Health & Case Management Ltd v The Physiotherapy Network Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nicklin |
| Judgment Date | 19 April 2018 |
| Neutral Citation | [2018] EWHC 869 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ15X04861 |
| Date | 19 April 2018 |
[2018] EWHC 869 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Nicklin
Case No: HQ15X04861
Andrew Kinnier QC and Ian Silcock (instructed by Goodman Derrick LLP) for the Claimant
Mark Spackman (instructed by Douglas-Jones Mercer) for the Defendant
Hearing dates: 6–8 December 2017, 15 January and 23 February 2018
When it was commenced on 23 November 2015, this action started life as a claim for a declaration that the Claimant had not acted in breach of contract or confidence. By dint of a counterclaim that was then brought by the Defendant alleging such breaches, it raises the conventional issues, albeit with the parties reversed. To avoid confusion, in this judgment I shall refer to the Claimant as HCML and the Defendant as TPN.
The parties
HMCL
HCML is a company that, amongst other things, provides services to insurance companies by managing referrals to physiotherapy clinics on behalf of the insurance companies' insured.
Individual patients who had suffered muscular skeletal injury would be referred to HCML by an insurance company. One company from whom HCML received referrals was Aviva Health UK Limited (“Aviva Health”). HCML would then look to place that patient with a geographically convenient clinic suitable for his/her injury. HCML used a range of providers to source clinics to whom it could refer patients for treatment. In the period between 2010 and 2014, HCML's panel of providers included TPN. The Chief Executive Officer of HCML is Keith Bushnell (“Mr Bushnell”).
TPN
TPN is a company that has established a nationwide network of physiotherapy clinics. Dale Naylor is the sole director and 75% shareholder in TPN (“Mr Naylor”). Between 1996 to 2002, Mr Naylor recruited a network of around 900 physiotherapy practices and some 1,200 individual physiotherapists. Ultimately, this business was taken over by TPN when it was incorporated in 2002. In 2002, TPN served England, Wales, Scotland, Northern Ireland and the Channel Islands with a network of clinics that offered physiotherapy services within 5 miles of any patient (excluding some areas with low population density). TPN is the largest physiotherapy network in the country.
TPN used a scoring system developed by Mr Naylor designed to monitor the effectiveness of treatment. He called this the functional assessment score or “FCA score”. It sought to measure the outcome of treatment by use of a two-digit indicator. The first digit was a letter from “A” to “E”, denoting work status. “A” indicated that the patient was fully-functioning at work and “E” indicated that the patient was off work with hindered activities of daily living. The following digit – a number – showed the patient's level of pain, function and range of movement. Numbers from 1 to 10 indicated a range from no pain to very severe pain. When combined, A1 would indicate the best score or outcome and E10 the worst. Capturing the score at various stages of treatment enabled monitoring of effectiveness and review of a patient's progress. From the insurer's perspective, it was able to show when treatment was no longer providing any further benefit.
TPN derives its income from introduction fees which it generates through referrals to clinics in its network. Individual clinics would not, typically, be exclusive to TPN. Most would receive referrals from other networks or would provide physiotherapy services directly to patients.
Contractual arrangements between HCML and TPN
In 2010 the parties explored a working relationship where HCML would refer patients to TPN to be placed with a local physiotherapist clinic which was part of its network. Thereafter, in return for a fee from HCML, TPN would manage the treatment of that patient by arranging initial and subsequent treatment sessions and reporting back to HCML on the progress of the treatment. A meeting took place on 22 September 2010 with a view to formalising the relationship. It was attended by Mr Naylor and Lesley Abbs, Group Manager of TPN (“Ms Abbs”) for TPN, and James Deadman and Operations Manager, Scott Olsen (“Mr Olsen”) for HCML. TPN indicated that, on average, it handled 400–600 referrals per month. HCML anticipated making around 200 referrals per month to TPN during a pilot period of 3 months.
The Pilot
In consequence, the parties entered what has been called a “pilot agreement” (“the Pilot Agreement”). The Pilot Agreement had a commencement date of 1 October 2010 and was due to run for 3 months (terminating on 31 December 2010). Consistent with discussions at the 22 September 2010 meeting, clause 2.3 the Pilot Agreement provided:
“HCML anticipates making circa. 200 referrals per month to TPN during this three month pilot, but there are no guaranteed minimum volumes.”
Clauses 3.1. and 4.1 imposed on the parties a reciprocal duty to act in good faith to one another.
Pursuant to the Pilot Agreement, from about the beginning of October, HCML began to refer patients to TPN. During the Pilot, on 30 November 2010, Ms Abbs wrote to Mr Bushnell confirming a ‘volume discount’:
“Based on high current and predicted referral volumes we will be able to offer efficiency savings in the form of a refund of £15 per referral.”
The Pilot Agreement proved to be successful, and so towards the end of the 3 months, the parties entered what was titled a ‘Services Agreement to Supply Physiotherapy Services’ (“the Services Agreement”).
The Services Agreement
The Services Agreement is dated 11 January 2011. It was apparently drafted by HCML. The recitals recorded that HCML was a provider of healthcare services to Aviva Health and that, following the Pilot Agreement:
“HCML and TPN have agreed that TPN will work with HCML in the provision of the Service to their customers and customers of AH having made a decision to extend and expand the TPN Service provision from 1 January 2011 onwards.” (“the Recital”)
“Service” was defined as:
“… the Service that comprises early intervention and end to end case management of relevant back and spine conditions and the planning, arranging and/or provision of Services to assist in the management of the conditions including (without limitation): triage assessment, telephone based advice, physiotherapy appointment services and referrals which HCML has agreed to provide direct to the Patient pursuant to the terms of an Agreement between HCML and [Aviva Health]”
“TPN Services” were defined as:
“… physiotherapy appointment, assessment, reporting and treatment services and referrals which TPN has agreed to provide direct to the Patient as part of the Service pursuant to the terms of this Agreement.”
Clauses similar to ones in the Pilot Agreement were included in the Services Agreement. The relevant clauses are:
“2.1 The Parties agree that TPN shall continue the provision of TPN Services from 31 December 2010 with the parties further agreeing to extend/expand this Agreement.
2.2 TPN shall perform the TPN Services (physiotherapy appointment, assessment, treatment and reporting) at the Clinics as requested by HCML from time to time.
2.3 HCML anticipates making circa. 700 referrals per month to TPN, and volume discounts from time to time for this level of referrals.
3.1 HCML shall act in good faith towards TPN at all times.
6.1 In consideration of TPN providing the TPN Services to HCML, HMCL shall pay to TPN… the Fees which are £60 for the Initial Assessment/Treatment Session and £45 for subsequent Physiotherapy Treatment Sessions…
14.1 HCML and TPN will keep confidential, both before and after the expiry or termination of this Agreement, all information of the other Party obtained under or in connection with this Agreement (including but not limited to any and all information obtained by TPN in respect of other HCML suppliers, HCML's supply chain and HCML's commercial arrangements with its other suppliers) (the “Confidential Information”) and will not (except as provided for in Clause 15.3 below) disclose any of that information to any third party without the prior written consent of the other.
14.2 Each Party hereby undertakes to keep the terms of this Agreement confidential and will not disclose any of the terms of this Agreement to a third party without the prior written consent of the other
14.3 Each Party will be entitled, but only to the extent reasonably necessary, to disclose the Confidential Information or any part of it:
14.3.1 to its officers, employees, servants, agents, advisers, insurers or other professional advisers to the extent necessary to enable it to perform (or to cause to be performed) or to enforce any of its rights or obligations under this Agreement subject in each case to the Party making the disclosure ensuring that the person(s) in question keeps the Confidential Information confidential and does not use it except for the purposes for which the disclosure is made; or …
14.3.3 to the extent that the Confidential Information has, except because of breach of confidentiality, become publicly available or generally known to the public at the time of the disclosure; or
14.3.4 to the extent that it has obtained the Confidential Information from a third Party who is not in breach of any obligation or confidentiality to the other Party”.
“ Clinic” was defined as “ an individual or organisation who is a member of TPN's [network of physiotherapists and locations to which TPN has access and from, or by, which the TPN Services can be provided]”.
One of the key disputes to be resolved in this dispute is whether clause 2.3 of the Services Agreement imposed upon HCML an obligation to make “ circa. 700 referrals per month” to TPN. I will return to this below.
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