The cost of care

Claims inflation remains the most pressing issue faced by compensators and personal injury practitioners alike. The care sector has also faced a unique set of challenges since 2020, which has impacted on availability, cost and claims reserving.

In this short series of articles we provide; a situational analysis of the care sector, look at how care is calculated (and the impact of inflation),in addition to examining how the courts have approached the issues relevant to care. Finally, we consider longer term trends and the future of social care in the UK.

In early 2024, Weightmans will hosts a round table event with expert speakers from the social care and legal sectors. Further details will follow later in the year.

Part 1 — a situational analysis

Inflationary pressures have been felt at all levels of society over the past 24 months. Amidst FCA warnings over solvency the issue of claims inflation remains the dominant topic occupying personal injury practitioners and compensators alike.

Inflation has been felt most acutely in the care sector which, as we will see in this short series of articles, has its own bespoke challenges. In this, the first, we provide a situational analysis of the care sector.

In future articles, we will explore how care is calculated, the impact of inflation and how the courts approach the main issues relating to care. Finally, we will canvass the views of experts to determine how matters are likely to unfold over the coming months and years.

Facts and figures

‘Skillsforcare’ in their paper “The state of the Adult Social Care Sector and workforce in England”, published in October 2022, noted that 17,900 organisations currently provide social care at 39,000 establishments with an additional 65,000 individuals employing their own staff.

Staff turnover in the care sector stands at 29% overall and 52.6% in those aged under 20 years. The UK average staff turnover rate stands at just 18%.

There are a total of 1.79 million social care posts which include 860,000 employed directly as care workers.
In a separate article “The King’s Fund”, published on 24 July 2023, its author Simon Bottery notes that current vacancies in Adult Social Care stand at 152,000 for the period 2022/2023 – a reduction of 12,000 compared to the period 2021/2022 (a vacancy rate of 10.9%), though still tens of thousands above the figure seen in 2015 (vacancy rate of 6%).

In March 2023, 9.9% of all social care jobs are vacant compared to a pre-pandemic rate of 7.3%. In context, the job vacancy rate across all sectors in the wider economy stands at just 3.4%.

The fault of Brexit?

Over the past five to 10 years, a significant proportion of carers were occupied by EU workers, many of whom returned to their native countries during the pandemic which placed strain on a sector already struggling with recruitment. Restrictions on economic migration brought about by the UK leaving the European Union are the not the sole cause of unfilled vacancies.

It became Government policy in December 2021, on the advice of the Migration Advisory Council, to lower the barrier for care workers to be allowed to work in the UK.

Care workers were then added to the “shortage occupations” list, meaning that workers outside the UK could be granted visas, provided they had a UK-based company willing to sponsor them.

Data from the Office for National Statistics (ONS) shows that 70,000 visas were granted in 2022/2023 – up from 20,000 in 2021/2022. Despite a net increase of 50,000, vacancies over the same period in the care sector fell by just 12,000.

Other reasons

• The starting rate of pay is low compared to other occupations.
• Progress to more remunerative pay is “poor”.
• Most social care is commissioned by local authorities from private providers with financial resources too stretched to pay staff much above the minimum wage.
• Care as a profession is generally undervalued by society.
• It is a profession which is unattractive to men who make up less than 20% of the total workforce (82% female).

Key trends in adult social care

In their paper “Social Care 360”, published on 2 March 2023, Bottery and Mallorie, identify these as follows:

• More working age adults require support, with requests for social care support rising by more than 9% since 2015/2016.
• The number of people receiving long term care has fallen.
• Financial eligibility has become tighter in the context of the planned health and social care being delayed.
• The total expenditure has increased due to covid.
• Local authorities are paying more for care home cases and home care.

The inverse link to unemployment?

Historically, a correlation could be found between wider employment/unemployment rates and care sector vacancies – vacancies reduced as unemployment rates rose. That inverse link appears to have broken with social care vacancies increasing by more than the rate that unemployment has declined.

By way of example, vacancies across the sector stood at 60,000 in 2012/2013, compared to 152,000 10 years later.

What does this mean in practice?

The positives

There are tentative signs that the number of open job vacancies is reducing from record levels seen in 2021/2022 and that by adding the care sector to the “shortage occupations” list in December 2021, the number of sponsored workers employed by UK care providers is increasing.

Wage and core inflation appears to be slowing which will act as a downward lever to slow the current cost of employing both direct and agency carers.

Conclusions

Despite these positives, adverse perceptions of the care sector remain deeply ingrained amongst the UK’s working population and this coupled with low pay and “poor” career progression will continue to have a negative impact on both vacancies and job turnover.

In later articles we set out how we feel this will translate in future months and years, whereas in Part 2, we address the principles of how care is costed and the impact of inflation.

Part 2 — calculation and the impact of inflation

In Part 1, we provided a situational analysis of the care sector. Here, we address how care is calculated and look at the wider impact of inflation on the overall cost of care.

The starting point

The physical and therapeutic needs of the claimant will determine the type, level and duration of care provided.  The nature of the claimant’s condition — symptoms, disability, independence and prognosis will be informed by one, or more likely several, medical experts reports. These should, amongst other things, detail the medication and rehabilitation regimes in force, or recommended and provide a broad indication of the wider care provision that is needed.

A detailed forensic review of medical and nursing care records is essential to determine the appropriateness of any existing care regime and to establish any additional needs.

Evidence provided by existing carers — whether this is given gratuitously by a spouse or parent or delivered professionally by a care worker — should also be carefully reviewed allowing the evidence to be considered in the round.

The claimant is entitled to have his/her needs met and for their life to be as full and enjoyable within any restrictions caused by their disabilities.

In injury cases of maximum injury severity, this may also include the provision of new or adapted accommodation, the installation of lifts and, where a high level of therapeutic need can be established, the building of hydrotherapy facilities.

Factors determining rates

The following factors are of relevance to rates.

• location: there remain regional variations on both the availability of carers and the hourly rates charged. Generally, rates are influenced by vacancies — these are currently the lowest in the Northeast and highest in London
• the nature and difficulty of the care provided
• the need to establish continuity of care
• any specific requirements of the claimant — for example, language and gender
• whether care is provided on weekdays or at weekends.

In most cases, it is appropriate for care to be provided by “standard support workers” as opposed to professional nursing care — the latter being considerably more expensive to reflect the higher training and qualifications of either Band 2 or Band 3 Healthcare Workers.

Care can be sourced either directly or through local agencies. 

The hourly rates charged by care agencies are commonly between £7 and £19 per hour more expensive than directly employed workers to reflect employment cost — for example, National Insurance, training and management costs.

The individual circumstances of the case will determine whether agency rates will be deemed recoverable over rates for the “directly employed”. In the short term — particularly post-accident — it will be difficult for defendants to argue that any claimant acted unreasonably in sourcing care via agencies.

Extraneous societal factors may be a factor influencing recovery.  In CCC v Sheffield Teaching Hospitals NHS Foundation Trust [2023], the court concluded that from March 2020 and through to 2021, the shortage of carers caused by the pandemic required the claimant to source care support from agencies — such cost being recoverable.

The wider care regime is, however, not limited to direct care provided to the claimant and assistance with accommodation, transport and appliances. Ongoing costs in appropriate cases may include;

• physiotherapy
• occupational therapy
• speech and language therapy
• dietician, and
• neuro-physiological rehabilitation, whose costs may range from £5,000 to £50,000 per annum.

In injury cases of greater or maximum severity where a long-term care package is required, it is usually appropriate for the Court of Protection Deputy to employ a case manager who will recruit the care staff and ensure that there is continuity of care and that the claimant’s needs are best met.

Case management costs vary but commonly exceed £20,000 per annum. Such costs are recoverable in addition. Discrete issues may arise as to the ratio of care which is needed by the claimant and the appropriateness of employing either sleeping or waking night carers.

Again, this will require a review of the totality of evidence to determine what in the circumstances is reasonable.

The impact of inflation

The combination of regional variations and wider inflationary pressures experienced by the UK economy in addition to issues bespoke to the care sector, mean that a “one rate fits all” approach cannot be applied to costing. The fact that care provision has become more expensive is not in dispute.

The rise in costs is evidenced in the recent Judgment in CCC v Sheffield Teaching Hospitals NHS Foundation Trust [2023], which is the first ‘quantum only’ cerebral palsy case to reach the courts for 6 years.

Here, Mr Justice Ritchie, commenting on the provision of support workers, referenced and approved National Joint Council rates local to Sheffield and South Yorkshire as follows:

When discussing the PPO to be put in place in December 2023, Mr Justice Ritchie commented that by December 2023, April 2023 rates will require uplifting for inflation.

If we are to apply a theoretical example of a claimant with agreed care needs of 10 hours each day to include weekend, we can see how both the annual and overall cost has increased in respect of standard support staff on National Joint Council rates.

In this worked example, we can see how the annual multiplicand for care alone has increased by over 31% between 2015 and 2020 and by 26% between 2020 and 2023.

Wider inflationary pressures have also impacted in other areas relevant to injury cases of maximum severity — for example, case management costs, construction/building adjustment costs and therapeutic services — the former and the latter impacted by wider wage inflation. Allan Wilen, Economics Director at Glenigan, (as reported by Building.co.uk), calculates current construction cost inflation at 9.7%. Other sources report that construction material inflation peaked at 26% in January 2023.

Commentary

We have seen how a valuation of care costs depends upon a host of factors, not least whether nursing care or standard support staff care is needed, and whether the carers are engaged directly or through an agency.

Regional variations, the pandemic, job vacancies and a stubbornly high inflation rate combine to make accurate valuation difficult.

In our next article, we assess how the courts have approached the main issues applicable to care.

Part 3 – The approach of the Courts

In our earlier articles we provided both a situational analysis of the care sector and guidance upon how calculations should be approached.

In Part 3, we consider the Judicial approach to issues varying from expert evidence, interim payments, PPO’s and the discount applicable for care provided gratuitously.

Expert evidence:

Two recent cases:- Muyopa  v  MOD [2022] and CCC v Sheffield Teaching Hospitals NHS Trust [2023] provide warnings to litigants of the need; firstly for the “expert” to have sufficient experience and expertise to qualify as a Part 35 expert but also in respect of any expert adopting a partisan approach and ignoring their “overriding duty to help the Court on matters within their expertise” (Muyopa).

Mr Justice Ritchie in CCC v Sheffield Teaching Hospitals NHS Trust [2023] was required to adjudicate on a liability admitted case where the Claimant had developed cerebral palsy caused by severe, chronic partial hypoxic ischemia before and during birth.

One of several issues to be determined was the care which should reasonably be provided to the Claimant to include the determination of appropriate hourly rates. The Defendants adduced evidence from an Occupational Therapist whilst the Claimant relied upon evidence provided by an expert described as having;

 “huge experience in case management, constructing, managing and changing care packages”.

The Judge’s view of the Defendant’s Occupational Therapist was articulated thus;

 “I did not find he was acting within his CPR 35 responsibilities, professionally or properly in holding himself out to be an expert on maximum severity care packages or the costing thereof”.

Furthermore, he described the Defendant’s experts evidence on hourly rates as “flimsy and inadequate”, describing this as “unsubstantial, relying on a single advertisement posted by someone else and some phone calls as his foundation for the rates.

Muyopa v MOD is an instructive lesson on how care experts need to ensure a balance in their portfolio of cases between Claimants and Defendants or risk the conclusion that they are considered to be biased towards one party in the litigation.

In Muyopa, the Claimant and his wife had lied to the Claimant’s instructed care expert on a number of factual issues.  The expert refused to reassess the valuation or recalculate the estimates and recommendations as to future care needs.  Furthermore, the expert also included financial provision for certain household items – for example a whirlpool bath (no explanation provided) and a riser/recliner chair, despite the Claimant’s condition “a non-freezing cold injury”, not causing any back complaints.

Mr Justice Cotter stated;

“The risk that arises when an expert’s workload and income is solely for one side to the litigation.  In my view, the risk came to fruition and the reports contained some partisan views designed to maximise damages for the Claimant rather than have to balance the objective application of the relevant principles."

Interim payments: 

The Courts permit the recovery of interim payments where liability had been admitted in part or in full of;

 “no more than a reasonable proportion of the likely amount of the final Judgment”.

The principles are set out in CPR 25.7 (4), though the authority of Eeles v Cobham Hire Services Limited [2019] EWCA Civ 204, requires the Court to adopt a cautious approach to the risk of overcompensating the Claimant or prejudicing any future periodical payment order.

Difficulties can arise if the parties to the litigation disagree on the level of care appropriate for an individual Claimant with a risk arising that an increased care regime had the potential to increase the Claimant’s dependency on it and thus being detrimental to the Claimant’s rehabilitation.

Such circumstances arose in the case of Salwin v Shahed [2022] and fell or determination by his Honor Judge Pearce. The Claimant sought a further interim payment of £175,000 citing a requirement for the Claimant to receive 24 hour care for at least a 12 month period.

Whilst the Court granted a further interim payment of £170,000 to the Claimant, this was costed on the basis of the Claimant receiving decreasing levels of care over a 12 month period with the Claimant receiving half the level of present daytime care and no night-time care in 12 months time.

Gratuitous care: 

Where care is provided to the Claimant by a spouse or family member, the Court has to assess its value and determine whether a discount from standard support worker rates would be applicable to reflect the “gratuitous element” of the care provided.

In catastrophic Personal Injury cases, this is often at the early stage – post accident, where liability has not yet been agreed/admitted and before a professional care regime has been put in place.

For occupational disease – mesothelioma cases, the care is often but not always principally companionship rather than nursing care per se and is frequently provided by the surviving spouse or children.

The appropriate level of discount has been considered in a number of cases and fell for determination by

Mr Justice Ritchie in CCC v Sheffield Teaching Hospitals NHS Foundation Trust. Noting the range of discounts that had been applied in previous cases ranging from £0.00 (Warren v North General Hospital) to 25 % (Fairhurst v St Helens and Knowsley Health Authority) and 33 % (Nash v Southmead Health Authority).

Mr Justice Ritchie stated; “I glean that the range of discounts in the case law is from 0 % to 33 %, but this is a Jury style issue and none of these decisions is a set precedent because every case depends on its own facts”.

The Judge however went on to cite 6 factors he had taken into account when assessing the discount from the expert’s commercial valuation of gratuitous care.  These were;

1. Notional commercial values assessed were gross and without deduction of tax and National Insurance which commercial carers and nurses would pay, so a deduction should be made “in principle”.
2. The weight, complexity, difficulty and intensity of care given which may vary between the equivalent of nursing care and what he termed “fetch and carry support”.
3. The hours when the care was provided ranging from midweek between 9 am to 5 pm up to 24 hours including waking night care and weekends.
4.  The income from employed work which the care giver has foregone.
5. If the care giver is a parent/partner, a level of love and support and care would have been provided in any event but for the injuries.
6.  Whether the parent has lived rent free in new accommodation funded by the Claimant.

Given that the mother’s gratuitous care was costed on a “standard support workers” rate, Mr Justice Ritchie declined to make any deduction stating;

“This undervalues those parts of the case M gave which were; Waking night care, nursing care, team leader care, case management and physio……. M was from time to time a team leader, physio and case manager, all of which roles are paid at higher hourly rates than National Joint Council rates”.

PPO’s and care: 

ASHE 6115 is the key index for those administering periodical payment orders. The index is based on an amalgamation of care earnings from 2 standard occupational classifications.

The 70^th and the 90^th percentiles are the most commonly adopted with the 80^th percentile invariably applied by the Courts and being effectively the “default position”.

“State funded care, Section 117 of the Mental Health Act guarantees the provision of non means tested state funded care in appropriate cases.

Where the Claimant with a significant pre-existing psychiatric condition was in receipt of state care at the time of trial, the court, in Martin v Salford Royal [2022], was asked to adjudicate on whether this state care should remain (as advocated by the Defendant) or whether this should be replaced by a different, privately costed care regime- to be funded by the Defendant.

The Claimant also sought a PPO, whereas the Defendant advocated a variable order to account for the risk of the Claimant suffering a serious psychiatric deterioration. The Court held that the S117 care regime could and should be replaced, but that a variable order be imposed given the Claimant’s pre -existing condition and the undoubted risk of future deterioration.

Although instances will be rare, the case illustrates that it remains a high bar for Defendants to successfully argue that an existing state funded regime should remain superior to that funded privately.

Conclusions: 

In our fourth and final article on “The cost of care”, and with the assistance of experts, we consider both longer term trends and whether the inflationary pressures felt acutely by the care sector in recent years are likely to ease over the coming months and years.