The ongoing standoff between the Compensation Fund and private healthcare provider Netcare over the alleged “dysfunctionality” of the CompEasy system has reached a critical juncture, raising concerns about whether Netcare will follow through on its warning to stop admitting non-emergency occupational injury and disease patients. While the resolution remains uncertain, one thing is clear: this escalating conflict will not be easily resolved.
In a recent case before the High Court, Netcare sought a declaratory order confirming that the CompEasy system is “dysfunctional”. The healthcare provider also requested a mandatory order compelling the Compensation Fund to fulfil its statutory duties, including acknowledging receipt of claims, assessing them, making decisions, and processing payments within prescribed timeframes.
In its pleadings, Netcare reiterated that unless the “dysfunctionality” of the CompEasy system is urgently addressed, it might have no choice but to stop admitting non-emergency occupational injury or disease patients at its hospitals.
In his judgment delivered on 12 December last year, Acting Judge Vuyani Ngalwana outlined seven reasons why Netcare’s application could not succeed. However, he cautioned that if Netcare were to halt the admission of non-emergency occupational injury or disease patients, it would unfairly prejudice workers who rely on the system for treatment.
“This is not a matter that is incapable of amicable resolution between the parties in good faith,” Judge Ngalwana noted, stating that the case “cried out for mediation”.
He added, “Had rule 41A empowered a court to direct a referral to mediation after judgment, I would have done so. Nevertheless, I would urge the parties to consider mediation in the best interests of all concerned, especially the employees who suffer workplace injuries or diseases, and for whose benefit the Fund was primarily established.”
Netcare has confirmed that it is appealing the decision and has since filed the relevant court papers.
In the meantime, Netcare’s legal counsel and group secretary, Charles Vikisi, told Moonstone that Netcare’s policy on treating patients with non-emergency occupational injuries or diseases remains unchanged.
“The court’s decision also does not affect patients,” Vikisi said.
Regarding the judge’s recommendation to pursue mediation, Vikisi stated that Netcare had, over many years, attempted to resolve this matter through engaging with the Compensation Fund to no avail before pursuing litigation as a final resort.
“We remain hopeful of reaching a solution to the impasse, and open to any engagements aimed at ensuring that Netcare is reimbursed for treatment provided to patients for Occupational Injury and Disease (COID) related treatments,” said Vikisi.
What Netcare says
The Compensation Fund, established under section 15 of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA), is tasked with compensating employees for work-related injuries and diseases when no other party is liable. Its responsibilities include covering medical aid costs, providing financial compensation, and offering other benefits to affected employees or their dependents.
In the case heard in the High Court, Netcare states that only 3% of its patients fall into the category whose accounts are required to be paid by the Compensation Fund. However, the private healthcare provider emphasizes that the amounts owed by the Fund are substantial, running into hundreds of millions of rands, and this has a significant knock-on effect on its broader resources.
Netcare argues that the CompEasy system is “dysfunctional” for several reasons:
- Lack of transparency in claims management: The system does not allow Netcare or the Fund to identify which claims have been accepted or adjudicated as occupational injury claims, which have been approved or paid, and which are still pending adjudication or approval. For example, Netcare contends that the Fund’s stated amount of outstanding claims is approximately R280 million less than what Netcare believes it is owed.
- Inaccurate remittance advices: Remittance advices fail to clearly indicate which claims have been short-paid and the reasons for such short payments.
- Employer non-compliance: Employers often fail to report occupational injuries to the Fund, even though COIDA makes this a criminal offence. A claim can only be paid after the employer has reported the injury and the Fund has adjudicated and accepted it.
- Barriers to reporting by Netcare: Although Netcare can notify the Fund of an occupational injury, enabling it to recover fees and charges, this process is not possible under the CompEasy system. Only an employer’s report triggers adjudication and acceptance of liability by the Fund.
- System incompatibility: The CompEasy system does not integrate with Netcare’s digital systems.
- Lack of document tracking: The system does not indicate which additional documents, information, or reports are needed if a claim is rejected. Furthermore, it does not show whether these additional documents have been uploaded to the system.
- Outdated communication protocol: The CompEasy system does not utilise the industry-standard business-to-business communication protocol, further hampering its efficiency.
Netcare contends that these systemic issues severely impede its ability to recover payments and maintain its operational efficiency.
What the Fund says
The Fund maintains that the non-payment of Netcare’s claims stems from factors unrelated to the alleged dysfunctionality of the CompEasy system.
These factors include:
- Employers failing to register or report incidents as work-related occupational injuries.
- The Fund justifiably rejecting or repudiating claims for liability.
- Insufficient training of Netcare staff on the system, despite the Fund having provided prior training sessions.
- Netcare’s refusal to comply with prescribed billing procedures.
- Claims being submitted outside the timeframe stipulated by COIDA.
The Fund also claims that Netcare is the only group of service providers encountering the so-called “bubble problem,” where approved claims remain unpaid. It asserts that other groups adhering to the system do not face similar issues.
According to the Fund, part of the reason for short payments, rejections, and “bubble problems” in relation to Netcare’s claims lies in Netcare’s insistence on using “fee-for-service” codes, which are not compatible with the CompEasy system. The system, instead, operates using “per diem” codes.
Netcare, however, disputes these assertions, insisting that it is not the only service provider experiencing challenges with the CompEasy system. In support of this, Netcare stated that the Chief Executive of the Hospital Association of South Africa had submitted an affidavit supporting Netcare’s position.
Netcare also clarified that the “bubble problem” is specific to patients with burn wounds. For all other claims, it uses the Fund’s “per diem” codes as required.
What the judge says
The judge ruled that none of the orders sought by Netcare could be granted, citing several reasons:
- Factual disputes: The case involved significant factual disputes about the CompEasy system’s functionality, which could not be resolved in a motion court. These disputes were foreseeable by Netcare when it opted for this route. Even if referred for oral evidence or trial, the case would face the challenge of judicial overreach.
- Judicial overreach: The court cannot impose obligations on an organ of state that the legislature has not prescribed. Netcare failed to identify any provision in COIDA or its regulations that imposes the duties it sought to enforce. The judge noted, “The proper approach… is for such a litigant to challenge the constitutional validity of the empowering statute.”
- Unfeasible relief: Netcare had sensibly abandoned its request for an order preventing the Fund from using the CompEasy system until certified as functional. Such an interdict would halt claims processing, risking claims expiring and prejudicing employees, service providers, employers, and other stakeholders.
- System functionality: The court found that Netcare’s own evidence did not support its claim of dysfunctionality. For instance, Netcare acknowledged existing functionalities such as notifications for invoices and payment remittance advice, contradicting its assertions that these were absent.
- Policy implementation: The judge highlighted that Netcare’s challenge was effectively against how the Fund’s officials were implementing policy, which should be addressed on a case-by-case basis rather than with blanket relief.
- Policy choice: The CompEasy system was a policy measure aimed at reducing fraud and fictitious claims. The judge noted that without a constitutional challenge to the legislation, the proper way to go about it in these circumstances “is to challenge the conduct of the officials in their implementation of the system, rather than the system itself”.
- Unjust preference: Granting Netcare’s relief would set a precedent for allowing one group of service providers to dictate an organ of state’s billing system, which the judge deemed inappropriate: “The tail would be wagging the dog.”
- Alternative remedies: Netcare failed to demonstrate the lack of alternative relief. The judge pointed out that Netcare could pursue options such as suing the Fund for payment of accepted claims via provisional sentence summons.
“There are numerous other options that are reasonably open to Netcare, including suing the Fund for payment of its accepted claims by way of provisional sentence summons,” said Judge Ngalwana.
