Care home residents who receive free care on the NHS were wrongly charged over £300 per week by Care UK.
The Competition and Markets Authority (CMA) says demanding this additional cost for people whose care should be free broke consumer protection law.
Care UK has agreed to refund more than 160 NHS-funded residents at more than 20 Care UK homes in England by the end of November. Most people will receive more than £1,000, with some residents receiving substantially more depending on their circumstances.
If you receive NHS Continuing Healthcare and paid this additional fee to Care UK from 1 October 2015, you may be due a refund.
Care UK will be contacting eligible people throughout November 2020 via letter to arrange for the fee to be paid back.
Care UK has now signed a formal commitment to stop charging this additional fee for NHS-funded residents at its homes. But the company, which is one of the UK's largest , rejects the CMA's suggestion that the charges were unfair.
The care provider initially claimed that the additional fees were necessary to cover the costs of its premium accommodation, and they insisted that it provided extra consumer choice, allowing residents to pay the difference between what the NHS was willing to fund and the costs of their premium rooms. Care UK called the CMA action 'a backwards step in terms of consumer choice'.
Michael Grenfell, executive director of enforcement at the CMA, said: 'Older people receiving Continuing Healthcare funding are some of the most vulnerable in our society and should not be expected to pay extra fees towards their essential care.
'We are pleased to see Care UK committing to make repayments as quickly as possible and to stop charging this additional fee altogether, which is good news for all current and future residents.'
NHS Continuing Healthcare is a special type of funding where essential care is arranged and fully funded by the NHS for people with a significant, ongoing health condition.
It's most often awarded to people in care homes who have the most complex or unpredictable medical care needs due to disability, accident or illness. It means that the full cost of the care home fees are covered, including room and board.
Emergency legislation passed during the coronavirus pandemic meant that some NHS Continuing Healthcare assessments were suspended. They were due to resume from 1 September 2020, but local authorities face a backlog of around 25,000 assessments not carried out since the suspension on 19 March.
The latest action against Care UK is part of a wider ongoing CMA probe into the care home market. The investigation started in June 2017 after concerns that some care providers had contract terms that might breach consumer law. The focus was on residents who pay for their care, and the specific issues of large upfront administration fees and the charging of fees after a resident's death.
This is not the first time that the CMA has taken action against Care UK. In February 2019, the CMA launched legal proceedings against Care UK to force the company to refund more than 1,600 residents who were charged upfront administration fees of up to £3,000. The case has been scheduled to be heard in the High Court in May 2021.
In November 2018, the CMA published its consumer law guidance for care home providers. This advice includes the information that a care home must provide to consumers upfront; what they should do to make sure their contract terms are fair and that customers are treated fairly, and how to ensure they have a complaints procedure that is fair and easy to access.
Care home fees differ depending on the type of home you are looking for, your care needs and where you live.
If you're choosing a care home, you need to be scrupulous. Don't get caught out by unfair terms. Before you sign a care home contract, it's essential to read it carefully and understand what you're agreeing to.