Parliamentary and health service ombudsman Ann Abraham made the claim as she outlined findings of an investigation into complaints about the level of compensation for elderly and disabled people who belatedly got NHS funding for care.
She said the problems were largely due to the DoH's 'maladministrative' means of coming up with the formula which PCTs used to calculate refunds. This meant the amount patients got was affected by where they lived.
Ms Abraham said: 'Where the NHS reviewed cases and agreed that the initial decisions [not to fund care] had been wrong, I would expect to see an appropriate level of interest paid on the reimbursed fees together with an element of compensation for the distress and inconvenience suffered.'
She said the DoH should develop 'properly considered' guidance on continuing care redress, which stated clearly how to calculate interest payments.