A judicial review will scrutinise how Devon County Council pays for places in private care homes, amid allegations that local authorities "bully" providers.
Operators have long raised concerns that their clients are now older and more ill than ever before, because of stricter guidelines about who qualifies for care home places. They say they are expected to provide an ever-higher standard of care despite ever-tighter budgets.
Now a group of four Devon care home operators has obtained permission from the High Court for a judicial review on how the council determines the fees it pays for residents in their care.
Martin Green, of the English Community Care Association, said it was the latest in a string of reviews across the country. He said most had been won by the care homes, and had highlighted the "dictatorial" behaviour of local authorities.
"Care homes are seriously under-funded and these judicial reviews are proving it," he said. "You get situations where the costs are so low that people can't invest in staff training and upgrading their buildings. Local authorities think they stand outside the law, but these reviews prove they do not. Many of them bully and abuse care providers and demand that they give a high level of care at a ridiculously low price."
Devon County Council's rates of pay for care home places are well below those recommended in a report by Laing and Buisson into reasonable standards of pay. In 2009, it recommended a weekly payment of £665 for the highest bracket of a placement with nursing needs. The council paid £533 at the time.
The four operators bringing the action are: Southern Healthcare (Wessex) Ltd, South West Care Homes Ltd, South West Residential Homes Ltd (a wholly-owned subsidiary of South West Care Homes Ltd), Forde Park Care and Palm Court Nursing Home.
Speaking on behalf of the companies, Alan Beale, managing director of South West Care Homes, said he was "disappointed" that the review was necessary, after a long period of attempting to negotiate had failed. He said care homes now felt they had "no choice" but legal action to secure the future for residents and their homes.
"We are absolutely committed to making sure our residents receive high-quality personal care based on their individual needs, are treated with dignity and respect, and have as much choice and control as possible over their own care plan.
"Against a background of rising costs, growing numbers of older people in Devon and increasing financial constraints, this high quality of care is extremely difficult to maintain – and something has to be done."
The hearing is expected to take place this spring.
A Devon County Council spokesman said: "The care and welfare of Devon's vulnerable people are, and have always been, at the heart of our decision-making, and we are disappointed that a judicial review has been granted in this case ."