Kerins v McGuinness
 IEHC 34
THE HIGH COURT
Mr. Justice Noonan
Ms. Justice Kennedy
[2014 No. 431 JR]
Representation of people – The Health Act 2004 – Inquiry into State funding in charity sector – Proceedings before Public Accounts Committee of Dail Eireann (PAC) – Validity of content and scope of inquiry conducted by PAC – Jurisdiction of PAC – Dail Standing Order 163 – Part 7 of the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013 – Bias – Separation of power – Extent of judicial interference in executive decisions – Freedom of speech – Art. 15.13 of the Constitution
This matter arises out of certain proceedings that took place before the Public Accounts Committee of Dáil Éireann (‘the PAC’) on 27th February, and 10th April, 2014. Arising from those proceedings, the applicant (Ms. Kerins) seeks certain injunctive and declaratory reliefs and damages by way of judicial review. A modular trial of the applicant's claim was directed by this court and on appeal, the Court of Appeal. Thus the issue of damages does not arise for determination in this module.
Ms. Kerins qualified as a nurse and midwife and worked in healthcare management positions before taking up employment with the Rehab Group in 1992. In December 2006, she was appointed Chief Executive Officer of the Rehab Group, a position which she held until her resignation in April 2014. The first thirteen respondents were at the relevant times members of the PAC and Dáil Éireann.
The Rehab Group (Rehab) is a company limited by guarantee and a registered charity. It was incorporated on 28th July, 1953. It was formerly known as the Rehabilitation Institute and the Rehabilitation Institution Ltd. It is an independent not for profit company.
Rehab comprises a mix of charitable and commercial companies and at the relevant times operated in Ireland, England, Scotland, Wales, Poland, the Netherlands and Saudi Arabia. Its total staff amounted to in excess of 3,500. It had some 80,000 service users annually. The income of Rehab is derived from a number of different sources. Among those sources are three which provided public monies. It is important to point out that although public monies were provided to the Rehab Group, it was at all times an independent entity operating in the private sector. Ms. Kerins was a private sector employee. She was not a public servant. She did not enjoy access to the public sector pension scheme.
The first element of public funding received by Rehab was as a result of a competitive tendering process whereby it entered into service level agreements (SLA's) with the Health Service Executive (the HSE) pursuant to the provisions of s. 39 of the Health Act 2004. The payment received on foot of those agreements was in consideration of the provision of specified health and social care services by Rehab. Under these SLA's the HSE retained oversight rights in respect of the service and the Rehab Group was obliged to maintain audited accounts and make them available to the HSE.
Rehab was also in receipt of payment for services from other State agencies apart from the HSE. Such funding included payments by an entity called Solas which was in respect of services provided by Rehab pursuant to contractual arrangements with Solas.
The third source of public funding came via the Department of Justice and Equality. Such payments were made under the Charitable Lotteries Scheme. Those funds were designed to compensate for the restrictive legislation that charity lotteries, including Rehab, operate under when compared to the unrestricted prize fund of the State owned National Lottery.
It is right to point out that both the HSE and Solas considered that the services provided by Rehab on foot of the contractual arrangements entered into with both entities represented value for money. This acknowledgment was made by both the HSE and Solas at a meeting of the PAC on 27th February, 2014. Insofar as the monies provided by the Department of Justice and Equality were concerned they were the subject of a detailed report provided to that Department on an annual basis. No complaint has been made by that Department against Rehab concerning how those monies were spent.
As Rehab was not within the remit of the Comptroller and Auditor General it was never audited by him.
The PAC is a committee of Dáil Éireann.
At all material times the first respondent (Mr. McGuinness) was the chairman of the PAC. It is composed exclusively of members of the Dáil. It is defined in s. 2 of the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013 (‘the 2013 Act’) as meaning ‘ the committee of Dáil Éireann established under the rules and standing orders of Dáil Éireann to examine and report to Dáil Éireann on the appropriation accounts and reports of the Comptroller and Auditor General’.
The Health Act 2004
The bulk of the public funds received by the Rehab Group are paid to it by the HSE pursuant to s. 39 of the Health Act 2004.
The HSE funds more than 2,600 agencies which operate more than 4,200 separate funding arrangements to a value of approximately €3.3 billion. A total of 39 of these agencies, accounting for €2.4 billion, are funded under s. 38 of the Health Act 2004. The remaining agencies, of which there are more than 2,500, are funded under s. 39 of that Act. The practical difference between these two statutory provisions is to be found in testimony which was given before the PAC by Mr. Tony O'Brien, the Chief Executive of the HSE. He said:
‘Under s. 38 the HSE may enter into an arrangement with the service provider for the provision of health and personal social services on its behalf. Under s. 39, the HSE may give assistance to a person or body to provide a service similar or ancillary to a service that the executive may provide. The governance context in which the HSE engages with s. 39 agencies is distinctly different from that which applies in the case of s. 38 agencies. For example, the employees of s. 39 agencies are not public servants, are not members of public service pension schemes and, unlike their s. 38 counterparts, are not directly bound by the Department of Health consolidated salary scales. In a situation where a funding arrangement under s. 39 was reclassified as coming under s. 38, the cost to the State of providing that service would likely increase in a material sense in the immediate and long term due to increased public sector numbers, pay rates and pension costs as well as the loss of the current flexibility around development and reorganisational services. No such reclassification has taken place in recent years.’
His evidence makes clear and indeed it is common case that monies paid to Rehab by the HSE were paid pursuant to the provisions of s. 39 of the Act.
Prior to February 2014, there was a degree of public controversy about the charity sector in Ireland. The issue of executive pay in the sector was the subject of extensive media coverage. Expenditure by the HSE on the provision of services to persons with disabilities was a matter of public debate. In 2013, Rehab received €86m from the HSE and Solas in respect of SLAs entered into in that year. It received €3m from the Department of Justice and Equality in respect of the Charitable Lotteries Scheme. There appears to have been considerable media interest in Ms. Kerins' salary. By letter dated 22nd January, 2014, the PAC wrote to Ms. Kerins informing her that it was examining the issue of State funding to Rehab. The letter said:
‘The request to both [the HSE and the Department of Justice and Equality] relates, in the main, to oversight and conditions of funding and the Committee has also sought access to any evaluations undertaken of the funding provided by the State to the Rehab Group. The Committee also directed me to make contact with you in relation to these matters so as to afford the Rehab Group the opportunity to outline to the Committee the outturn and outcome achieved by Rehab of the funding received from the State.’
On 24th January, 2014, Ms. Kerins met with Mr. McGuinness privately to discuss her attendance before the PAC. On 17th February, 2014, Rehab issued a press release concerning Ms. Kerins' salary. By letter of 18th February, 2014, the PAC invited Ms. Kerins to appear before it as a witness. The letter said:-
‘I wish to inform you that the Committee has set aside Thursday 27th February 2014…for examination of the following matter:-
Payments made by the HSE to Rehab under s. 39 of the Health Act, 2004.
The operation of the Charitable Lottery Scheme and payments made to Rehab from the vote of the Department of Justice and Equality.
Payments made by Solas...
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