The Care Quality Commission has lodged a High Court claim against auditing giant Grant Thornton in a bid to curb potential losses from the regulator’s imminent legal clash with its former deputy chief executive.

Papers lodged at the court revealed Jill Finney is seeking at least £1.3m libel damages from the CQC. The regulator could also have to pay Ms Finney’s legal bill should it lose.

Her case is expected to claim that the CQC’s current chair David Prior and chief executive David Behan abused their power and acted maliciously in publishing allegations that she ordered a “cover up” of its failings.

These allegations were made in a report by Grant Thornton, which said it was “more likely than not” that Ms Finney had ordered the deletion of an internal report by Louise Dineley, the CQC’s head of regulatory risk.

Ms Dineley’s report criticised the CQC’s regulation of University Hospitals Morecambe Bay Foundation Trust.

Ms Finney denies these allegations.

Royal Courts of Justice

The CQC’s court papers suggest it will strongly contend claims by its former deputy chief executive Jill Finney

The CQC’s claim against the auditor seeks a contribution towards any “damages, interests and/or costs” incurred in the case as a result of the publication of the Grant Thornton report.

The regulator’s court papers indicated it will strongly contend Ms Finney’s allegations and argues it had a right to expect the firm would use “reasonable care and skill in undertaking the review”.

Papers prepared by Grant Thornton’s lawyers claimed the report was “in substance true” and points to disclaimers within the report that stated it was produced “exclusively” for the CQC and that the firm cannot be responsible for any loss or damage as result of the CQC’s use of the report.

The auditor’s papers claimed the decision to publish its report in June last year was made by the CQC and deny it had sought Grant Thornton’s agreement to do so.

The dispute between the CQC and Grant Thornton will only be considered if the court finds in Ms Finney’s favour.

The CQC’s defence papers draw the battle lines along which the court case will be fought.

It denied Ms Finney’s allegation that Mr Behan and Mr Prior abused their power by publishing the report and sayid her “grave allegation of malice” has no basis. 

The CQC defence also alleged that Ms Finney failed to make the new chief executive Mr Behan aware of the existence of the Dineley report on several occasions when it would have been appropriate to do so. These included discussions about commissioning the Grant Thornton report.

“The defendant will contend that this failure of governance was so fundamental that it can only have been the consequence of a deliberate decision to which the claimant [Ms Finney] materially contributed.

“The Dineley report was clearly material to the question of whether [the Grant Thornton] review was necessary at public expense,” the papers said.

CQC lawyers argued in the papers that it would have been “contrary to the public interest” not to publish the auditor’s report.

Withholding it “would have implicated the current management of CQC in perpetuating the alleged cover up”, they added.

HSJ understands a court date for the case has not yet been set.

A spokeswoman for Grant Thornton said it “fully supports the validity and accuracy of the detailed report we produced for the Care Quality Commission, believing it to be a true and accurate reflection of our findings following the in-depth investigation we were commissioned to undertake”.

In a statement released to HSJ, Ms Finney said she would be submitting a response to the CQC’s defence later this week.

This would “continue to deny” ordering the deletion of the Dineley report as well as the CQC’s “widening accusations levelled against me”.

“My legal team and I remain extremely confident in the merits of my case,” she said.