreements or are in the process of doing so, with many specifically inserting clauses allowing unilateral termination. This has also been coupled with PCTs requiring GPs to hit new performance targets. This makes this hearing of extreme importance to PCTs.

The application

GPs in London, with barrister Simon Butler representing them, have sought to challenge the vires of the 2010 Regulations and the ability for PCTs to unilaterally terminate PMS agreements “without fault”.

This application was refused on the papers, but the oral Permission Hearing has now been heard. There was then some delay whilst the case was considered but the judgment has now been published (Flasz v Havering PCT; Secretary of State for Health (Interested Party) [2011] EWHC 1487 (Admin)).

The outcome

We can confirm that Mr Justice Nicol, who heard the case, refused permission.

In summarising the case he stated:

'In 2010 the PCTs unilaterally changed the contracts so as to include provision which would permit the contracts to be terminated on six months' notice. The PCTs did so in response to regulations which were made by the secretary of state for health on 3rd March 2010 and which came into force on 1st April 2010.

‘The arguments which the claimants raised have not succeeded. In my judgment the claimants have not shown a reasonably arguable case. Accordingly, on an examination of their merits I would refuse all the claimants permission to apply for judicial review.’

The challenge to the vires of the 2010 Regulations was also rejected with Mr Justice Nicol explaining it was within the statutory powers of the Secretary of State to make the 2010 Regulations.

This judgment confirms that PCTs retain their right to terminate the PMS contract with six months' notice and that PCTs have been acting within the legal framework.

How can we help?

Our Commercial Healthcare team would be happy to assist you with any issues that arise in relation to your PMS contracts.