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Health and Social Care BillPage 130

(8) The period specified for the purposes of subsection (7)(c) must not be less than
28 days beginning with the day on which the notice is given.

122 Local modifications of prices: agreements

(1) The commissioner and the provider of a health care service may agree that the
5price payable to the provider for the provision of the service for the purposes
of the NHS in such circumstances or areas as may be determined in accordance
with the agreement is the price determined in accordance with the national
tariff for that service as modified in accordance with the agreement.

(2) An agreement under this section must specify the date on which the
10modification is to take effect; and a date specified for that purpose may be
earlier than the date of the agreement (but not earlier than the date on which
the national tariff took effect).

(3) An agreement under this section has effect only if it is approved by Monitor.

(4) An agreement submitted for approval under subsection (3) must be supported
15by such evidence as Monitor may require.

(5) Monitor may approve an agreement under this section only if, having applied
the method specified under section 114(1)(d), it is satisfied that, without a
modification to the price determined in accordance with the national tariff for
that service, it would be uneconomic for the provider to provide the service for
20the purposes of the NHS.

(6) Where an agreement is approved under subsection (3), Monitor must send a
notice to the Secretary of State and such clinical commissioning groups,
providers and other persons as it considers appropriate.

(7) Monitor must also publish the notice.

(8) 25The notice must specify—

(a) the modification, and

(b) the date on which it takes effect.

(9) If the Secretary of State considers that the modification gives or may give rise
(or, where it has yet to take effect, would or might give rise) to liability for
30breach of an EU obligation, the Secretary of State may give a direction to that
effect; and the modification is (or is to be) of no effect in so far as it is subject to
the direction.

123 Local modifications of prices: applications

(1) Monitor may, on an application by a provider of a health care service who has
35failed to reach an agreement under section 122 with the commissioner, decide
that the price payable to the provider for the provision of the service for the
purposes of the NHS in such circumstances or areas as Monitor may determine
is to be the price determined in accordance with the national tariff for that
service as modified in such way as Monitor may determine.

(2) 40An application under this section must be supported by such evidence as
Monitor may require.

(3) Monitor may grant an application under this section only if, having applied the
method under section 114(1)(d), it is satisfied that, without a modification to
the price determined in accordance with the national tariff for that service, it

Health and Social Care BillPage 131

would be uneconomic for the provider to provide the service for the purposes
of the NHS.

(4) Subsections (5) to (8) apply where Monitor grants an application under this
section.

(5) 5The decision by Monitor on the application takes effect on such date as Monitor
may determine; and a date determined for that purpose may be earlier than the
date of the decision (but not earlier than the date on which the national tariff
took effect).

(6) Monitor must send a notice of the decision to the Secretary of State and such
10clinical commissioning groups, providers and other persons as it considers
appropriate.

(7) Monitor must also publish the notice.

(8) The notice must specify—

(a) the modification, and

(b) 15the date on which it takes effect.

(9) If the Secretary of State considers that the modification gives or may give rise
(or, where it has yet to take effect, would or might give rise) to liability for
breach of an EU obligation, the Secretary of State may give a direction to that
effect; and the modification is (or is to be) of no effect in so far as it is subject to
20the direction.

124 Correction of mistakes

(1) This section applies where the national tariff contains information that does
not accord with—

(a) what Monitor and the National Health Service Commissioning Board
25agreed on the matter concerned, or

(b) where the matter was determined by arbitration, what was determined.

(2) Monitor must send a notice to—

(a) each clinical commissioning group,

(b) each licence holder, and

(c) 30such other persons as Monitor considers appropriate.

(3) Monitor must also publish the notice.

(4) The notice must specify—

(a) the information that does not accord with what was agreed or
determined,

(b) 35the correction required to make the information so accord, and

(c) the date on which the correction is to take effect.

(5) A date specified for the purposes of subsection (4)(c) may be earlier than the
date of the notice.

Health and Social Care BillPage 132

CHAPTER 5 Health special administration

125 Health special administration orders

(1) In this Chapter “health special administration order” means an order which—

(a) is made by the court in relation to a relevant provider, and

(b) 5directs that the affairs, business and property of the provider are to be
managed by one or more persons appointed by the court.

(2) An application to the court for a health special administration order may be
made only by Monitor.

(3) A person appointed as mentioned in subsection (1)(b) is referred to in this
10Chapter as a “health special administrator”.

(4) A health special administrator of a company—

(a) is an officer of the court, and

(b) in exercising functions in relation to the company, is the company’s
agent.

(5) 15A person is not to be the health special administrator of a company unless the
person is qualified to act as an insolvency practitioner in relation to the
company.

(6) A health special administrator of a relevant provider must manage its affairs,
business and property, and exercise the health special administrator’s
20functions, so as to—

(a) achieve the objective set out in section 126 as quickly and as efficiently
as is reasonably practicable,

(b) in seeking to achieve that objective, ensure that any regulated activity
carried on in providing the services provided by the provider is carried
25on in accordance with any requirements or conditions imposed in
respect of that activity by virtue of Chapter 2 of Part 1 of the Health and
Social Care Act 2008,

(c) so far as is consistent with the objective set out in section 126, protect
the interests of the creditors of the provider as a whole, and

(d) 30so far as is consistent with that objective and subject to those interests,
protect the interests of the members of the provider as a whole.

(7) In relation to a health special administration order applying to a non-GB
company, references in this Chapter to the affairs, business and property of the
company are references only to its affairs and business so far as carried on in
35Great Britain and to its property in Great Britain.

(8) In this section—

(a) a reference to a person qualified to act as an insolvency practitioner in
relation to a company is to be construed in accordance with Part 13 of
the Insolvency Act 1986 (insolvency practitioners and their
40qualifications);

(b) “regulated activity” has the same meaning as in Part 1 of the Health and
Social Care Act 2008 (see section 8 of that Act).

(9) In this Chapter—

126 Objective of a health special administration

(1) 20The objective of a health special administration is to secure—

(a) the continued provision of such of the health care services provided for
the purposes of the NHS by the company subject to the health special
administration order, at such level, as the commissioners of those
services determine by applying criteria specified in health special
25administration regulations (see section 127), and

(b) that it becomes unnecessary, by one or both of the means set out in
subsection (2), for the health special administration order to remain in
force for that purpose.

(2) Those means are—

(a) 30the rescue as a going concern of the company subject to the health
special administration order, and

(b) one or more transfers falling within subsection (3).

(3) A transfer falls within this subsection if it is a transfer as a going concern—

(a) to another person, or

(b) 35as respects different parts of the undertaking of the company subject to
the health special administration order, to two or more other persons,

of so much of that undertaking as it is appropriate to transfer for the purpose
of achieving the objective of the health special administration.

(4) The means by which a transfer falling within subsection (3) may be effected
40include in particular—

(a) a transfer of the undertaking of the company subject to the health
special administration order, or of part of its undertaking, to a wholly-
owned subsidiary of that company, and

(b) a transfer to a company of securities of a wholly-owned subsidiary to
45which there has been a transfer falling within paragraph (a).

(5) The objective of a health special administration may be achieved by transfers
to the extent only that—

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(a) the rescue as a going concern of the company subject to the health
special administration order is not reasonably practicable or is not
reasonably practicable without such transfers,

(b) the rescue of the company as a going concern will not achieve that
5objective or will not do so without such transfers,

(c) such transfers would produce a result for the company’s creditors as a
whole that is better than the result that would be produced without
them, or

(d) such transfers would, without prejudicing the interests of its creditors
10as a whole, produce a result for the company’s members as a whole that
is better than the result that would be produced without them.

127 Health special administration regulations

(1) Regulations (referred to in this Chapter as “health special administration
regulations”) must make further provision about health special administration
15orders.

(2) Health special administration regulations may apply (with or without
modifications)—

(a) any provision of Part 2 of the Insolvency Act 1986 (administration) or
any related provision of that Act, and

(b) 20any other enactment which relates to insolvency or administration or
makes provision by reference to anything that is or may be done under
that Act.

(3) Health special administration regulations may in particular provide that the
court may make a health special administration order in relation to a relevant
25provider if it is satisfied, on a petition by the Secretary of State under section
124A of the Insolvency Act 1986 (petition for winding up on grounds of public
interest), that it would be just and equitable (disregarding the objective of the
health special administration) to wind up the provider in the public interest.

(4) Health special administration regulations may make provision about—

(a) 30the application of procedures under the Insolvency Act 1986 in relation
to relevant providers, and

(b) the enforcement of security over property of relevant providers.

(5) Health special administration regulations may in particular make provision
about the publication and maintenance by Monitor of a list of relevant
35providers.

(6) Health special administration regulations may in particular—

(a) require Monitor to publish guidance for commissioners about the
application of the criteria referred to in section 126(1)(a);

(b) confer power on Monitor to revise guidance published by virtue of
40paragraph (a) and require it to publish guidance so revised;

(c) require Monitor, before publishing guidance by virtue of paragraph (a)
or (b), to obtain the approval of the Secretary of State and the National
Health Service Commissioning Board;

(d) require commissioners, when applying the criteria referred to in section
45126(1)(a), to have regard to such matters as Monitor may specify in
guidance published by virtue of paragraph (a);

Health and Social Care BillPage 135

(e) require the National Health Service Commissioning Board to make
arrangements for facilitating agreement between commissioners in
their exercise of their function under section 126(1)(a);

(f) confer power on the Board, where commissioners fail to reach
5agreement in pursuance of arrangements made by virtue of paragraph
(e), to exercise their function under section 126(1)(a);

(g) provide that, in consequence of the exercise of the power conferred by
virtue of paragraph (f), the function under section 126(1)(a), so far as
applying to the commissioners concerned, is to be regarded as
10discharged;

(h) require a health special administrator to carry out in accordance with
the regulations consultation on the action which the administrator
recommends should be taken in relation to the provider concerned.

(7) Health special administration regulations may modify this Chapter or any
15enactment mentioned in subsection (8) in relation to any provision made by
virtue of this Chapter.

(8) The enactments are—

(a) the Insolvency Act 1986, and

(b) any other enactment which relates to insolvency or administration or
20makes provision by reference to anything that is or may be done under
that Act.

(9) The power to make rules under section 411 of the Insolvency Act 1986
(company insolvency rules) applies for the purpose of giving effect to
provision made by virtue of this Chapter as it applies for the purpose of giving
25effect to Parts 1 to 7 of that Act.

(10) For that purpose—

(a) the power to make rules in relation to England and Wales is exercisable
by the Lord Chancellor with the concurrence of the Secretary of State
and, in the case of rules that affect court procedure, with the
30concurrence of the Lord Chief Justice;

(b) the power to make rules in relation to Scotland is exercisable by the
Secretary of State;

(c) references in section 411 of that Act to those Parts are to be read as
including a reference to this Chapter.

(11) 35Before making health special administration regulations the Secretary of State
must consult—

(a) Monitor, and

(b) such other persons as the Secretary of State considers appropriate.

128 Transfer schemes

(1) 40Health special administration regulations may make provision about transfer
schemes to achieve the objective of a health special administration (see
section 126).

(2) Health special administration regulations may in particular include
provision—

(a) 45for the making of a transfer scheme to be subject to the consent of
Monitor and the person to whom the transfer is being made,

Health and Social Care BillPage 136

(b) for Monitor to have power to modify a transfer scheme with the consent
of parties to the transfers effected by the scheme, and

(c) for modifications made to a transfer scheme by virtue of paragraph (b)
to have effect from such time as Monitor may specify (which may be a
5time before the modifications were made).

(3) Health special administration regulations may in particular provide that a
transfer scheme may include provision—

(a) for the transfer of rights and liabilities under or in connection with a
contract of employment from a company subject to a health special
10administration order to another person,

(b) for the transfer of property, or rights and liabilities other than those
mentioned in paragraph (a) from a company subject to a health special
administration order to another person,

(c) for the transfer of property, rights and liabilities which would not
15otherwise be capable of being transferred or assigned,

(d) for the transfer of property acquired, and rights and liabilities arising,
after the making of the scheme,

(e) for the creation of interests or rights, or the imposition of liabilities, and

(f) for the transfer, or concurrent exercise, of functions under enactments.

129 20Indemnities

Health special administration regulations may make provision about the
giving by Monitor of indemnities in respect of—

(a) liabilities incurred in connection with the discharge by health special
administrators of their functions, and

(b) 25loss or damage sustained in that connection.

130 Modification of this Chapter under Enterprise Act 2002

(1) The power to modify or apply enactments conferred on the Secretary of State
by each of the sections of the Enterprise Act 2002 mentioned in subsection (2)
includes power to make such consequential modifications of provision made
30by virtue of this Chapter as the Secretary of State considers appropriate in
connection with any other provision made under that section.

(2) Those sections are—

(a) sections 248 and 277 (amendments consequential on that Act), and

(b) section 254 (power to apply insolvency law to foreign companies).

CHAPTER 6 35Financial assistance in special administration cases

Establishment of mechanisms

131 Duty to establish mechanisms for providing financial assistance

(1) Monitor must establish, and secure the effective operation of, one or more
mechanisms for providing financial assistance in cases where a provider is
40subject to—

Health and Social Care BillPage 137

(a) a health special administration order (within the meaning of
Chapter 5), or

(b) an order under section 65D(2) of the National Health Service Act 2006
(trust special administration for NHS foundation trusts).

(2) 5Mechanisms that Monitor may establish under this section include, in
particular—

(a) mechanisms for raising money to make grants or loans or to make
payments in consequence of indemnities given by Monitor by virtue of
section 129 or under section 65D(11) of the National Health Service Act
102006;

(b) mechanisms for securing that providers arrange, or are provided with,
insurance facilities.

(3) Monitor may secure that a mechanism established under this section operates
so as to enable it to recover the costs it incurs in establishing and operating the
15mechanism.

(4) Monitor may establish different mechanisms for different providers or
providers of different descriptions.

(5) Monitor does not require permission under any provision of the Financial
Services and Markets Act 2000 as respects activities carried out under this
20Chapter.

(6) An order under section 300 providing for the commencement of this Chapter
may require Monitor to comply with the duty to establish under subsection (1)
before such date as the order specifies.

132 Power to establish fund

(1) 25Monitor may, for the purposes of section 131, establish and maintain a fund.

(2) In order to raise money for investment in a fund it establishes under this
section, Monitor may impose requirements on providers or commissioners.

(3) Monitor must appoint at least two managers for a fund it establishes under this
section.

(4) 30A manager of a fund may be an individual, a firm or a body corporate.

(5) Monitor must not appoint an individual as manager of a fund unless it is
satisfied that the individual has the appropriate knowledge and experience for
managing investments.

(6) Monitor must not appoint a firm or body corporate as manager of a fund unless
35it is satisfied that arrangements are in place to secure that any individual who
will exercise functions of the firm or body corporate as manager will, at the
time of doing so, have the appropriate knowledge and experience for
managing investments.

(7) Monitor must not appoint an individual, firm or body corporate as manager of
40a fund unless the individual, firm or body is an authorised or exempt person
within the meaning of the Financial Services and Markets Act 2000.

(8) Monitor must secure the prudent management of any fund it establishes under
this section.

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Applications for financial assistance

133 Applications

(1) Monitor may, on an application by a special administrator, provide financial
assistance to the special administrator by using a mechanism established under
5section 131.

(2) An application under this section must be in such form, and must be supported
by such evidence or other information, as Monitor may require (and a
requirement under this subsection may be imposed after the receipt, but before
the determination, of the application).

(3) 10If Monitor grants an application under this section, it must notify the applicant
of—

(a) the purpose for which the financial assistance is being provided, and

(b) the other conditions to which its provision is subject.

(4) The special administrator must secure that the financial assistance is used
15only—

(a) for the purpose notified under subsection (3)(a), and

(b) in accordance with the conditions notified under subsection (3)(b).

(5) Financial assistance under this section may be provided only in the period
during which the provider in question is in special administration.

(6) 20If Monitor refuses an application under this section, it must notify the applicant
of the reasons for the refusal.

(7) Monitor must, on a request by an applicant whose application under this
section has been refused, reconsider the application; but no individual
involved in the decision to refuse the application may be involved in the
25decision on the reconsideration of the application.

(8) For the purposes of reconsidering an application, Monitor may request
information from the applicant.

(9) Monitor must notify the applicant of its decision on reconsidering the
application; and—

(a) 30if Monitor grants the application, it must notify the applicant of the
matters specified in subsection (3), and

(b) if Monitor refuses the application, it must notify the applicant of the
reasons for the refusal.

(10) In this Chapter—

(a) 35“special administrator” means—

(i) a person appointed as a health special administrator under
Chapter 5, or

(ii) a person appointed as a trust special administrator under
section 65D(2) of the National Health Service Act 2006, and

(b) 40references to being in special administration are to be construed
accordingly.

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134 Grants and loans

(1) Monitor may not provide financial assistance under section 133 in the form of
a grant or loan unless it is satisfied that—

(a) it is necessary for the provider—

(i) 5to be able to continue to provide one or more of the health care
services that it provides for the purposes of the NHS, or

(ii) to be able to secure a viable business in the long term, and

(b) no other source of funding which would enable it do so and on which
it would be reasonable for it to rely is likely to become available to it.

(2) 10The terms of a grant or loan must include a term that the whole or a specified
part of the grant or loan becomes repayable in the event of a breach by the
provider or special administrator of the terms of the grant or loan.

(3) Subject to that, where Monitor makes a grant or loan under section 133, it may
do so in such manner and on such terms as it may determine.

(4) 15Monitor may take such steps as it considers appropriate (including steps to
adjust the amount of future payments towards the mechanism established
under section 131 to raise funds for grants or loans under section 133) to
recover overpayments in the provision of a grant or loan under that section.

(5) The power to recover an overpayment under subsection (4) includes a power
20to recover interest, at such rate as Monitor may determine, on the amount of
the overpayment for the period beginning with the making of the overpayment
and ending with its recovery.

Charges on commissioners

135 Power to impose charges on commissioners

(1) 25The Secretary of State may by regulations confer power on Monitor to require
commissioners to pay charges relating to such of Monitor’s functions that
relate to securing the continued provision of health care services for the
purposes of the NHS.

(2) The regulations must provide that the amount of a charge imposed by virtue
30of this section is to be such amount—

(a) as may be prescribed, or

(b) as is determined by reference to such criteria, and by using such
method, as may be prescribed.

(3) The regulations must—

(a) 35prescribe to whom the charge is to be paid;

(b) prescribe when the charge becomes payable;

(c) where the amount of the charge is to be determined in accordance with
subsection (2)(b), require Monitor to carry out consultation in
accordance with the regulations before imposing the charge;

(d) 40provide for any amount that is not paid by the time prescribed for the
purposes of paragraph (b) to carry interest at the rate for the time being
specified in section 18 of the Judgments Act 1838;

(e) provide for any unpaid balance and accrued interest to be recoverable
summarily as a civil debt.

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