Breaches of GP practice contracts, Remedial and Breach Notices
and termination of GP Practice Contracts.
This Chapter contains:
1.1 A GP practice contract is a legally binding agreement under which the GP practice takes on a large number of obligations, although primarily to deliver primary care services to NHS patients, and NHS England agrees to make payments to the GP practice in accordance with the contract. Although, to a great extent, the terms of a GMS or PMS contract is prescribed by Regulations, once the contract has been signed it takes effect as a normal commercial contract between the parties. The position was explained by Hickinbottom J in Tomkins v Knowsley Primary Care Trust  EWHC 1194 (QB) who said at §8:
“.. once a contract  had been agreed between the PCT and a dentist, it took effect as an ordinary contract, enforceable as such”
1.2 The rights and obligations of both the contractor and NHS England are set out in the wording of the GMS or PMS contract and it takes effect as a normal contract between the parties. That document defines the totality of the rights and obligations of both parties and defines how each party is entitled to react if there is a breach of contract by the other party (for more details see chapter 3). For the purposes of this chapter it is rarely relevant whether the GP practice has an NHS contract or a legally binding contract. Please click here for an explanation of the differences between an NHS contract and a legally binding contract. The only difference is that a dispute about the termination of an NHS Contract can only be raised within the NHS Disputes Resolution process.
1.3 The scheme described in this chapter is based around a General Medical Services Contract (“GMS”)  contract. Personal Medical Services (“PMS  ”) and Alternative Personal Medical Services (“APMS”) contracts ought to have an largely identical scheme for breaches and termination because the relevant parts of the GMS Regulations are replicated in the PMS Regulations.
1.4 There are a large number of obligations that GP practices take on within a practice contract. NHS England is thus entitled to require GP practices to perform all of the obligations. Thus, for example, the practice is obliged to be open for core hours as defined in the GMS Regulations. Christmas day is excluded from core hours but the practice must be open on Christmas Eve. A practice that fails to provide services to NHS patients on either Christmas Eve would be acting in breach of contract and NHS England would therefore be entitled to take enforcement action against the practice for that breach.
1.5 However NHS England is rarely able to terminate a GP practice for a single breach of contract of that type. The contract sets out a scheme under which NHS England is entitled to respond to breaches of contract in a measured and proportionate way. This scheme requires the contractor to respond appropriately to an alleged breach. The scheme seeks to avoid unnecessary confrontation and to manage the relationship between the contractor and NHS England in a sensible way. However a contractor which does not co-operate with NHS England by responding appropriately to action by NHS England under the contract can find that his, her or its contract is lawfully terminated.
2.1 NHS England issued Guidance to its own staff in June 2013 about how to respond to breaches of contract by GP Practices called “Contract breaches, sanctions and termination for primary medical services: Standard operating policies and procedures for primary care”. The Guidance set out the policies that NHS England excepts its staff to follow when responding to actual or perceived breaches of contract by GP practices. The Guidance starts with the following:
“Whilst most health care professionals practise to a very high standard, some individuals may occasionally work in ways that pose a serious risk to patient safety. In many instances this can be unintentional and the clinician’s performance may be affected by a combination of personal and situational factors, such as illness or professional isolation and in these cases NHS England shall refer to the policy for Identification management and support of independent contractors whose performance gives cause for concern”
2.2 At paragraphs 14 to 16 the Guidance then explains the basic approach that NHS England staff are expected to take to contract breaches as follows:
“14. In most cases, the issue of a breach notice, application of a sanction or a move to terminate a contract should be considered as the final stages in a process where NHS England and contractor have endeavoured to resolve matters satisfactorily, without the need to take formal contractual steps.
15. However, there will be occasions when a contract or is either unable or unwilling to change their behaviour or remedy a situation which may then result in a direct breach of their contracted terms and/or pose a significant risk to patient safety, requiring immediate action by NHS England to quickly resolve the matter.
16. This policy is designed to give an overview of the procedure to be followed by NHS England when taking formal steps in resolving contractual and performance related issues of independent contractors providing primary medical care services”
2.3 The Guidance then sets out a clear warning to NHS staff that they have to be accountable for the actions they take in connection with GP contracts. It states:
“Given that any decision to issue a breach or remedial notice, apply sanctions or terminate a contract or agreement can be challenged by the contractor under appeal, it is essential that NHS England follows, and can demonstrate that they have followed, due process in investigating, communicating and implementing actions in this respect and that NHS England has acted fairly and reasonably throughout”
2.4 The Guidance refers to the role played by the Local Medical Committee (“LMC”) in cases where there are disputes between NHS England and a GP practice. The Guidance provides at paragraphs 30 and 31:
“30. Whenever NHS England is considering –
a. terminating the contract;
b. which of the alternative notices in writing it will serve; or
c. imposing a contract sanction,
it shall, whenever it is reasonably practicable to do so, consult with the Local Medical Committee before taking action.
31 Whether or not the LMC has been consulted, whenever NHS
England imposes a contract sanction on a contractor or terminates a contract, it shall, as soon as reasonably practicable, notify the
LMC in writing of the contract sanction imposed or of the termination of the contract (as the case may be)”
2.5 Thus local GP practices are entitled to expect NHS England to consult with the local LMC before taking action against a local GP practice under the contract, and to pay careful attention to any views expressed by the LMC.
3.1 The GP contractor is entitled to resign the GP practice contract by serving notice in writing on NHS England. Clause 26.6 of the standard GMS Contract provides that if a sole practitioner serves notice of resignation, the contract will end at the end date of the month 3 months after the date when notice of resignation is served. If a partnership or company which holds a GP practice contract serves notice of resignation, the contract will end at the end date of the month 6 months after the date when notice of resignation is served.
3.2 It is possible for NHS England and the contractor to agree that a GP practice contract should end on any date by mutual agreement. This is expressed in clause 26.4 of the standard GMS contract which provides:
“The Board and the Contractor may agree in writing to terminate the Contract, and if the parties so agree, they shall agree the date upon which that termination will take effect and any further terms upon which the Contract should be terminated”
3.3 There should be a like provision in every PMS contract under paragraph 99 of Schedule 5 to the PMS Regulations which provides that every PMS contract should contain the following term:
“The Board and the contractor may agree in writing to terminate the agreement, and if the parties so agree, they shall agree the date upon which that termination should take effect and any further terms upon which the agreement should be terminated”
4.1 In most circumstances where NHS England do not pay monies owing under the GP practice contract, the GP practice will, of course, not wish to terminate its contract because that will effectively bring an end to its business. The options open to the GP practice if it wishes to force NHS England to pay monies that are said to be owing depend on whether the GP practice has a legally binding contract or a an NHS contract.
a) If the GP Practice has a legally binding contract then the terms of a standard PMS or GMS contract will mean that the GP practice will have the option of suing NHS England in the courts or referring the dispute to the NHS Disputes Resolution process for determination (through the Family Health Services Appeal Unit (“the FHSAU”)). The advantage of this route is that the GP practice will not expose itself to the risk of a legal costs order if the FHSAU finds against the GP practice. If debt proceedings are commenced in the courts then the GP practice is likely to secure a legal costs order if the practice succeeds in its claim but is likely to find itself having to pay NHS England’s legal costs if it loses. The FHSAU is also a specialist decision maker which is familiar with all of the NHS contracts and so the GP practice is likely to get a quicker (and far cheaper) result by referring the dispute to the NHSLA;
b) If the GP practice has a legally binding contract, its only option is to refer a dispute to the FHSAU to resolve when NHS England does not pay the monies that are owing to the GP practice. An NHS contract does not give rise to any legally enforceable legal rights and so cannot be the subject of an action in the County Court or the High Court.
4.2 There is usually nothing to prevent a GP practice suing NHS England for sums that are claimed to be owing under the contract (or referring a dispute to the FHSAU for dispute resolution) and continuing the contract at the same time. However there is a separate scheme under the GMS Contract for the contractor serving notice to terminate if the contractor asserts that NHS England has failed to pay monies due to the GP practice. Failure to pay monies due to the GP practice is a breach of contract by NHS England. The sums due to a GP practice are set out in Directions made by the Secretary of State. NHS England has a duty to pay ums owing “promptly” under clause 18.1 of the GMS Contract. If NHS England fails to do so, the contractor may serve a “late payment notice” under clause 26.6.4. The clause provides:
“The Contractor shall specify in the late payment notice the payments that the Board has failed to make in accordance with Part 18 of the Contract>”
4.3 In such a case the period of notice is reduced from 6 or 3 months to 28 days because, if NHS England continues to fail to pay sums 28 days after the contractor serves a notice, the contractor can serve a further notice on NHS England terminating the contract. That period of 28 days is however extended if, within the period of 28 days, NHS England dispute that they owe money to the contactor and make an application to the FHSAU under the NHS Disputes Resolution Procedures to determine whether any money is owing by NHS England to the contractor or not. There is a like term for PMS contracts under paragraph 101 of Schedule 5 to the PMS Regulations.
5.1 If a sole practitioner dies, the GP practice contract will automatically come to an end 7 days after the death of the GP who held the contract unless NHS England agrees with the personal representatives that there should be an extension of not more than 28 days before the contract comes to an end.
5.2 The relevant clause provides:
“26.5.1 Where the Contractor is an individual medical practitioner and the Contractor dies, the Contract must terminate at the end of the period of 7 days after the death of the Contractor unless, before the end of that period, clause 26.5.2 applies.
26.5.2 This clause 26.5 applies where the Contractor’s personal representatives have confirmed in writing to the Board that they wish to employ or engage one or more general medical practitioners to assist in the continuation of the provision of clinical services under the Contract and after discussions with the Board—
the Board agrees to provide reasonable support which would enable the provision of clinical services under the Contract to continue;
a) the Board and the personal representatives agree the terms upon which clinical services under the Contract can continue to be provided; and
b) the Board and the personal representatives agree the period during which clinical services must continue to be provided and such a period must not exceed 28 days starting on the day after the end of the period of 7 days referred to in clause 26.5.1.
26.5.3 In clauses 26.5.1 and 26.5.2 “general medical practitioner” has the same meaning as in regulation 4(1) of the Regulations”
5.3 There are a number of potential difficulties with the operation of this scheme. It appears that it was originally drafted to allow the widow or widower of the GP to find another GP to take over the practice with the intention that the incoming GP would take over the practice and would purchase any part of the practice that could be sold from the widow or widower. GPs are prohibited from selling the goodwill of a GP practice but there is nothing to prevent the widow or widower of a GP from selling the buildings from which the practice was delivered (if owned by the deceased GP) and the fixtures, fittings and equipment of the practice.
5.4 However this scheme meant that, subject to NHS England giving their agreement, the selection of the incoming GP was mainly made by the widow or widower of the deceased GP. Such an arrangement may have benefitted the financial position of the widow or widower of the GP but was not a defensible process for the selection of the holder of a contract to deliver public services. NHS England are now obliged to follow a transparent and open process under the National Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 before appointing a new contractor to take over any GP practice.
5.5 Any extension of a contract under clause 26.5 can therefore only be for an extension of 28 days as set out in the above clause and there is no power for a further extension. Unless NHS England agree to provide the incoming contractor with a temporary contract (which would have to be an APMS contract) it is difficult to see an incoming GP practitioner taking the risk of buying the practice equipment and buildings when he or she has no guarantee that they will secure the contract. Few ne sole practitioner contracts are being let by NHS England, and so it is possible that NHS England would prefer a sole practice to be taken over by a neighbouring multi-handed practice. NHS England would still be obliged to run a procurement process in due course.
5.6 There is a similar but slightly more straightforward provision for PMS Contracts under paragraph 99A of Schedule 5 to the PMS Regulations which provides:
“(1) Where the agreement is with a single individual and that individual dies, the agreement shall terminate at the end of the period of seven days after the date of his death unless, before the end of that period the Board has agreed in writing with the contractor's personal representatives that the agreement should continue for a further period, not exceeding 28 days after the end of the period of seven days.
(2) Sub-paragraph (1) does not affect any other rights to terminate the agreement which the Board may have under paragraphs 104 to 107”
6.1 A significant feature of GMS contracts is that they are public sector contracts which do not have a time limit attached to them. Unlike almost any other form of contract under which a contractor is appointed to provide public services, NHS primary care contracts are not time limited. Further they are almost unique amongst public sector contracts in allowing the contractors to change the identity of the contractor without the specific consent of NHS England. A GP partnership contract is held by the GP partnership as it is constituted from time to time. When a new GP is brought into the partnership, that person automatically becomes a contractor to NHS England. However in virtually all other public sector contracts a person does not get the right to deliver public services unless selected by the contracting authority.
6.2 However the position is different for PMS contracts. The contracts were originally permanent contracts in the same way as PMS contracts are permanent contracts. However the position was changed by the National Health Service (Primary Medical Services) (Miscellaneous Amendments) Regulations 2010 which came into force on 1st April 2010. These Regulations amended the terms of all PMS contracts by requiring the following terms to be introduced:
“(1) The contractor or the relevant body may terminate the agreement by serving notice in writing on the other party at any time.
(2) Where a notice is served pursuant to sub-paragraph (1) and the period of notice in relation to such termination (which must be a period of not less than six months) has previously been agreed between the parties and provided for in the agreement, the date of termination under the notice must be calculated in accordance with such agreed period of notice, and the agreement will terminate on the date so calculated.
(3) Where a notice is served pursuant to sub-paragraph (1) and no period of notice has previously been agreed between the parties and provided for in the agreement in relation to such termination, the period of notice required must be six months and the date of termination under the notice must be calculated accordingly, and the agreement will terminate on the date so calculated.
(4) This paragraph is without prejudice to any other rights to terminate the agreement which the contractor and the relevant body may have”
6.3 Thus this term (which ought now to be incorporated into every PMS contract) entitles NHS England to serve a notice on the contractor terminating the contract without any breach by the GP practice on 6 months notice. A challenge to the lawfulness of this change to the law was rejected by the High Court in R (Flasz & Ors) v Havering Primary Care Trust  EWHC 1487 (Admin). This was only a permission decision and so is of limited weight, but it is nonetheless a decision of a high court judge after contested argument. It follows that GP practices that hold PMS contracts can find their contracts ended by NHS England serving them with a 6 month termination notice even if the GP practice has not acted in breach of any term of its contract.
6.4 PMS contracts which are held by GPs (or anyone else who can hold a GMS contract under regulations 4 and 5 of the GMS Regulations) can apply to NHS England to revert to GMS status by serving a 3 month notice under Regulation 19 of the PMS Regulations and, if the paperwork is in order, NHS England have a statutory duty to award the practice a GMS contract. It follows that the “6 month notice” provision under the above Regulations does not make the business run by PMS practices as precarious as they might have thought because, as long as they act swiftly, they can use Regulation 19 to convert from PMS to GMS status.
7.1 There are a limited number of circumstances in which NHS England is obliged to terminate a GP practice contract (as opposed to circumstances in which NHS England has an option to do so and so must make a discretionary decision whether to do so).
7.2 Clause 26.8.1 of the GMS contract covers the situation where an individual GP is removed from the GMC Register of General Practitioners. In such a case it is not surprising that the GMS Contract provides that the GMS contract should come to an end. The clause provides:
“Subject to clauses 26.8.2 and 26.8.11, the Board shall serve notice in writing on the Contractor terminating the Contract forthwith if the Contractor is an individual medical practitioner, and the medical practitioner no longer satisfies the condition specified in regulation 4(1) of the Regulations”
7.3 This clause refers to regulation 4 of the GMS Regulations which provides as follows with regard to an individual GP:
“(1) In the case of a contract to be entered into with a medical practitioner, that practitioner must be a general medical practitioner.
7.4 A “general medical practitioner” is defined in Regulation 2 as follows:
““general medical practitioner” means, unless the context otherwise requires, a medical practitioner whose name is included in the General Practitioner Register kept by the General Medical Council”
7.5 The GP Register was established on 31 March 2006. From 1 April 2006, all doctors working in general practice in the health service in the UK, other than doctors in training such as GP Registrars, have been required to be included on the GP Register. Details about the register are at http://www.gmc-uk.org/doctors/register/gp_register.asp and the register of all GPs can be found at http://www.gmc-uk.org/doctors/register/LRMP.asp However there is an exemption for GPs who were in practice on 15th February 1981 because these GPs are exempt from the need to undergo the specialist training needed to become a member of the register. There are other minor exemptions in Regulation 5 of the National Health Service (Vocational Training for General Medical Practice) Regulations 1997.
7.6 A doctor who is removed from the General Practitioner List cannot hold a practice contract. However a GP who is suspended from the list but is not permanently removed is in a different category. In such a case the contract will usually continue if the Contractor is able to satisfy the Board that it has in place adequate arrangements for the provision of clinical services under the Contract for so long as the suspension continues. However NHS England have a residual power to remove the contract if
“the Board is satisfied that the circumstances of the suspension are such that if the Contract is not terminated forthwith—
i) the safety of the Contractor’s patients is at serious risk; or
ii) the Board is at risk of material financial loss”
7.7 There is a like provision for PMS contractors in paragraph 105(3)(b) of the PMS Regulations which permits NHS England to terminate a PMS contract if the contract holder is “disqualified or suspended (other than by an interim suspension order or direction pending an investigation or a suspension on the grounds of ill-health) from practising by any licensing body anywhere in the world”.
8.1 The automatic termination of a GMS GP contract does not apply if a sole GP is suspended by the GMC. However during the period of suspension the GP is obviously unable to deliver services to NHS patients. The GMS contract gives NHS England an option to terminate the contract in 2 circumstances, namely:
a) If the Contractor is unable to satisfy the Board that it has in place adequate arrangements for the provision of clinical services under the Contract for so long as the suspension continues; or
b) the Board is satisfied that the circumstances of the suspension are such that if the Contract is not terminated forthwith:
(i) the safety of the Contractor’s patients is at serious risk; or
(ii) the Board is at risk of material financial loss.
8.2 There is a potential contradiction between (a) and (b)(i) here because in any case where the GP has made adequate arrangements for the provision of clinical services it is hard to imagine circumstances in which the patients remain at serious risk. However that would arise if, for example, the GP was continuing to adversely affect how patients were treated despite his or her suspension. Equally, if the GP has put in place adequate arrangements for the practice to be run by another GP, it is hard to see how NHS England could be at material financial risk.
8.3 When considering whether to terminate a contract where a single handed GP is suspended, NHS England are required to consider the GP’s rights as well as other relevant factors. It is not a correct approach to equate the removal of a contract with the initial grant of such a contract. This was made clear in the NHSLA judgment in the case of Dr Ikwueke v Haringey PCT where the NHSLA said:
“There is a significant difference between a suspended applicant looking to build a career in PMS hoping to persuade a PCT to grant him a contract and the Applicant in this case who has been in PMS practice for many years; has built up experience; developed a lifestyle consistent with the income generated by the contract and devoted most of his professional life to the patient’s of that practice thereby developing goodwill in the non technical sense. It is one thing not to grant a contract – quite another to take away established rights in possession. In many suspension cases the difference may be illusory but in the present case use of the word ‘Similarly’ and its context suggests the Respondent failed to give proper consideration to the Applicant’s interests when exercising the unquestioned discretion”
8.4 If the contract is terminated when a GP is suspended, NHS England can continue it during the interim period of the suspension. The GMS contract is silent about what is supposed to happen if the GP’s suspension is lifted by the GMC but it appears to be implicit that the contract will be reinstated. There are no equivalent provisions for PMS contractors, but there equally no automatic termination of a PMS contract when a PMS doctor is suspended or removed from practice. It follows that a similar decision making process needs to be followed if NHS England wishes to terminate a PMS contract in such circumstances.
9.1 A GP Practice contract with multiple partners does not necessarily come to an end if one of the partners is struck off. However NHS England may have a duty to terminate the contract if the other GP partners who are not stuck off are only limited partners (i.e. they have a limited liability under the Limited Partnerships Act 1907) because, in such a case, the partnership cannot continue to hold a GMS contract.
9.2 The conditions which a GP partnership must satisfy to hold a GMS practice contract are set out in regulation 4(2) of the GMS Regulations which provides:
“(2) In the case of a contract to be entered into with two or more individuals practising in partnership—
(a) at least one partner (who must not be a limited partner) must be a general medical practitioner; and
(b) any other partner who is a medical practitioner must—
(i) be a general medical practitioner, or
(ii) be employed by . . . a Local Health Board, (in England and Wales and Scotland) an NHS Trust, an NHS foundation trust, (in Scotland) a Health Board or (in Northern Ireland) a Health and Social Services Trust”
9.3 Clause 26.8.3 of the GMS contract provides that where the only full partner (i.e where others are limited partners) ceases to be a general medical practitioner, the mandatory termination provisions in clause 26.8.4 apply. The mandatory termination provisions in clause 26.8.4 are as follows:
“… the Board shall-
(a) serve notice in writing on the Contractor terminating the Contract forthwith; or
(b) serve notice in writing on the Contractor confirming that the Board will allow the Contract to continue, for a period specified by the Board in accordance with clause 26.8.2 (the “interim period”), during which time the Board shall, with the consent of the Contractor, employ or supply one or more general medical practitioners to the Contractor for the interim period to assist the Contractor in the provision of clinical services under the Contract”
9.4 Thus where the only full partner in a GP practice is struck off by the GMC, the GMS contract must be ended by NHS England unless the removal of the doctor’s name from the GMC list arises because of a suspension. NHS England can extend the notice period before the termination takes effect for up to 6 months under clause 26.8.5 or, if the main partner has been suspended, for the period of the suspension. The scheme appears to suggest that the contract will be reinstated if the suspension is lifted although the exact mechanism by which this operates is not entirely clear. There are also clauses in the GMS contract which give NHS England the right to terminate the contract if there are problems with the GP practice during an interim period.
9.5 These provisions do not apply to PMS practices because NHS England is not under a mandatory obligation to terminate the contract if a GP is struck off by the GMC.
10.1 Those who hold GP practice contracts are required to provide a large amount of information to satisfy NHS England (or the PCT before them if the contract was originally granted by a PCT) that they satisfy the conditions in Regulations 4 and 5 of the GMS Regulations. Hence, for example, each GP who is a party to a contract must not have been removed from the office of charity trustee or trustee for a charity by an order made by the Charity Commissioners or the High Court on the grounds of any misconduct or mismanagement in the administration of the charity for which he was responsible or to which he was privy, or which he by his conduct contributed to or facilitated.
10.2 The GP practice also has a contractual duty to inform NHS England if there are changes to the partners in a GP partnership contract or, in the case of a medical company which holds the contract, there are changes to the shareholders, directors or company information (see clauses 16.9 and 16.10).
10.3 Clause 28.9.1 provides that NHS has the power (but not the duty) to terminate the contract if the GP practice provides any false information in relation to the conditions set out in Regulations 4 and 5. It provides:
“The Board may serve notice in writing on the Contractor terminating the contract forthwith, or from such date as may be specified in the notice if, after this Contract was entered into, it has come to the attention of the Board that written information provided to the Board by the Contractor—
(a) before the Contract was entered into; or
(b) pursuant to clauses 16.9.2, 16.9.3 or 16.10.2,
in relation to the conditions set out in regulation 4 and 5 of the Regulations (and compliance with those conditions) was, when given, untrue or inaccurate in a material respect”
10.4 This is not a mandatory ground for termination of the GP practice contract but the provision of any false information by a GP practice to NHS England puts the contract at risk. There is a like provision for PMS contracts in paragraph 104 of Schedule 5 to the PMS Regulations.
11.1 GMS contracts can only be granted to a GP practice if the conditions in regulations 4 and 5 are satisfied (see chapter 3.8 for details). Clause 26.10.2 provides that the discretionary right for NHS England to terminate a GMS contract for breach of the Regulation 4 and 5 conditions if:
a) in the case of a contract with a single medical practitioner, that medical practitioner in in breach of the Regulation 4 and 5 conditions;
b) in the case of a contract with two or more individuals practising in partnership, any individual or the partnership is in breach of the Regulation 4 and 5 conditions; and
c) in the case of a contract with a company limited by shares, the company, any person both legally and beneficially owning a share in the company, or any director or secretary of the company, is in breach of the Regulation 4 and 5 conditions.
11.2 The relevant Regulation 4 and 5 conditions are as follows:
a) The person does not satisfy the conditions prescribed in section 86(2)(b) or (3)(b) of the 2006 Act, namely the person is no longer an:
i) an NHS employee;
ii) a section 92 employee, section 107 employee, section 50 employee, section 64 employee, section 17C employee or Article 15B employee;
iii) a health care professional who is engaged in the provision of services under the NHS Act or the National Health Service (Wales) Act 2006 (c 42), or
iv) an individual falling within section 93(1)(d)  ;
b) the person is the subject of a national disqualification from the NHS England Performers List;
c) subject to clause 26.10.3 (which provides for an added layer of discretion where a person is suspended by a foreign licensing body), he or it is disqualified or suspended (other than by an interim suspension order or direction pending an investigation or a suspension on the grounds of ill-health) from practising by any licensing body anywhere in the world;
d) subject to clause 26.10.4 (which provides that this clause does not apply if a person secures a finding that he was unfairly dismissed), he has been dismissed (otherwise than by reason of redundancy) from any employment by a health service body unless before the Board has served a notice terminating the Contract pursuant to this clause, he is employed by the health service body that dismissed him or by another health service body;
e) he or it is removed from, or refused admission to, a primary care list by reason of inefficiency, fraud or unsuitability (within the meaning of section 151(2), (3) and (4) of the 2006 Act respectively) unless his or its name has subsequently been included in such a list;
f) he has been convicted in the United Kingdom of murder or an offence referred to in Schedule 1 to the Children and Young Persons Act 1933 or Schedule 1 to the Criminal Procedure (Scotland) Act 1995;
g) he has been convicted in the United Kingdom of a criminal offence other than murder, and has been sentenced to a term of imprisonment of over six months;
h) he has been convicted elsewhere (i.e. outside of the United Kingdom) of an offence which would, if committed in England and Wales-
i) constitute murder, or
ii) constitute a criminal offence other than murder, and been sentenced to a term of imprisonment of over six months,
Unless NHS England is satisfied that the conviction does not make the person unsuitable to be a contractor, a partner, a person both legally and beneficially holding a share in the company, or a director or secretary of the company, as the case may be;
i) he or it has:-
i) been adjudged bankrupt or had sequestration of his estate awarded unless (in either case) he has been discharged or the bankruptcy order has been annulled,
ii) been made the subject of a bankruptcy restrictions order or an interim bankruptcy restrictions order under Schedule 4A to the Insolvency Act 1986 or Schedule 2A to the Insolvency (Northern Ireland) Order 1989, unless that order has ceased to have effect or has been annulled,
iii) made a composition or arrangement with, or granted a trust deed for, his or its creditors unless he or it has been discharged in respect of it,
iv) been wound up under Part IV of the Insolvency Act 1986,
v) had an administrator, administrative receiver or receiver appointed in respect of it, or
vi) had an administration order made in respect of it under Schedule B1 to the Insolvency Act 1986;
j) that person is a partnership and:-
i) a dissolution of the partnership is ordered by any competent court, tribunal or arbitrator, or
ii) an event happens that makes it unlawful for the business of the partnership to continue, or for members of the partnership to carry on in partnership together;
k) he has been:-
i) removed from the office of charity trustee or trustee for a charity by an order made by the Charity Commissioners or the High Court on the grounds of any misconduct or mismanagement in the administration of the charity for which he was responsible or to which he was privy, or which he by his conduct contributed to or facilitated, or
ii) removed under section 7 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 or under section 34 of the Charities and Trustee Investment (Scotland) Act 2005 (powers of Court of Session), from being concerned in the management or control of any body;
l) he is subject to a disqualification order under the Company Directors Disqualification Act 1986, the Companies (Northern Ireland) Order 1986 or to an order made under section 429(2)(b) of the Insolvency Act 1986;
m) he has refused to comply with a request by the Board for him to be medically examined on the grounds that it is concerned that he is incapable of adequately providing services under the Contract and, in a case where the Contract is with two or more individuals practising in partnership or with a company, the Board is not satisfied that the Contractor is taking adequate steps to deal with the matter.
11.3 NHS England is not obliged to terminate a contract with a multi-handed partnership if one of the partners falls into a category set out above, but it has the contractual right to do so. However, in such a case, the partnership will usually have a measure of warning that one of the partners is likely to fall into a category which puts the contract at risk and thus will act to remove the person from the partnership. The contract is held between NHS England and the partnership as it is constituted from time to time. Thus the removal of a partner from the partnership by the other partners before the material event happens (such as a criminal conviction for a serious offence or a bankruptcy) will prevent the practice contract from being at risk. However if these steps are not taken the remaining partners put their practice contract at potential risk.
12.1 A GMS partnership contract is held between NHS England and the partners in a partnership as it is form time to time constituted: see Regulation 13(1) of the GMS Regulations. This means that the GPs can take someone into partnership and, on doing so, that person becomes a party to the practice contract. Regulation 13(2) of the GMS Regulations provides:
“Where the contract is with two or more individuals practising in partnership, the contractor must be required by the terms of the contract to ensure that any person who becomes a member of the partnership after the contract has come into force is bound automatically by the contract whether by virtue of a partnership deed or otherwise”
12.2 If a partner leaves the partnership then that person ceases to be a contracting party to the GMS contract. Clause 16.10 requires the GP practice to inform NHS England in writing if any partner leaves or joins the partnership.
12.3 This right to have a contract with a fluctuating number of individuals (all of whom must satisfy the conditions in regulations 4 and 5 of the GMS Regulations) may lead to a situation where NHS England is not satisfied that the remaining partners have the skills or experience to hold a GMS contract or there are other factors operating which make it inappropriate for the remaining partners to hold the contract. This situation is covered in clause 26.15.1 which provides:
“Where the Contractor is two or more persons practising in partnership, the Board shall be entitled to terminate the Contract by notice in writing on such date as may be specified in that notice where one or more partners have left the practice during the existence of the Contract if in its reasonable opinion, the Board considers that the change in membership of the partnership is likely to have a serious adverse impact on the ability of the Contractor or the Board to perform its obligations under the Contract”
12.4 The test is whether NHS England considers that the change in the identity of the partners is likely to have a serious adverse impact on the ability of the Contractor or the Board to perform its obligations under the Contract. NHS England would need to have conducted a proper investigation and have reasoned grounds before it could say that it was likely (i.e. more probable than not) that the remaining partners could not manage the practice so that the practice continued to deliver on its obligations. In practice this situation is likely to occur most often then the partner who leaves the practice has departed “under a cloud” and there are serious questions as to whether the remaining partners are able to turn the practice around so that it is able to deliver on its contractual obligations.
12.5 This problem does not arise with PMS practices because there is no provision in the PMS Regulations which permits the GPs to change the identity of the contracting parties. Accordingly if a PMS contract is concluded with a partnership it can only be varied when a partner leaves or joins by signing a new PMS contract or by agreeing a variation with NHS England.
13.1 Clause 26.11 of the GMS contract is the “nuclear” option for NHS England and is used very rarely in practice. It allows NHS England to serve notice on the contractor terminating the practice contract forthwith if the GP practice commits one or more serious breaches of contract. It provides:
“The Board may serve notice in writing on the Contractor terminating the Contract forthwith or with effect from such date as may be specified in the notice if
a) the Contractor has breached the Contract and the Board considers that as a result of that breach, the safety of the Contractor’s patients is at serious risk if the Contract is not terminated; or
b) the Contractor’s financial situation is such that the Board considers that the Board is at risk of material financial loss”
13.2 In practice only a very serious risk to patient safety could justify NHS England from relying on this forthwith notice provision. The scope for NHS England terminating the contract for “material financial loss” is also only likely to arise in the most serious of situations, particularly if NHS England cannot rely on the bankruptcy and insolvency provisions set out above.
13.3 The relevant part of the NHS England Guidance makes it clear that the use of these powers will be very rare. It provides:
“66. The grounds for this form of termination are much more complex than those already covered in this policy. Though they are most likely to relate to the conditions set out in Regulation 4, this is not defined in either the GMS or PMS regulations. In most cases there is likely to have been significant dialogue and engagement between NHS England and the contractor prior to any such grounds being established.
67. There will, of course, always be the exception to this rule where a breach is so significant that it warrants an immediate termination of the contract, however, in general most cases resulting in this action will have taken some time to investigate thoroughly and to gather the evidence to support a termination on these grounds”
13.4 Any GP practice which finds itself in receipt of a termination notice under these provisions should seek urgent specialist legal advice.
13.5 There is a like provision for PMS contracts at paragraph 106 of Schedule 5 to the PMS Regulations.
14.1 The provisions in the GMS contract concerning sub-contracting are fairly complex but there is one provision which is specifically designed to avoid a sub-contract arrangement being used by a GP contractor to attempt to get around the prohibition in the NHS Act on the sale by GPs of goodwill in their practice contracts  . This prohibition is expressed in clause 15.9.10 which provides:
“The Contractor shall not sub-contract any of its rights or duties under the Contract in relation to the provision of essential services to a company or firm-
a) owned wholly or partly by the Contractor, or by any former or current employee of, or partner or shareholder in, the Contractor;
b) formed by or on behalf of the Contractor, or from which it derives or may derive a pecuniary benefit; or
c) formed by or on behalf of a former or current employee of, or partner or shareholder in, the Contractor, or from which such a person derives or may derive a pecuniary benefit,
where that company or firm is or was formed wholly or partly for the purpose of avoiding the restrictions on the sale of the goodwill of a medical practice in section 259 of the 2006 Act or any Regulations made wholly or partly under that section”
14.2 If NHS England learns that a GP practice has undertaken any subcontracting in breach of this clause, the GP contract can be terminated forthwith or an instruction can be given to terminate the sub-contracting arrangements that give rise to the breach forthwith (where any failure to do so will result in the contract being terminated forthwith).
14.3 There is a like provision for PMS contracts at paragraph 106A of Schedule 5 to the PMS Regulations.
15.1 Apart from the specific circumstances set out in the paragraphs above, the structure of the GMS Contract is that NHS England is entitled to respond to a breach by the GP practice of any of the terms of the contract by serving either a “remedial notice” or a “breach notice”. These are 2 different types of notices which have subtlety different consequences for the GP practice.
15.2 A “remedial notice” is served under clause 26.13 which provides:
26.13.1 Where the Contractor has breached the Contract other than as specified in clauses 26.8.1 to 26.12.2 and the breach is capable of remedy, the Board shall, before taking any action it is otherwise entitled to take by virtue of the Contract, serve a notice on the Contractor requiring it to remedy the breach (“remedial notice”).
26.13.2. A remedial notice shall specify:
a) details of the breach;
b) the steps the Contractor must take to the satisfaction of the Board in order to remedy the breach; and
c) the period during which the steps must be taken (“the notice period”).
26.13.3. The notice period shall, unless the Board is satisfied that a shorter period is necessary to protect the safety of the Contractor’s patients or protect itself from material financial loss, be no less than 28 days from the date that notice is given.
26.13.4. Where the Board is satisfied that the Contractor has not taken the required steps to remedy the breach by the end of the notice period, the Board may terminate the Contract with effect from such date as the Board may specify in a further notice to the Contractor”
15.3 The service of a remedial notice thus gives rights to both NHS England and the contractor. It can be served for any breach (however trivial) of the obligations of the GP practice as set out in the GMS contract. Once it is served the GP practice has the notice period (which must be not less than 28 days) to remedy the breach. The NHS England Guidance explains the steps that its Area Teams are required to take when considering serving a Remedial Notice. This provides a series of steps that the Area Team are required to follow at paragraph 36 as follows:
“ATs [Area Teams]shall take the following steps:
1. Initially the AT should contact the contractor and discuss the breach with them and the action that they may be entitled to take, i.e. the issue of a remedial notice.
2. The contractor should be afforded the opportunity to provide an explanation as to the circumstances that lead to the breach and this discussion should be recorded accurately in writing for the contract file.
3. The AT shall then investigate the breach and any details recorded during the contractor discussion which are pertinent to the matter at hand and examine any evidence in relation to the breach.
4. If the AT is satisfied that the matter is a breach which is capable of remedy then they may issue a remedial notice to the contractor, requiring them to remedy the breach,
5. The AT may then consider any further action NHS England is otherwise entitled to take by virtue of the contract, at the earliest opportunity after the initial matter was raised.
6. It is important that when steps 1 to 4 are undertaken, this is completed as quickly as is reasonably possible as long delays between the breach occurring, or NHS England becoming aware of the breach, and the notice being issued are inappropriate and can lead to further complications once, and if, the matter proceeds to a full breach, possible termination and dispute”
15.4 The NHS Guidance also explains at paragraphs 36(10) and (11):
“10. Where the AT is satisfied that the contractor has taken the required steps to remedy the breach within the notice period, a letter will be issued to the contractor informing them that the terms of the remedial notice have been satisfied and that no further action will be taken at this stage.
11. The letter should also set out the consequences of the contractor further breaching their agreement in that if, following a breach notice or a remedial notice, the contractor –
a. repeats the breach that was the subject of the breach notice or the remedial notice; or
b. otherwise breaches the contract resulting in either a remedial
notice or a further breach notice,
NHS England may serve notice on the contractor terminating the contract with effect from such date as may be specified in that notice. (Annex 3)”
15.5 The reference to “Annex 3” is a reference to a standard form letter which is annexed to the Guidance. Thus, if the GP practice does not act to remedy the breach to NHS England’s satisfaction (or later repeats the same breach or breaches the contract in a different way), NHS England acquires the right to terminate the contract by serving a further notice after the notice period has ended. The wording provides that NHS England obtains the right to terminate if NHS England is not “satisfied” that the breach has been remedied. This provision has not been, as far as the author is aware, ever been tested in the High Court. However it is possible to envisage a situation where the contractor contends that he has taken sufficient steps to remedy the breach but NHS England say that they are not satisfied with those actions. In such a case (unless possibly the dispute about whether the breach is remedied is referred to the NHSLA for determination) NHS England would still appear to have the contractual right to terminate the contract.
15.6 There is also no time period set within the terms of the contract within which NHS England have to respond to a failure to remedy a breach. The contractual terms appear to permit NHS England a theoretically unending period within which to serve a termination notice. However if there is a significant delay of many months or years, there may be arguments that NHS England has affirmed the contract and thus cannot serve a termination notice.
15.7 There are other breaches of contract which cannot be remedied. For example, the GP Practice is required to be open from Monday to Friday for all days except from except Good Friday, Christmas Day or bank holidays (see the definition of “core hours” in the GMS Contract). If a GP practice failed to open on, say Christmas Eve, this would be a breach of contract. However it cannot be “remedied” because, by the time a notice is served, it is all in the past. However NHS England is entitled to respond to such a breach by serving a breach Notice. Clause 26.13.5 provides:
“Where the Contractor has breached the Contract other than as specified in clauses 26.8.1 to 26.12.2  and the breach is not capable of remedy, the Board may serve notice on the Contractor requiring it not to repeat the breach (“breach notice”)”
15.8 Thus the primary effect of the breach notice is that it acts as a “yellow card” to warn the GP practice that NHS England considers that they have breached the contract and to warn the GP practice not to repeat the breach. However clause 26.13.6 explains the extensive powers that NHS England has once a breach notice has been served. It provides:
“If, following a breach notice or a remedial notice, the Contractor-
(a) repeats the breach that was the subject of the breach notice or the remedial notice; or
(b) otherwise breaches the Contract resulting in either a remedial notice or a further breach notice,
the Board may serve notice on the Contractor terminating the Contract with effect from such date as may be specified in that notice”
15.9 This clause gives a very considerable power to NHS England. The first part covers the circumstance where the GP practice breaches the same term of the contract for a second time following the service of a breach notice. In such circumstances NHS England can respond to the second breach by serving a notice to terminate the GP practice contract.
15.10 However the effect of a breach notice is far wider than the particular breach. If, following the service of a breach notice, the GP practice act in breach of any of the terms of a GP contract, NHS England are entitled to serve a further breach notice or, as the case may be, a remedial notice and then get the right to serve a termination notice. However this seemingly wide power is cut down by the following clause which provides:
“The Board shall not exercise its right to terminate the Contract under the previous clause unless it is satisfied that the cumulative effect of the breaches is such that it would be prejudicial to the efficiency of the services to be provided under the Contract to allow the Contract to continue”
15.11 This is the “cumulative effect” clause under which NHS England consider must be satisfied before they have the right to terminate the contract. It is thus not quite a “two strikes and you are out” provision. However the power to serve a termination notice applies if NHS England are “satisfied” that the breaches have a cumulative effect, and thus gives a considerable amount of discretion to NHS England staff to determine whether the breaches have this effect or not.
15.12 The NHS England Guidance refers to the “cumulative effect” test but does not provide any specific guidance to Area Teams on who the test is to be applied. It says, for example at paragraphs 36(13) and (14):
13. NHS England shall not exercise its right to terminate the contract unless it is satisfied that the cumulative effect of the breaches is such that NHS England considers that to allow the contract to continue would be prejudicial to the efficiency of the services to be provided under the contract.
14. When considering a cumulative effect ATs must act proportionately and reasonably having full regard of the nature and timeframe of the notices issued”
15.13 Thus the Guidance does little more than reproduce the words of the contract. However the expression “prejudicial to the efficiency of the services” has a specific meaning under Regulation 14 of the National Health Service (Performers List) (England) Regulations 2013 which refers to the test that NHS England must apply when considering the removal of a GP from the Performer List. Regulation 15 sets out a list of factors that NHS England (or the First Tier Tribunal on appeal) must take into account when considering whether to remove a practitioner from the Performers List under the 2013 Regulations. The factors are as follows:
“(5) Where the Board is considering whether to remove a Practitioner from a performers list under regulation 14(3)(b) (an efficiency case), it must consider—
(a) any information relating to that Practitioner which it has received under regulation 9;
(b) any information held by the NHSLA about past or current investigations or proceedings involving or relating to that Practitioner, which information the NHSLA must supply if the Board so requests; and
(c) the matters referred to in paragraph (6).
(6) Those matters are—
(a) the nature of any incident which was prejudicial to the efficiency of the services which the Practitioner performed;
(b) the length of time since the last incident occurred and since any investigation into it was concluded;
(c) any action taken by any regulatory or other body (including the police or courts) as a result of any such incident;
(d) the relevance of the incident to the Practitioner’s performance of the services which those included in the relevant performers list perform, and the likely risk to patients or to public finances;
(e) whether the Practitioner has ever failed to comply with a request to undertake an assessment by the NCAA on or before 31st March 2005, by the NPSA between 1st April 2005 and 31st March 2012 inclusive, by the NICE between 1st April 2012 and 31st March 2013 inclusive, or thereafter by the NHSLA;
(f) whether the Practitioner has previously failed to supply information, make a declaration or comply with an undertaking required on inclusion in a performers list;
(g) whether, in respect of any list, the Practitioner—
(i) was refused inclusion in it,
(ii) was included in it subject to conditions,
(iii) was removed from it, or
(iv) is currently suspended from it,
and, if so, the facts relating to the incident which led to such action and the reasons given for such action by the holder of the list; and
(h) whether, in respect of any list, the Practitioner was at the time of the originating event or in the six months preceding that event, a director of a body corporate, which —
(i) was refused inclusion in it,
(ii) was included in it subject to conditions,
(iii) was removed from it, or
(iv) is currently suspended from it,
and, if so, the facts relating to that event and the reasons given for such action by the holder of the list”
15.14 The use of the same language in both the GMS Contract and the National Health Service (Performers List) (England) Regulations 2013 means that it seems that NHS England ought to consider each of these factors before making a decision whether the “cumulative effect” test has been met.
15.15 The NHS England Guidance provides the following concerning the steps that should be followed by NHS England Area Teams before a decision is made to terminate an NHS Contract:
“1. NHS England must establish that they have grounds to move to terminate a contract or agreement under the terms laid out in Regulations, following due process and investigation of the facts and providing the contractor the opportunity to provide a response to allegations, wherever possible.
2. NHS England will consider the available information and decide an appropriate course of action and will determine by reference to, and in accordance with, the appropriate statutory regulations:
· Whether the contract or agreement should be terminated with
immediate effect, or
· Whether the contract should be allowed to continue for an interim period [not normally to exceed six months] if NHS England is satisfied that the contractor has in place adequate arrangements for the provision of services during the interim period.
3. The AT shall provide a notice of termination to the contractor, as soon as is practicably possible, to include:
a. the reasons for termination of the contract with reference to the relevant contractual, agreement clauses,
b. the evidenced relied on in making the decision to terminate,
c. the date when termination will become effective,
d. the actions that the contractor must take leading up to the termination in respect of their duty of cooperation and on-going patient safety, ie. any other arrangements included in the contract/agreement on the arrangements on termination, and
e. the Contractor’s right to invoke the NHS Dispute Resolution Process or court proceedings.
4. Where NHS England determines that a contract or agreement should be terminated with immediate effect, the AT shall serve notice of termination in writing on the contractor terminating the contract or agreement immediately in accordance with the details set out in sub paragraph 3 above.
5. Where NHS England determines that the contract or agreement should be allowed to continue for an interim period, the AT should serve written notice on the contractor confirming the arrangements as set out in sub paragraph 3 above.
6. When issuing a notice of termination it is essential that the AT retains a record that the contractor has received the notice and the date of its delivery. This can be achieved either by hand delivery of the notice upon which the contractor should be asked to sign a Received Receipt (Annex 3), or by recorded or special delivery arrangements through the Royal Mail, when all tracking records must be retained on file”
15.16 Unlike in the case of a Performers List matter where a specific committee of NHS England has been constituted to make the decision, the NHS England Policy does not precisely specific who within NHS England is entitled to make a decision on behalf of the organisation to serve a notice on a GP terminating a contract. The policy set out in this Guidance simply states that “NHS England will consider the available information and decide an appropriate course of action and will determine” what decision should be made. It is thus unclear from the published policies what level of management decision making within NHS England should take the decision to serve a termination notice on a GP practice. It seems unlikely that these decisions need to be made on an individual basis at director level but, unless there has been a specific delegation of this function by the directors to Area Teams, the guidance and policy does not appear to vest decision making responsibility in the Area Team. This issue will no doubt be made clear if a decision of NHS England is the subject of a legal challenge at some point in the future.
15.17 There are like provisions for remedial and breach notices at paragraph 107 of the PMS Regulations.
16.1 One of the key features of GP Practice contracts is the power of NHS England to impose “contract sanctions” on a GP practice that acts in breach of contract as an alternative to termination of the contract. The imposition of contract sanctions is thus a “half way house” between informal management of a contract breach and termination of the contract.
16.2 The power to impose contract sanctions on a GP practice that acts in breach of contract arises under clause 26.16 of the GMS contract which provides as follows:
“26.16.1 In clauses 26.16.2 to 26.17.4 “contract sanction” means-
(a) termination of specified reciprocal obligations under the Contract;
(b) suspension of specified reciprocal obligations under the Contract for a period of up to six months; or
(c) withholding or deducting monies otherwise payable under the Contract.
26.16.2 Where the Board is entitled to terminate the Contract pursuant to clauses 26.9.1 to 26.11.1, 26.13.4, 26.13.6 and 26.14.1 to 26.15.2, it may instead impose any of the contract sanctions if the Board is reasonably satisfied that the contract sanction to be imposed is appropriate and proportionate to the circumstances giving rise to the Board’s entitlement to terminate the Contract.
26.16.3 The Board shall not, under clause 26.16.2, be entitled to impose any contract sanction that has the effect of terminating or suspending any obligation to provide, or any obligation that relates to, essential services.
26.16.4 If the Board decides to impose a contract sanction, it must notify the Contractor of the contract sanction that it proposes to impose, the date upon which that sanction will be imposed and provide in that notice an explanation of the effect of the imposition of that sanction.
26.16.5 Subject to clauses 26.17.1 to 26.17.4 the Board shall not impose the contract sanction until at least 28 days after it has served notice on the Contractor pursuant to clause 26.16.4 unless the Board is satisfied that it is necessary to do so in order to protect the safety of the Contractor’s patients, or protect itself from material financial loss.
26.16.6 Where the Board imposes a contract sanction, the Board shall be entitled to charge the Contractor the reasonable costs of additional administration that the Board has incurred in order to impose, or as a result of imposing, the contract sanction”
16.3 It follows that NHS England only obtains the right to impose contract sanctions where it has a contractual right to terminate the GP practice contract. If the circumstances do not give NHS England the right to serve a notice of termination, NHS England does not have the contractual right to impose contract sanctions.
16.4 The NHS England Guidance gives the following advice to Area Teams about the imposition of contract sanctions:
“41. Sanctions cannot be applied to a contract unless NHS England is in a position to move to terminate. As an alternative to terminating a contract or agreement, NHS England may, in certain circumstances consider the application of sanctions.
42. Where the termination of a contract or agreement is being considered on the grounds that a contractor has breached the contract or agreement or has failed to respond to a remedial notice, NHS England will in all cases consider the option of applying sanctions as an alternative. Such sanctions may involve:
· Termination of specified reciprocal obligations, such as the right to provide additional or enhance services, under the contract or agreement;
· Suspension of specified reciprocal obligations under the contract or agreement for a period of up to six months; or
· Withholding or deducting monies otherwise payable under the contract or agreement.
43. The choice of which sanction to use would ordinarily depend on the nature of the breach, or cumulative effect, and what is felt to be the most appropriate and proportionate action in those circumstances. For example, if the breaches have occurred in relation to a specific service element under the contract, it might be most appropriate to move to terminate that specific service, such as an additional service.
44. Where NHS England decides that the most appropriate sanction would be to withhold or deduct monies, this must be calculated in accordance with set criteria in order to establish a consistent, fair and measured approach:
1. The AT shall issue a notice of their intent to apply a sanction to the contractor which should include:
a. The nature of the sanction to be applied;
b. If withholding or deducting monies, how this has been calculated and the duration of any such sanction,
c. If services are to be terminated, which services and from what date,
d. If suspension of specified reciprocal obligations under the contract or agreement, the period of that suspension and its end date; and
e. The contractors right to appeal to this decision (Annex 7)
2. If there is a dispute between NHS England and the contractor in relation to a contract sanction that the AT is proposing to impose, the AT shall not, subject to paragraph 5 below, impose the proposed contract sanction except in the circumstances specified in paragraph (3)(a) or (b) below.
3. If the contractor refers the dispute relating to the contract sanction to the NHS dispute resolution procedure or court proceedings within 28 days beginning on the date on which NHS England served notice on the contractor (or such longer period as may be agreed in writing with the AT), and notifies the AT in writing that it has done so, the AT shall not impose the contract sanction unless−
a. there has been a determination of the dispute and that determination permits NHS England to impose the contract sanction; or
b. the contractor ceases to pursue NHS dispute resolution procedure or court proceedings, whichever is the sooner.
4. If the contractor does not invoke NHS dispute resolution procedure or court proceedings within the time specified in paragraph (3), the AT shall be entitled to impose the contract sanction immediately.
5. If NHS England is satisfied that it is necessary to impose the contract sanction before the NHS dispute resolution procedure or court proceedings is concluded in order to–
a. protect the safety of the contractor’s patients; or
b. protect itself from material financial loss,
the AT shall be entitled to impose the contract sanction immediately, pending the outcome of that procedure”
16.5 The right to impose sanctions includes the right impose a financial penalty on the GP practice. The level of financial penalty is not set out in the contract and the Guidance only states that it should be fixed by applying “set criteria in order to establish a consistent, fair and measured approach”, but does not say what those criteria should be in practice. Clause 26.12.2 states that the contract sanction must be “appropriate and proportionate to the circumstances giving rise to the Board’s entitlement to terminate the Contract”.
16.6 There are like provisions about the imposition of contract sanctions as an alternative to termination for PMS contracts at paragraph 109 of Schedule 5 to the PMS Regulations.
17.1 The NHS has operated a Disputes Resolution Service for individuals and organisations operating in the NHS for many years. Section 9(6) of the NHS Act 2006 provides that if any dispute arises with respect to an NHS Contract, either party may refer the matter to the Secretary of State for determination. The Secretary of State does not become personally troubled with the resolution of such disputes because he has delegated the discharge of this function to the Family Health Services Appeal Unit (known as the FHSAU) which is part of the National Health Service Litigation Authority (“NHSLA”) which is a Special Health Authority. The delegation is found in Directions made by the Secretary of State, namely the Directions as to the Functions of the National Health Service Litigation Authority (GMS Contract Disputes) 2005 and the Functions of the National Health Service Litigation Authority (PMS Agreement Disputes) 2005.
17.2 If the GP Practice has signed an NHS Contract then the GP practice cannot sue NHS England in the courts (because an NHS Contract gives rise to no rights or liabilities) and therefore the only route to resolving a dispute is to refer the matter to the FHSAU for determination. If the GP Practice has signed a legally binding contract then it has the option of litigating in the courts or referring the matter to the FHSAU for determination. However if the matter is referred to the FHSAU the GP practice is bound by the outcome of the determination which will be binding on both the GP Practice and the NHSLA unless it is set aside by the High Court in a Judicial Review challenge.
17.3 The procedures adopted by the FHSAU for resolving GP contract disputes are explained on their website in a series of Factsheets. The majority of decisions are taken by the FHSAU on the basis of written material provided by both sides with only occasional oral hearings where this is needed to resolve disputes of fact.
17.4 Parties are entitled to be legally represented in the written material they put before the FHSAU or at an oral hearing but neither party will be awarded their legal costs as part of any determination. The FHSAU publishes decisions that it makes on its website, either with the names of the relevant parties or in an anonymised form. However there is no clear mechanism to search against the content of such decisions and therefore it is difficult to find decisions which are a precedent on any particular point.
17.5 One of the issues that is unclear from both the NHS England Guidance and in some decisions of the FHSAU itself is the remit of the FHSAU’s dispute resolution powers. The GMS contract gives considerable discretion to NHS England to decide whether to serve a remedial notice or, for example, whether to impose contract sanctions or to move straight to a termination of a GP contract. There are 3 possible roles that the FHSAU could adopt as part of its dispute resolution function, namely:
a) The FHSAU could act as a discretionary decision maker in place of NHS England and could exercise the discretion afresh in place of officers of NHS England;
b) The FHSAU could confine itself to asking whether NHS England had the power to make the decision that it purported to make (such as serving as notice of termination), and provided NHS England had the power to do so, the FHSAU will not seek to interfere in the exercise of NHS England’s discretionary decision making; or
c) The FHSAU could ask itself both whether NHS England had the power to make the decision in question and whether it acted in a procedurally correct manner in seeking to exercise that power, including asking whether NHS England acted in accordance with its internal guidance and policies in doing so. Decisions will be upheld if NHS England had the power to take the relevant decision and also can demonstrate that it followed its internal policy guidance in the process leading up to the making of the decision.
17.6 In practice the FHSAU tends to adopt the last of these three approaches. This approach recognises that there can only be a “dispute” between the GP practice and NHS England (or previously a PCT) if the GP practice can legitimately complain about the way in which NHS England has acted. If NHS England has a discretion to exercise and has properly considered all relevant factors, there is no real basis for the GP Practice to complain. The discretionary powers under a GP practice contract are given to the parties to the contract and not the FHSAU. However if NHS England has failed to follow its own guidance or has acted outside its powers, the GP Practice has a legitimate complaint which can be adjudicated upon by the FHSAU.
17.7 Some guidance on this was given by Lawrence Collins LJ in R (on the application of Assura Pharmacy Ltd) v E Moss Ltd (t/a Alliance Pharmacy)  EWCA Civ 1356 who said as follows at paragraphs 59 to 62:
“59. First, decision letters such as the ones which are the subject of this appeal are to be considered on a "straightforward down-to-earth reading… without excessive legalism or exegetical sophistication": Clarke Homes Ltd v Secretary of State for the Environment (1993) 66 P&CR 263 at page 272-3, per Sir Thomas Bingham MR), applied in, e.g. MR Dean & Sons (Edgware) v First Secretary of State EWCA Civ 1083, at .
60. Second, questions of adequacy, need and desirability are to be decided by the decision-makers, and provided that the proper approach is adopted, the answer will inevitably become a question of fact and degree eminently suitable for resolution by a committee of laymen, and not susceptible to sophisticated legal analyses: R v The Family Health Services Appeal Authority, ex parte E. Moss Ltd (1999) 48 BMLR 204, 215 (CA).
61. Third, the mere absence of mention of a factor in the text of the decision does not necessarily mean that it was not considered. The reasons given should contain sufficient detail to enable the reader to know what conclusion has been reached on the principal important issue or issues and why, but it is not a requirement that they should rehearse every consideration to which they have had regard.
62. Fourth, if the Secretary of State issues non-statutory guidance for decision-makers, and there is a radical departure from the guidance, then, although not relevant to the construction of the relevant provisions, the guidance may be relevant to a challenge because the decision-maker may be under an obligation to take it into account and to explain why he has taken that radically different approach”
17.8 NHS England has a discretion not to implement a decision whilst it is the subject of a reference to the NHSAU and will usually do so. However it will implement a decision even if it is the subject of a reference if there are serious issues of patient safety or financial loss to NHS England.
17.9 If the GP practice is dissatisfied with a determination by the FHSAU, there are 2 possible appeal routes to the High Court. There is an established right for the GP practice to apply for judicial review of a decision of the NHSLA. For an example of this in a case that went to the Court of Appeal see R (on the application of Hussain & Ors) v Secretary of State for the Health Department & Anor. However a public law challenge should only be accepted by the Judicial Review court if there is a significant public element to the dispute. If the determination is, in reality, a dispute about the amount of money that NHS England should pay to the practice there may well be an insufficient public law element to the dispute to persuade the High Court that it is suitable for a public law hearing. In R (on the application of Shah) v National Health Service Litigation & Ors  EWHC 2575 (Admin) Silber J was faced with the argument that the determination by the FHSAU did not have a sufficient public law element to support a claim for judicial review following the guidance given by Dyson LJ in R (Beer) v Hampshire Farmers Markets Limited  1WLR 233. Silber J decided that it was arguable that the GP did have a right to seek judicial review and did not decide the point. The GP’s claim was dismissed on other grounds and thus the point remains to be finally determined.
17.10 There is an argument (which the author believes to be likely to be correct) that a determination by the FHSAU is an “arbitration” and that accordingly any challenge to that decision should only be made by way of the more limited rights under the Arbitration Act 1996. That argument was rejected by Cranston J in the High Court in see R (on the application of Hussain & Ors) v Secretary of State for the Health Department & Anorbut that judgment was overturned on a different point in the Court of Appeal. The argument that a GP practice must use the FHSAU route was successful in the unreported case of Pitalia v Central Lancashire PCT  . At the date of writing this judgment is the subject of an appeal to the Court of Appeal (listed in March 2014) and it is therefore unclear whether this argument will be sustained. However any challenge to the decision of the FHSAU by way of an arbitration challenge must be commenced in the High Court within 28 days of the date of the determination. There is no power under the Arbitration Act 1996 to extend that time period. It follows that, in order to protect its position, a GP Practice would be well advised to apply to the High Court under the Arbitration Act within the 28 day period and apply for Judicial Review.
18.1 NHS England is a public body and accordingly, in as much as it is making decisions about the grant, variation and termination of GP practice contracts, it is obliged to act reasonably and in a way that is consistent with its overall statutory obligations. This duty to act reasonably is set out in clause 2.1.5 of the GMS Contract which provides:
“In complying with this Contract, and in exercising its rights under the Contract, the Board must act reasonably and in good faith and as a responsible public body required to discharge its functions under the 2006 Act”
However a breach by NHS England of this term does not discharge the contractor from performance of any other part of the contract as a result of clause 2.1.6.
18.2 it is an open question as to how far discretionary decisions taken by NHS England to exercise powers under a GP practice contract can be challenged on a public law basis. This issue was considered in detail in the context of a General Dental Contract case by Turner J in Krebs v NHS Commissioning Board  EWHC 3474 (Admin)  . The Judge referred to Hampshire County Council v Supportways Community Services Ltd  EWCA Civ 1035 in which the Claimant provided housing related support services under a contract with the defendant local authority. After nine months, the defendant purported to terminate the contract on the basis that the claimant was charging too much. The claimant sought to challenge the decision by way of judicial review. Turner J then quoted at length from the judgment of Neuberger LJ (as he then was) as follows:
"Can the Company seek a public law remedy?
34 … The primary question in this context is whether the Company should have been seeking only a private law remedy (as the Council contended), whether its remedy lay both in public and in private law (as the Company contended, albeit that it put its case primarily in public law), or whether it does not matter how its remedy is characterised (as the Judge held).
35 In my judgment, the basis of the Company's case was not in public law, but only in private law. The Company's complaint was that the Council had failed to comply with the Agreement, and the Company accordingly was seeking to enforce the Council's compliance. Subject to being contradicted by a closer analysis of the principles or by binding authority, such a complaint and such enforcement would appear to me respectively to involve a private law claim and a private law remedy, both of which are contractually based, albeit with common law and equitable aspects.
36 In answer to this, Mr Knafler first relied on the fact that the Council's obligations under clause 11.3 were, in reality, public law duties in that they can be traced directly to section 93 and to paragraph 71 of the 2003 Guidance. The fact that a contractual obligation is framed by reference to a statutory duty does not, in my view, render that obligation a public law duty. Of course, where the statutory duty is owed to a contracting party independently of the contractual obligation, he can normally expect to be able to seek a public law remedy by reference to the duty, as well as, or instead of, a private law remedy by reference to the obligation. However in the present case, the Council's public law duty, namely that arising under section 93, was owed to the Secretary of State in relation to the provision of grants. There was, as it seems to me, no question of that duty being owed to providers such as the Company.
37 Mr Knafler next relied on the fact that the nature of the Agreement, involving as it did the Council performing public administrative functions, was such that a claim brought under it would be a public law claim. That cannot, I think, be right. Virtually any contract entered into by a local authority, almost by definition, will involve it acting in such a way, as otherwise it would be acting ultra vires. Yet, it is clear that, as Mr Knafler rightly accepts, in the case of alleged breaches of many such contracts, a private law claim is the only type of claim which can be brought.
38 Thus, the mere fact that the party alleged to be in breach of contract is a public body plainly cannot, on its own, transform what would otherwise be a private law claim into a public law claim. There are, of course, circumstances where, in a contractual context, a public body is susceptible to public law remedies. However, where the claim is fundamentally contractual in nature, and involves no allegation of fraud or improper motive or the like against the public body, it would, at least in the absence of very unusual circumstances, be right, as a matter of principle, to limit a claimant to private law remedies.
39 Mr Knafler referred to a passage in the sixth (1999) edition of de Smith, Woolf and Jowell's Principles of Judicial Review , at paragraph 3–019, which includes the following three sentences:
"If a public function is being performed, and contract law does not provide an aggrieved person with an appropriate remedy, then action taken under or in pursuance of a contract should be subject to control by judicial review principles. Where a public body enters into a contract with a supplier, a dispute about the rights and duties arising out of the contract will often be determined by private law. However, the decision of a public body to enter, or not [to] enter, into a contract may be subject to judicial review."
40 The point made in the third sentence of that passage (which is expanded in paragraph 5–035 of the book) has no application here. It is true that the result of the review of which the Company complains did result in the determination of the Agreement and in the offer of a new contract whose terms it considered objectionable. This does not mean, however, that its claim is within the scope of the third sentence in that passage. Its claim is that the 2004 review was not carried out in accordance with the Agreement, not, for instance, that the Council acted in bad faith or was guilty of an improper motive in carrying out, or in failing to carry out, the 2004 review in accordance with clause 11.3. The Company's complaints that the Agreement was not properly determined, and that it was not offered a new contract on appropriate terms, are solely based on the contention that the Council failed to comply with its (purely contractual) obligation to carry out the 2004 review in accordance with clause 11.3.
41 Mr Knafler relied on the first sentence in the passage I have quoted from de Smith, on the basis that, if private law could not provide a satisfactory remedy in the present case, then the Company should be entitled to resort to public law remedies. As discussed above, it does indeed appear that the Company is only entitled, in terms of private law remedies, to damages for breach of clause 11.3, and it seems likely that such damages would be very difficult to assess. Indeed, it is quite possible that they would only be nominal, as the only consequence of the breach of clause 11.3 was its reflection in the terms of the new contract offered to the Company, and, as the Judge pointed out when considering the terms of the order, the Council had no obligation to enter into a new contract with the Company.
42 However, it cannot be right that a claimant suing a public body for breach of contract, who is dissatisfied with the remedy afforded him by private law, should be able to invoke public law simply because of his dissatisfaction, understandable though it may be. If he could do so, it would place a party who contracts with a public body in an unjustifiably more privileged position than a party who contracts with anyone else, and a public body in an unjustifiably less favourable position than any other contracting party.
43 Equally importantly, it appears to me that it would be wrong in principle for a person who would otherwise be limited to a private law claim should be entitled to base his claim in public law merely because private law does not afford him a sufficiently attractive remedy. It is one thing to say that, because a contracting party is a public body, its actions are, in principle, susceptible to judicial review. It is quite another to say that, because a contracting party is a public body, the types of relief which may be available against it under a contract should include public law remedies, even where the basis of the claim is purely contractual in nature.
44 Mr Knafler relied on a number of cases relating to the circumstances in which, when making a claim in relation to a contract with a public body, the other contracting party can make a claim in public law. Two of those cases appear to me to be of some relevance to the present dispute, and, indeed, to support the conclusion that the Company cannot rely on public law in this case.
45 In Mercury Energy Ltd -v- Electricity Corporation of New Zealand Ltd  1 WLR 521, Lord Templeman, giving the judgment of the Privy Council, said this at 529B:
"It does not seem to me likely that a decision by a state enterprise to enter into or determine a commercial contract to supply goods or services will ever be the subject of judicial review in the absence of fraud, corruption or bad faith."
That statement is plainly unhelpful to the Company's case: the only basis on which its claim is founded is breach of contract. Later, at 529G, Lord Templeman made the following observation, which also seems to apply to the present case:
"The causes of action based on breach of statutory duty, abuse of monopoly position and administrative impropriety are only relevant if the causes of action based on contract are rejected. If the causes of action based on contract are rejected, the other causes of action will only constitute attempts to obtain, by the declaration sought, specific performance of a non-existing contract. The exploitation and extension of remedies such as judicial review beyond their proper sphere should not be encouraged."
46 In Mercury Communications Ltd -v- Director-General of Telecommunications  1 WLR 48, Lord Slynn of Hadley, (who gave the only reasoned speech) referred in a passage at 57E–G to the importance of maintaining a degree of "flexibility as to the use of different procedures", namely public law and private law procedures. That case was concerned with the question of procedure than with that of remedy. Lord Slynn explained in the same passage that the plaintiff had properly brought private law proceedings because the dispute was "in substance and in form … as to the effect of the terms of the contract even if it can also be expressed as a dispute as to the terms of the licence". In the present case, the issues which we are considering concern the meaning and effect of the Agreement.
47 In these circumstances, I conclude that the Company has no claim which it can pursue by way of judicial review, and in particular by seeking public law remedies. Since preparing this judgment, I have had the opportunity of reading the judgment of Mummery LJ which deals with this aspect of the appeal on a somewhat broader basis, and with which I agree."
18.3 Turner J in Krebs considered that the Supportways Community Services case provided strong support for the conclusion that it would be wrong to admit a public law element into a private law claim about how NHS England had exercised their contractual powers in a GDS contract. The Judge decided that the position in summary was as follows:
“i) It would be difficult on any convincing jurisprudential basis to distinguish the Supportways case from the instant case so as to invest the latter with any more compelling element of public law;
ii) There is no allegation of fraud or improper motive or the like against the defendant in this case and there are no "very unusual circumstances" which would otherwise render it inappropriate to limit the claimant to private law remedies;
iii) In the circumstances of this case, if the claimant were afforded public law remedies the nature and extent of which went beyond those available in private law then it would place him in an unjustifiably more privileged position than a party who had contracted with a private health provider. It would also place the defendant in an unjustifiably less favourable position than any other contracting party”
18.4 However the Judge then went on to consider whether, as a matter of policy, public law concepts should be introduced to restrain the contractual rights that NHS England had under DGS contracts. He said
“Furthermore, I take the view that if public law concepts were routinely introduced into otherwise straightforward contractual disputes merely because one of the contracting parties was a public body then the advantage of relative certainty would be lost and (as this case has clearly demonstrated) litigation would become more uncertain, more prolonged and more expensive”
18.5 It is difficult to see any differences in principle between dental contracts and medical contracts since both are based on a statutory template. It follows that (unless this case is overturned in the Court of Appeal), in the absence of allegations of fraud or bad faith, it is likely to be very difficult for GP practices to mount public law challenges against NHS England arising out of discretionary decisions made under GP contracts.
 The Tomkins case concerned a dental contract but the same principles apply to a GP medical contract.
 GMS stands for “General Medical Services”. It is the default form of agreement for GP practices. For details of the different types of contracts that a GP practice can hold please see chapter 3. The original Regulations setting up GMS contracts were the National Health Service (General Medical Services Contracts) Regulations 2004. These Regulations are at http://www.legislation.gov.uk/ssi/2004/291/contents/made However the www.legislation.gov.uk website has not been updated to show all the changes made by the numerous amending regulations made since the Regulations were introduced in 2004. The wording quoted in this chapter is the version which is current at 1 January 2014 when this chapter has been written.
 PMS stands for “Personal Medical Services”, a form of GP Practice contract originally brought in by the National Health Service (Primary Care) Act 1997. For details please see chapter 3. The original PMS Regulations are the National Health Service (General Medical Services Agreements) Regulations 2004. These Regulations are at http://www.legislation.gov.uk/ssi/2004/619/contents/made However the www.legislation.gov.uk website has not been updated to show all the changes made by the numerous amending regulations made since the Regulations were introduced in 2004. The wording quoted in this chapter is the version which is current at 1 January 2014 when this chapter has been written.
 For a detailed explanation of the meaning of these terms please see chapter 3.8 and 3.9.
 Interestingly there has never been a prohibition on the sale of the goodwill value of contracts held by by NHS dentists.
 These clauses refer to the breaches which entitle NHS England to take action without serving a breach notice and are referred to above.
 Although this case has an “Admin” citation it was not an Administrative Court case but was a private law claim in the Queen’s Bench Division. David Lock QC acted for NHS England in this case. At the time of writing the Claimant is seeking permission to appeal from this decision but no decision has been given on that paper application.