Alice Brown, the ombudsman, said it would be too costly to appeal when she appeared in front of Holyrood's local government and communities committee.
Professor Brown added that the case had already cost her office an estimated 100,000.
Lord Macphail backed Argyll and Bute Council last month when the local authority had taken the ruling to court. It caused a major row, with ministers criticised for not making legal representations in court on the issue.
Prof Brown told parliament's local government committee: "We decided not to appeal on the grounds of costs and the time needed."
A pensioner's son, William McLachlan, had complained after the council failed to provide funding for the free personal care of his father.