A decision by the Road Accident Fund (RAF) to reject claims for medical expenses where these expenses have already been paid by medical schemes is not in line with the provisions of the Medical Schemes Act (MSA), says the Council for Medical Schemes (CMS).
Discovery Health and the RAF are engaged in litigation over reimbursements for claims arising from motor vehicle accidents.
Historically, a person’s medical scheme membership has not removed or diluted the RAF’s obligation to compensate him or her for the medical expenses (provided the person was not solely responsible for causing the accident).
Typically, schemes cover the initial medical expenses incurred by members who are injured in road accidents. Once the RAF has settled an accident victim’s claim – which can take years – the scheme will be reimbursed for medical expenses covered by the RAF.
But in August last year, the RAF issued a directive stating it would reject claims for medical expenses where these expenses had already been paid by a medical scheme.
Discovery took the RAF to the High Court and succeeded in interdicting the fund from implementing its directive.
The High Court and the Supreme Court of Appeal dismissed applications by the RAF for leave to appeal against the judgment.
The RAF subsequently petitioned the Constitutional Court for leave to appeal. Discovery has opposed the RAF’s application. The Constitutional Court has yet to make a ruling.
Discovery has unsuccessfully attempted to obtain an order forcing the RAF to resume the payment of past medical expenses for injured medical scheme members. The High Court heard an application for leave to appeal this ruling in August, and judgment was reserved.
Clearing up anomalies
The CMS published a “legal review” of the matter, written by the regulator’s senior manager for legal services, John Letsoalo, and benefits management senior analyst Mpho Sehloho.
They said the CMS is not obliged to comment on matters “remote to its mandate”. But “as a responsible regulator, it became a necessary act to clear [up] any anomalies”.
Most medical schemes provide for the handling of motor vehicle claims in their rules, wherein members can claim compensation from the RAF for such claims and any future healthcare services that may arise because of a motor vehicle accident.
It is also common cause that where the RAF is responsible for claims that a medical scheme has paid in terms of its rules and the MSA, the RAF should refund to the scheme the amounts paid.
Members of medical schemes who have claimed directly from the RAF and received compensation for such claims must pay back such amounts to the scheme. This is commonly known as subrogation, Letsoalo and Sehloho said.
If a member does not receive any compensation from the RAF after claiming, the scheme remains liable for the costs of the treatment, subject to its rules, and the member must not be required to repay such funds to the scheme. The scheme may, however, attempt to recover such amounts paid from the RAF for the benefit of its members, they said.
Subrogation allows schemes to minimise losses as a result of these claims and keep members’ contributions reasonable, by holding responsible parties accountable. It also prevents members from being “overcompensated” or unjustifiably enriched for the loss because they should not receive double compensation from both the medical scheme claim payout and the recovery from the RAF.
Risk-pooling undermined
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.
“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.”
It is not in the interest of members if schemes are required to claw back payment made on behalf of members because the RAF does not pay these costs. Moreover, the non-recovery of these costs by schemes negatively and unfairly withdraws from the entire risk pool that is aimed at benefiting all the members, Letsoalo and Sehloho said.
The World Health Organization defines pooling as “accumulation and management of revenues in such a way as to ensure that the risk of having to pay for healthcare is borne by all members within the pool, not by each contributor individually”. By implication, the RAF’s refusal to refund medical schemes leads to the unfair deterioration of the entire risk pool.
Within this context, the CMS believes the RAF’s refusal to refund medical schemes is not in line with the provisions of the MSA and is not in the interest of scheme beneficiaries, they said.
Discovery comments
Discovery Health said it agrees with the CMS’s interpretation and supports its position.
The CMS correctly noted the negative effect on medical scheme reserves when members are excluded from RAF payments. “This constitutes an unfair discrimination against medical scheme members as road users who also pay the fuel levies,” said Dr Ryan Noach, the chief executive of Discovery Health.
The RAF was approached for comment, but it has not done so.
