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overpayment recovery - claimant lacked mental capacity to make claim
I have a client who lacks the mental capacity to manage his own financial affairs. His understanding of most things is very limited and the most he can do in terms of reading and writing is to sign his name. An Enduring Power of Attorney (EPA) was executed in the 1990s so that his sister manages his financial affairs. He has lived in supported accommodation since 2001 and the Care Home staff have confirmed that he would not have sufficient understanding of matters such as whether he has capital/savings.
The Care Home staff were aware of the EPA but were not aware that the client had any other account to his post office account, which his sister had arranged to only have a small amount of money at any one time. They made a claim for housing benefit in the client’s name and asked him to sign it. He did so and housing benefit has been paid for several years. In fact the client has numerous savings and investments and was not entitled to housing benefit. It was for this reason that the sister, who was aware of this, had never made such a claim.
The sister did not discover that any housing benefit claims were made/paid until 2009. As soon as the Council discovered the savings/capital the housing benefit claim was closed and my client has been informed of a large overpayment, spanning several years. The Council state that they were not aware that anyone had EPA for the client and therefore have not committed an official error in accepting the claim in the first place. They were aware that the client lived in supported accommodation but also that the claim form was completed by his liaison officer so were entitled to deem the information to be correct.
The difficulty I am having is that a person can innocently fail to disclose relevant information but the overpayment still stands and is still recoverable. From my case law research, I can only see that metnal capacity has been considered in relation to a person not appreciating the significance of information that should be reported, as opposed to when a person does not understand the question “do you have savings/capital?” or was not even aware of the question because he did not complete the form himself. In the case of a person not understanding the significance of information, it was still held to be a recoverable overpayment.
I would appreciate anyone’s thoughts on how I can legally challenge the recoverability of this overpayment. It does not seem right that it can be recovered from a person who had no idea of the claim being made and his sister with EPA did not make the claim, and did not know it had been made.
The Council have considered recovering from the Care Home as the landlord, although have decided that they can legally recover from my client. The difficulty is that if they recover from the Care Home, my client will still have to pay the sum, but in rent arrears.
In my view, the Council is correct in this case.
The overpayment legislation for HB and CTB respectively is different to the legislation for other Social Security benefits. In short, for HB/CTB, the starting point is that all overpayments are recoverable. The only exception is where the overpayment has been caused by an error on the part of the Council, or DWP, or HMRC AND where the claimant (or recipient in some cases):
a) did not contribute to the cause of the overpayment, or
b) could not reasonably have been expected to realise he was being overpaid at either the time of the payment(s) or at the time of any notice relating to the payment(s).
In short, if there is no “official error” by the bodies concerned, the overpayment is recoverable irrespective of any other consideration. You could ask the Council to exercise its discretion not to seek recovery of a recoverable overpayment, but that is entirely a matter for the Council - recovery (distinguished from recoverability) is not appealable. I agree with the Council it was not an error to accept the claim. In fact, there is no legal basis on which the Council could have refused to accept a claim.
The only possibility for argument, based on the info given, would be if the question(s) on the claim form were ambiguous - that *could* amount to an error on the part of the Council (or DWP if one of their forms). But, the fact a person didn’t have the ability to understand the questions on a form wouldn’t in itself mean there had been an error in the phrasing or presentation of questions on a claim form.
For what it’s worth, I have dealt with appeals (as both an advisor to claimants and whilst working for LA benefits sections) involving capital where the question(s) on the claim form have been at issue. To date, every single Tribunal has found against the claimant. In other words, there will have to be some very unusual circumstances to convince a Tribunal that the questions on a claim form relating to capital were so badly phrased / presented so as to amount to an error.
As an aside, it *may* even be arguable that the overpayment is recoverable from the person with Power of Attorney - this would be as well as the claimant. Based on the info so far, I don’t think the overpayment is recoverable from the LL, but obviously I haven’t seen the papers. For completeness, all the claims have, in law, been made by the claimant - not the staff at the care home.
I appreciate the above won’t make happy reading but, in this case and based on the info so far, I can’t see any realistic argument that can be made against the recoverability of the overpayment.
Finally, playing devil’s advocate, I think it is unlikely the LA will drop recovery action. Firstly, the claimant has capital that could be used to pay back the overpayment and, secondly, given the claimant apparent lack of comprehension, it is difficult to see how a recovery would be detrimental to the claimant as his lack of comprehension, presumably, is such that he won’t realise the significance of the recovery.
[ Edited: 27 Sep 2010 at 03:45 pm by Kevin D ]Thank you for taking the time to respond. Those are also my thoughts, together with the fact that the client hasn’t really been put out of pocket, since had the claim not been made, he would have been paying the additional rent out of his bank accounts. I was just hoping someone may have heard of a wonderful case that could help. It was a very small hope!
What about the following:
A. The problem here is possibly that, as the client had no capacity to make a claim then any payments made were not payments “by way of housing benefit” and hence cannot be overpayments. For them to have been payments of HB then there needed to be a claim (sec 1 SSAA 1992). There was no claim in this case as he had no capacity to make one. So they were not payments of HB.
B. If that were correct it would mean that although no recovery could take place under the HB Regs, the LA could rely on principles of restitution to recover outside the HB statutory scheme.
C. You could always try an appeal on ground A above and hope that the relevant LA do not realise when they lose that that then means they have option B available to them.
Just what I was going to say! Most LAs ahve never eahrd of diminsihing capital and make a right dog’s breakfast of trying to do one.
There is some pretty tough case law on capacity (Sheffield, I think) which goes on the basis that if you do make a claim you are deemed to ahve the capacity. If the client’s lack of capacity is so obvious, wouldn’t the care home have applied for an appointeeship?
Well the Care Home knew that the sister had EPA, and didn’t apply for appointeeship, and however much I may think the Care Home was in the wrong to make the claim knowing this, it doesn’t really affect the issue of the Council’s error.
Does anyone think the Council have a duty to cross check information held by other agencies, such as jobcentre Plus? In this case, the Council have lost the very first claim form , but the second and third (renewals) indicated the client was receiving income-related benefit. Although he was not, the Council would then normally cross-reference with the DWP records wouldn’t they? If the DWP records indicated that the sister had EPA, should the Council be expected to notice this and so reject the claim?
If the DWP records indicated that the sister had EPA, should the Council be expected to notice this and so reject the claim?
Makes no difference. A claimant is still entitled to make a claim - irrespective of whether or not anyone has EPA, or appointee, status.
The one point I overlooked in my original post has been picked up by other posters: the LA *should* have undertaken a calculation of “diminution of capital” in accordance with regulation 103 or the HB regulations 2006 (working age references). Relevant CD for method of calculation is CH/0314/2007.
Grounds for recoverability exist to suggest it should be from the Landlord-if housing benefit was paid to them and they caused the op. But I take your point that the client will be pursued for arrears of rent so it would be swings and roundabouts. If the client moved home that could be different.
Just a long shot on the that the claimant did not give informed consent to the ‘claim’ which was an unknown act by a third party purpoprting to be on their behalf so no claim for your claimant could arguably exist. This of course raises other ethical and legal issues with the landlord and is going down sticky issues to do with fraud route.
What I cannot understand is how a care home can make a claim and supply all the bank account personel information and not be aware that someone else had EPA. Even more worrying is the fact that they seemed not to be aware at all of the EPA in other basic concerns of such a vulnerable client. Simlarly if the client had a relative with EPA were they not paying the rent as well as they were unaware HB was in payment. If they were not paying rent why did they not query this.
It all rather messy for your client.
[ Edited: 29 Sep 2010 at 08:19 pm by ikbikb ]could always consult a solicitor re action against the care home to recover the financial loss caused by what they have done; as has been said, how could they NOT have known about the appointee, etc?
now was that devilish?
but i reckon there might be something in it..
The more I think about this the more things don’t add up. The council state they were not aware of EPA. But all information to support the claim in bank details, award letters, other docs must have named the sister as EPA. So how can they claim no official error occurred in that they were not aware of the EPA and accept a claim in such a way. You state the claim form stated the client was in receipt of income related benefits when he was not. How could the claim be put into payment without error when proof of this could not be produced when he was not on it. If proof of this was produced via the DWP this must have been in error. Ask for all documents to do with the claim and the OP period. Glean them any evidence of EPA. Once you have the error then you will have to argue it was not reasonable for those concerned to realise they were being overpaid. Thart could cause further difficulties because you would have to show the sister with EPA was not aware of the HB claim. Is that possible if they managed his affairs. Award letters would have been issued. Did the sister continue to pay rent. If not why not. A very curious case and one that needs much more proding for evidence. Good luck.
[ Edited: 30 Sep 2010 at 01:38 am by ikbikb ]It’s not at all unusual for a claim to be received from a claimant with an Attorney but for the LA to be completely oblivious to the existence of an attorney until something out of the ordinary happens - I have personally dealt with several such claims over the years. Nor is it unusual in such cases for personal documentation, such as bank statements / award notices, to be still held in the name of the claimant.
But, even if the attorney was known, the LA still has no legal basis on which to reject a claim made directly be a claimant. Nothing in HBR 82 REQUIRES that a claim must be made by an attorney. The provision simply allows a claim to be made by the attorney; it does not preclude a claim being made by the claimant.
With reference to the LA checking DWP records, it is highly unlikely a LA would notice there was an EPA in existence, unless there was a specific and relevant issue that led to making an enquiry relating to appointees / attorneys etc. LAs are under strict instructions not to search for more than is appropriate. Unless the LA had information that made the seeking of such info relevant, from DWP records, there would be no reason for such information to be actively checked. In other words, fishing expeditions are not appropriate. In my first hand experience, the primary purposes for checking DWP records are to check income details and, where applicable, information relating to claim dates if “backdating” and/or earlier claims are matters of potential dispute. I can’t recall a single occasion where it would have been appropriate to check “acting for” details.
If the LA did in fact check the DWP records to see if relevant benefits were in payment and were happy that any inconsistencies in the info given in the claim form were explainable and there was nothing untoward, the LA wouldn’t have any reason to do other than process the claim and award HB accordingly. Ironically, LAs are sometimes criticised for asking for too much verification, thus unnecessarily holding up claims.
So far, nothing in the info given by the original poster suggests any error on the part of either the LA or the DWP. On that basis, from the LA perspective, it’s not a case that would concern me in the event of an appeal going to Tribunal. Indeed, a couple of years ago, I assisted a LA in a case where the claimant was found to have capital in excess of £16,000 AND where it subsequently transpired there was an EPA in place - the LA was completely oblivious to this. It only came to light when, upon appeal, the person with EPA revealed herself thinking it would negate the overpayment. It didn’t - the LA changed its decision to make the o/p recoverable from BOTH the claimant AND the person with the EPA (correctly so in my view). The appeal was unsuccessful, although it’s only fair to acknowledge the overall facts were not the same.
As for the care home’s involvement, it would only be culpable if there was any misrepresentation, to the LA, on its part - the care home would not be under a duty to disclose. If staff at the care home completed the claim forms merely as scribes, the care home will not be culpable. As suggested in my first post, if there was no “misrepresentation” on the part of the care home, the O/P will probably not be recoverable from the care home.
I appreciate this appears to be somewhat unhelpful to the OP. However, unless there is more to this, I just don’t see any realistic prospect of succeeding with an appeal - other than to argue the o/p should be recoverable from other targets as well as the claimant. Almost certainly, the o/p will still be recoverable from the claimant though. The one thing that does come to mind is it may be worthwhile for the claimant (and/or his attorney) making a DPA request to the LA. You just never know what might fall out….
[ Edited: 30 Sep 2010 at 04:21 am by Kevin D ]and where is the mental Capacity Act in all this? bearing in mind that previous leading cases on claimants knowledge & benefits predated that act.
and Safeguarding
i cannot think it right that someone with no capacity whatsoever should be penalised for something others did on his behalf; those caring for him are supposed to safeguard him in ALL respects relevant, including financial…
and where is the mental Capacity Act in all this? bearing in mind that previous leading cases on claimants knowledge & benefits predated that act.
and Safeguarding
i cannot think it right that someone with no capacity whatsoever should be penalised for something others did on his behalf; those caring for him are supposed to safeguard him in ALL respects relevant, including financial…
Hi Claire. I just can’t see lack of capacity being a defence in terms of the benefit overpayment (legally). If it involved a “contract”, obviously it is possible for an application to be made for that contract to be voided. However, I can’t see it (ultimately) being open to argument that a benefit claim and the subsequest award can be retrospectively declared a nullity on the grounds of capacity. Whether or not the claimant would have a cause of action against the care home and/or the person with EPA is another matter - but if the EPA thinks she could leave herself open to legal action, she’s hardly likely to instigate it against herself.
In response to a particularly thin line of argument I once tried at FtT for a claimant, the Judge listened very patiently, let me finish, said something like “...very well put…” and then added very calmly; “...so Mr D, where does that get us?” (Answer: nowhere :( ). I can see a very similar ending to an appeal in this case….(target issue excepted).
The Care Home in this case were very well aware of the EPA, just not that the client had capital. I believe they were wrong in making the claim on behalf of the client, when actually they should have advised the sister to make the claim - the sister would then have put them right about the capital. However, if at the end of all this I advise the sister/client to seek legal advice regarding a possible civil action against the care home, I can’t see that such an action would be successful, since the client has not actually been put out of pocket. He would have had to pay the rent if the housing benefit claim had not been made. My role is in the benefit appeal, not any civil action. I would refer to solicitors for advice regarding that.
The sister was completely unaware that the housing benefit claim had been made. She transferred monthly amounts to the care home, what she thought was the rent. However I have since obtained a copy of the tenancy agreement and the amount she was paying was substantially less than the actual rent. She hadn’t appreciated this.
The bank acounts are in the client’s sole name although posted c/o of the sister.
I have to say my main concern, is that I will attend at FtT, explain all the circumstances, and look rather foolish as I can’t see how I can get around “has the Council committed an official error?” I will give a wonderful narrative but have no legal challenge.
I gather the general consensus is that there is no ground to appeal, all I can do is request that the overpayment be written off in the circumstances and hope they agree.
Thank you all for your comments
and where is the mental Capacity Act in all this? bearing in mind that previous leading cases on claimants knowledge & benefits predated that act.
and Safeguarding
i cannot think it right that someone with no capacity whatsoever should be penalised for something others did on his behalf; those caring for him are supposed to safeguard him in ALL respects relevant, including financial…
Hi Claire. I just can’t see lack of capacity being a defence in terms of the benefit overpayment (legally). If it involved a “contract”, obviously it is possible for an application to be made for that contract to be voided. However, I can’t see it (ultimately) being open to argument that a benefit claim and the subsequent award can be retrospectively declared a nullity on the grounds of capacity. Whether or not the claimant would have a cause of action against the care home and/or the person with EPA is another matter - but if the EPA thinks she could leave herself open to legal action, she’s hardly likely to instigate it against herself.
In response to a particularly thin line of argument I once tried at FtT for a claimant, the Judge listened very patiently, let me finish, said something like “...very well put…” and then added very calmly; “...so Mr D, where does that get us?” (Answer: nowhere :( ). I can see a very similar ending to an appeal in this case….(target issue excepted).
indeed, but it seems to me that the mental capacity act is not there to be ignored, and that the social security legislation has not caught up with that. it is totally mad that someone with no capacity whatsoever should be dealt with in this way ...
In this case, the Council have lost the very first claim form
That’ll be the one in which the Care Home, upon reflection, cannot now rule out having declared every penny of those numerous savings and investments.