256.The Report of an Efficiency Scrutiny on Prescription Fraud, published in June 1997, recommended specific new penalties for the evasion of prescription charges, upon which the provisions in this section are based. They are consistent with the strategy document Countering Fraud in the NHS published in December 1998.
257.Section 39 inserts new sections 122A, 122B and 122C into the 1977 Act. They contain two provisions, a civil penalty and a new criminal offence, designed to deter the evasion of NHS charges. Both will apply to NHS charges for prescriptions, dental treatment or optical services, including those provided for hospital out-patients, and to payments or benefits such as NHS spectacle vouchers, or free NHS sight tests.
258.It is intended that regulations will be made which will provide for a civil penalty to be imposed where a person fails to pay a NHS charge, or receives a payment to which he is not entitled, towards the cost of a NHS charge or service. Exemptions from charges are granted for a number of reasons such as age, certain medical conditions, receipt of some Social Security benefits, or where the patient is on low income. The regulation making power in the new section 122B will allow regulations to provide for a penalty notice to be issued requiring payment of the original charge or any repayment of an original payment and an additional penalty charge, where it is found that an exemption, reduction or payment has been wrongly obtained.
259.Under the powers in new section 122B, regulations will be made which will set out the information that penalty notices must contain, the amount of the penalty payable, the payment period and the arrangements for payment. The amount of the penalty will be subject to the maximum in subsection (2) which is either £100 or 5 times the unpaid charge, whichever is the less. Subsection (3) provides a power allowing these maxima to be changed by order which, under subsection (8), would be subject to affirmative resolution.
260.Under new section 122B(4) regulations may also provide that where the penalty charge is not paid within the period prescribed, a surcharge would be made of up to 50% of the penalty charge. All sums payable under the penalty provisions will be recoverable as a civil debt.
261.Where more than one person may be liable for payment, for example, where a patient has a representative who signs forms or claims on his behalf, new section 122A(3) provides for them to be liable for payment jointly and severally. In practice, either the patient or the representative could be held liable to pay a penalty according to the circumstances, but the amount in question may only be recovered once. Under new section 122B(7)(b) a person is not to be liable if he shows that he did not act wrongfully, or with any lack of care in respect of the charge or payment in question.
262.Section 39 also creates a new criminal offence where a person secures, for himself or another, the evasion, reduction or remission of a NHS charge, or a payment for which there is no entitlement towards the cost of a NHS charge or service. The acts which will give rise to criminal liability are:
	knowingly making a false statement or representation (or asking or allowing another person to do so); and
	tendering a document or information which the person doing so knows to be false in a material particular (or asking or allowing another person to do so).
263.New section 122C(7) provides that if a person is convicted of an offence under that section in connection with a charge or payment, then he cannot also be liable to pay a penalty charge in connection with that same charge or payment. The converse is also true, i.e. if a person (having been issued with a penalty notice) pays a penalty charge, then he cannot be convicted of an offence in connection with that particular charge or payment.
264.Such behaviour is already a criminal offence under section 15(1) of the Theft Act 1968, but, to date, no prosecutions relating to the evasion of NHS charges have been brought under that provision. The reason for this appears to be the generally small amounts of money involved compared to the likely cost of such a prosecution. The costs of a prosecution under the Theft Act tend to be high given that offences under that Act can be prosecuted “either way”, meaning that an accused can opt for trial either in the Crown Court (a jury trial) or the Magistrates Court. The former is more costly and is considered to be an option which many defendants would be likely to choose.
265.The new offence will be a summary offence only and will be heard in the Magistrates Court. Where a prosecution is brought by the Secretary of State, new section 122C(4) provides that any person authorised by the Secretary of State may conduct proceedings without being legally qualified. It is anticipated that the costs of such prosecutions will be much lower than under the existing Theft Act provision, with a consequent increase in the likelihood of prosecution, and thereby in the deterrent effect of the provisions.
Commentary on Sections Schedule 2 Section 39: Evasion of charges etc.