State kept interest on patients' income illegally

The Government faces a new controversy over illegal nursing home charges following advice from the Attorney General that health authorities had no legal basis for retaining interest on millions of euro held for safe-keeping on behalf of patients in long-stay facilities.

The Irish Timeshas learned that the Health Service Executive is preparing to repay the money involved.

Initially interest will be repaid to 15,000 patients, or their estates, who had accounts held by the HSE since 2005.

The HSE is taking further legal advice on interest retained on accounts held by the former health boards in previous years.

Repayments for 2005 alone could cost up to €1.8 million. However, the bill for the Government could be substantially higher if interest retained in earlier years has to be repaid.

The HSE said that assuming an interest rate of 3 per cent, the holders of the 15,000 accounts in 2005 could be due between €70 and €120 each for that year.

The new repayment scheme is separate to the €1 billion reimbursement of patients who were illegally charged for their stay in nursing homes.

HSE chief Prof Brendan Drumm and the secretary general of the Department of Health, Michael Scanlan, are expected to be questioned about the issue at the Dáil Public Accounts Committee today.

According to the most recent accounts, the HSE held more than €72 million in patients' private accounts in 2005.

These accounts, which are held separately from HSE funds, contain patients' private income, such as pension payments

However in the past, interest generated by investment of this money was retained by the former health boards and not paid over to the patient. Instead, it was used to defray the cost of administering the accounts.

This practice had been questioned in the past and following committee hearings in 2005, the HSE and the Department of Health agreed to seek definitive legal opinion.

It is understood the Attorney General advised the Department of Health late last year that the practice of retaining interest was unlawful. This advice concurred with that provided earlier to the HSE by separate counsel.

An internal report provided to the board of the HSE before Christmas said that the former health boards had operated on the basis of various legal advices which indicated that they were either entitled to retain any interest or to levy a charge to recoup their costs. It said that on foot of new advice received, it was "considered appropriate that HSE disclose a potential obligation in respect of this matter".

"It is not practical to reliably estimate the likely value of this potential obligation on the basis that our investigations to date indicate that, due to the passage of time, there will be significant gaps in the availability of records that are sufficiently detailed to facilitate the identification of the amount of interest to be repaid to individual patients or the identity of individual patients or estates of deceased patients in a significant number of cases," the report stated.

The HSE said last night that no charges had been levied or interest removed since it received legal advice in September 2005.

It said that work was under way to repay the past interest retained by the HSE for 2005 and 2006 and that a centralised unit had been established to manage patients' private accounts.

It said that money arising from the existing nursing home repayment scheme and lodged to private accounts had been earning interest since last month. It expected that interest would be credited to individual accounts by the mid-year.

A spokesman for Minister for Health Mary Harney said that she had made provision in legislation last year to put the maintenance of patients' private property accounts on a statutory basis.