Residential care contracts – fees after death

We highlighted last year that care home providers were at risk of breaching consumer rights protections when charging families for extended periods (of up to four weeks) after the death of a resident.

The Competition and Markets Authority (CMA) has now published final advice to help care homes understand and comply with their responsibilities under consumer law, in these circumstances. The CMA confirms that:

• if you charge a fixed fee following the death of a resident, this should be calculated pro rata up to a maximum of three days;
• if you charge fees following the death of a resident up until the resident’s room is cleared of their possessions, this can be calculated pro rata up to a maximum of ten days (this back-stop period can be extended at the explicit request of relatives);
• you should not charge top-up fees for any period that is longer than the Local Authority would have paid following a resident’s death;
• relatives should not be required to make up any shortfall in Funded Nursing Care following a resident’s death; and
• any funds charged after a resident has passed away should be refunded if their room is then reoccupied.

There are benefits that can arise from keeping a room available after a resident has passed away. For example, it provides friends and family with time to make suitable arrangements to attend the home without feeling under pressure from a home to make the room available as soon as possible. However, the guidance makes clear that providers should avoid charging twice for the same room.

If your contract terms allow you to clear the deceased’s room of belongings, you should clearly state what you will do with their possessions plus what (if anything) you will charge for clearing and/or storing the items. Any fees charged to the estate should reflect your reasonably incurred costs, and you should return any monies received from the sale of items to the resident’s representative within a reasonable timeframe (i.e. within 30 days).

Now that the advice is final, the CMA expects all care homes to review as soon as possible and, where necessary, change their contract terms and practices or risk enforcement action. A contract term that is unfair is not enforceable against a resident and any money paid may be recoverable by them. Additionally, a consumer may be entitled to receive a discount or seek damages for detriment caused by a breach of consumer protections.

Whilst it can feel uncomfortable to discuss what happens next in the event of a resident’s death, it is important to ensure your contract terms are clear and that individuals understand their rights and obligations, whilst also treating the topic with appropriate sensitivity.

The CMA is now consulting on its general guidance for care home providers. You have until 12 July 2018 to submit your thoughts on what is fair for consumers purchasing residential care for the elderly.

Further information

We are considering the potential impact of this second consultation and the amendments that are likely to be required of customer contracts going forward. For more information on the above or, if you would be interested in a self-assessment toolkit for your customer contracts when it becomes available, please contact Emma Watt or John Wearing.

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