Disaster strikes the surgery! Are you sufficiently protected?
In normal times, GP surgeries happily practice out of their premises with no major issues. But what happens if a disaster strikes – maybe in the form of flood, fire or storm damage to your premises? This blog aims to highlight some important matters you should consider to make sure you protect your business from unexpected interruptions.
Understand the risksâ
It is important to ensure that you have adequate insurance and contingency planning in place to deal with the unexpected. If, for example, your premises flood or are damaged by fire, you could be obliged to:
- find and pay for new premises to operate from on a temporary basis;
- repair the structure of the building;
- repair & redecorate the interior of the building;
- replace all damaged contents, including medical supplies, refrigeration units and IT equipment;
- pay for clear up costs.
If you are a tenant of leased premises, you may think that the landlord’s building insurance covers you for some, or all, of the above, but that is rarely the case. Typically, the landlord is only obliged to insure the structure of the building and not your contents. Nor are they under any obligation to provide you with alternative temporary premises. It is, however, likely that the rent you pay to the landlord (for your damaged building) will be temporarily suspended if you cannot occupy the premises.
Perhaps the biggest risk â
It’s not only the immediate costs you incur as a result of a disaster, but a longer term risk to your business. If, for example, you are left unable to carry on providing some or all of your services and find yourself having to cancel certain clinics, you may be at risk of beaching your NHS contract. Under your contract you are obliged to be able to provide services from agreed premises at agreed times. Whilst the commissioner may be sympathetic to your plight, ultimately they will want to understand how you will continue to see patients. If you are unable to satisfactorily explain this, you risk receiving a Breach Notice.
Safeguard your positionâ
Having a disaster recovery plan in place is vital, as it is not easy to think with a clear head during a disaster. Be sure to keep an easily accessible copy of your disaster recovery plan off-site too – it’s no good to you if it’s destroyed by fire – and ensure that all the staff understand what they should do. The disaster recovery plan should cover a variety of different scenarios, but from a premises perspective, you should ideally have an agreed back up location in place, such as temporarily opening in the village hall or sharing a neighbouring surgery.
It may sound obvious, but ensure sufficient insurance is in place. Review the value of your contents cover regularly to ensure it remains adequate, particularly when you purchase a new piece of valuable equipment.
You may want to consider taking out ‘business interruption’ insurance, which could help with the emergency costs and any loss to your business as a result of an unexpected disaster. Speak to your insurance broker to get advice as to what would be appropriate in your particular circumstance. If you don’t have a broker, we would be happy to introduce you to specialist healthcare brokers through our network.
Conclusion
Disasters can be expensive but they don’t have to be catastrophic. Proper planning and protection will help ensure you can continue to deliver services to your patients safely and with minimum disruption.
If the worst happens and your practice does find itself ‘homeless’, then we recommend you take professional advice early on to understand your rights and confirm your responsibilities.
If you would like to discuss anything in this blog, please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com.
News
Do you have unclaimed capital allowances?
You will need to claim capital allowances if you are to enjoy the benefit of them. It is our experience that not all GP practices promptly claim their full value. This can be a deliberate policy or simply an oversight. Left unclaimed, most capital allowances simply carry forward into subsequent years.
Some of the largest (and most commonly unclaimed) capital allowances are associated with premises improvements. In the event a property owning partner is bought out, the unclaimed capital allowances would normally remain with the partnership for the benefit of the remaining partners. This could result in a new partner using any unclaimed capital allowance to reduce their own tax liability, even though it was an outgoing partner who participated in the original investment giving rise to the capital allowance.
As the value of capital allowances can be significant, this is a potential source of conflict amongst partners. In this blog, we share some common scenarios together with some pros and cons so you can agree the right decision for your practice.
Who should benefit from them?
Usually, the existence of unclaimed capital allowances will be reflected in the price paid by a buyer. Unclaimed capital allowances increase the inherent value in a commercial building, so would increase the price in a ‘normal’ transaction, however they are often not taken into consideration in GP surgery valuations – even if the partners are aware that unclaimed allowances exist.
What can you do?
- Research
We are aware of occasions when partners discover very large bought forward unclaimed capital allowances. A nice windfall for the current partners perhaps, but any former partners would wish they had researched the position before retiring.
- Don’t delayâ
The common business practice is to claim capital allowances as quickly possible. This reduces the risk of a problem arising as well as reducing the partners’ tax bills.
- Document your positionâ
If you decide to leave significant amounts of capital allowances unclaimed, or you retire before you have claimed all of the allowances due, you need to agree with your partners how to deal with this. If the surgery building is a partnership asset, you should also have on record that it is only the owning partners that benefit from any capital allowances.
- Consider the accounts.
One option is to record the unclaimed allowances as an asset in the partnership accounts, or at least to do this when creating retirement accounts. Your accountant may be willing to do this if he considers the allowances ‘realisable’.
- Be consistentâ
Should you wish to allocate capital allowances to a retiring partner before they have been claimed in full, you will also have to agree this between the partners. In this case, you would agree that the unclaimed allowances are an asset of the partnership and that they should be valued appropriately when the retirement accounts are drawn up. You should however ensure that you are consistent over time in the way that you do this.
Conclusion
This may appear an obscure technical matter, but large sums can be at stake. If the ownership of these is left unclear, it can be a recipe for a partnership dispute. Practices would be well advised to ensure they understand whether they have significant unclaimed capital allowances, and if so to agree how they wish to deal with them. This should then be cross checked with the Partnership Agreement to ensure it is consistent.
If you have any questions specifically about capital allowances, then you should contact your accountant in the first instance. For assistance in documenting a relevant policy or for updating your partnership deed to deal with the position, please contact Daphne Robertson on 01483 511555 d.robertson@drsolicitors.com
News
Is the GP Partnership Model past its sell by date?
There is currently much discussion about whether the partnership model for General Practice is still fit for purpose. It is clear that the model is under severe strain, and the Secretary of State has commissioned a review into how it might need to evolve. In this blog we draw on our experience of working with over 1,000 practices to offer our thoughts on the future of the partnership model.
Background & context
In common with other professionals like lawyers and accountants, GPs have traditionally organised their businesses as either sole practitioners or partnerships. The partnership model for General Practice long predates the NHS, and indeed the NHS Act 1948 had surprisingly little impact on the business model as GPs retained their independent contractor status. The GP Partnership model has served the profession well over the years, but it is interesting to compare GP practices with what has happened in the law and accountancy. Most other professionals still organise themselves as partnerships, but they are typically managed very differently to GP partnerships.
Partnerships are simply one of many ways of running a business. Most businesses are actually run as limited liability companies, so why is this much less common in the profession? The answer is that Limited Companies are designed to separate out the ownership from the management, and to provide more flexible options for financing. This is very useful in capital-intensive businesses that require multiple layers of management. The professions, by contrast, sell the skills of highly trained people who are largely able to self manage. Such businesses typically require only low levels of finance, which can be easily secured through mortgages and bank loans. There is therefore no need to separate ownership and capital from management.
Benefits of Partnerships
Partnerships, by their very nature, pool the risks of the business between the partners. This shared risk-taking strongly encourages collaboration. All the professions encourage members to understand their own limitations, and to seek the advice of colleagues when they come across something new or unexpected. This requires the kind of open, trusting relationship which forms naturally in a partnership, but which can be more difficult to forge in a hierarchical employer/employee relationship. This in turn creates an environment where tacit skills are easily transferred. These are the kind of human skills which will never be mastered by Artificial Intelligence, but which form the bedrock of what GPs and other generalist professionals do. Investment in the partnership encourages a long-term commitment, which is of course well aligned to ensuring continuity of patient care. The model is also very flexible: there are very few laws about running partnerships so you are largely free to contract with your partners about how you want to run things, and to change this agreement over time as the needs of the business evolve.
Problems with Partnerships
Unlimited liability is one of the most obvious problems with traditional partnerships. It used to be felt that limiting liability was inappropriate for professionals as it might encourage them to act recklessly. However, this idea evolved as society became more litigious, and limited liability partnerships (LLPs) have been permitted since 2000. Most accountants and solicitors have since become LLPs, but this structure is not currently allowed for NHS GP partnerships. Finance has also become an issue as partnerships take on bigger risks, particularly in the form of long-term leases or larger freeholds. Small partnerships risk becoming unviable when there is concern about becoming ‘the last man standing’ with large financial obligations – particularly when these are unlimited and there are recruitment issues. Lastly, there is a generational question over whether younger professionals actually want to manage themselves anymore, or whether they would rather be ‘managed’ as an employee or locum.
The future
The benefits of the partnership model in a generalist profession are, in our opinion, significant. In many ways they underpin the key cultural values of the professional, but many commentators miss this link and assume an organisation’s values are completely independent of the business vehicle. This is not our view. However, the GP partnership model does need to change. There is no obvious reason why GPs should be prevented from forming LLPs, and larger partnerships would enable practices to better deal with the increased finance and risk in modern general practice. There is undoubtedly a role to play for a variety of business models in primary care, but we believe that an evolved partnership model still has an important role to play. We will be exploring this further in subsequent blogs as we provide our input to the Key Lines of Enquiry of the Partnership Review.
For more information about the GP Partnership Model and any other related topics, please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com
News
Thinking of ‘shutting up shop’? What are your options regarding your leased premises?
Thinking of ‘shutting up shop’? What are your options regarding your leased premises?
Having the security a lease offers you is important when you are operating your business, but what happens if you no longer wish to practice from that location? There are a number of ways a lease can be brought to an end, but whether they are available to you will depend on how your lease is drafted. In this blog, we discuss some of the more common options that might be available to you.
1. Expiry of the Term
The simplest way is to wait until your lease expires. Leases are usually for a defined period, e.g. 10, 15 or 20 years, and it may be that you are approaching the end date of your lease. Depending on the type of lease you have, you may not need to do anything to bring it to an end, this will simply happen when the term expires. However, your lease may require you to serve notice on the landlord, depending on when you intend to vacate the premises (this is particularly relevant if your lease is protected by the security of tenure provisions of the Landlord & Tenant Act 1954, which we have written about in more detail here).
We recommend that you check your lease (or that you instruct a solicitor to do so) as soon as the subject of termination is discussed. It will be important to assess the type of lease you have and what processes you need to follow to ensure you can bring the lease to a close at the end of the lease term.
Remember that even if the lease comes to an end, that does not always mean that your liability ceases. For example, you may be responsible for repair and decoration costs to bring the premises up to the standard required under the lease and the landlord can recover these costs from you even after the lease has expired. This can be expensive, although some of the costs may be recoverable from NHSE/the CCG. Where you have such an obligation, it is important to consider how the liability is accrued or you risk partners seeking to retire ‘just in time’ to avoid having to contribute.
2. Break clauses
Some leases contain break clauses which allow either the landlord or the tenant (or both) to bring the lease to an end before the term expiry date. Such clauses are individually negotiated when you first enter into the lease, and the terms of the break and when it can be exercised vary enormously. Typical examples could be a break after set periods (e.g. every 5 years) and some GPs have also been able to negotiate breaks linked to termination of their core contract. You may want to read our blog to explore break clauses in more detail.
Before seeking to exercise any break clause, you should ensure you take professional advice. There are usually a number of conditions attached to a break, which an unwary tenant may fall foul of. Whilst some of these conditions may sound reasonable in practice (e.g. being up to date with all payments of rent and service charges) these can actually prove difficult to comply with, as courts strictly interpret the wording of any break condition. There has been a recent case where even though the landlord had not requested a particular payment (in this case, of interest) due under the lease, the tenant’s failure to pay the un-demanded payment was deemed to be a breach of the break condition, and resulted in the tenant being unable to exercise their break clause.
3. Assignment
This is the right for the tenant to assign (i.e. sell or transfer) the lease to another party. If you do not have a break clause and you are some way from the end of the lease term, this may be a viable option if you can find another tenant interested in the premises. Landlords will need to be involved in the process and they almost always want to approve a potential new tenant. There may also be specific conditions set out in your lease that you have to comply with – such as the type of tenant – but as a general rule, the landlord cannot unreasonably withhold consent. In some instances, you may be required to guarantee the entity you are assigning to, so be aware that you may still have a residual liability under the lease.
If the landlord lawfully objects to the assignment, an alternative may be to ‘underlet’ the premises to the entity rather than assign it. Whether or not you are allowed to do this will depend on the terms of your lease and you need to be aware in this instance that you will still be the head tenant, so will still have the ongoing obligation to pay rent etc. to the landlord. Hopefully you will be able to recover the same from your under-tenant.
4. Surrender
If all else fails, you may be able to negotiate a surrender of the property with your landlord. The success or otherwise of this will be based purely on commercial negotiation. There may be a value to the landlord in taking the premises back and using it for other purposes (for example redevelopment, or to grant a new lease to a tenant that attracts a higher rent) – but there are no guarantees that a landlord will be open to such discussions.
Conclusion
Careful thought and legal advice is crucial when entering into a lease to ensure you have built in as much flexibility as possible, given the strengths of the relative negotiating positions. If you are considering closing your main or branch surgery premises, then an assessment of your lease by a solicitor is important to enable you to evaluate the options and make sure you comply with your obligations.
For more information on terminating your lease, or anything else, please contact Daphne Robertson on 01483 51155 or email info@drsolicitors.com
News
What pregnancy and maternity rights does a partner have?
A partner is a business owner and employer, which by definition means they are not an employee. As a consequence, partners do not benefit from all the various employment protections afforded to employees. Despite this, we are often asked about partner entitlements, particularly regarding maternity and childcare.
What is the legal position?
Partners do not benefit from statutory maternity and childcare entitlements, although they are protected from being discriminated against by reason of their pregnancy and maternity, gender and marital status under the Equality Act 2012.
Broadly speaking, the Equality Act provides that women should not be subject to “less favourable treatment”, or subject to unreasonable requirements that they cannot meet because of their pregnancy/maternity or childcare commitments.
The majority of the maternity rights for a partner will be set out in their partnership agreement. These will be binding unless they are found to be discriminatory. In the absence of a partnership agreement, there are very few automatic rights that will accrue.
Common Issues
Particular issues where liability under the Equality Act could accrue include:
- Not engaging or promoting someone to Partner because of concerns that they will be absent due to maternity leave, or won’t be able to “pull their weight” because of childcare commitments;
- Not allowing for any maternity leave at all or a very short period only;
- Not allowing a female Partner who has a pregnancy related illness the same sickness absence entitlements as other sick Partners;
- Reducing profit share during maternity leave;
- Not accruing holiday leave during maternity leave;
- Not allowing a partner to work part time or change session times to deal with childcare commitments.
None of the above are entirely clear-cut and would need to be looked at on a case-by-case basis. For example, the Equality Act certainly indicates that holiday leave should accrue in the normal way during some of a partner’s maternity leave, but it is less clear whether this would accrue during the entire period of their absence.
Practices should be aware that they can claim under the SFE for payments to cover locum expenses during maternity, paternity and adoption leave. The common practice is that the absent partner continues to receive profit share whilst the SFE payments are being received. However, if you wish to do this, you will have to ensure that this is set out in your partnership agreement.
Conclusion
This is an area of law that is both complex and uncertain. There is only a limited amount of case law applying specifically to Partners, so each case is likely to be determined on its own merits.
Practices should be very wary of opening themselves to the risk of a discrimination claim, as these have unlimited liability. The best protection is to:
- Ensure that the practice has a clear non-discrimination policy in place which includes discrimination on the grounds of maternity and childcare commitments.
- Make clear that this policy applies to all staff, including partners.
- Ensure that the Partnership Deed is professionally prepared, that it is clear on the subject of maternity and other forms of leave, and that it is kept reasonably current as the law changes. Anything drafted more than 3 years ago may well be out of date with current best practice.
If you have any questions about this or any other matter, please contact Daphne Robertson on 01483 51155 or d.robertson@drsolicitors.com
News
What does GDPR mean for GP Practices?
What is GDPR and what does it mean to be compliant?
I am sure that you will all by now be aware of GDPR. GDPR comes into effect on 25th May 2018 and seeks to give individuals more control over how organisations use their data.
GDPR is a European regulation, and automatically becomes law in the UK because of our membership of the European Union. Although Brexit would take us out of the European Union, the current plan is to incorporate all EU law into UK law, so GDPR is almost certainly here to stay.
Confusingly, the UK Parliament is drafting its own data protection law called the Data Protection Act 2018 (DPA 2018). This law will supplement the GDPR and replace the existing 1998 Data Protection Act. The DPA 2018 is still working its way through Parliament so is not finalised. Much of the commentary on ‘GDPR’ combines it with the DPA 2018, and so mixes actual law with a draft bill.
Who does it apply to?
GDPR applies to all individuals and businesses who have responsibility for handling personal data. GP practices are ‘data controllers’ registered with the Information Commissioner (ICO) and are responsible for deciding how and why data is processed.
In our experience, practices have long been familiar with the concepts of data confidentiality, but GDPR requires additional levels of process and control, and forces practices to think about all personal data, not just the confidential health data they hold.
The key to understanding compliance with GDPR is not to see it as a tick-box exercise to be completed by 25th May, but rather as developing and embedding a permanent change of culture, whereby protection of personal data is central to every decision made within the practice. When all staff are able to recognise personal data and make informed decisions about protecting and processing it, and know what to do in the event of a breach, you will be well on the way to compliance.
What can GP practices do to prepare for GDPR?
- If you haven’t found it already there is a very helpful 12 Steps to Take Now and Data Controller Self Assessment Toolkit on the ICO Website. Given that the ICO is the data regulator, they are the best place to start with your preparation.
- It is critical that practices can demonstrate that they have sought to comply. The ICO has been clear that they are looking to see reasonable efforts being made. To do this you will need to have identified, documented and explained the legal basis for all the data flows to and from the practice. This is likely to be a time consuming undertaking and will be difficult to do unless you have a member of staff who is familiar with documenting processes and data flows. Remember that this documentation will have to be kept up-to date, so be careful not to outsource all your understanding of this information audit.
- Data Protection policies and procedures must also be updated. Many practices have historically relied on ‘template’ policies, but these are unlikely to be adequate, as procedures will have to relate to the data flows identified in the information audit.
- Privacy Notices are another important part of GDPR. These must be displayed prominently, which as a minimum is likely to be on the practice website and the noticeboard. Practices should think hard about opportunities to draw patient attention to these Privacy Notices, since one of the key principles underlying GDPR is transparency about how you deal with data. New information which must be added to privacy notices includes how you intend to use data, and the ‘lawful basis’ for what you are doing.
- Be aware that much health data falls under one of the GDPR special categories. In addition to the ‘lawful basis’ that all data controllers must identify, practices need to satisfy a second separate condition that the processing is necessary for the purposes of healthcare.
- Staff training is also an important part of compliance. Practices will need to be able to demonstrate that they have trained all their staff, including Partners, in GDPR and have an ongoing program to ensure that they are kept up to date as the law changes.
- One significant change is that practices can no longer charge patients for access to their medical records except in exceptional circumstances. This may unfortunately increase the administrative workload as patients and others get used to making ‘subject access requests’. The time limit for dealing with these has been reduced from 40 days to one month.
- An interesting example of the current uncertainty is the role of the Data Protection Officer (DPO). Under GDPR, it is not at all clear that practices are required to appoint a DPO. However, the DPA 2018 if enacted in its current draft form would certainly require practices to appoint a DPO.
So what happens if there is a breach and what are the risks of non-compliance?
In the event of a data breach affecting patient’s privacy rights, you must notify the Information Commissioner’s Office (ICO) no later than 72 hours after you become aware of the breach. If the breach is likely to present a high risk to their data, the patient must also be informed. You should have a clearly documented process for managing a data breach. This is another example of how proper documenting of processes and staff training is going to be vital.
Conclusion
It is important that practices take ownership of GDPR themselves. Compliance is not really something that can be outsourced, although there are plenty of commentators looking to profit from it. The ICO have made clear that the world will not end on the 25 May 2018 as they realise this is a journey for all businesses and they want to be supportive rather than punitive, but they will want to see evidence that practices are taking data security seriously throughout the organisation.
If you are concerned about your GDPR readiness, then please give us a call and we would be happy to talk through your plans. In our experience, most local medical committees are also aware of what needs to be done and are able to assist members and share good practices on GDPR.
If you would like to discuss GDPR or any other legal matter, please contact Nils Christiansen on 01483 511555, n.christiansen@drsolicitors.com
News
Stamp Duty Land Tax on Surgery Leases
Stamp Duty Land Tax (SDLT) was introduced in December 2003. It is a tax payable on a variety of property transactions, including purchases and transfers of freehold and leasehold land and property.
GP Practices sometimes believe they are exempt from SDLT because of the ‘partnership exemption’. Whilst this may be the case for some transactions, the truth is unfortunately much more complicated.
What types of transaction are liable for SDLT?
SDLT is payable on UK land transactions that have a chargeable consideration – for example, on the purchase price of a property, or when a lease is granted.
For the purposes of SDLT, a chargeable consideration is defined by HMRC as “anything given for the transaction that is money or money’s worth”. When the value of a transaction rises above a certain threshold, the purchaser is liable to pay the tax.
The calculation of SDLT on the grant of a new commercial lease depends on the length of the lease, the premium paid (if any) and the rent payable under the lease. A helpful SDLT calculator can be found on the HMRC website: www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-use-rates
Who is responsible for paying SDLT?
It is the responsibility of the purchaser or tenant (upon the granting of a lease) to calculate the amount of tax and complete and submit a Land Transaction Return (SDLT1) to HMRC within 30 days of the effective date of completion of a transaction.
A solicitor can help complete this on behalf of the purchaser or tenant, but legally the purchaser is responsible for the accuracy and timeliness of the information submitted. Failure to submit the Land Transaction Return and/or to pay SDLT on time will result in penalties. Interest is charged on both late paid tax and outstanding penalties.
Joint purchasers, such as a partnership, are jointly liable to pay the tax, although the proportion that each individual partner should pay can be subject to private agreement within the partnership.
Additional points practices should be aware of:
- SDLT regulations for freehold and leasehold properties differ.
- SDLT may be payable on certain changes to the lease. For example, lease renewals have the same SDLT implications as new leases.
- A sale and leaseback would normally trigger two payments of SDLT; one by the purchaser of the surgery and the second by the tenants on completion of their lease. However, you can claim tax relief on the lease element of the transaction if the seller and the tenant are identical. Be aware though that this doesn’t get you off the hook for ever – the SDLT will become due on the first lease assignment.
- If SDLT was paid in full when the lease was originally entered into, it is only payable on the premium element of any lease assignment. As most GP surgery leases are 25 years or less and have no premium value, surgery lease assignments are usually SDLT free.
- Some changes in partnership arrangements may incur SDLT. This is a particularly complicated area, but introducing and withdrawing property from a partnership are both chargeable events, regardless of whether the name on the lease or at the Land Registry changes.
- If an original lease term expires, but the tenant remains in occupation of the premises, it is called holding over. Once the lease runs past its contractual expiry date, it is treated as if the original term of the lease has been extended by one year. If SDLT was paid at the outset of a lease, or if the additional year takes the lease over the SDLT threshold, then a further SDLT return will need to be filed with HMRC and relevant tax paid. This is required for each subsequent year the lease is held over.
If a rent review occurs within the first 5 years of a lease, SDLT should be recalculated using the new rent for the remaining years, and a new submission made to HMRC. This can result in either additional tax to pay, or a refund in the event SDLT has been overpaid.
If you need advice on SDLT payments for your practice or any other matter related to your Surgery building, contact DR Solicitors on 01483 511 555, or email at info@drsolicitors.com.
News
Should a GP practice accept gifts and legacies?
Every now and then, a practice might be fortunate enough to be remembered in a patient’s Will or to receive gifts from grateful patients. Research has shown that the proffering of small gifts is relatively common place. Whilst it is obviously nice to be recognised for one’s good work, it does give rise to a number of professional and legal issues.
Professional issues
Good Medical Practice Guidance states that “You must not encourage patients to give, lend or bequeath money or gifts that will directly or indirectly benefit you.” However you “may accept unsolicited gifts from patients or their relatives” provided that it doesn’t affect the treatment you provide.
Whilst this appears to permit the receipt of unsolicited gifts and legacies, there is a big caveat. In each case, you must “also consider the potential damage this could cause to your patients’ trust in you and the public’s trust in the profession. You should refuse gifts or bequests where they could be perceived as an abuse of trust.” This is clearly a judgmental matter which will be easier to balance for a box of chocolates than for a £100k legacy.
Legal issues
The PMS and GMS Regulations are clear that practices must keep a register of gifts from patients or their relatives that have a value of £100 or more. You should record the name, the NHS number or address of the donor, the nature of the gift, its estimated value and the name of the recipient.
The next question which arises is how should the gift or legacy be shared?
To determine the answer to this question, you need to look at both the gift or legacy itself and the partnership deed.
For example, a legacy may be left ‘to the partners at the XXX Surgery’. So has the gift been left to the GP partners individually in equal shares, or left to the partnership to be divided between the partners in their respective profit sharing ratios? Was it intended for the partners in the practice at the time the Will was written, at the time of death or when the legacy is actually received? Alternatively, is it actually intended for the benefit of the patients and therefore shouldn’t be taken as income at all, but rather invested in healthcare within the practice area? Sometimes the intended purpose is clear because the donor has perhaps left a letter of wishes stating how they want the money to be spent or shared. Unfortunately, this is frequently not the case and a large legacy can often be a source of dispute between the partners.
Recommendations
Practices need to be careful about what gifts and legacies they accept and how these are recorded. The larger the gift, the more care needs to be taken.
Remember that this is, at heart, an ethical issue and whatever decision you make, would you be comfortable in justifying it in front of the GMC, or perhaps even a journalist?
For larger gifts and legacies, in addition to recording them in the gift register, we would recommend that you prepare a paper trail setting out your thinking behind the decision you took and any professional advice that you sought.
You would also be well advised to check what your partnership deed has to say about sharing of gifts and legacies to minimise the risk of future partnership disputes.
If you have any queries relating to legacies and gifts, or any other matter, then please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com
News
Does your professional indemnity insurance put you in breach of your employment contract?
GP practices and salaried GPs are advised to check the terms of their employment contracts if employed clinical staff are considering taking out “claims made” insurance, such as that recently offered by the MDU.
In a previous blog, we looked at the broader implications of claims-made insurance policies (Will you or your practice be impacted by the MDU policy changes?). However, another potential consequence, which we’ll be focusing on here, is how claims-made policies may inadvertently put salaried GPs in breach of their employment contract.
So, what exactly is the issue and what action should you take?
Current employment contracts
The ‘BMA Model Employment Contract’ states that “The practitioner will maintain full registration with the General Medical Council and membership on an occurrence based basis with a recognised medical defence organisation commensurate with your responsibilities”. (What is the BMA model contract and does it apply to me?)
This point is regarded as so important, that it is repeated in both the BMA model contract and in the BMA model offer letter. It is clear that the BMA negotiators assumed that all salaried GPs would be insured on an occurrence based basis – i.e. a policy that offers protection for any incident which occurs during the policy period, even if the claim is filed after the policy has ended.
Since all GMS practices, and many PMS practices, are required by their provider contracts to engage their salaried GPs on employment contracts that are ‘no less favourable’ than BMA model terms, it is likely that most salaried GP contracts will include a similar clause.
As a consequence, if a salaried GP moves to a claims-made indemnity policy, they may be unwittingly breaching the terms of their employment contract.
Our recommendations
As a first step, we would advise all practices and salaried GPs to look at their employment contracts and Staff Handbook, to see whether there is a requirement for employees to have an occurrence based indemnity policy.
If the requirement is included, practices need to have procedures to ensure compliance. The BMA model contract states that salaried GPs should provide “written proof and evidence of such membership”, so practices would be free to request this.
If there is currently no written requirement, practices should consider whether they are content to allow salaried staff to move to a claims-made contract or not, and employees should consider whether they wish to make the move. This is a question of understanding the risks involved, such as whether the employing practice is exposing itself to more risk by permitting claims made policies. All parties would be well advised to speak to a specialist IFA to fully understand this.
Practices which do not currently require occurrence based policies but wish to do so going forward will need to consider making changes to their employment contracts. We recommend that you always seek appropriate legal guidance before doing this.
If you are at all unsure about any of the issues we have covered here and how they might affect your practice, then please do not hesitate to get in touch.
For more information, please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com
News
Cheema vs Jones: The importance of an up-to-date Partnership Deed
Regular readers will understand the importance of keeping your partnership deed up to date. This is particularly true when new partners join, as this can easily supersede and invalidate the former partnership arrangements. A recent High Court case has demonstrated some of the risks.
The case of Cheema vs Jones
In this case, two GPs – who we’ll refer to here as A and B – entered into a partnership to provide medical services under a GMS contract. The terms of this agreement were set out in a Partnership Agreement which was signed in April 2016.
Shortly afterwards, A and B decided to admit doctors C, D and E into an expanded partnership, and it was agreed that this larger partnership would start on 1 July 2016.
Solicitors were instructed to prepare a new partnership agreement. However, before the terms could be finalised a dispute arose between A and B. Matters escalated and when B was prevented from seeing patients and refused access to medical records, B obtained a High Court injunction allowing him back into the surgery.
A, C, D & E then served a Notice on B dissolving the partnership. Their intention was presumably to exclude B, enabling the others to continue the practice without him.
The High Court agreed with A, C, D & E that a Partnership at Will had been created in July 2016, and the April Partnership Agreement was no longer relevant. They were therefore entitled to dissolve it by serving notice on B.
Consequences
Sadly, A, C, D & E’s High Court victory was pyrrhic. By dissolving the partnership they immediately put the GMS contract at risk since this was held by a Partnership which no longer existed. Within weeks the practice had been given notice by NHS England and a temporary contract to ensure continuity of care had been placed with another practice.
Key lessons
- When you are considering admitting a new partner to the practice, make sure you agree the terms of the partnership in advance. This can be either a Deed of Accession to the existing Deed, or by signing a new Partnership Deed.
- Always issue a comprehensive partnership offer letter to prospective new partners. This will set out the key terms of the appointment and help ensure the current partnership deed continues, at least in the interim. For more information see: Why is a partnership offer letter so important?
- Probationary periods are not relevant to the continuation of the ‘old’ partnership. Once a new partner joins, the old partnership arrangements fall away unless there is strong evidence to the contrary.
- It is always very risky to dissolve an NHS medical partnership. The contract and the future of the practice is immediately put at risk. Dissolution is such a draconian step it should normally only be undertaken as a last resort and with very careful contingency planning.
- Having an up-to-date partnership deed is your best protection in the event of a dispute. It can be invalidated in whole or in part for a number of reasons, so you should revisit it on a regular basis. For further information see: The dangers of having an out of date partnership deed
Our recommendations
The Partnership Agreement is a critical document for managing your practice and securing your future. Revisit it regularly, always use a solicitor who is experienced in Primary Care matters, and don’t rely on unregulated ‘advisers’ or borrowed templates.
For all your partnership matters, please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com