Discovery Health intends to appeal high court judgment, ‘given its far-reaching implications’.
Higher monthly medical aid premiums are a looming possibility if a recent judgment in favour of the Road Accident Fund (RAF) is not successfully appealed.
The court ruled that the fund is not liable for payment of the past medical expenses of road accident victims whose medical schemes have already paid those costs.
The majority judgment was handed down earlier this week by a full court of the High Court in Pretoria by Gauteng Division Judge President Judge Dunstan Mlambo and Judge Noluntu Bam, with Judge Ingrid Opperman dissenting.
Judge Opperman referred to the order handed down on 27 October 2022 by Judge Mandla Mbongwe in the High Court in Pretoria that declared unlawful the 12 August 2022 RAF directive, which instructed RAF employees not to make any payments to claimants if their medical aid scheme has already paid for their medical expenses arising from a road accident.
She said Judge Mbongwe listed the consequences for Discovery Health’s scheme members and their clients if this RAF directive was implemented, and recorded that the rejection of claims to pay past medical expenses to claimants meant that:
- Medical aid schemes would no longer be receiving reimbursement for past medical expenses incurred for medical treatment of their clients whose rights to recover these expenses from the RAF stood to be taken away from them;
- Medical aid schemes would suffer a significant, unplanned loss of income that would require that they reassess and increase monthly premiums payable by their clients to ensure the sustainability of the schemes;
- Members would be prejudiced in that they would contribute to the RAF fuel levy but would not receive full compensation from the RAF in the event of sustaining injuries caused by the wrongdoing of a negligent driver; and
- Medical aid schemes might find it viable to exclude claims for medical expenses arising from motor vehicle accidents, which would entitle RAF claimants to claim for past medical expenses, but this in turn would undermine the very purpose of the schemes because members would be forced to incur the costs upfront and claim later.
Discovery Health indicated in a previous court application that medical schemes incur an irrecoverable loss of about R500 million per year when the RAF fails to pay medical scheme members for past medical expenses resulting from a road accident.
Discovery Health CEO Dr Ron Whelan said this week it disagrees with the judgment and, given its far-reaching implications, Discovery Health intends to apply for leave to appeal it.
Further comment was requested from Discovery Health about the implications and consequences of this week’s judgment if it was not successfully appealed but a response has not yet been received.
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Medical Schemes Act
Comment was also requested from the Council for Medical Schemes (CMS) on the impact of the judgment on the viability and sustainability of medical schemes.
CMS spokesperson Stephen Monamodi said the CMS is still studying the judgment and is unable to comment at this stage.
However, the CMS said in September 2023 it believed the RAF’s directive that no payments must be made to claimants if their medical aid scheme has already paid for their medical expenses arising from a road accident is not in line with the Medical Schemes Act (MSA).
This was contained in a legal review of the issue conducted by CMS senior manager for legal services John Letsoalo and CMS benefits management senior analyst Mpho Sehloho, who further concluded the non-payment by the RAF of these medical costs is not in the interest of the beneficiaries of medical schemes.
Former Discovery Health CEO Dr Ryan Noach at the time welcomed this CMS statement, adding it agrees with the CMS’s interpretation and supports its position.
“The CMS correctly notes the negative effect on medical scheme reserves in the event medical scheme members are excluded from RAF payments.
“This constitutes an unfair discrimination against medical scheme members as road users who also pay the fuel levies,” he said.
Judge Mlambo and Judge Bam disagreed with Discovery Health’s claim that the principle of subrogation applies to claims submitted against the RAF by claimants.
Subrogation allows an insurer to sue any third party legally liable for the insured loss.
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Majority judgment
Judges Mlambo and Bam said any medical scheme registered under the MSA, among others, assumes liability for and guarantees the benefits offered to its members and their dependants in terms of the rules.
“The contract between Discovery medical scheme and its members is not based on the success of a claim from the fund,” they said.
“On the contrary, when the scheme pays prescribed minimum benefits (PMB’s) and emergency medical conditions (EMC’s) it is not only discharging a contractual obligation but a statutory one.”
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Dissenting judgment
In the dissenting judgment, Judge Opperman said the statutory obligation on the medical aids to pay PMBs and EMCs does not detract from the RAF’s obligation to do what its statute obliges it to do, as affirmed by Judge Mbongwe’s judgment.
She said the provisions of the MSA and the RAF Act should be interpreted together and harmoniously to avoid conflicts.
Judge Opperman said to interpret the MSA in the manner suggested in the majority judgment would lead to the result that “the one Act, the MSA, authorises reimbursement and the other, the RAF Act, prohibits it”.
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‘Responsible parties’
Letsoalo and Sehloho said in the CMS legal review that subrogation allows medical schemes to minimise losses as a result of RAF claims and keep members’ contributions reasonable by holding responsible parties accountable.
They said it also prevents members from being “overcompensated” or unjustifiably enriched for the loss since they should not receive double compensation from both the medical scheme claim payout and the recovery from the RAF.
Letsoalo and Sehloho emphasised that the financial risk associated with health interventions for which the need is uncertain is equitably shared within the covered population through a risk pool managed by medical schemes under the MSA.
“Therefore, the CMS cannot condone a situation where members of medical schemes are forced to be out of pocket due to the non-payment of medical costs by the RAF where these have since been paid out by medical schemes.
“In line with the CMS’s mandate under Section 7 of the Medical Schemes Act, it is not in the members interest if medical schemes are required to claw back payment made on behalf of members due to non-payment of these costs by the RAF.
“The non-recovery of these costs by medical schemes negatively and unfairly withdraws from the entire risk pool that is aimed at benefiting the whole membership,” they said.
Letsoalo and Sehloho said by implication, the refusal by the RAF to refund medical schemes leads to the unfair deterioration of the entire risk pool funds.
“Within this background, CMS believes the refusal to refund medical schemes by the RAF is not in line with the provisions of the Medical Schemes Act and it is not in the interest of beneficiaries of medical schemes,” they said.
Judge Opperman said Judge Mbongwe’s judgment, among other things, ruled that medical aid scheme benefits that a claimant has received, or will receive, are not deductible from their claim against the RAF for past and future hospital and medical expenses and the RAF is not entitled to seek to free itself from its obligation to pay full compensation to victims of motor vehicle accidents under Section 17 of the RAF Act.
She stressed that the Supreme Court of Appeal (SCA) and the Constitutional Court refused the RAF leave to appeal Judge Mbongwe’s order and judgment.
“As a result, these issues and findings are final and res judicata as against the RAF,” she said.
In terms of the res judicata legal principle, a matter that has been finally determined by a competent court cannot be re-litigated by the same parties through another court application.
This article was republished from Moneyweb. Read the original here.
