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JOINT COMMITTEE ON HEALTH AND CHILDREN díospóireacht -
Tuesday, 19 Apr 2005

Travers Report: Presentations.

I welcome the former CEO of the former South Eastern Health Board, Mr. Pat McLoughlin, to discuss the Report on Certain Issues of Management and Administration in the Department of Health & Children associated with the Practice of Charges for Persons in Long-Stay Care in Health Board Institutions and Related Matters. I draw attention to the fact that while committee members have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I invite Mr. McLoughlin to make his presentation to the joint committee.

Mr. Pat McLoughlin

Let me outline the context of the decision of the South Eastern Health Board to seek legal opinion. Following the report of the Ombudsman in January 2001, the Government introduced a repayment scheme by way of ex gratia payments. Our director of complaints and appeals was given the task of implementing it in the health board’s area. A number of persons disputed the amounts of the payments and solicitors’ letters were received on behalf of those seeking reimbursements, mostly on foot of the Ombudsman’s view contained in the report that a nursing home was an extension of a long-stay hospital. As the State could not provide for the patients concerned in a public facility, they felt they were entitled to a full refund. The basis for this view was that they had medical cards and, therefore, believed they had full eligibility under section 52 of the Health Act.

Following the granting of full eligibility for medical cards to all persons not less than 70 years old in July 2001, a number of appeals were received regarding the charges. The director of appeals and complaints contacted the Department informally on the issue and was advised that it was its opinion that the charges were legal. He advised the then chief executive officer that he had concerns regarding the legality of the charges and it was decided to discuss the matter with the board's legal advisers.

Following discussion with solicitors in late 2001, the case was sent to counsel in May 2002. The board received advice from counsel in late October 2002. This would have been given to me in November 2002 having taken up duty as CEO in October. At that stage I asked the director to discuss the matter with the Department of Health and Children. It was still the Department's view that it had legal advice that rebutted our opinion. This was raised by me at the annual service plan meeting in early February 2003, at which time I expressed my concern that this was an emerging issue. I felt the opinion we had received was compelling and that we needed a definitive legal view thereon from the Department.

It was agreed at that stage that there would be a bilateral meeting between officials of the Department of Health and Children and officers of the South Eastern Health Board. This was held in March 2003. The departmental officials still insisted that the charges were legal and that it had legal opinion to support the Department's view. We gave them an eight page summary of our advice but there was no meeting of minds on the issue. However, they agreed to forward their legal opinion to us.

Following this, it was clear to me that there would be no rapid progress on the issue. I was concerned about the advice. The director sent an internal memo to me outlining the costs that might be incurred by the board should the charges be found to be inappropriate. This was sent in May 2003. As it was stated other chief executive officers did not necessarily agree with my opinion on the matter, I arranged that it would be placed on the agenda of the teleconference of chief executive officers on 13 June 2003. We sent them a summary copy of the legal opinion received about which they were concerned. It was agreed that the chairman would write to the Department on behalf of the group.

Nothing further happened until the matter was tabled for the MAC-CEO meeting in December, as referred to in the Travers report. My main reason for having the issue addressed at that time was that I was concerned there would be no attempt to clarify the legal position in the planned legislation of 2004 establishing the Health Service Executive. I wished to have a discussion with the MAC about it because I felt the legal opinion was compelling and that an opportunity would be lost if we did not try to clarify the position.

I was satisfied with the result of the meeting in that it was agreed the issue needed to be examined and that there would be a definitive legal opinion sought on the matter. Following the meeting, we were under the impression that the matter had been relayed to the Attorney General. We received no further information at variance with this fact in 2004. That is the sequence of events.

Would it be possible to have Mr. McLoughlin's summary circulated to the joint committee?

Mr. McLoughlin

It is in an inappropriate format but I will forward the relevant points to the joint committee.

That will be done later. As at previous meetings, I will allow members to ask questions for as long as time permits. We will now hear the first series from Deputies Twomey, McManus and Devins.

I welcome Mr. McLoughlin. I knew him well as CEO of the South Eastern Health Board. He has always been an excellent administrator and I wish him well in his new role.

I am trying to differentiate between what I call the administration of the Department of Health and Children and the health service in general. The administration is carried out by civil servants. What were known as the health boards which employed public servants were part of the same administration bloc. The executive comprises the Minister, the Ministers of State and their advisers. Does Mr. McLoughlin concur the executive has overall responsibility for the health service?

Mr. McLoughlin clearly indicated how this issue arose in so far as it affected him. According to Mr. Travers, the issue surrounding the illegality of nursing home charges was well known in the Department of Health and Children in 2001. Therefore, I am surprised Mr. McLoughlin heard something that contradicted this, namely, that the Department believed it had legal advice to the contrary. Mr. Travers made it clear in his documents and briefings that the Department was clear from 2001 that the charges were illegal. Will Mr. McLoughlin clarify this?

In 2002 Mr. McLoughlin sought legal opinion. It was clear therefrom that, according to the 2001 legislation, the charges imposed on patients over 70 years of age were illegal. Will he elaborate on the reasons he sought advice in 2002? Mr. Travers' report implies Mr. McLoughlin was telephoned by an official in the Department asking him to obtain his own legal advice. This sounds strange. I have always believed the Department would have been responsible for obtaining legal advice, even if it meant seeking it from the Attorney General, and that it would not have asked Mr. McLoughlin to obtain it. I believed his role was to implement Government policy stemming from the Department.

A Mr. Pat Harvey wrote a letter in 2001 which seemed to indicate that the chief executive officers felt it was not a problem for nursing homes to charge those over 70 years of age. The former South Eastern Health Board received legal advice which contradicted that. Why was it necessary to wait until December 2003 for any formal discussion of this? Mr. McLoughlin pointed out that he read that advice in November 2002.

I presume that, like Minister of State at the Department of Health and Children, Deputy Tim O'Malley, Mr. McLoughlin saw the legal, financial and political implications of this. Nevertheless, it was 13 months before it reached the agenda of a major meeting of all chief executive officers and officials of the Department of Health and Children. According to his own chronology, Mr. McLoughlin had at least four significant meetings on this issue alone during 2003.

Mr. McLoughlin may not be free to discuss this but the former South Eastern Health Board is involved in a court action. Did this begin before or after the 2001 legislation? It involved charging people where the legislation made it clear that, particularly for those over the age of 70, nursing home care was a statutory obligation. This is at odds with the practice before the 2001 legislation, when it was at the discretion of the chief executive officers of the health boards.

The 2001 legislation raised questions from the point of view of the health boards which Mr. McLoughlin could tease out for the committee. Where does the health board stand on the fact that it did not charge some people who complained about the charges but continued to charge other people although it was in possession of legal advice that it considered to be important? What is the position of the Department of Health and Children on this matter? This is a serious issue yet everybody seemed to drag their heels on it. I would like to hear Mr. McLoughlin's opinions on that because he appears to have been quite aware of what was happening.

Given that Mr. McLoughlin sought the legal advice, can he release his eight page summary to the committee? He might even release the 80 page legal document because the Department of Health and Children is not co-operating with us.

The Freedom of Information Act was tightened up in early 2003. Previously, it allowed a significant amount of information about events at Government level to be released to individuals or groups. Will Mr. McLoughlin indicate how this affected his working day prior to early 2003? For example, were certain significant communications between Ministers and officials not put on paper?

Did the health board make telephone calls between officials or to Ministers? Did Mr. McLoughlin make telephone calls to officials in the Department of Health and Children in regard to this issue, rather than commit something to writing because of the Freedom of Information Act? Did he make phone calls to the executive of the Department, namely, the Minister or Ministers of State or their advisers, informing them of this?

The teleconference in June 2003 was between all the health board chief executive officers who are part of the higher executive of the health boards. Did they discuss this issue at one of those meetings and, if so, will Mr. McLoughlin indicate the priority he gave to it? We have been informed that this issue was nothing more than a footnote at the end of the management advisory committee meeting in 2003. It does not seem to have been given any priority but everything the South Eastern Health Board did in the 18 months leading up to the management advisory committee meeting suggests it was giving the matter serious consideration. The board was in discussions with the Department of Health and Children. It had specific meetings in this regard in March 2003 and found the advice compelling. Everything Mr. McLoughlin said about it and that other health board chief executive officers would have known, particularly after the teleconference, suggests they would have regarded this as quite serious. Will Mr. McLoughlin share his views on this meeting? Was the issue of nursing home charges dealt with as a footnote for a few minutes and left at that? How urgently was it treated?

This was quite an important issue in the Department of Health and Children. It became important to the chief executive officers of the health boards after Mr. McLoughlin sought legal advice. Unbelievably, however, the Ministers and their advisers do not seem to have attached any importance to it.

Mr. McLoughlin

At that stage the health boards were all statutory bodies with their own boards. As chief executive, my job was to implement the service plan and be generally responsible for the management of the affairs of the board. We conducted our daily dealings with the Secretary General and the officials in the Department of Health and Children. We were not aware in 2001 that the Department was of the opinion that there were difficulties with the regulations or the legislation. Had we known that, it would not have been necessary for us to seek an opinion.

The Department did not ask us to seek the opinion. It was our decision because when we checked with the Department, it expressed the view that the charges were legal. We were guided by the views of the Ombudsman who, in considering the nursing homes issue, said that boards whose opinion was at variance with that of the Department had a duty to check the position further. That was the basis on which we sought a definitive opinion.

I cannot comment on the gap between our knowing about this and anything happening because that was internal to the Department of Health and Children. When I raised the issue with the Secretary General and members of the management advisory committee at the meeting in February, they hastily arranged to meet us in March to discuss the opinion. I was less than happy at the later delays that occurred because the summary of the opinion pointed out some difficulties that should have warranted referral to the Attorney General.

The Department had another opinion on eligibility versus entitlement and that was important. We, and our advisers, took the view that these were separate issues. We have not been involved in any court action on this matter. We have not dealt differently with people arising from the advice. We were concerned that the vacuum that would be created in time would push us into that position. Had we been before a court, we would have been in a difficult position because our advisers had one view of the legal opinion and the Department had a different view of it. That is one reason for trying to inject urgency into the situation.

I understood the issue was likely to be dealt with based on forecasts of what the 2004 Act might include, for example, organisational changes. The health strategy referred to clarification of the legislation regarding entitlement. I had thought the timing was good in this regard and that our opinion would be checked by the Attorney General and would allow the situation to be clarified. Nobody had been complaining to any significant degree about the principle behind what we were doing; it was the legality that gave rise to concern.

After 2001, the chief executive officers were not asked to obtain legal opinion; they were asked to come back quickly to the Department regarding their views on the 2001 position in respect of those over 70. They did not seek legal opinion on it and the letter, which is in the Travers report, points out that they did not necessarily see any difference. However, they pointed out that they were referring to the Department's circulars in 1976. No definitive position was adopted at that stage, mainly, I would imagine, because of the speed with which this was arriving in any event. It took us quite some time to obtain legal opinion. It was quite a complex issue.

I am not at liberty to release the summary or the opinion, which is privileged because of ongoing litigation that does not involve us. We did not send the legal opinion to the health boards. We sent a summary of it to them and to the Department. We did not provide the opinion in full until, when the matter became a major public issue, the Department sought it. We gave the opinion to one other former health board area which is involved in litigation.

The opinion dealt with many individual cases of patients and charging and assessments and arrangements for that. It also dealt with the legal strategy that the board might adopt in the event of nothing being determined on this by the Department. Therefore, it was not appropriate that I would release the legal opinion.

The Freedom of Information Acts have not changed how I do my work. They have not changed what information I will release or record. That has always been my way of approaching matters. It is true that most of the contact between the staff of my office and the Department's staff would have been by telephone and there would not have been any record of that. That was not for FOI purposes; it was simply the ongoing contact on whether anything had been received from the Attorney General or whether there had been any further developments in that regard. Such communications were not written down on either file but it would not have been because of FOI.

I have had no discussion with the Ministers on this. I never had a discussion with the Minister or the Ministers of State about the advice we received. My view was that once this was officially with the Secretary General of the Department, that was the most appropriate place for it to be and it was a matter for him to make a judgment on discussing it with the Minister. I would have never discussed it with the advisers.

Since the publication of the Travers report, I have had two discussions with the Minister of State, Deputy Callely, solely for the purpose of him recollecting what transpired at the meeting in December. He made it clear that his sole purpose was to discover, to my recollection, who was present at the meeting and how detailed an account was given. My recollection of that meeting is that there was quite a long agenda. The matter in question did not necessitate a long discussion because once the decision was taken by the Secretary General that our opinion merited referral to the Attorney General and that the significance of it — namely, that legislative change might be required — was understood, as far as I recollect, everybody in the room was satisfied. It did not merit detailed consideration. There were many items on the agenda.

The only point I would have made to the Minister of State, Deputy Callely, as a result of his discussion with me, was that there was an impression being given in the Travers report that in some way CEOs were more concerned about their own business and their contracts of employment. That was never raised. We never raised that with a Minister or Minister of State. It would have been totally inappropriate for us to raise it. That was an issue between us and the Secretary General. It remains an issue for some CEOs. On that particular day, the CEOs were not interested in their own personal positions arising from the change.

This was a priority for the CEOs because of the fact that they were on the front line, receiving requests from the Ombudsman and solicitors and dealing with patients' complaints. If it went to a court, it is likely, given that legislation was being challenged, the Department would have been enjoined in those actions. One could certainly state that we were feeling the heat from various parties — solicitors, the Ombudsman and patients — on the interpretation, particularly after 2001, because of the issuing of medical cards to those over 70. We wanted, therefore, to try to obtain clarification.

Our job is to implement and uphold the law and we cannot change that. Where an interpretation of a compelling nature is made, however, it is my duty to bring it to the attention of the Secretary General. When it was stated that other colleagues, particularly in the context of the letter from Mr. Pat Harvey, did not agree with me, I brought to their attention a summary of the advice and they were of the opinion that this needed to be clarified by the Department. I think that deals with Deputy Twomey's questions.

Did Mr. McLoughlin ever feel any need to inform one of the Ministers on this issue? I would have considered that they would have had overall responsibility for the Department and, considering the timeframe involved, it was quite topical in 2003 within Mr. McLoughlin's circle of higher public servants and civil servants. Did no one mention it to any Minister? Was it that Mr. McLoughlin or another CEO never got around to saying it at any stage, even over a cup of coffee?

Mr. McLoughlin

I did not because once we asked that it be dealt with and placed on agendas, this, in fairness to the Secretary General, was done. If that had been blocked and if the decision had been not to seek the opinion of the Attorney General, then I would have felt it my duty to tell the Minister at that stage and to advise the Secretary General that I was going to do that. However, this did not arise. My dealings would always be with the Secretary General. I would have rarely had discussions with the Minister. The Minister might have visited the south east on occasion. I would generally have used those opportunities to talk to him about capital developments and service developments which I felt were necessary in the south east. We would not have discussed issues that were more appropriately in the domain of the Secretary General.

When Mr. McLoughlin made the point that there was no discussion on the future of CEOs, was he referring to the MAC meeting?

Mr. McLoughlin

Yes, the MAC meeting.

I ask Mr. McLoughlin to respond to my questions as I go along. This would help my train of thought. Did Mr. McLoughlin accept the legal opinion? Did he feel it was correct? If he did, why did he think the Department of Health and Children was rejecting it and who told him it had received legal advice?

Mr. McLoughlin

I accepted that the legal opinion seemed compelling. Naturally, legal opinion is not definitive until it has been adjudicated on elsewhere but, to me, it was so compelling that it needed immediate assessment by the Attorney General. We would have then sought clarification from the Department and there would have been senior officials in the Department who would have said that their advice on this was different. That is what led to the meeting to clarify the advice. They had to clarify the advice we had. They gave us their opinion, which, as I stated, dealt with issues of entitlement and eligibility but which, in our view, did not deal with the substantive issue as to our ability to charge. When there was no meeting of minds on that issue, the director of appeals and complaints sent me a formal memo outlining his views, those of counsel and the financial implications if this was found to be illegal. At that stage, I formally sent this to the Department of Health and Children.

That was in May 2003.

Mr. McLoughlin

Yes.

Mr. McLoughlin had received the opinion in October 2002 but felt attention was not paid to it until December 2003?

Mr. McLoughlin

No. We had a scheduled service plan meeting in February 2003. Every health board had to approve a service plan and it was up to management to discuss it with the Department. One of the items on the agenda was emerging issues that might cause difficulty during the year in question. I raised the issue with the Secretary General who was accompanied by other senior officials, including assistant secretaries and principal officers. Naturally, it was a long meeting. It was an opportunity to raise the matter and say we felt there would be difficulties. It was agreed by him and me that it needed to be teased out by way of a bilateral meeting which took place in March. I was happy with the progress made and the attention paid to the issue.

My dilemma was that my legal advisers felt the Department's legal advice did not address the fundamental issues of concern to us. I had to try to protect the interests of the board. I had to try to ensure my CEO colleagues were made aware of the matter, without giving them the full details. When we felt it may not be tackled, that there was stalemate, that the legal opinion was not being pursued actively, we decided to have a discussion with the MAC and CEOs to try to progress it. The CEOs were very happy with the decision taken at the meeting in December but subsequently were not aware that advice had not been sought from the Attorney General. Any informal contact we had with departmental officials and any formal contact between the CEOs and the MAC would have led us to understand they were awaiting his advice.

I appreciate that the time delay had nothing to do with Mr. McLoughlin but considering the cost involved which could amount to €500 million, does he regret that he did not mention the matter to any Minister or ministerial adviser?

Mr. McLoughlin

I must be always aware, when I obtain legal advice, that legal advice is received on the other side also. It took some time, from the time we had sought legal advice from our own counsel, to receive a definitive legal opinion. In late 2001 there was much discussion with our solicitors who had a lot of work to do on the issue which we referred to counsel in May 2002. Despite a lot of work by us and our solicitors, it still took until October 2002 for counsel to give an opinion because of the complexity of the range of issues raised. I was not alarmed that nothing was emerging for some time because I thought the matter was with the Attorney General.

I am talking about the period 2002 to December 2003. Presumably, Mr. McLoughlin felt he had not been able to convince the Department of Health of Children on the matter.

Mr. McLoughlin

We did not have a MAC meeting which would normally have happened every two months.

Mr. McLoughlin

Because of the range of issues involved. Mr. Travers drew attention to the particular pressures on the Department of Health and Children at the time in dealing with the health reform programme which was seen as a major issue which took up a lot of the time of CEOs and their teams, as did other issues, to which attention was drawn in the Travers report. As a group of CEOs, we were concerned that nothing was happening on the issue. Once we had received a definitive decision in December that it was to be referred for legal opinion, we were satisfied.

I would like to ask about two other issues. Mr. McLoughlin said he believed the matter could have been dealt with in the HSE legislation. That makes sense but the legislation was rushed through the House. Presumably, when he saw what was contained in the Bill prior to the debate in the House, alarm bells went off for him, or did he feel as someone was dealing with the issue, he did not have to worry about the Bill?

Mr. McLoughlin

The sequence of events was that prior to the MAC meeting in December 2003 I had become aware it was unlikely the issue of eligibility would be determined in the HSE Bill. However, the minutes of the meeting in December 2003 stated a decision would be taken in separate legislation on the eligibility factor.

That was a matter for the Minister for Health and Children.

Mr. McLoughlin

That was included in the minutes of the meeting. It was agreed between the CEOs and the MAC that it might be necessary to have separate legislation to deal with the issue.

That it might be necessary——

Mr. McLoughlin

Yes. Once my colleagues and I were aware that the issue was understood and being taken seriously, our position was that it was a matter for the Attorney General to advise the Department and the Government. It was then a matter for the Legislature.

My last question relates to Mr. McLoughlin's relationship with board members. He had received this legal opinion which in his view was compelling. His board members had a responsibility under the Health Act to agree to financial statements. Under section 3(3) of the Act, part of his duty was to assist them in the performance of their reserved functions. Did it not appear to him that they were agreeing to a financial statement within which a considerable amount of money was being raised in an invalid or illegal way, and that they were doing so unknowingly? Did he believe he had a duty to advise them? Did he believe it could expose him to audit tests by the Comptroller and Auditor General? The Comptroller and Auditor General must satisfy himself that transactions conform with the authority given in regard to health board activities? Mr. McLoughlin had received advice that the charges were invalid or illegal but he kept this information from board members who proceeded to exercise their reserved function, presumably in all innocence. Was that not remiss of him?

Mr. McLoughlin

The reason I did not advise the board was that when we had received the advice it was just that — advice. We engaged with the Department, albeit on an informal basis, before the service plan meeting of the board and it indicated it was not its view of the law. At that stage I did not believe it was appropriate for me to raise concerns with the board if I was not in a position to have the matter deliberated on and finalised. As I said, we had discussed with our legal advisers the strategy the board should take if the Department did not deal with the issue arising. That formed part of the legal opinion. If the issue was not adjudicated on by the Attorney General, we would have exposure. Legal cases were being taken against us. I had not agreed to the legal strategy advice available to me as to how the board should deal with the matter to protect its interests.

It is important to state that at that stage there was no known risk to the board on which I had a definitive view. I had received a compelling view from counsel but that was their view of an interpretation of the legislation. The Department had a different view. The board and I are obliged to implement the laws of the Oireachtas.

Describe the legal strategy proposed. Did Mr. McLoughlin believe he had a duty to advise health board members of this conflict? Why did he not tell them?

Mr. McLoughlin

I did not tell them because at that stage I was not aware there was a conflict and the Department had not seen the definitive legal view we had received. I received it in November 2002. The service plan——

Was that November 2002?

Mr. McLoughlin

That is correct. The letter of determination arose in early December 2002. We focused entirely on trying to bring forward a plan that could be delivered within the allocation for 2003.

As far as I was concerned, the issue of the long-stay charges could wait until the meeting, with the management advisory committee and the Secretary General of the Department of Health and Children, which was scheduled for early February. There were situations in committee or in open fora when I would have advised, or arranged to have advised, members of risks — mainly service risks — that we saw as leading to difficulties. In regard to an issue such as a legal opinion, I believed it was more appropriate to pursue that with the Department. If the Department did not bring it to a conclusion and the board still had a risk, I felt it my duty to advise the board.

The Department did what we set out it would do. I cannot describe the legal strategy recommended to us because it is part of the legal opinion, which is privileged, but it advised me on the advice I should give the board regarding its legal strategy.

Mr. McLoughlin had the legal opinion in 2002 but he did not advise his members, despite the fact that they had to carry out reserved functions and that the Comptroller and Auditor General had a role to play. He again failed to advise the members in 2003, in respect of the service plan, and they blithely assumed that they were in compliance with the law and that no risk attached to their actions. Does he not think it would be appropriate to treat his board in a way commensurate with its authority and provide it with information to which it is entitled?

Mr. McLoughlin

In December 2003 I was of the opinion that the issue was being dealt with in a serious manner and that the resolution would emerge from the Attorney General. It is a matter of judgment as to what are the ongoing issues of risk for the board. The board meets once a month, when its agenda is dominated by issues relating to service pressures and the monitoring of its financial position. That was a difficult year. However, we emerged from it with a credit balance about which I previously informed the committee.

Mr. McLoughlin did not tell us it was illegal at that stage.

Mr. McLoughlin

No, I did not. I had an opinion which indicated that was the case. However, I did not have the views of the Department of Health and Children which had access to the Attorney General. We often receive legal opinions which may not prove appropriate, depending on the situation. In my opinion it would have been inappropriate to raise the issue with the board when there was no definitive strategy to deal with it.

It was a case of growing mushrooms.

Mr. McLoughlin

That is my personal view.

I welcome Mr. McLoughlin and wish him well in his new position. The discussion in the past hour was fascinating. To what did the legal advice pertain? Did it pertain to medical card holders in geriatric wards in hospitals or to people in private or public nursing homes? We have not seen this legal advice and it appears unlikely that we will. Who gave this advice to the South Eastern Health Board? Does Mr. McLoughlin know who gave the conflicting legal advice to the Department of Health and Children?

Did Mr.Travers speak to Mr. McLoughlin at any stage while he was compiling his report? Am I correct in stating that Mr. McLoughlin said that at no time did he, as chief executive officer of the South Eastern Health Board in possession of that legal advice, speak to any Minister, Minister of State or ministerial adviser?

With regard to the management advisory committee meeting with the chief executive officers of the health boards in March 2004, is it correct that it was mentioned that the Department had sought legal advice on long-stay charges? Was that the only discussion of this matter at that meeting? According to the minutes of the MAC meeting, which are quoted in the Travers report, “The CEO Group expressed concern about the legal advice they have received in relation to the long stay charges issue.” That was almost a year after it was first raised at the meeting on 18 October 2004. What legal advice was that? Was that the advice Mr. McLoughlin received or was it advice from the Department or advice it had obtained from the Office of the Attorney General? The minutes continue:

The Department acknowledged the pressure building on this and stated that the legal options are still being reviewed. It was highlighted that particular attention should be paid to individual cases of all Health Boards.

Does that refer to cases where health boards were being sued or cases where there was conflicting legal advice? I am all at sea in regard to much of this. It seems quite amorphous and I may have to pose a supplementary question.

Mr. McLoughlin

Our advice covered a range of situations and many individual cases regarding charges for long-stay care, nursing home care, and assessments connected with that, and how we were to deal with our responsibility under the 1996 legislation, given its demand-led nature, within our financial allocation. It covered a range of issues concerning care of elderly people. I will make available the names of the advisers to the committee.

I do not know who advised the Department on this issue. The issue in our opinion and that of our legal adviser was different. It was eligibility for services versus entitlement and the distinction between the two.

That is difficult to understand. Could Mr. McLoughlin explain it briefly to the committee? The question of full or partial eligibility is quite confusing.

Mr. McLoughlin

It depends on how one rates the onus of statutory duty on a board to provide a service for somebody who is eligible for it, given the financial constraints on a board. Under the 1996 Act, the board had to operate within a specific allocation. I do not have a copy of the opinion given to the Department but it dealt with that question of eligibility versus entitlement. It would be better able to answer the issues on which it had sought an opinion. We did not seek an opinion on this issue. We sought an opinion on whether we were legally entitled to impose charges.

Mr. Travers did not speak to me. Given his terms of reference, that is not unusual because all of our information was on the record in the form of the summary opinion we sent to the Department. I did not attend the meeting in October — Mr. Peter Finnegan deputised for me on that occasion — but I would take it to mean that the CEO group was referring to the legal advice which we in the south east had received. I would also take it that the particular attention being paid to individual cases referred, in all likelihood, to the fact if any cases were pending while the advice was being sought, they should have been discussed with the Department. I would not have seen anything unusual in that. They would have had an opportunity to bring those to the attention of the Attorney General while he was considering the matter. At that stage, we all assumed the file was with the Attorney General.

Does Mr. McLoughlin mean, in other words, that if there was a problem or a legal case pending in another health board area, the impression was that the matter was being dealt with via the Department and the Attorney General directly?

Mr. McLoughlin

No. Although I was not at the meeting, my understanding of the minute was that if we were being sued or if there were individual cases in which we were carrying an exposure, then we should discuss the matter with the Department while the opinion was being sought. That was my understanding of it.

Will Mr. McLoughlin confirm that at no stage——

Mr. McLoughlin

At no stage did I discuss, prior to the publication of the Travers report, the legal opinion in my possession with any Minister. As already stated, I received telephone calls which, as the Minister made clear to me, were solely for the purpose of clarifying the position and discovering what was my recollection of the meeting and whether I had given a long analysis of this matter to the MAC-CEO group. My view is that I did not do so because the MAC-CEO group readily accepted that the issue merited referral to the Attorney General and that it was of such significance that legal change might be necessary.

Were all Mr. McLoughlin's communications with the Department with the Secretary General or senior officials?

Mr. McLoughlin

All my communications would have been with the Secretary General and most of the other communications would have been between the director of appeals and complaints and other officials in the Department of Health and Children.

Did Mr. McLoughlin seek the legal advice more as a result of what was being thrown up by the 2001 legislation?

Mr. McLoughlin

It was sought by my predecessor. Having spoken to the director of appeals and complaints, it was due to a variety of issues emerging. We were unhappy with the position, both arising from the Ombudsman's report on nursing homes and then, particularly after 2001, the greater frequency of requests.

The health strategy was published in November 2001. Am I correct?

Mr. McLoughlin

Yes.

All the issues such as eligibility, to which Mr. McLoughlin referred, that were supposed to be dealt with were published a year before legal advice was sought.

Mr. McLoughlin

It was our view that once the strategy was published, there was an acceptance that there was a problem. Once this was being challenged again, the management took the view that it should seek definitive opinion on the position.

I thank Mr. McLoughlin. The committee will suspend for approximately 15 minutes.

Sitting suspended at 11.33 a.m. and resumed at 11.59 a.m.

We will take questions from Deputy Neville who will be followed by Deputy Cowley and Senators Henry, Browne and Feeney.

I welcome Mr. McLoughlin and thank him for attending. I want to clarify some points about what has occurred. Were any court actions taken by the families of residents in nursing homes prior to the 2003 MAC meeting? In other words, were any claims made regarding the payments deducted prior the 2003 MAC meeting? I am somewhat confused because we had been informed that when patients in the South Eastern Health Board area complained about or questioned the charges they were discontinued. Given Mr. McLoughlin's statements today, am I correct in stating that it was not the case that when a complaint or solicitor's letter was issued on behalf of or by a patient, the deductions ceased? It has come to my attention in recent weeks that when the South Eastern Health Board received complaints, it stopped charging the patients who made them.

Another issue arises in respect of the eight page summary to which Mr. McLoughlin referred. Was it provided in the briefing document for the 2003 MAC meeting? This was a serious discussion which was very satisfactory from Mr. McLoughlin's point of view because the issue was immediately passed on to the Attorney General. However, was Mr. McLoughlin's eight page briefing document summarising the advice received included in the briefing documents issued to those who participated in the 2003 MAC meeting? Perhaps I will be permitted to comment further as Mr. McLoughlin answers these questions.

Were medical cards taken away from anyone entering public nursing homes in the South Eastern Health Board area or at any time thereafter? Were medical cards removed from people at any time? In particular, were medical cards removed from anyone over 70 years of age following the 2001 Act?

Mr. McLoughlin

I may have to return with details of some of those questions. My information about, for example, our involvement with the Ombudsman in this situation is that we had received two complaints from the Office of the Ombudsman regarding long-stay charges for people with full eligibility. One concerned a patient who is deceased and the other concerned a patient in one of our hospitals, namely, St. Senan's in Enniscorthy. In both cases, the issue of the legal basis for the charges was raised and the Office of the Ombudsman sought our legal advice in respect of it. However, we explained that we were not in a position to give the advice because we were awaiting clarification from the Department of Health and Children. In neither case did we concede that we should not have levied charges. Contrary to news reports, we did not stop charging anyone as a result of the intervention. The fact that the person in question stopped paying is a separate issue. We did not stop charging on foot of it.

Did just one person stop paying?

Mr. McLoughlin

Yes. One person took the matter up with the Ombudsman.

The impression was given that many people complained and that once a complaint was made, the deductions were stopped.

Mr. McLoughlin

That is not my understanding of the situation. I will have the matter checked and if anything at variance with that arises, I will communicate further with the committee. According to my information, we did not stop making deductions and there were not any legal cases pending. There may have been legal cases and actions in other boards.

In some instances it was stated that cases arose while in others it was stated that complaints were made. The latter may not even have had legal status.

Mr. McLoughlin

I am not aware that we took the action of stopping the charges. We took the view that we were still obliged to charge — although we had the legal opinion — until a definitive ruling was made. This is my understanding of the situation. I will have it checked and if anything at variance is found, I will come back to the joint committee with it.

As to the question on medical cards, we would have taken medical cards on the basis that people had gained access to a full range of services. Arising from the Department's instruction, we would have levied the charges from 1996 onwards. I need to get absolute confirmation before I make a definitive statement regarding the taking of cards or otherwise from the over 70s. I will have the information in time for the afternoon session.

Was the eight page summary of the legal advice issued as part of the briefing documents?

Mr. McLoughlin

My recollection is that it was. I understand from reading the Travers report that it is accepted that this was the case. This is my understanding of it.

I probably know this but can Mr. McLoughlin clarify for the joint committee why the medical cards were removed? What was behind the rationale of telling someone that he or she had been assessed as eligible for a medical card and that the CEO had granted it but that the health board was going to remove it?

Mr. McLoughlin

The rationale was that patients would be cared for in institutions and, therefore, the need for them to have cards no longer arose. This was the situation from the 1970s. This is really at the kernel of the situation.

If the cards were not needed — if they were insignificant — why was there an active decision to remove them? Mr. McLoughlin has stated that patients were getting the service anyway. Why then decide to remove their cards? People's cards were insignificant or of no value to them. Why make an active decision to remove them?

Mr. McLoughlin

We removed the cards because we were charging them and because that was the nature of the decision in the circular of 1976.

Was that practice extensive? Would the health board remove a medical card from someone who entered, for example, long-term nursing care? Was it an extensive practice to take medical cards from such patients?

Mr. McLoughlin

Yes.

In all institutions.

Mr. McLoughlin

That is my understanding.

Once a person entered long-stay care, the medical card was taken from him or her automatically.

Mr. McLoughlin

That is my understanding.

To judge from Mr. McLoughlin's beliefs, it is more than likely that anyone in possession of an over 70s medical card had it removed from him or her if he or she entered a long-stay institution.

Mr. McLoughlin

That is what gave rise to the complaints after 2001.

Mr. McLoughlin has acknowledged that there is a distinct difference between a medical card and an over 70s medical card, in that the latter, as he indicated in the long discussion on eligibility, was a statutory entitlement.

Mr. McLoughlin

It was.

Does Mr. McLoughlin agree that the South Eastern Health Board was not in a position to take cards from such patients?

Mr. McLoughlin

It was after 2001 that we began to realise that there could be a serious difficulty regarding that situation. As stated earlier, that was not definitively adjudicated on by counsel. The Department of Health and Children had asked the CEOs for their views on it when the cards were introduced. We drew attention to the 1976 circular but complaints subsequently emerged and when they were examined, it was felt that there was a difficulty about the legal status.

The granting of over 70s medical cards was a statutory entitlement and was not means-tested, whereas the granting of ordinary medical cards has a discretionary element to it in that the chief executive officer decides to whom such cards are awarded. He or she may have guidelines regarding means but the medical cards established in the 2001 Act had a different status. They were a statutory entitlement. Mr. McLoughlin has stated that these were removed along with the semi-discretionary cards.

Mr. McLoughlin

Yes, that is when real concern emerged. When people — including ourselves in the south east — examined the position, the fact that the internal auditor and staff involved in the administration of primary care services would have highlighted the issue of the statutory entitlement would have been one of the bases for the CEOs seeking the decision. When this was clarified with the Department, its view was that the charges were legal and it pointed out that the CEOs had confirmed that understanding. It was following that sequence of events that the director of complaints and appeals became concerned regarding the legality of the issue and asked the CEO for approval to seek definitive legal opinion.

There was concern within our board at the time. It appears from the Travers report that there was concern in other health boards following the 2001 situation. Our non-legal opinion was that whatever about the situation prior to 2001, the position changed thereafter because of the fact that the situation on discretion was taken from the CEOs.

Did Mr. McLoughlin see the memorandum that was circulated by the Department of Health and Children to health board officials and senior Department officials at the beginning of 2002?

Mr. McLoughlin

At the beginning of 2002——

The report says there was a memorandum passed around.

Mr. McLoughlin

I think that would be the memorandum that we would have operated on. It would have been the memorandum produced by my adviser.

This is a different memorandum that was sent out by the Department of Health and Children.

When did the complaints start coming in? Was it in 1990?

Mr. McLoughlin

Most of the complaints started coming in after 2001 legislation.

There must have been some complaints before then.

Mr. McLoughlin

We received some complaints before 2001.

Did Mr. McLoughlin say two complaints?

Mr. McLoughlin

Two complaints were received from the Ombudsman. However, there would have been some individual complaints. When the managers considered these, particularly after 2001, they felt there was some difficulty with them. They highlighted that to their superiors within the health board. They would have checked with the Department, which would have sent back its view that there was no difficulty regarding them and that the health board was entitled to claim and make the charges——

Were these charges for the over 70s?

Mr. McLoughlin

They were charges for those under and over the age of 70. In view of the situation with the over 70s, the decision was increasingly being referred back to the boards and the CEOs of those boards were in agreement with the interpretation of the Department. That was not a considered opinion. The CEOs did not obtain any considered legal opinion. As one can see from the Travers report, this was dealt with by way of a conference call among the CEOs.

Therefore, the situation became really bad when the middle classes became involved.

Mr. McLoughlin

The situation became worse when the over 70s got their cards.

I would like some clarification before we move from this point. Did the legal advice received by the South Eastern Health Board conclude that there was no statutory basis for levelling the charges and that the board was not entitled to take medical cards away from the over 70s?

Mr. McLoughlin

I cannot comment on that.

As I recognise the frustration of members who have not had the opportunity to ask questions yet, I want to roll back on that fairly quickly.

I would like clarification on the point I raised.

I do not want to stifle debate but other members are becoming frustrated.

I welcome Mr. McLoughlin. I know that, as former CEO of the South Eastern Health Board, he was very definite on the need for a radiotherapy unit in the south east. Therefore, I hope he uses his new position to push for radiotherapy units both there and in the north west.

I sense Mr. McLoughlin's frustration regarding the situation whereby solicitors were contacting him. He said the Department of Health and Children maintained that it had received legal opinion, that there was no meeting of minds, that he was concerned about the need for the Department to clarify matters and that the legal situation was compelling. All of this paints a picture of a Department clutching at straws. According to Mr. McLoughlin, the Department maintained that it had received legal opinion. It appears, therefore, that he was not certain as to whether the Department had received legal opinion.

Was Mr. McLoughlin convinced by the response he received because this had clearly been going on for a long period and he was under considerable pressure from relatives and solicitors? Did Mr. McLoughlin discuss the matter with other CEOs? I note that he said all the CEOs did not agree with his opinion in May 2003. What was Mr. McLoughlin's opinion about the modus operandi at that time or about the level of concern regarding what was happening in respect of this matter and how the health service was being run?

I welcome Mr. McLoughlin and wish him well in his new post. Could he indicate when the MAC was set up?

Mr. McLoughlin

The MAC is an ongoing system of governance in the Civil Service. The CEOs of the former health boards would have met the MAC every two to three months. We probably met the MAC that frequently until the year in question. We met it less frequently during that particular year because of the amount of contact between individual members of the MAC and CEOs as part of the reform programme and because the Department was heavily engaged in other work. It was a useful system that allowed us to jointly assess situations and would have been a very appropriate forum to discuss this issue because it would have straddled a number of health boards and divisions in the Department.

Would Mr. McLoughlin have attended the MAC meetings when there was a problem in his own health board? He said earlier that he would not raise the issue we are discussing with the Minister or a Minister of State and that Mr. Kelly was the person with whom he would discuss it.

Mr. McLoughlin

If an issue was peculiar to the South Eastern Health Board, I would have dealt directly with the Department through the line divisions, that is, with an assistant secretary or a principal officer or, in some situations, the Secretary General. If a matter gave rise to broader issues of policy or service delivery within the health boards in general, we tended to put them on the MAC-CEO agenda.

All of the CEOs agreed with the summary legal opinion we obtained. They all accepted it because they had never sought definitive legal opinion — they had been asked to do so by the Department — when medical cards for the over 70s were introduced. All CEOs agreed at that meeting that the information and opinion we had received changed the situation and they also agreed with our analysis of the situation, which was that the matter needed to be taken very seriously by the Department.

To what period is Mr. McLoughlin referring?

Mr. McLoughlin

It was following the conference call that we had in, I think, June 2003.

That would have put paid to Mr. Pat Harvey, the chairman of that particular group.

Mr. McLoughlin

He had been chairman that year.

Mr. Harvey wrote a letter on 2 July 2001. I note from this letter that there were no Ministers or ministerial advisers involved because it was a teleconference among the CEOs of the group to which he was referring. He said that there was a discussion at this teleconference and that participants believed the arrangements as they pertained up to the end of June could continue from 1 July. He did not see any need for that to change. That arrangement, as everyone is aware, dated back to 1976 and the decision of the High Court in the McInerney case. According to Mr. McLoughlin, the CEOs changed their minds when the advice he received came to light.

Mr. McLoughlin

Boards were operating on the basis of the 1976 circular. They did not seek legal advice when asked to discuss the situation with the Department of Health and Children after the events of 2001. This would have been inappropriate as it would have been a matter for the Department. Conference calls were held between the CEOs to address issues that could be dealt with quickly. We met monthly to deal with matters that required substantive discussion. This was a response from people who were following the 1976 circular. We were unaware of the 2001 internal departmental concerns indicated by Mr. Travers.

Would Mr. McLoughlin, as a member of the 2001 CEO group, agree with Mr. Harvey's assumption that the boards were within their rights by charging from 1976 on?

Mr. McLoughlin

I was not a member of the group at that time.

Is it correct that Mr. McLoughlin was new to the job in November 2002 and that is when he obtained the legal advice?

Mr. McLoughlin

Yes.

Mr. McLoughlin, in replying to one of Deputy McManus's questions, stated that had decided not to do anything with the advice because a MAC meeting was scheduled for February 2003. This meeting did not go ahead.

Mr. McLoughlin

I instructed the director of complaints and appeals to discuss this matter with the Department when I received the advice. He told me the Department did not accept our advice. I raised it with the Department formally during a meeting in which my management team and the Department's management team discussed the service plan. This was the sequence of events.

Which meeting was that?

Mr. McLoughlin

It was a meeting held in early February 2003 to consider our service plan for that year.

That was Mr. McLoughlin's health board.

Mr. McLoughlin

Yes. The Secretary General accepted that this matter should be discussed urgently in light of the implications we indicated. It was agreed to quickly hold the meeting between senior officials of the South Eastern Health Board and the Department on 11 March.

We only have minutes for the MAC meetings held on 16 December 2003, 29 March 2004 and 18 October 2004. Were other meetings held in between?

Mr. McLoughlin

I do not think so but there would probably have been meetings of the MAC-CEO group every two months prior to that. The Senator is speaking of the meetings highlighted by Mr. Travers.

It would appear that there were five points under "items for brief mentioning" in the meeting on 16 December. The charging of those over 70 was listed as the fourth item. On 29 March, under the heading of "brief overview on developments since last meeting", it was listed as the second item. We were told that advice had been sought as a result of the 16 December meeting. It was raised under "matters arising" in the 18 October meeting, at which Mr. Peter Finnegan deputised for Mr. McLoughlin. This was ten months later. One piece of advice stated it was illegal to make the charges and Mr. Kelly sought other contradictory advice but did anyone at the meeting ask him where it was? Perhaps Mr. McLoughlin put this question to Mr. Finnegan.

Mr. McLoughlin

It did not arise. The meetings were not so acrimonious in nature.

I did not mean to be rude in that sense.

Mr. McLoughlin

As CEOs, we were satisfied that it was a matter for the Attorney General to determine how quickly the Department's advice could be analysed once it accepted the need for advice. Between discussing it with the health board's solicitors and referring it for our counsel's definitive legal opinion, most of a year had passed. We did not expect this to be fast but it should have been easier to review the situation having received a definitive legal opinion.

We know it is a serious issue in hindsight. I do not have any medical or legal training but it seems it was never a burning issue or a hot potato. It was insignificant on the agenda. I have examined the agenda and the health reform programme was rated higher than it, as were domiciliary childbirth and SARS, which dominated one meeting. This issue received only a short mention. How well did Mr. McLoughlin get on with Mr. Kelly?

Mr. McLoughlin

I will respond to an earlier point. The agenda was not usually agreed in terms of order of importance by the CEOs. The MAC, the Secretary General and the secretariat of the CEOs decided the issues. The agenda should not be viewed as being in a specific order of importance. We would have tried to ensure that all of the issues were dealt with.

I have a good relationship with Mr. Kelly. I have worked in the service since December 1977. When I was a personnel officer in the South Eastern Health Board from 1989 on, Mr. Kelly was a principal officer in human resources. We had a good personal and professional relationship that continues to this day. I met him on the day the report was due to be published and he had no difficulty with our raising of this matter. It is not an issue between us.

It was a good working relationship. Did Mr. McLoughlin ask Mr. Kelly about this off the record after a meeting? Mr. McLoughlin felt this was a pressing matter. It was like a bad tooth he wanted pulled. Did he ever ask where Mr. Kelly's advice was or say that his organisation needed to act? Did he ask Mr. Kelly whether the Minister was made aware of this?

Mr. McLoughlin

There is an assumption that we have more contact with the Secretary General than is the case. He ran a busy Department and we ran the health boards. Senator Feeney referred to this as a bad tooth. Unfortunately, there are many ongoing and pressing issues that we must extract or fill. It is one of 20 or so matters to be placed on my desk as CEO.

Due to its placement, I cannot help but think it was not the burning issue that we have been led to believe. I understand Mr. McLoughlin's comments that there was no set agenda and that every item was important but other items in the minutes were noted in more detail than this issue.

Mr. McLoughlin

The minutes should indicate decisions. The relevant minutes were quite definitive. It was accepted that there was a requirement to get a definitive legal position. It indicated that the Department would examine the potential to establish separate legislation. The minutes were an acceptance by the Department of the seriousness of the situation, the quality of the opinion we possessed and the implications from a legislative point of view. The Secretary General and those at the meeting grasped the essence of the dilemma the health boards faced, took it seriously and were going to obtain the Attorney General's opinion. It was not up to us to constantly badger the Department about this. It had accepted the matter and was taking it on board. My officials would have asked, on an ongoing basis and as cases emerged, if a report had been received back from the Attorney General and would have been told no. They thought, in good faith, that it was with the Attorney General.

We now know it was not. The minutes of the 16 December meeting state that the varying views of different legal advisers were noted in the context of the legislation clarifying the existing eligibility framework. What was that varying advice?

Mr. McLoughlin

I understand the advice referred to is that which the Department had in respect of the issue of entitlement and eligibility, a matter about which I spoke earlier. To my knowledge, that was the advice. It now transpires, I suppose, that there was advice internally in the Department on this issue but we certainly were not aware of any concerns in the Department at the time we gave our advice.

We will move on. Senator Browne has not spoken yet.

The Chairman has broken the order and has moved on to somebody else.

I have not broken the order. Since these hearings have begun, I have made sure everybody has been given free rein. There has been no stifling of discussion whatsoever. I will return to the Deputy. I am not breaking the order; I have a list. I was of the opinion Deputy Cowley had finished asking questions.

I did not get an answer and I was not finished asking questions.

I assure Deputy Cowley he will get his answer, provided Mr. McLoughlin can give it.

I thank the Chairman.

I welcome Mr. McLoughlin. It is clear from listening to him that he was very concerned about this issue and sought legal advice. The legal advice, which was quite clear, was brought to the attention of the Secretary General. Mr. McLoughlin assumed the Secretary General would notify the Attorney General and the Minister or seek clarification. It is worth mentioning a point Deputy Devins was trying to make, I think disingenuously, that the Travers report was clear that Mr. Michael Kelly stated that he clearly recollects discussing the implications of nursing home charges with the Minister. I wish to put that on the record because I believe an impression was being created that the Minister did not know.

There is a clear conflict of evidence in the report. There is no doubt that Mr. McLoughlin brought the issue to the attention of Mr. Michael Kelly. Mr. McLoughlin has clarified that he did not necessarily notify the Minister directly. However, it is clear from the Travers report that Mr. Michael Kelly clearly recollects talking to the Minister, not only about the charges but also about the implications.

Mr. Kelly and the Minister will be coming before the committee to answer those questions.

I know that.

Let us be clear on that. There is not much point asking Mr. McLoughlin.

An impression was created that the former Minister, Deputy Martin, would escape scot-free on this issue. He still has major questions to answer because we ascertained today that the South Eastern Health Board, by way of its legal advice, brought this issue to the attention of the Secretary General who, according to the Travers report, then brought it to the attention of the Minister.

It was just a routine query at the time but there was no big issue——

Mr. McLoughlin said he brought it to the attention of the Secretary General and assumed he was seeking legal advice through the Attorney General's office. Will he clarify again the steps he took? Was it raised at every meeting under matters arising? Was clarification sought on what progress was being made? For example, did Mr. McLoughlin ask Mr. Michael Kelly if a letter had been sent to the Attorney General?

Mr. McLoughlin

Following the December meeting, we assumed the matter had been referred to the Attorney General and all the indications were that it had been referred. Therefore, we did not seek a copy of, or any information on, what had gone to the Attorney General. We assumed our summary opinion and memorandum had gone to the Attorney General. It was simply put on the agenda for mention and for update to see if anything had come back from the Attorney General.

Do I take it that the former Secretary General indicated to Mr. McLoughlin that he sent a letter to the Attorney General seeking advice and that is why he assumed the issue had been referred?

Mr. McLoughlin

I do not think he would have put it as strongly as that. I think we would have just heard that the matter had been referred. The minutes indicate that the matter had been referred to the Attorney General and his advice was awaited. It certainly would not have been known to us or, in fairness, to him, from what I have read of his evidence, that it had not gone. All of us assumed the advice had been sought by the Attorney General and had gone at some point after December. It was agreed that internal work was needed to prepare a paper. The Travers report indicates that work was done with speed and was prepared to go to the Attorney General but that it was not sent. We were not aware it had not gone and the minutes of the MAC-CEO group would bear that out. We all assumed that opinion was awaited when, in fact, it had not been sought.

As this was obviously discussed at the MAC meetings, the chief executive officers of the different health boards would have become aware of the problem. Mr. McLoughlin said he did not discuss this directly with a Minister. Does he agree there was a possibility another CEO of a health board may have discussed it? That is not beyond the realms of possibility.

Mr. McLoughlin

I have no indication whether they would have done so. I would not have thought it an appropriate matter to discuss with the Minister unless I felt it was not being taken seriously. What I would have done would have been to advise the Secretary General that the position was not acceptable. I would then have advised the Minister and informed the Secretary General that I was going to do so. It did not come to that but it is what I would have done.

It is possible another chief executive officer may have discussed it?

Mr. McLoughlin

It is, but I have no indication——

Was Mr. McLoughlin happy matters were proceeding?

Mr. McLoughlin

Absolutely.

What puzzles me is that in 2001, the then Ombudsman, Mr. Murphy, came before this committee and made a clear presentation on this issue. After he concluded, the then Chairman, Deputy Batt O'Keeffe, asked if Mr. Murphy was telling the committee that the State should provide care free of charge to an elderly person who is a medical card holder and who is currently being charged 80% of his or her pension by a community hospital and hospital for his or her care. Mr. Murphy indicated he believed it should. It seems it was known then and there was clear advice from the Ombudsman's office in 2001. At the time, it was the subject of an article in the Sunday Independent, so it was in the public domain. I am confused that more alarms bells did not ring, particularly in light of Mr. McLoughlin’s legal advice.

Mr. McLoughlin mentioned that one person had stopped paying the South Eastern Health Board. How did the health board pursue the matter? Did it allow the person to stop paying the long-term charges or did it take a soft approach?

Mr. McLoughlin

We would, in effect, have had to go after that person for the debt, which we did not do. We raised it as a charge. We felt we had no option but to do that. The person stopped paying the charge and we did not follow through and take the person to court, if that is what the Senator is asking.

Did the health board even send letters to the person threatening legal action?

Mr. McLoughlin

We would not have threatened legal action.

In effect, the health board backed away.

Mr. McLoughlin

I suppose we would be wary of taking legal action against a patient at any stage.

Particularly when the health board knew, or felt, it would lose.

Mr. McLoughlin

It depends. As the legal opinion covered a certain set of circumstances, so it was not clear. The opinion would not have covered every definitive set of circumstances. I will come back to the committee with details of the particular case, other than the name of the individual.

I am fascinated by the idea of medical cards being taken away from patients who went into long-stay hospitals. What happened if a patient who was resident in a long-stay institution had to go to an acute hospital for an operation? Did the patient get the medical card back? What charges would have been imposed?

Mr. McLoughlin

No charges would have been raised. They would have got full treatment in an acute hospital.

What about hospital charges?

Under what heading would they have been free?

Mr. McLoughlin

They would have been receiving care and maintenance from the board, so if they required any treatment or referral to a outpatient or inpatient appointment, it would have been provided free of charge, as I understand.

Separate hospital charges.

Mr. McLoughlin

I will have to check whether hospital charges were raised in such situations.

Did the legal advice refer to the two issues involved — the over 70s who were entitled to medical cards and the fact that the charges were illegal? In preparing a service plan for the health board was Mr. McLoughlin not concerned that the charges might not continue the following year?

Mr. McLoughlin

I am not at liberty to discuss the content of the legal opinion.

I am not asking Mr. McLoughlin to do so. I am saying——

Mr. McLoughlin

The Deputy asked what had been addressed. I cannot go any further than what I have said.

I will ask a slightly different question. Having read the legal advice, did Mr. McLoughlin conclude that the charges were invalid or illegal and that he did not have the right to take medical cards from the over 70s?

Mr. McLoughlin

The opinion stated there were difficulties for us. If it was accurate and definitive, we would have had a significant financial exposure. That was outlined to me in the memo and an opinion which I had to have validated by the Department. As we were operating under the aegis of the Department and Acts of the Oireachtas, we had to receive legal opinion.

There would be exposure on both issues.

Mr. McLoughlin

We would have had exposure on a range of issues in relation to care of the elderly.

I asked some questions but do not know whether Mr. McLoughlin got to them.

Mr. McLoughlin

Some were related to the length of time involved. I may have dealt with that issue. Certainly, from our point of view, we were worried in the period between July and December because the opinion had been validated and accepted by all of the CEOs and there was still no indication a contrary opinion was being sought by the Department. That is the context as I understand it, as placed on the MAC agenda. What one has to understand is that when the agenda was being prepared for the MAC-CEO group, all of us had to identify issues we wanted to see on it. The two secretariats agree on the issues to be placed on the agenda. While I do not know whether three or four of my colleagues raised this issue simultaneously, I do know that I kept it live. That would have been the first formal meeting. Although I was concerned about the lapse of time, we did have the issue on the agenda and I was satisfied with the outcome of the meeting.

It seems a game was being played. Mr. McLoughlin was placing the issue on the record with the Department but it appears the Department was not facing up to the situation and that it was in everybody's interest to carry on as they were. That was the climate. I suggest this was generally known among CEOs but nobody was biting the bullet. In fairness to Mr. McLoughlin, at least he did seek legal advice and was under pressure to do so. Does he agree this was motivated by economic circumstances and that the legal advice he received was so strong that nobody could argue with it? It was clear that the basis was precarious and the practice had no legal basis; that he knew this but so did the Department. It was just a question, therefore, of knocking on the ball and not playing the game. Did Mr. McLoughlin believe the Department had received legal advice or that it was just using this as an excuse to him?

Mr. McLoughlin

No. In fairness, although the advice was strong, I had no way of knowing that would be the ultimate conclusion until the matter was subsequently determined by the courts. From our point of view, it was strong in the sense that it indicated the risk of exposure. The departmental officials with whom my people had spoken felt equally strongly on the issue on which they had received advice. The view of our solicitors and counsel was that our issue dealt with the legality of the charges. The December meeting was useful from the point of view of a discussion on the significance of our opinion, financially and legally. In fairness, we had no indication that the Department was simply ignoring it because of the financial situation. The officials with whom we had spoken were of the view that their opinion was equally strong but the view of our counsel and solicitors was that that was a different issue. That was the critical issue. I had not received any indication of how the Attorney General might view it but it was my view that if the Attorney General viewed it in a particular way, that it was definitive legal advice that we could use with solicitors, patients and the ombudsman, we could then move on. The Attorney General could also have determined that there was a need for a change in the legislation. It appeared likely that there would be a need for a changed legislative framework but that was my view based on our opinion. It was possible that other counsel could take a completely different view.

In Mr. McLoughlin's experience of the health board and dealing with the Department, given the interaction between the Department of Health and Children and the health boards, did he consider there was a deficiency? He mentioned that he had worked with and had a good relationship with Mr. Michael Kelly and inferred that he was competent in his job. Was it right that he should be the fall guy? Will he comment on this?

Mr. McLoughlin

All I will say is that on any issues on which I had dealings with Mr. Michael Kelly he was extremely efficient. He led the development of the national health strategy, a major programme of change, and the Prospectus, Brennan and Deloitte & Touche report evaluations of the health service. He was involved centrally in the legislative changes designed to bring about the Health Service Executive. He was a reforming Secretary General with whom I had a good personal and professional relationship, although we crossed swords on some issues. While there were always issues about which we felt strongly from our individual perspectives, it never changed our relationship at a personal and professional level. As regards the blame issue, I have no comment to make.

Mr. McLoughlin received legal advice in 2002. I wish to ask him about the draft memorandum on long-stay charges. Paragraph 4.29 of the Travers report states:

The draft memorandum was widely distributed for views and observations of officials within the Department. Its content was also discussed with representatives of the Health Boards in December 2002.

Paragraph 4.28(iii) of the report states:

In referring to the “automatic entitlement to medical cards by persons aged 70 years and over” in the Health (Miscellaneous Provisions) Act, 2001 the draft Memorandum states that “this entitlement means that there is now no mechanism to require persons over seventy with means in health board long stay residential care to contribute towards the cost of care”.

It appears that by December 2002 this briefing memorandum given to health board and departmental officials with Mr. McLoughlin's legal advice should have made it crystal clear that the charges were illegal. In the course of 2003 he had meetings in February, March, April, May and June with health boards and the Department of Health and Children which related solely to this issue. If it had been resolved, say, before October 2004, who would have had ultimate responsibility for resolving it?

Mr. McLoughlin

Ultimately, it is a matter for the Minister if legislative change is required. The view had been expressed in the health strategy — I had no reason to disagree with it — that there was a need for clarification of the legislative position. The view of the CEOs was that if there was that degree of lack of clarity on issues, then there might be a need for legislative change. I do not have any recollection of seeing the particular memorandum and this may have been because of the position I held at the time.

When I became CEO of the South Eastern Health Board, I was of the view that the issue of legislation — as regards whether the charges were legal — and the matter of clarification of the eligibility issues would be dealt with on foot of the health strategy the Government had agreed. I was also of the opinion that, arising from the strategy, legal changes would be necessary — without indicating whether the charges were illegal — to clarify the situation. My concerns related to the fact that I was of the view that it is not easy to have legislation passed and that an opportunity in this regard would arise in terms of the 2004 Act. I felt that if the legal opinion of the South Eastern Health Board was examined by the Attorney General, then there was a possibility it could be done as part of the 2004 legislation. Having read the opinion, that was my view.

The Travers report refers to the legal opinion and other briefing documents. In the case of long-term care issues, these papers, including excerpts from the legal opinion — Mr. McLoughlin's memorandum — and advice previously received by the South Eastern Health Board, referred to in this report, together with an internal South Eastern Health Board paper on the issue, were all part of some briefing document. Was this held over for the December 2003 meeting because the executive, the Minister and Ministers of State and the Minister's advisers would be in attendance? This meeting had already been discussed in detail by the Department of Health and Children and the health board CEOs. Was this simply being held over in order to give a briefing to the Minister, his Ministers of State and his advisers? Am I correct in that assumption?

Mr. McLoughlin

No, certainly not in my situation. I would have regarded it as the next opportunity because the Ministers may or may not attend the MAC-CEO group. While there was a tradition for them to attend the December meeting because the service plans would have been in preparation, the Estimates would be prepared and the Minister would normally take the opportunity to talk about the financial situation for the coming year. I would not have put it down as an issue on the agenda simply because the Ministers were there. In my opinion, it was an issue between the CEOs and the Secretary General in the first instance. It was then a matter for the Secretary General to make a judgment as to whether to refer it on because of the policy, financial or other implications. I did not include on the agenda with a view to ensuring there would be a ministerial buy-in to the situation; it was simply an issue I felt we needed to deal with.

Can Mr. Travers recall any statement being made by any of the Ministers or their advisers in regard to this issue at the meeting?

Mr. McLoughlin

I could not. I recollect that the Minister arrived late. It was mentioned that the Ministers of State, Deputies Callely and Tim O'Malley, were there. I remember that the Minister of State, Deputy Brian Lenihan, was not there but I cannot recall what Ministers were there when I spoke on the issue. In some ways it was immaterial, in my opinion, because we were simply dealing with the Secretary General on this issue. I am not absolutely clear who was at those meetings. Sometimes Ministers and CEOs take telephone calls on urgent business. I would not be 100% sure who was there when I discussed the issue.

Would Mr. McLoughlin not have expected a ministerial input on this issue, considering that it dates back over two or three years?

Mr. McLoughlin

If the issue had arisen a month or so afterwards, I probably would have a clearer recollection of who said what. Given that the issue was decided on the basis of what we had wanted and expected, in my opinion it was immaterial. We wanted a decision to go to the Attorney General and we wanted at least an understanding that there might be a legislative provision required as a result of this. By the time the problem became public, it was nearly a year after the meeting.

I wish to deal with the meeting. Everybody would have been aware of the Ombudsman's report, other reports and court cases. This was discussed between Mr. McLoughlin and the Department of Health and Children. A briefing note was passed around which indicated the cost to the Exchequer of this issue was in the region of €90 million or €100 million. Did Mr. McLoughlin not regard it as strange that some Minister did not raise his head above the parapet and ask what was going on? Does he find it strange that they had nothing to say in the course of this meeting?

Mr. McLoughlin

I do not recollect what they said at the meeting. I was less concerned with what was said than with what was decided and, in all honesty, I was happy with what was decided.

Since this issue became public, did Mr. McLoughlin not find it strange that the Minister never read his briefing notes?

Those questions can be put to the Minister when he appears before the committee.

Mr. McLoughlin has worked in the health service as a CEO. In his opinion, have lessons been learned and what is wrong with the system that allows this situation to happen? The system has been put in jeopardy and the taxpayers will be the ultimate fall guys. The witness is in a very good position to comment and I hope he will do so.

Mr. McLoughlin

When one considers the past decade in terms of the health system, every senior manager has been under extreme pressure in terms of the delivery of health services. I agree with the structured approach outlined in the Travers report in terms of proper risk assessment and proper analysis of issues, etc., and the framework he recommends. It must be ensured that structures are in place for the future. There are complaints about the number of additional managers but too often we probably have not identified the functions necessary to ensure that we have risk assessment plans and an ongoing strategic management of the organisation, as well as catering for the operational side. Many issues with which I deal — such as accident and emergency services, outpatient services and risk assessment in accident and emergency departments by the Health and Safety Authority — are operational in nature and receive public attention. I must now endeavour to have a separate programme and people in place who are not bogged down by that constant pressure on the delivery system so that they will be in a position to constantly identify risks — regardless of what is happening in the delivery system — and the more long-term strategic issues which must be dealt with. It is a system in which managers and others have been under pressure. It is a lesson for all of us that the simplest things, such as administrative systems and tracing systems for files, can let us down.

Do the reform proposals address the system in the Department that has led to this and which may lead to similar accidents?

Mr. McLoughlin

There is a reform programme within the Department. The Health Service Executive is the fundamental reform in terms of the delivery system. In the former health boards we would not have been aware of other legal opinion because the boards were all separate and independent legal entities. Independent legal opinion might have been obtained by hospitals in an unco-ordinated way. Health board chief executives tried to introduce co-ordination and sought the establishment of the health boards executive as a means of ensuring that we worked conjointly. We tried, by means of our monthly agendas, to share information on issues that would be appropriate for all of us.

In my opinion it is much easier when a unitary system is in place to have a more defined approach to risk assessment and a defined approach to interpretation and analysis of issues. This will benefit the system. We must ensure to develop those functions and to protect them in the future. If we do not, the types of issues that have arisen in this instance may recur. As a consequence of the lack of adherence to an effective tracer system for files, it seems all of us continued for a year in the belief that an opinion was being sought which would have dealt with the issue. However, that did not happen. There have been calls for the removal of multiple layers of administrative staff and systems. As well as dealing with the operational issues which are the focus of public concern, however, it is essential to have good basic management systems in place and effective analytical processes.

The Travers report offers an excellent template for any public service organisation in terms of ensuring its good governance and the existence of effective systems. We will endeavour to operate that template in the HSE.

It seems, therefore, the recommendations of the Travers report will go some way towards resolving the difficulties in the system.

I have already communicated my endeavours to be impartial at all times during this discussion. I ask Mr. McLoughlin to clarify a number of points. We are all now aware of the significance of the nursing home charges issue. However, it seems the discussion of this issue took place at a routine management advisory committee, MAC, meeting rather then a meeting specifically convened for consideration of that matter. Is it correct to say this was a routine meeting?

Mr. McLoughlin

I would not necessarily describe the meeting as routine. The issue of nursing home charges was considered serious but it was only one of several such matters for discussion.

Senator Feeney made the point that it was not high on the agenda and that the meeting was rushed and included many items for discussion. Those of us with experience as health board or local authority members will recall that whenever a serious issue on the agenda was not reached, a special meeting would be arranged. Was the seriousness of the issue appreciated at the time of that meeting?

Mr. McLoughlin

The agenda was partly drawn up by the Department and Health and Children and partly by the MAC. The reform programme was a critical issue for the Department, while the issue of nursing home charges for over 70s was critical for me because it was on my desk. The structure of these meetings is not to prioritise items for discussion but to get through the business as efficiently as possible. Mr. Michael Kelly was extremely adept at organising and handling meetings and ensuring there was full discussion on all issues. I was quite satisfied with the time allocated to me, the priority this issue received and the decision taken.

We are satisfied that Mr. Kelly, who will appear before the committee along with the former and current Ministers for Health and Children, was——

The Chairman is incorrect.

May I finish my point?

The agenda for that meeting indicates that the issue to be discussed before that of the long-stay charges was the proposed amendments to the Infectious Diseases Regulations 1981. The item which followed the nursing home charges issue on the agenda related to emergency planning. Both these items relate to SARS or any outbreak of infectious diseases or bio-chemical attack, issues of major public concern in 2003. The order of the items, therefore, indicates that the issue of nursing home charges was considered one of significance.

I am not trying to make any point in that regard and do not wish to be political. My aim is to establish the facts. There have been repeated claims that there is an attempt to make Mr. Kelly the fall guy. It seems some would be glad if the former Minister for Health and Children, Deputy Martin, were assigned this role. My objective is to discover what happened.

Mr. McLoughlin claimed it was immaterial whether the Minister responded to his concerns because the Secretary General was aware of the issue. We should keep this point in focus as we progress through the hearings. Mr. McLoughlin was satisfied the matter was raised at the MAC meeting and did not require a response from the Minister because the issue was effectively in the system.

Mr. McLoughlin

I do not understand it as my role to advise the Minister.

Yes. However, Mr. McLoughlin observed that if he believed the process were stifled, he would have raised the issue with the Minister. I wish to be clear on this in my own mind. Does Mr. McLoughlin accept, therefore, that he understood the process was not stifled and that matters were being progressed quite properly?

Mr. McLoughlin

Yes, the correct decision was taken at the December meeting.

I am glad to hear that and we shall move on from there. I thank Mr. McLoughlin and remind members that he is free to return should we require further assistance.

The joint committee adjourned at 1.05 p.m. until 10 a.m. on Wednesday, 20 April 2005.

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