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Home care services providers face the winds of change – consumer choice – the legal issues

By Leo Hopsick09 Nov 2016

Introduction

In this article, Leo Hopsick, Director at Hynes Legal overviews the legal challenges facing providers of Home Care services in the wake of pending reforms and the ways of managing the attendant risks.

Money and choice

From 27 February 2017, Consumers of Home Care (Consumers) will be emboldened to negotiate their care by direct Government funding and the power to choose his or her provider of Home Care services (Service Provider).

As in any open market for the supply of services, the forces of money and choice are a commanding strength of the Consumer and an enduring challenge for the Service Provider.

More than ever, the Consumer will be the focal point of the Home Care transaction and the principles of competition and contestability will be paramount for the Service provider. A market requiring transparency, contestability and competition for the Service Providers will also require Consumer protection.

It is in this context that the Australian consumer protection laws come into play for the provision of Home Care services. The requirements of the Aged Care Act 1997 (Aged Care Act) and associated quality care and pricing principles are, of course, also important.

Consumer protection laws

The Australian Consumer Laws (ACL) are found in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA) and are of key importance for Service Providers of Home Care. The ACL sets out a range of consumer rights (called consumer guarantees) applicable to the provision of Home Care services which cannot be excluded by contract.

The ACL have always applied to Home Care services in circumstances where the recipient of the services (the person receiving the care) can properly be regarded as a “consumer” for the purpose of the ACL. In the wake of the new Home Care reforms (where the Consumer is paying for the services), the ACL has a more direct application.

Consumer guarantees

The ACL consumer guarantees imply certain standards of service into Home Care services contracts, including guarantees regarding the standard of care and skill and fitness for purpose.

While the Home Care service agreement cannot exclude these consumer guarantees there are mechanisms available under the ACL which allow the Service Provider to limit its liability in the event of a breach of the guarantees.

Be careful what you say

In the heat of market completion many promises are invariably made about the high quality of services and products in order to win the sale. Service Providers should understand that they have legal responsibility for what they represent to Consumers. In particular, the ACL allows for remedies against Service Providers that engage in misleading or deceptive conduct.

Statutory overlay of quality standards

In addition to the ACL, Services Providers must also comply with the Government’s quality and pricing standards set out in the Aged Care Act. In particular, Service Providers will need to ascertain if, and to what extent, their statutory obligations are repeated or otherwise affected in the Home Care services agreement.

To be competitive, Service Providers may need to distinguish their quality standards as being above those required by statute. They may also need to distinguish their regulated and non-regulated services both for compliance purposes and for market advantage.

The Common Law

The ACL and the statutory requirements under the Aged Care Act do not provide the entire legal landscape for Service Providers: the common law also needs to be considered.

In a nutshell, the common law may also provide legal recourse for Consumers against Service Providers in circumstances where the Service Provider is negligent or is in breach of contract. In such cases, the common law may provide the Consumer with the right to sue for damages or other compensation in addition to the Consumer’s statutory rights.  

Government stewardship

While the new Home Care reforms will strengthen and straighten the contractual relationship between the Consumer and Service Provider, the Government will still retain a very important stewardship role in delivery of Home Care services. Despite the Home Care reforms, the Government can be expected to still make a significant contribution (by statute or otherwise) to the design, quality, outcomes and priorities of the Home Care services sector.

This means the Service Providers will need to accommodate a virtual tripartite relationship between the Government, the Consumer and the Service Provider in their legal contractual arrangements and business management processes.

Risk management

The Home Care reforms mean that Service Providers will need to review their risk management to respond to the new regime.

A Home Care services agreement is, as with any legal contract, essentially an exercise in risk allocation. The business risks for Service Providers will be many and varied; including risks associated with: the market; regulatory changes; innovation by competitors; contractual failures, design defects, availability, technical and operational risks.

Service Provider will need to adopt strategies to respond to those risks including: contractual limitations of liability; avoiding risks entirely; subcontracting risks; pricing the risks; insuring against the risks; and managing the risks.

Contract reviews

The Home Care reforms represent a significant change to the legal and commercial landscape for Service Providers. As with all such changes, the success of Service Providers will depend significantly on evaluating the risks, meeting the challenge and taking up the opportunities.

A core feature of the changes to Home Care will be the change to the contractual relationships between the Consumer and the Service Provider. It is highly recommended that all Service Providers review their Home Care services contract and associated legal and business processes to ensure that they are meeting the challenges of the new Home Care reforms.

Hynes Legal

Hynes Legal is a well-established commercial law firm with a leading national practice in the Aged Care, Retirement Village and Senior Living sectors.

We specialise in advice on Consumer Law compliance and risk management; particularly in respect of Home Care, NDIS and Community Services.

Hynes Legal has a range of products and services to support Service Providers in the provision of Homes Care services, including Home Care Agreements and NDIS Service agreements. Contact Hynes Legal on (07) 3019 0500 to discuss how Hynes Legal can support your readiness for the move to the consumer law environment.