When Virgin Care sued the NHS and how Virgin have since misdirected and misrepresented about what happened

1st May 2020

Even Richard Branson now admits it may have been “unwise” for Virgin Care to have sued the NHS.

The fact that a Virgin company once sued the NHS is no doubt inconvenient for Branson, and Virgin generally, as they seek support from the United Kingdom government during the current coronavirus emergency.

This post sets out the circumstances of the legal claim and why Virgin Care was not compelled to sue the NHS.

This post also sets out that the reported settlement amount of £2million that was paid to Virgin Care had to have been found from somewhere, presumably either from other services or through increased borrowing.

And this post sets out the systemic misrepresentations and misdirections from Virgin in seeking to cloak the inconvenient fact that Virgin Care once sued the NHS for money. 

In summary, this post avers that Virgin Care made a sequence of “unwise” decisions: to sue the National Health Service, to be party to a confidential settlement of that claim, and to have since then misrepresented and misdirected about what happened.

For even if, as Branson suggests, it was “unwise” for Virgin Care to sue the National Health Service, it would have been better if that was openly admitted to have been a cock-up, rather than a strategy based on confidentiality and misleading public relations.

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Let us start with what Richard Branson says about this in his recent open letter.

He (or a PR attributing the words to Branson) says:

“Much has been written about Virgin Care’s dispute with a commission over a contract a number of years ago. Some will say it was unwise for Virgin Care to do this, but the most important thing is that Virgin Care was never intending to profit from it and 100 per cent of the money awarded went straight back into the NHS.”

This statement is worth reading carefully.

The “a number of years ago” in fact refers to events as recent as in 2016 to 2017.

He accepts there was a “dispute” and admits “[s]ome will say that it was unwise for Virgin Care to do this” – though the “this” here is left unclear.

(The implication of the “unwise” comment seems to me to be an acceptance that Virgin Care could have done things differently, as it can hardly be “unwise” to take the only option available.  The word itself suggests there was a choice.)

Branson then sets out the defence that the money “awarded” (itself a strange word to use here, as we will see below) “went straight back into the NHS”.

Branson then earnestly assures us that this defence, together Virgin Care never “intending”(?) to profit from the dispute is “the most important thing”.

For the reasons set out below, you may take a different view as to what “the most important thing” was in all this was.

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Branson’s open letter links to a statement from Virgin Care dated 1st June 2019.

This significant statement was published by Virgin Care itself, and Virgin Care is responsible for the content and its headline.

The statement should be read carefully, not least because it was written carefully.

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Anyone clicking into the Virgin Care statement from Branson’s open letter or because they wanted to find out about the matter themselves are met with a headline set on a picture of happy smiling children.

The headline is: “Why it’s wrong to say we sued the NHS because we lost a contract in Surrey”

Note what the headline does not say: it is not simply “Why it’s wrong to say we sued the NHS”.

And the reason the headline is not “Why it’s wrong to say we sued the NHS” is by reason of the weasel words “because we lost a contract in Surrey”.

Many who come across the headline will no doubt not realise the significance of those weasel words.

Those who come across the headline may even think that Virgin Care did not even sue the National Health Service.

Weasel words can make such a difference.

The presumed intention of the weasel words is to make the headline somehow technically true.

But even with a literal construction or interpretation, the headline is misleading to the point of conveying a false impression.

For Virgin Care did sue the National Health Service, and the basis of the legal claim was that Virgin Care was not awarded a contract in Surrey.

Without the non-award of the contract, Virgin Care would not have had what lawyers call “a cause of action”.

Perhaps the chosen headline is intended to read as meaning that the real, subjective intention of Virgin Care in suing the National Health Service was to serve some selfless, noble purpose.

Or perhaps there is a verbal sleight-of-hand with “because we lost a contract in Surrey” as the claim was based on a non-award (in this case, renewal) of a contract rather than the “loss” (that is, termination) of  a contract.

Who knows.

But as a matter of law, the headline gives a false impression.

And giving such a false impression cannot be an accident.

Having considered the (in my view, deliberately) misleading headline, now let us look at what Virgin Care has (carefully) chosen to say in the rest of their very own published statement.

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The statement begins with “Much has been written and said about the procurement process which the NHS in Surrey ran back in 2016…”.

You will recall that the statement in Branson’s open letter begins in near-identical terms: “Much has been written about Virgin Care’s dispute…”.

This suggests at least a similar approach to public relations, if not the same PR.

The Virgin Care statement then asserts “A lot of what has been written is misleading or misinformed…”.

Given that the chosen headline to this statement is itself misleading, this suggests that the publisher of this statement has a rather brass neck.

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So you can understand what then follows in the Virgin Care statement, this post now will explain a couple of things about the law of public procurement.

First: the law of public procurement provides special rules for public bodies when purchasing goods, services and works: in essence, public procurement exercises should be competitive, transparent and fair, with bidders being treated equally (including any incumbents bidding again) and, if there is a breach of these special rules, the bidders adversely affected should have a legal remedy.

Second: a disappointed tenderer can, before any contract is executed, seek to have the procurement exercise suspended and/or re-run if there has been a breach of these special legal rules; and if the contract has already been executed, the disappointed tenderer can seek an award of damages as a money remedy (and sometimes other remedies) for a breach of the special legal rules.

Knowing these two things about the law of public procurement are important for understanding the predicament of Virgin Care and the options that were available to it when it did not win this particular Surrey National Health Service contract.

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The contract in question was substantial: a five year contract for providing certain children’s services to the Surrey National Health Service.

The contract was reportedly worth £82million.

Virgin Care was the incumbent, and was re-bidding to carry on providing the services.

Virgin Care thought highly of the services they had provided for the previous five years:

“Our bid was based on five years’ experience of running the services, making improvements which would make a real difference for families and taking on up to 20% additional demand each year without any additional funding from the NHS.”

Surrey National Health Service, however, took a different view and awarded the contract to another provider, who is still in place providing the services.

The loss of any public contract is a hard hit for any service provider, but that is the nature of public procurement: bidders know that there are fixed terms and a serious risk of another bidder winning at the next contest.

Virgin Care were unhappy at not being selected and sought, as is their right, feedback on why they had not been selected.

There was nothing wrong with this, and it is a sensible move for any disappointed tenderer so that future bids can be improved.

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According to Virgin Care, this feedback indicated “flaws” and raised “concerns” about the procurement exercise:

“When we asked those questions in Surrey, we became seriously concerned there may have been flaws in the process and asked the commissioners to look again at how things had been done to make sure they had picked the right provider.”

Again, there can be nothing wrong with this.

There is a question – which I have put to Virgin Care but got no answer – why Virgin Care had not identified the flaws and raised the concerns before in the procurement exercise.

And there is the question of what these flaws and concerns were – and given these were in respect of a high-value contract for children’s services to the National Health Service – there is a public interest in these flaws and concerns being open knowledge.

Virgin Care will not say what these flaws and concerns were.

There is a report that there are confidentiality and non-disclosure terms in place between Virgin Care and Surrey National Health Service, as part of the settlement of this claim.

But such agreements should not prevent the publication of information in the public interest.

There can be (in my opinion) no good reason for the alleged flaws and concerns not to be published.

After all: what about the happy and smiling children?

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Surrey National Health Service proceeded to execute the contract with the current provider.

Perhaps it was wrong for Surrey National Health Service to do this, and that the procurement exercise should have been suspended or re-run.

(If a procurement exercise is suspended, the incumbent provider often obtains an extension on its current contract.)

We do not know whether it was right or wrong for Surrey National Health Service to execute the contract, and so we should give Virgin Care the benefit of the doubt and assume that Surrey National Health Service should not have done this.

What then?

There is no question that Virgin Care could sue, like any disappointed tenderer where there has been a breach of the public procurement rules.

And the possibility of such legal claims is important for ensuring that public bodies abide with the rules.

And it may be that it was in the commercial self interest of Virgin Care to sue, despite the claim that it is not a profit making entity.

And there was probably a duty on the directors of Virgin Care to consider all their options.

But what followed was a choice.

Virgin Care chose to sue the National Health Service and to obtain a money remedy.

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Now, let us go back to the Virgin Care statement, and to two paragraphs in particular:

“The commissioners refused to discuss our concerns with us and signed a contract with their new provider. Although our ideal outcome was that the process was redone properly, and everyone had a fair opportunity to win, signing the contract meant the CCG had turned this into a claim which could only be settled with the payment of damages.

“In other words, it was the NHS commissioners who made this dispute about money.”

Insofar that once a contract had been executed with the new provider, these paragraphs set out that the only legal remedy available to Virgin Care was to sue for damages.

This is probably true (though other remedies may also have been available depending on information we do not know).

But these sentences give a false impression that Virgin Care was compelled to sue.

The National Health Service commissioners “turned this into a claim which could only be settled with the payment of damages” and “it was the NHS commissioners who made this dispute about money”.

These statements are ugly, and convey an unfortunate impression of victim-blaming: it was the National Health Service that made Virgin Care bring a legal claim, Virgin Care did not want to do it, really it did not, genuinely.

Virgin Care did not have to bring a claim, and Virgin Care could have chosen not to do so.

Virgin Care, aware of “flaws” could have brought these flaws to public attention, or made a complaint, or requested an investigation.

Virgin Care could have taken the view that any litigation would be costly for the National Health Service and that it would not be a good use of the National Health Service’s scarce resources.

Virgin Care, of course, may have had the right to sue – just as McDonald’s once had the right to sue the McLibel Two.

Virgin Care may have even had a strong case, though we do not know what the alleged flaws were.

But it was entirely a decision for Virgin Care.

And as Branson now seems to admit, an “unwise” decision was taken.

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Once the claim was brought, it appears there was a quick settlement of the legal claim, with payments reportedly totalling £2million being paid to Virgin Care.

That there was a swift settlement tells us nothing about the merits of the claim.

A public body can prudently seek to settle quickly when it faces a strong claim.

And a public body can prudently seek to settle quickly a claim with little or no merit, instead of enduring costly litigation.

We do not know the merits of the claim, despite the alleged “flaws”.

What we do know is that the reported £2million had to be found from somewhere, as it would be an amount additional to what would be paid for the contract that had been awarded.

Surrey National Heath Service would have to pay for both the services and a settlement amount on top.

Logically, the amount had to come from elsewhere in the budget (and thereby from other services.

Perhaps even services for happy smiling children.

Or it had to come form further borrowing, presumably at interest.

You may think that the National Health Service needed that money more than Virgin Care.

The defence offered by Virgin Care – and indeed by Branson – is that the £2million was given “straight back” to the National Health Service – presumably by the provision of other contracted services.

If so, this does not necessarily mean the money was given “straight back” to those same parts of the National Health Service that now had a £2million gap because of the settlement.

And you may think that the National Health Service itself was in a better position to know what to do with £2million than any external service provider exercising its selfless discretion.

You may be impressed by this defence of Branson and Virgin Care.

Or you may not be.

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What seems to have happened here is that Virgin Care “unwisely” sued Surrey National Health Service and that Branson and Virgin more widely are embarrassed by this inconvenient fact.

The adverse publicity from this legal claim certainly offsets the £2million obtained.

But what Branson and Virgin should do, in my view, is openly admit that Virgin Care cocked up by suing the National Health Service, even though it was entitled to do so.

Instead, as set out above, there has been a doubling-down.

Things are confidential which should not be confidential.

Headlines, sentences and paragraphs misdirect and misrepresent the law and the facts.

The National Health Service is made out to be to blame for a decision of Virgin Care.

All these were also decisions.

They are decisions just as “unwise” – if not more so.

Virgin Care sued the National Health Service when it did not need to do so, and since then Virgin has not been plain about what happened.

And this perhaps is “the most important thing”.

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