Charity sues NHS trust for full cost of service

A Northern Irish charity is to sue an NHS trust for failing to pay the full cost of a contract to provide residential care.

In what is believed to be the first case of its kind, the Praxis Care Group is taking the Sperrin Lakeland Trust to court to recover £1.5m in under-payment. The trust serves Omagh and Fermanagh.

Praxis took over four homes for adults with learning disabilities from a private provider in 2003, but estimates it has lost £500,000 a year in running them.

The charity said it has pressed the trust for a full-cost recovery contract, but after a year of "failed negotiations" it has issued a writ to claw back the cost of running the service and has handed back responsibility for the homes.

Praxis, which runs homes in England and the Republic of Ireland as well as Northern Ireland, said the trust had agreed to arbitration but claimed it had no money to fund any additional costs set by an arbiter because it paid for care home places according to a national tariff.

"We tried to achieve full-cost recovery," said Bill Halliday, director of development at Praxis. "We've been quite open in showing them our costs of running the service. We've explained that, as a charity, we can't sustain losses like that, which would seriously impact on the rest of our business. We are subsidising the trust by operating this service for it."

Insiders say many UK charities have suggested court action against under-paying statutory funders in negotiations over contracts, but Praxis is the first to carry out the threat.

In a statement, the Sperrin Lakeland Trust said: "Negotiations have been concluded between the trust and Praxis. We have not been able to reach an agreement on terms for next year."

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