Could the Proceeds of Crime Act 2002 be used to recuperate money from the disgraced breast surgeon Ian Paterson and his employer, Spire Healthcare?
The United Kingdom (UK) has a long legislative history of confiscating the proceeds of criminal activity. Its origins are associated with the decision of the House of Lords in R v Cuthbertson,(( A.C. 470 HL.)) where despite the defendants being convicted of conspiracy to manufacture and distribute drugs, the court concluded that the forfeiture powers under the Misuse of Drugs Act 1971 were limited to “physical items used to commit the offence”.((Cuthbertson  A.C. 470 at 479G.)) After a series of ineffective measures to correct this a broader confiscation regime was introduced by the Proceeds of Crime Act 2002, which has since been amended by the Serious Crime Act 2015 and the Criminal Finances Act 2017. The aim of these provisions has been to eradicate the so called ‘champagne life style’ of the ‘kingpins’ of organised criminals in the UK. The confiscation provisions have been used to target several well-known criminals including Curtis Warren, a former Liverpool bouncer turned drug dealer, who was ordered to pay £198m after he was unable to prove that he had not illegally earned the money. However, the effectiveness of these measures continues to be questioned. The most blatant fault of the confiscation regime is that only a very small percentage of the outstanding monies ordered to be paid have been collected. In 2016, the National Audit Office concluded that the total amount of money overdue exceeded £1.6bn.
It is against this background that we turn our attention to the conviction in 2017 of Mr Paterson, who was sentenced to 20 years imprisonment for performing needless cancer operations on ten women at the private Spire Parkway Hospital in Solihull (although there were several hundred other victims). As of August 2017, the National Health Service had paid approximately £17m in compensation to patients Paterson treated at the NHS hospital where was employed, and in September 2017 Spire Healthcare announced that it would contribute just over £27m to compensate Mr Paterson’s private patients for “the physical and psychological pain they suffered undergoing unnecessary treatment”. This raises the question of whether the confiscation provisions of the Proceeds of Crime Act 2002 could be used against Mr Paterson or his employers. The scope of the confiscation provisions under Schedule 2 of the Proceeds of Crime Act 2002 (POCA) includes drug trafficking, money laundering, directing terrorism, slavery, people trafficking, arms trafficking, counterfeiting, intellectual property, prostitution and child sex, blackmail and ‘inchoate offences’ – offences that have not yet been completed or are undeveloped. This last category of offence could possibly be used for the purposes of a confiscation order under POCA if Paterson was planning more unnecessary operations, but this is a very complicated area of law and a more detailed discussion is beyond the scope of this brief comment.
A confiscation order is imposed by a court, following conviction of the defendant, to recuperate the assets obtained by the defendant as a result of the crime, and there are several cases that suggest Mr Paterson could be required to repay the proceeds of his unlawful conduct. For example, in August 2017 Paula Vasco-Knight, a former NHS Chief Executive was ordered to provide information about her financial assets under POCA, after pleading guilty to fraud charges, and this matter is still before the courts. Many other confiscation orders have been imposed and if the defendant is unable or in some cases unwilling to repay the money, a custodial sentence could be imposed. For example, in March 2016 the convicted fraudster Phillip Boakes was sentenced to 730 days imprisonment for not satisfying the full value of a confiscation order against him. Therefore, in theory, it could be possible to use the criminal confiscation mechanisms against Mr Paterson under the Proceeds of Crime Act 2002.
The further possibility that Spire Parkway Hospital, or its owners Spire Healthcare, might be subject to a confiscation order for having made substantial profits from Paterson’s criminal activity is complicated by the relationship between him and Spire Healthcare, who claim that he was not their employee and they are therefore not responsible for his actions. Although under the regulations of the Health and Social Care Act a consultant with practising privileges at a private hospital is clearly deemed an employee, one of the most complicated and perhaps most controversial aspects of the UK’s criminal justice system relates to the criminal liability of companies for acts committed by its employees. In the infamous case of Tesco v Nattrass the House of Lords determined that in order for criminal liability to be imposed on a company, it must be satisfied that the guilty person has a ‘directing mind and will of the company’.(( A.C. 153.)) Additionally, the common law rules that relate to the potential liability of any company are also very complicated and have been hampered by the ‘identification doctrine’.((See for example Lim, E. ‘A critique of corporate attribution: directing mind and will and corporate objectives’ (2013) Journal of Business Law, 333 and Wells, C. ‘Corporate criminal liability: a ten year review’ (2014) Criminal Law Review, 12, 849-878.)) It would therefore be very difficult to determine if any corporate liability could be imposed in this particular case.