Chapter 4: Managing conflicts of interest for GPs

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Managing conflicts of interest for GPs.

 

This chapter contains:

 

1.     An introduction to the issues raised by conflicts of interest.

2.     The Nolan Principles.

3.     What is an “interest”?

4.     Registration of Interests by a CCG.

5.     The duty on CCGs to make arrangements to manage conflicts of interest.

6.     What arrangements for managing conflicts of interest are suggested by the CCG Model Constitution?

7.     What rules are necessary to ensure that an interest does not affect and is not seen to affect the integrity of the decision making process?

8.     Potential legal consequences where decisions are made in breach of the rules about managing conflicts of interest.

 

1.              An introduction to the issues raised by conflicts of interest.

1.1          Managing actual or potential conflicts of interest is essential for every professional.  General Practitioners are in no different position to lawyers, accountants or many other professionals who ply their professional trade for the benefit of clients but, to a greater or lesser extent, are not paid by clients but by a third party (and often the government).  No professional can avoid conflicts of interest, every professional must be acutely aware of them, understand how differing interests are seen by others and act in a professional manner to manage these interests properly.  This is far from easy for all professionals but the present NHS structures have created particularly difficult issues around conflict of interests for GPs.

 

1.2          NHS England has published Guidance concerning the management of conflicts of interest.  It explains their understanding of a conflict of interest as follows:

 

“A conflict of interest occurs where an individual’s ability to exercise judgement or act in one role is or could be impaired or otherwise influenced by his or her involvement in another role or relationship. The individual does not need to exploit his or her position or obtain an actual benefit, financial or otherwise. A potential for competing interests and/or a perception of impaired judgement or undue influence can also be a conflict of interest”

 

1.3          Helpful guidance on identifying what is meant by a conflict of interest is also set out in a Paper prepared by the NHS Confederation and the Royal College of General Practitioners dated September 2011.  This defined a conflict of interest as follows:

 

“A conflict of interest can be defined as: “a set of conditions in which professional judgement concerning a primary interest (such as patients’ welfare or the validity of research) tends to be unduly influenced by a secondary interest (such as financial

gain)”  or a situation in which “one’s ability to exercise judgement in one role is impaired by one’s obligation in another”.

 

For a GP or other clinical commissioner, therefore, a conflict of interest may arise when their own judgment as an NHS commissioner could be, or be perceived to be, influenced and impaired by their own concerns and obligations as a healthcare provider or as a member of a particular peer, professional or special interest group, or those of a close family member”

 

1.4          It is impossible to describe and provide guidance about every single all factual situation which might give rise to a conflict of interest for GPs in practice.  The arrangements which have been set up the government which involve GPs in commissioning will inevitably involve GPs in many situations where they potentially have more than one interest in a proposed decision.  However it is important to remember that conflicts of interest can never be eliminated.  They existed for GPs before the creation of CCGs (in particular under the old fundholding system) are an inevitable feature of all professional practice. 

 

1.5          Hence the key requirements for GPs are to identify where conflicts arise and to make sure that these are properly disclosed and registered, and then managed in accordance the arrangements that CCGs have put in place are the proper disclosure and management of actual and potential conflicts. 

 

1.6          Every GP Practice which holds an NHS practice contract is required to be a member of the local Clinical Commissioning Group (“CCG”) : See section 14A(1) of the NHS Act.  The constitution of the CCG will define how members of a practice can become involved in the workings of the CCG, stand for election to its committees and otherwise become involved in its work.  There is an obvious potential for conflicts of interest where a GP practice, which is a member of a CCG, bids for a contract where the NHS commissioner is the local CCG.

 

1.7          However there are many other circumstances where a GP, acting perfectly properly, may become involved in a situation where a conflict of interest or potential conflict of interest arises.  Many GPs are also shareholders, directors, employees or partners in medical or social care businesses that provide medical services to NHS patients or provide primary medical services to such businesses.  These businesses may have contracts with NHS commissioners.  There is a potential conflict of interest if any of these businesses tender for a contract with the CCG of which the GP is a part.

 

1.8          There can be both legal and professional consequences for a GP who fails to recognise and properly manage a conflict of interest.  However managing conflicts of interest is part of the professional duties of a GP as the Royal College of GPs and NHS Confederation observed in their Paper in September 2011:

 

“..  seeking to eliminate conflicts of interest completely is unlikely to be possible or desirable”

 

1.9          Issues around conflicts of interest do not usually arise with general practice contracts (i.e. GMS, PMS and APMS contracts) because those contracts are awarded and managed by NHS England and not by the local CCG.  However local GP practices, either individually or through consortia, are in a prime position to contract for the delivery of a large number of services in addition to those governed by GMS, PMS and APMS contracts.  These are very often contracts which are let by the local CCG, whose members are the local GP practices.  The transfer of NHS services out of hospital settings and into the community over the coming years means that the volume of such contracts is certain to increase and hence managing the actual and potential conflicts of interest inherent in such arrangements will become a problem that GPs, CCGs and those who advise them will need to focus on with particular care.

 

1.10       The legal obligations on practising doctors concerning conflicts of interest arise in a number of different ways.  There are provisions of the GMC Code about managing conflicts of interest (which are set out below).  There are also provisions in both the NHS Act (as amended by the Health and Social Care 2012) and the in National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 (“the 2013 Regulations”) around managing conflicts of interest.  Rules for managing conflicts exist within CCG constitutions and standing orders and guidance on this subject has also been given by both NHS England and Monitor.  Much of this Guidance from different bodies covers the same grounds.

 

1.11       It follows that all GPs who are working the NHS must have a working understanding of the concepts that lie behind managing conflicts of interest and have a legal and professional duty to ensure that they know and abide by the national and local rules to manage potential conflicts.  Obligations of openness and proper management of conflicts of interest have been imposed on elected councillors and local government officers for many years.  These rules are, to a large extent, an inevitable consequence of their roles within a tax payer funded public service.  The rules referred in this chapter impose similar obligations on those working in the NHS.  Whilst GPs may resent the level of openness that properly managing conflicts inherently entails, doctors (and CCG staff) have to take difficult decisions about how tax-payers monies are spent and what services are received by NHS patients. Patients pay the taxes that fund the service.  The openness about decision making required by the present arrangements is part of the system under which those who make public service decisions are accountable to their paymasters for the decisions that are made.

 

2.              The Nolan Principles.

 

2.1          The starting point of any analysis of the duties of those who hold public office (including those GPs who take part in CCG business) are the Nolan principles.  The Nolan Committee, which is properly called the “Committee on Standards in Public Life”, is an independent advisory non-departmental public body which was set up by Prime Minister John Major in 1994.  It was set up in response to concerns about the standards in public life, particularly around the issue of MPs taking “cash for questions”.  The committee developed 7 principles which ought to guide all holders of public office.  These are as follows:

 

·       Selflessness – Holders of public office should act solely in terms of the public interest. They should not do so in order to gain financial or other benefits for themselves, their family or their friends.

 

·       Integrity – Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might seek to influence them in the performance of their official duties.

 

·       Objectivity – In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.

 

·       Accountability – Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.

 

·       Openness – Holders of public office should be as open as possible about all the decisions and actions they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.

 

·       Honesty – Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.

 

·       Leadership – Holders of public office should promote and support these principles by leadership and example.

 

2.2          These principles ought to provide a general guide to GPs who are elected to CCG Boards, serve on CCG committees or take any decisions where they are acting on behalf the public or spending public money.  However, of themselves, they have no legal effect.  They are however important because GPs should have the security of knowing that, in seeking to judge whether they are responding properly to a conflict of interest problem, exactly the same standards are required of holders of every other type of public office across a very wide range of statutory and non-statutory bodies. 

 

2.3          However even if the principles themselves have no direct legal effect, they can create legal obligations if they are incorporated into a CCG Constitution.  The Nolan Principles are expressly incorporated in to the constitutions of many CCGS as they appear at Appendix F of the Department of Health Model Constitution for CCGs.  Clause 8.1.1 of the Model Constitution provides:

 

Employees, members, committee and sub-committee members of the group and members of the governing body (and its committees) will at all times comply with this constitution and be aware of their responsibilities as outlined in it. They should act in good faith and in the interests of the group and should follow the Seven Principles of Public Life, set out by the Committee on Standards in Public Life (the Nolan Principles)   The Nolan Principles are incorporated into this constitution at Appendix F”

 

2.4          The precise legal effect of the Nolan Principles being included within a CCG Constitution is unclear and will depend on the precise facts of any individual case.  However it seems that, at least, it would raise a legitimate expectation that the CCG would conduct its affairs in in accordance with the Nolan Principles.  That would entitle a judicial review challenge to be made if he CCG adopted a course of action that was clearly in breach of the principles.

 

3.              What is an interest?

 

3.1          GPs, like other members of their communities, are likely to have a wide range of interests in the communities in which they live and serve.  It is not the case that everything that a GP, as a member of the public, is interested in counts as an “interest” under the statutory scheme.  Some of these interests go no further than the “interest” of the average member of the public.  Hence all GPs are likely to be registered with a General Practice as a patient and are potential users of the NHS for their own health needs, those of their families and for their friends.  These general interests are not “interests” that need to be registered.  However where a person who is required to registers their interests has an involvement in a particular organisation or matter (whether that amounts to a pecuniary interest or not) which goes beyond that of the average member of the public, a question arises as to whether this is an “interest” that ought to be declared.  The NHS Act does not define what interests ought to registered or declared.  However the concept to declaring interests has existed for many years in local government and so it is to local government that we should first go to find out what is meant by an interest.

 

3.2          The Local Authority Model Code of Conduct  for councillors defines the “interests” that a councillor must register as follows:

 

“You have a personal interest in any business of your authority where either—

 

(a)  it relates to or is likely to affect—

 

(i)             any body of which you are a member or in a position of general control or management and to which you are appointed or nominated by your authority;

 

(ii)           any body—

 

(aa)     exercising functions of a public nature;

 

(bb)     directed to charitable purposes; or

 

(cc)     one of whose principal purposes includes the influence of public opinion or policy (including any political party or trade union),

 

of which you are a member or in a position of general control or management;

 

(iii)          any employment or business carried on by you;

 

(iv)          any person or body who employs or has appointed you;

 

(v)           any person or body, other than a relevant authority, who has made a payment to you in respect of your election or any expenses incurred by you in carrying out your duties;

 

(vi)          any person or body who has a place of business or land in your authority’s area, and in whom you have a beneficial interest in a class of securities of that person or body that exceeds the nominal value of £25,000 or one hundredth of the total issued share capital (whichever is the lower);

 

(vii)        any contract for goods, services or works made between your authority and you or a firm in which you are a partner, a company of which you are a remunerated director, or a person or body of the description specified in paragraph (vi);

 

(viii)       the interests of any person from whom you have received a gift or hospitality with an estimated value of at least £25;

 

(ix)          any land in your authority’s area in which you have a beneficial interest;

 

(x)           any land where the landlord is your authority and you are, or a firm in which you are a partner, a company of which you are a remunerated director, or a person or body of the description specified in paragraph (vi) is, the tenant;

 

(xi)          any land in the authority’s area for which you have a licence (alone or jointly with others) to occupy for 28 days or longer; or

 

3.3          All of the above categories refer to commercial or non-commercial relationships that the individual councillor has with a variety of persons who might have dealings with the Council of which that councillor is a member.  However the Code also gives guidance on where an interest which is held by someone other than the councillor can give rise to an interest that a councillor is required to disclose.  The local authority Model Code provides:

 

“(b)  a decision in relation to that business might reasonably be regarded as affecting your well-being or financial position or the well-being or financial position of a relevant person to a greater extent than the majority of—

 

(i)             (in the case of authorities with electoral divisions or wards) other council tax payers, ratepayers or inhabitants of the electoral division or ward, as the case may be, affected by the decision;

 

(ii)           (in the case of the Greater London Authority) other council tax payers, ratepayers or inhabitants of the Assembly constituency affected by the decision; or

 

(iii)          (in all other cases) other council tax payers, ratepayers or inhabitants of your authority’s area”

 

3.4          That definition make reference to a “relevant person” being a person in a close relationship with a councillor where that relationship might be thought to influence the decision making of the councillor, and thus leads to an interest which must be declared.  The term “relevant person” is defined in the local authority Model Code as follows:

 

“In sub-paragraph (1)(b), a relevant person is—

 

(a)  a member of your family or any person with whom you have a close association; or

 

(b)  any person or body who employs or has appointed such persons, any firm in which they are a partner, or any company of which they are directors;

 

(c)  any person or body in whom such persons have a beneficial interest in a class of securities exceeding the nominal value of £25,000; or

 

(d)  any body of a type described in sub-paragraph (1)(a)(i) or (ii)”

 

3.5          In contrast to the Model Code for councillors (which is Regulations), the NHS Act does not define what is meant by an “interest”.  However paragraph 8.2.3 of the model CCG Constitution produced by NHS England suggests that the following are all potential “interests” which require registration by a GP member of a CCG or an employee of a CCG:

 

a)         a direct pecuniary interest: these are interests where an individual may directly or indirectly financially benefit from the consequences of a commissioning decision (for example, where a GP or a close relative has a financial interest in a potential provider of services);

 

b)         an indirect pecuniary interest: for example, where an individual is a partner, member or shareholder in an organisation that will benefit financially from the consequences of a commissioning decision;

 

c)          a non-pecuniary interest: where an individual holds a non-remunerative or not-for profit interest in an organisation, that will benefit from the consequences of a commissioning decision (for example, where an individual is a trustee of a voluntary provider that is bidding for a contract);

 

d)         a non-pecuniary personal benefit: where an individual may enjoy a qualitative benefit from the consequence of a commissioning decision which cannot be given a monetary value (for example, a reconfiguration of hospital services which might result in the closure of a busy clinic next door to an individual’s house);

 

e)         where an individual is closely related to, or in a relationship, including friendship, with an individual in the above categories.

 

3.6          Thus the concept of “interests” that need to be registered by a GP member of a CCG or an employee of the CCG is wide and extends far beyond situations where a GP (or someone else) can say that their personal financial position will be affected by a proposed decision.  The test adopted by the courts is generally that of the informed and interested bystander.  Whether a GP (or someone else on the above list) has a particular involvement in a body or organisation, or where someone closely connected to the GP has such an interest, depends on whether an interested bystander may consider that it would be appropriate for the interest to be openly declared.  Hence, if there is any doubt, any person who comes within the categories listed above should ensure that their interest is registered with the CCG (see also the GMC Guidance set out below).

 

3.7          There are subtle differences between the definitions of interests which need to be disclosed under the CCG Model Constitution and the slightly wider category of interests that fall to be disclosed in local government.  However it would be prudent to interpret the general descriptions of interests in the CCG Model constitution through the prism of the defined list of interests in the Model Code for councillors.  It is difficult to identify any “interest” which a councillor would be required to register under the Model Code which should not be registered by a CCG member or employee.

 

4.              Registration of Interests by a CCG.

 

4.1          Having identified the meaning of an “interest”, the next question for a CCG is the recording and registering of interests.  Section 14O of the NHS Act, which was introduced by the Health and Social Care Act 2012, brought in the following provisions relating to the registration of interest by CCGs for their members and staff:

 

“(1)     Each clinical commissioning group must maintain one or more registers of the interests of—

 

(a)     the members of the group,

 

(b)     the members of its governing body,

 

(c)     the members of its committees or sub-committees or of committees or sub-committees of its governing body, and

 

(d)     its employees.

 

(2)     Each clinical commissioning group must publish the registers maintained under subsection (1) or make arrangements to ensure that members of the public have access to the registers on request.

 

4.2          CCGs are thus under a statutory duty to set up “one or more registers” to record the “interests” of each of the four categories of persons listed in section 14O(1).  These 4 categories are:

 

a)         The members of the CCG.  These are the individuals, partnerships or corporate bodies that hold the GP practice contracts with NHS England which operate within the CCG area.  If the practice contract is held by a partnership then the disclosure duties affect each member of the partnership;

 

b)         The members of the CCG governing body of the CCG (as defined in the CCG Constitution).  These will typically be the GPs, members of staff and other individuals including health care professionals and the lay members of the CCG;

 

c)          All members of any committees set up by the CCG;

 

d)         All members of staff employed by the CCG.

 

4.3          The registers are required to record all of the “interests” of the relevant individuals.  The duty to register arises whether there is any conflict associated with that interest or is even likely to be any conflict of interest.  There is also no concept a “personal sphere” for GPs which is detached from their public activities.  If a GP (or other relevant person) is within the categories of people set out above it is necessary to register all of the relevant interests of a GP.

 

4.4          This section thus places a duty on CCGs to ensure transparency by having a publicly accessible register which sets out all of the interests held by the members of the CCG (who are all of the local GP practices), committee members (who include persons other than GPs such as a local consultant and non-executive members) and by staff of the CCG.

 

4.5          The Model CCG Constitution published by NHS England does not define the number of registers that a CCG is required to maintain. Whether the information is contained within a single register for all of the above categories or in different registers is, to a large extent, irrelevant.  However the registers are public documents which the CCG must make available to the public (including journalists).  Section 14O(2) provides:

 

“Each clinical commissioning group must publish the registers maintained under subsection (1) or make arrangements to ensure that members of the public have access to the registers on request”

 

4.6          These are also documents which a member of the public could ask to inspect under the Freedom of Information Act 2000.  The relevant NHS England Guidance suggests that CCGs take greater steps to make details of the registers freely available.  It provides:

 

In the interest of transparency, the clinical commissioning group’s registers of interest must either be published or made publicly available. Groups may wish to consider other ways of making these registers available to patients and the public (especially those who don’t have access to the internet), which could be outlined in this constitution. Examples include:

 

·       confirming you will make these registers available upon request for inspection at your headquarters or local health premises

 

·       confirming that the registers will be available upon application, either by post - in which case you will need to include the postal address of your headquarters

 

·       email – you’ll need to provide an email address

 

·       making arrangements with your local authority(ies) for copies to be made available via local libraries”

 

4.7          The NHS England Model Constitution for CCGs suggests that disclosure of interests should be made by a relevant person “as soon as they become aware of it” and in any event within 28 days.  The model also provides as follows for a situation where an interest only becomes apparent during a meeting.  It provides paragraph 8.3.4:

 

Where an individual is unable to provide a declaration in writing, for example, if a conflict becomes apparent in the course of a meeting, they will make an oral declaration before witnesses, and provide a written declaration as soon as possible thereafter”

 

Those provisions reflect the requirements in section 14O(3) of the NHS Act which are set out above.

 

4.8          If a GP or a relevant person either acquires or loses an interest then the register should be amended to show the changed position.  However the Model Constitution also recognises the need for the CCG to review the declarations by relevant persons at regular intervals in order to ensure that the register is up to date.   Paragraph 8.3.5 of the Model Constitution provides that the CCG should name a specific officer who is required to “will ensure that the register(s) of interest is reviewed regularly, and updated as necessary”.  The Guidance on reviewing the register suggests that the register should be reviewed on a quarterly basis.  It provides:

 

For example a group may delegate responsibility for this task [i.e. reviewing the register] to:

 

·       the group’s governing body (or through the governing body, the governing body’s audit committee)

 

·       the lay member identified in Towards establishment as leading on remuneration, audit and conflict of interest matters

 

·       the accountable officer

 

·       an individual member or employee of the group.

 

·       The body / person with this delegated responsibility should also be included in the group’s scheme of reservation and delegation.

 

The NHS Commissioning Board Authority’s “Towards Establishment annex” on managing conflicts of interest suggests that register(s) of interest should be reviewed every quarter. Clinical commissioning groups may wish to specify how regularly they wish to review registers in paragraph 8.3.5 above”

 

4.9          The legal obligation on the CCG is thus to maintain an open register of interests.  Most CCGs publish their Register of Interests on the CCG website.  However some CCGs appear to consider that it is sufficient if the members of the governing body of the CCG register their interests but it appears that no declarations are routinely made by each of the constituent GP practices.   However section 14O provides that declarations must be made by every “member” of a CCG, which means every provider of primary medical services in the CCG area.   In the case of a partnership, the “member” is the partnership rather than the individual doctors.  However the rules about declaration of interests require the partnership to declare all relevant interests which must mean the interests held by the individual members of the partnership.

 

5.              The duty on CCGs to make arrangements to manage conflicts of interest.

 

5.1          Having identified and registered relevant interests, the next issue for a CCG is how the business of the CCG is to be managed so as to ensure that any conflicts of interest are properly recognised and managed.   Section 14O of the NHS Act does not mandate a single scheme which dictates how CCGs should approach this difficult task.  Instead the legislation requires CCGs to devise their own rules for the management of conflicts of interests.  The implication is that, once the rules have been set by the CCG, the CCG will have a public law duty to act in accordance with its own rules.

 

5.2          Sections 14O(3) to (7) provide:

 

“(3)     Each clinical commissioning group must make arrangements to ensure—

 

(a)     that a person mentioned in subsection (1) declares any conflict or potential conflict of interest that the person has in relation to a decision to be made in the exercise of the commissioning functions of the group,

 

(b)     that any such declaration is made as soon as practicable after the person becomes aware of the conflict or potential conflict and, in any event, within 28 days, and

 

(c)     that any such declaration is included in the registers maintained under subsection (1).

 

(4)     Each clinical commissioning group must make arrangements for managing conflicts and potential conflicts of interest in such a way as to ensure that they do not, and do not appear to, affect the integrity of the group's decision-making processes.

 

(5)     The Board must publish guidance for clinical commissioning groups on the discharge of their functions under this section.

 

(6)     Each clinical commissioning group must have regard to guidance published under subsection (5).

 

(7)     For the purposes of this section, the commissioning functions of a clinical commissioning group are the functions of the group in arranging for the provision of services as part of the health service”

 

5.3          The legal duty to “make arrangements” is used in many other places in the NHS Act and in other legislation which imposes statutory duties on public bodies.  The nature of the duty places a considerable degree of discretionary decision making on CCGs to decide for themselves how to manage their affairs so that the existence of GP members or staff who have interests does not affect or is seen to affect the integrity of the group's decision-making processes. 

 

5.4          Some guidance about the meaning of a duty to make arrangements was given by Underhill LJ in the first instance decision of R (on the application of Nash) v Barnet London Borough Council (Capita plc and others, interested parties [2013] EWHC 1067 (Admin).  The case was only a permission decision and so is of limited weight but it is a full judgment by a distinguished judge.  The Judge was concerned with a duty to make arrangements under local government legislation but his approach may have relevance for understanding the nature of the duty under section 14O.  He said at paragraph 70:

 

“..  the reference to 'making arrangements' would make it clear that the duty was concerned with intentions rather than outcome. It may also be that the draftsman wanted to emphasise the need to build the fulfilment of the best value duty into authorities' plans and procedures. Or perhaps it is just circumlocution. But, whatever the explanation, the important point for present purposes is what the arrangements are aimed at, namely securing improvements in the way in which authorities perform their functions”

 

5.5          Thus the legal duty is to ensure that the way in which the CCG conducts its business ensures that the interests held by GP members or staff do not affect (and are not seen to affect) the integrity of the decisions made by the CCG.  The CCG must therefore have a system which records conflicts of interests when these are relevant to an issue that the CCG is considering, and that those with some types of interest are removed from the decision making process.  The "arrangements" which the CCG is required to put in place under section 14O are the means by which that end is to be achieved.  In Tandy v East Sussex CC [1998] A.C. 714 Mummary LJ emphasised the width of the discretion on a public body which had a duty to make arrangements (in that case about the education of children with special educational needs).  He said:

 

“In the interests of fairness, consistency and administrative efficiency a local education authority is entitled to formulate a policy setting norms, standards and criteria to be applied in the consideration of the circumstances of individual children. Such a policy is lawful if it promotes the specified statutory purpose and is sufficiently flexible not to fetter the decision-making process in individual cases. Further, once a policy has been formulated, it is permissible (and advisable) to review it from time to time in the light of experience and of changing circumstances”

 

5.6          However the overall purpose of the arrangements must be borne in mind and the fact that, whatever arrangements the CCG sets up, it must achieve the aim of ensuring that the interests held by GP members or staff do not affect (and are not seen to affect) the integrity of the decisions made by the CCG.   Speaking in the House of Lords in the same case Lord Browne-Wilkinson said at Page 747:

 

The duty is to make arrangements for what constitutes suitable education for each child. That duty will not be fulfilled unless the arrangements do in fact provide suitable education for each child”

 

5.7          Thus the arrangements made by the CCG must in fact deliver a proper system for the management of conflicts of interests within the CCG.  Paragraph 5 of Schedule 1A to the NHS Act (which was introduced by Schedule 2 of the Health and Social Care Act 2012) provides that the constitution for each CCG must specify the arrangements made by the CCG for discharging its duties to manage conflicts of interest under section 14O(1) to (4). 

 

6.              What arrangements for managing conflicts of interest are suggested by the CCG Model Constitution?

 

6.1          Paragraph 5 of Schedule 1A to the NHS Act provides:

 

“The constitution must specify the arrangements made by the clinical commissioning group for discharging its duties under section 14O(1) to (4)”

 

6.2          The constitution for CCG is thus required to “specify” the arrangements which the CCG will operate in order to manage conflicts of interest.  Unfortunately the Model Constitution published by NHS England does not appear fully to comply with this legal requirement.

 

6.3          The model constitution provides at clause 8.2.2:

 

Where an individual, i.e. an employee, group member, member of the governing body, or a member of a committee or a sub-committee of the group or its governing body has an interest, or becomes aware of an interest which could lead to a conflict of interests in the event of the group considering an action or decision in relation to that interest, that must be considered as a potential conflict, and is subject to the provisions of this constitution”

 

6.4          This paragraph thus identifies the circumstances in which the CCG has a legal obligation to operate its business in accordance with the rules about managing conflicts of interests.   That duty arises if any individual becomes aware that a potential conflict arises.  The “individual” is not limited to the person who has the relevant interest.  It comes into play if the potential conflict becomes apparent to anyone who understands the circumstances and appreciates the emergence of the potential conflict.  The circumstances which bring the rules about conflicts of interest into play are that the CCG is considering or may be considering an “action or decision” in relation to which anyone at a CCG has “an interest which could lead to a conflict of interests”.   There is a potential problem with this formulation because it appears to set up a subjective test which only triggers the conflict of interest rules if anyone in the CCG realises that there is a potential or actual conflict of interest which means that attention must be paid to the conflict of interest rules.  That raises the obvious question as to what happens if the CCG makes a decision which is infected with a conflict of interest but, at the time the decision was made, no one at the CCG appreciated that one or more of the relevant decision makers had a relevant interest.  The resolution of that issue may require a court ruling but it seems highly unlikely that a CCG could rely on its own lack of perception to justify the lawfulness of its decision making.

 

6.5          Once a potential conflict of interest has been identified, the key question is how the CCG should manage the conflict within its decision making processes in order to ensure that the integrity of the decision making process is maintained.  The steps that a CCG should take to manage an interest depend, of course, on the nature of the interest of that individual and in particular whether it is a pecuniary interest or a non-pecuniary interest, and whether this is a direct interest of the person or is an indirect interest (because for example it is an interest held by a member of his or her family.  There are 3 broad approaches that are possible where a person who is a member of a relevant committee has a relevant interest:

 

a)         The interest is declared and noted in the minutes of the meeting but the person with the interest is still able to take a full part in the decision making process;

 

b)         The interest is declared and that person with the interest cannot vote on any decision.  However the person remains as a member of the relevant committee, can see papers relating to the decision and remains in the room and can contribute to any debate about the decision;

 

c)          The interest is declared and that person is excluded from the decision making process.  That would mean that the person should not be provided with the committee papers relating to the decision and cannot have any part in the decision-making process (formally or informally).   That would exclude any informal lobbying as well as making formal representations in favour of a particular decision.

 

6.6          Regrettably the model CCG Model Constitution does not provide a clear answer to this problem.  It says at paragraph 8.4.1: 

 

“Individual members of the group, the governing body, committees or sub-committees, the committees or sub-committees of its governing body and employees will comply with the arrangements determined by the group for managing conflicts or potential conflicts of interest”

 

6.7          That must lead to the question “well what are the arrangements”?  The model CCG Constitution suggests that it is sufficient for the CCG to delegate the detailed decision about how the CCG should operate where a conflicts of interest is identified to an officer of the CCG.  It appears to assume that the job of this officer is to make up the rules about how the committees of the CCG should operate when there is a conflict.  However specifying that a named individual will make up the rules (i.e. determine the “arrangements”) does not fulfil an obligation to specify what those rules are.  Hence the Model Constitution probably does not fulfil the obligation in paragraph 5 of schedule 1A to the NHS Act.

 

6.8          The full text of the relevant provisions within the model constitution is as follows:

 

“8.4.3  “Arrangements for the management of conflicts of interest are to be determined by the [insert the name of the body / person overseeing the management of conflicts of interest on behalf of the group] and will include the requirement to put in writing to the relevant individual arrangements for managing the conflict of interests or potential conflicts of interests, within a week of declaration. The arrangements will confirm the following:  

 

a)         when an individual should withdraw from a specified activity, on a temporary or permanent basis;

b)         monitoring of the specified activity undertaken by the individual, either by a line manager, colleague or other designated individual.

 

8.4.4.  Where an interest has been declared, either in writing or by oral declaration, the declarer will ensure that before participating in any activity connected with the group’s exercise of its commissioning functions, they have received confirmation of the arrangements to manage the conflict of interest or potential conflict of interest from the [insert the name of the body / person overseeing the management of conflicts of interest on behalf of the group].

 

8.4.5  Where an individual member, employee or person providing services to the group is aware of an interest which:

 

a)    has not been declared, either in the register or orally, they will declare this at the start of the meeting;

b)    has previously been declared, in relation to the scheduled or likely business of the meeting, the individual concerned will bring this to the attention of the chair of the meeting, together with details of arrangements which have been confirmed for the management of the conflict of interests or potential conflict of interests.

 

The chair of the meeting will then determine how this should be managed and inform the member of their decision. Where no arrangements have been confirmed, the chair of the meeting may require the individual to withdraw from the meeting or part of it. The individual will then comply with these arrangements, which must be recorded in the minutes of the meeting.

 

8.4.6  Where the chair of any meeting of the group, including committees, sub-committees, or the governing body and the governing body’s committees and sub-committees, has a personal interest, previously declared or otherwise, in relation to the scheduled or likely business of the meeting, they must make a declaration and the deputy chair will act as chair for the relevant part of the meeting. Where arrangements have been confirmed for the management of the conflict of interests or potential conflicts of interests in relation to the chair, the meeting must ensure these are followed. Where no arrangements have been confirmed, the deputy chair may require the chair to withdraw from the meeting or part of it. Where there is no deputy chair, the members of the meeting will select one.

 

8.4.7  Any declarations of interests, and arrangements agreed in any meeting of the clinical commissioning group, committees or sub-committees, or the governing body, the governing body’s committees or sub-committees, will be recorded in the minutes.

 

8.4.8  Where more than 50% of the members of a meeting are required to withdraw from a meeting or part of it, owing to the arrangements agreed for the management of conflicts of interests or potential conflicts of interests, the chair (or deputy) will determine whether or not the discussion can proceed.

 

8.4.8  In making this decision the chair will consider whether the meeting is quorate, in accordance with the number and balance of membership set out in the group’s standing orders. Where the meeting is not quorate, owing to the absence of certain members, the discussion will be deferred until such time as a quorum can be convened. Where a quorum cannot be convened from the membership of the meeting, owing to the arrangements for managing conflicts of interest or potential conflicts of interests, the chair of the meeting shall consult with [insert the name of the body / person overseeing the management of conflicts of interest on behalf of the group] on the action to be taken”

 

8.4.10  This may include:

 

a)    requiring another of the group’s committees or sub-committees, the group’s governing body or the governing body’s committees or sub-committees (as appropriate) which can be quorate to progress the item of business, or if this is not possible,

 

b)    inviting on a temporary basis one or more of the following to make up the quorum (where these are permitted members of the governing body or committee / sub-committee in question) so that the group can progress the item of business:

 

i)          a member of the clinical commissioning group who is an individual;

 

ii)         an individual appointed by a member to act on its behalf in the dealings between it and the clinical commissioning group;

 

iii)        a member of a relevant Health and Wellbeing Board;

 

iv)        a member of a governing body of another clinical commissioning group.

 

These arrangements must be recorded in the minutes.

 

8.4.11  In any transaction undertaken in support of the clinical commissioning group’s exercise of its commissioning functions (including conversations between two or more individuals, e-mails, correspondence and other communications), individuals must ensure, where they are aware of an interest, that they conform to the arrangements confirmed for the management of that interest. Where an individual has not had confirmation of arrangements for managing the interest, they must declare their interest at the earliest possible opportunity in the course of that transaction, and declare that interest as soon as possible thereafter. The individual must also inform either their line manager (in the case of employees), or the [insert the name of the body / person overseeing the management of conflicts of interest on behalf of the group] of the transaction.

 

8.4.12  The [insert the name of the body / person overseeing the management of conflicts of interest on behalf of the group] will take such steps as deemed appropriate, and request information deemed appropriate from individuals, to ensure that all conflicts of interest and potential conflicts of interest are declared

 

6.9          These paragraphs do not provide proper guidance to CCGs on the key issues as to how to manage conflicts of interest in practice.  They require the CCG to appoint someone whose job it is to set up arrangements for the management of conflicts.  However they do not provide any clear guidance as to how those rules should be or how the conflicts should be managed.  The joint paper from the RCGP and the NHS Confederation was slightly more helpful in that it suggested that CCGs might wish to adopt guidance provided by the General Practice Committee of the GMS which advised:

 

·       Directors of provider companies or those with holdings above 5 per cent should not be on a clinical commissioning management board if their company does business or is likely to do business with the CCG.

 

·       CCGs must keep a register of the interests of anyone who might be able to influence a decision. This must be available to the public. It should also extend to the interests of family members and those closely connected to the member.

 

·       Interests must be declared at the beginning of meetings even if it is included in the register. They should not be allowed to speak or vote on the issue unless the group has decided that the interest is non-prejudicial.

 

·       If the interest would be considered prejudicial by a reasonable person, the member should leave the room while the item is discussed.

 

·       If the meeting is left non quorate because of this, an independent body should be appointed to verify any decisions made.

 

·       When a CCG decides to commission enhanced services from its GP members, the issue should always be referred to the local overview and scrutiny committee for approval”

 

6.10       This approach appears sensible and balanced. However NHS England the Department decided not to introduce them into a model CCG constitution.  This has the advantage that the detail of the rules about management of conflicts are not “set in stone” for the CCG and can therefore be amended reasonably easily if changes are needed to make them workable.  However it leaves 3 potential problems for those working with CCGs, namely:

 

a)         The CCG Constitution may be in breach of paragraph 5 of Schedule 1A to the NHS Act;

 

b)         It may be difficult for members of the public to find out the details of the present rules (unless these are included on the CCG website which is not always the case); and

 

c)          Even if a decision is made in accordance with locally agreed rules, there is no guarantee that a decision will be a lawful decision for the reasons set out below.

 

7.              What rules are necessary to ensure that an interest does not affect and is not seen to affect the integrity of the decision making process?

 

7.1          Section 14O(4) requires a CCG to have arrangements which manage conflicts of interest in such a way that the interests do not  affect and are not seen to affect the integrity of the decision making process.  There are 2 separate parts to this test.  The first is that the existence of interests must not in fact affect the decision making process.  The second is that the existence of interests must not be seen to affect the decision making process.  The first test broadly requires a CCG to have rules which ensure decisions are not affected by any interest that a member or member of staff has which is relevant to the decision.  The second is a much wider test because it is concerned with how the decision making process appears from the outside.

 

7.2          When public bodies (which include CCGs) are making administrative decisions s series of Judicial Review cases have established that the test is “whether there was objectively a real danger of bias” in the decision.  This approach was demonstrated by Brooke J in R v Chesterfield BC, ex p Darker Enterprises Ltd [1992] COD 466 which concerned an application to renew a sex shop licence had been refused by a sub-committee of the local authority.  The council committee was chaired by a councillor known to be strongly opposed to sex shops in general and to the applicants' shop in particular but it also had included a councillor who was a director of the Co-operative Society which owned the neighbouring retail premises and which hoped to expand into the sex shop premises if its licence was not renewed.  The latter councillor took part in the meeting but abstained from voting because of his declared interest.  Brooke J, following the decision of Kennedy J in R v Reading BC, ex p Quietlynn Ltd, held that the chairman's participation was unobjectionable provided that, whatever his views, he was prepared to listen.  Hence a GP who expresses strong views in advance in favour or against a particular form of medical provision is not obliged to remove himself from a meeting just because of these pre-existing views.  However in the Quietlynn case the Judge held that the participation of the other councillor, despite his properly registered declaration of an interest and consequent abstention from voting, would have persuaded a fair-minded observer who knew of his Co-op connection, that it was unfair for the councillor to be present and to have participated in questioning the applicants.  The decision was therefore quashed.  The Judge said:

 

'I am satisfied that in a situation like this, where the involvement of a councillor is challenged not because of his public views on the merits of the matter being discussed but in relation to his private interests, in relation to companies of which he is a director, the question as to whether a decision to which he is party can be successfully quashed is not to be tested by the principle laid down by Kennedy J in the Reading case but in accordance with the general line of cases on bias which culminated in the decision of the Divisional Court in R v Liverpool City Justices, ex p Topping [1983] 1 All ER 490, [1983] 1 WLR 119”

 

7.3          This approach was followed by Sedley J in R v Secretary of State for the Environment ex parte Kirkstall Valley Campaign Group [1]  who said:

 

'The mere fact that the power affects rights or interests is what makes it “judicial” and so subject to the procedures required by natural justice.' (My emphasis.) The reference to interests as well as to rights is important. Public law is concerned not only with the vindication of positive rights, but with the redress of public wrongs wherever the court's attention is called to them by a person or body with a sufficient interest.

 

I hold, therefore, that the principle that a person is disqualified from participation in a decision if there is a real danger that he or she will be influenced by a pecuniary or personal interest in the outcome, is of general application in public law and is not limited to judicial or quasi-judicial bodies or proceedings.

 

7.4          This approach means that a GP who has either any significant form pecuniary interest or a non-pecuniary interest which is not trivial should be required entirely to remove himself from any decision which relates to his interest.  This may make decision making difficult in practice but the standard against which these matters are tested is not whether the objector is able to show bias but whether there was any real danger of bias in the making of the decision. 

 

8.              Potential legal consequences where decisions are made in breach of the rules about managing conflicts of interest.

 

8.1          What happens if a CCG makes a decision where it fails properly to manage a conflict of interest of one of its members?   There are several potential legal consequences if the CCG fails to follow its own rules about managing conflicts of interest.  These are:

 

a)         A damages claim by a disappointed alternative contractor;

b)         A judicial review;

c)          An NHS compliant; and

d)         A complaint to the GMC.

 

8.2          In almost every procurement or contracting decision made by public body there are winners and losers.  The successful party has got the contract but there are other bidders who will feel bruised and disappointed at not being awarded the contract.  Section 75 of the Health and Social Care Act 2012 gave a power to the Secretary of State to make Regulations for NHS England and CCGs concerning the way in which health services were procured.  Section 76(7) provided that a breach of those Regulations would result in a damages claim.  It provides:

 

“A failure to comply with a requirement imposed by regulations under section 75 which causes loss or damage is actionable, except in so far as the regulations restrict the right to bring such an action”

 

8.3          The relevant Regulations are the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013.  Regulation 6 of these Regulations which makes provision for circumstances where there is a real or apparent of interest between the NHS commissioner and the supplier of services to the NHS.  It provides:

 

(1) A relevant body must not award a contract for the provision of health care services for the purposes of the NHS where conflicts, or potential conflicts, between the interests involved in commissioning such services and the interests involved in providing them affect, or appear to affect, the integrity of the award of that contract.

 

(2) In relation to each contract that it has entered into for the provision of health care services for the purposes of the NHS, a relevant body must maintain a record of how it managed any conflict that arose between the interests in commissioning the services and the interests involved in providing them.

 

(3) An interest referred to in paragraph (1) includes an interest of—

 

(a)   a member of the relevant body,

 

(b)   a member of its governing body,

 

(c)  a member of its committees or sub-committees or committees or sub-committees of its governing body, or

 

(d)   an employee”

 

8.4          This Regulation uses the same wording as section 14O(4) namely that a contract must not be awarded if “the interests involved in providing them affect, or appear to affect, the integrity of the award of that contract”.  Thus a CCG would act in breach of the Regulations if it awarded a contract in circumstances which appeared to an outside observer to affect the integrity of the award of the contract even if, properly examined from inside the CCG, the process was scrupulously fair.

 

8.5          The tie up between the 2013 Regulations and section 14O means that a contract which is awarded by a CCG in breach of its own conflicts of interest rules will open up the possibility of damages being awarded to the disappointed contractor.  Damages will usually be based on the commercial value of the loss of the chance to secure the contract.  Hence damages will be minimal if the CCG can show that the disappointed contractor would not have had any real chance of being awarded the contract even if the conflicts rules had been followed.  However if there was a real prospect that the disappointed contractor might have gained a contract from the CCG then damages could be very substantial.

 

8.6          The second risk is that a judicial review challenge will be made to the decision.  Any challenger would have to have a “sufficient interest” in the decision.  However any patient in the CCG area would probably be entitled to challenge a decision that was taken in breach of the rules.  Any challenger must act promptly and in any event within 3 months of the relevant decision but if a breach of the rules is proved the decision of the CCG is likely to be quashed.

 

8.7          Thirdly, a potential contractor who wishes to challenge a decision of a CCG or NHS England that he claims has been made in breach of the rules about managing conflicts of interest could make a complaint to Monitor and invite Monitor to investigate and make a decision whether there had been a breach of Regulation 6.  However a breach of Regulation 6 cannot lead to Monitor declaring the contract to be ineffective because Regulation 6 is omitted from the list of breaches where that power arises:  see Regulation 14(2).  If a complaint is made Monitor could issue a Direction to prevent the CCG from repeating the conduct under Regulation 15(1) but this is unlikely to be effective to change the present position.  It is thus difficult to understand why a disappointed contractor should take such an approach.

 

8.8          The fourth possibility is that an NHS complaint is made that the CCG has acted in breach of its own rules on the management of conflicts of interest.  This may, on appeal, lead to the matter being looked at by the Parliamentary and Health Service Ombudsman.  That could lead to a finding that the CCG was guilty of maladministration and a “recommendation” that the CCG issue apologies or provide compensation to the complainant.

 

8.9          Finally, failing to follow the rules relating to the management of conflicts of interest may result in a GP being referred to the General Medical Council.  The GMC Code of Conduct “Good Medical Practice has the following sections about managing conflicts of interest:

 

77. You must be honest in financial and commercial dealings with patients, employers, insurers and other organisations or individuals.

 

78. You must not allow any interests you have to affect the way you prescribe for, treat, refer or commission services for patients.

 

79. If you are faced with a conflict of interest, you must be open about the conflict, declaring your interest formally, and you should be prepared to exclude yourself from decision making.

 

80. You must not ask for or accept – from patients, colleagues or others – any inducement, gift or hospitality that may affect or be seen to affect the way you prescribe for, treat or refer patients or commission services for patients. You must not offer these inducements”

 

8.10       This part of the Code has been expanded by new Guidance published in 2013 called Financial and Commercial Arrangements and Conflicts of Interest which sets out general principles that all doctors are required to follow.  The section on Conflicts of Interest provides as follows:

 

“10. Trust between you and your patients is essential to maintaining effective professional relationships, and your conduct must justify your patients’ trust in you and the public’s trust in the profession. Trust may be damaged if your interests affect, or are seen to affect, your professional judgement. Conflicts of interest may arise in a range of situations. They are not confined to financial interests, and may also include other personal interests.

 

11. Conflicts of interest are not always avoidable, and whether a particular conflict creates a serious concern will depend on the circumstances and what steps have been taken to mitigate the risks, for example, by following established procedures for declaring and managing a conflict.

 

12. You should:

 

a. use your professional judgement to identify when conflicts of interest arise

 

b. avoid conflicts of interest wherever possible

 

c. declare any conflict to anyone affected, formally and as early as possible, in line with the policies of your employer or the organisation contracting your services

 

d. get advice about the implications of any potential conflict of interest

 

e. make sure that the conflict does not affect your decisions about patient care.

 

13. If you are in doubt about whether there is a conflict of interest, act as though there is”

 

8.11       The final “if in doubt” provision in the GMC Guidance is replicated at paragraph 8.2.4 of the Model Constitution prepared by the Department of Health for CCGs which provides:

 

If in doubt, the individual concerned should assume that a potential conflict of interest exists”

                   

8.12       A breach of professional obligations may lead to a GP being referred to the GMC for disciplinary action.  However it will not, of itself, necessarily create any other legal right for proceedings to be taken against the GP or the organisation which is said to have benefitted from the failure of the GP properly to address the conflict of interest.

 

8.13       There are some difficult issues about the effect of a legal challenge on the private law contractual rights of the successful contractor, particularly if that contractor was wholly innocent of the procedural flaws which affected the decision.  Thus a CCG which acts in breach of the rules relating to the management of conflicts of interest may find itself under a legal liability to both a successful and unsuccessful contractor.



[1] [1996] 3 All ER 304.

David Lock QC

David Lock QC is a barrister at the Landmark Chambers.

180 Fleet Street
London, EC4A 2HG
DX 1042 (London)

He was called to the Bar in 1985 and was appointed Queens Counsel in 2011.

David Lock QC is Head of the Administrative & Public Law Group and the Judicial Review & high Court Challenges Group at No5 Chambers. - See more at: http://www.no5.com/barristers/barrister-details/137-david-lock-qc/#sthash.PcnGl1Eh.dpuf

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