Court orders RAF to pay medical scheme members’ claims

The Road Accident Fund (RAF) has lost two more cases in which it relied on a judgment against Discovery Health to contest its liability for medical expenses that were paid by two road accident victims’ medical schemes.

What is sometimes referred to as “the majority decision” of the Full Bench of the High Court in Pretoria was, again, the cornerstone of the RAF’s defence in two cases heard concurrently by the High Court in Cape Town.

The latest judgment involving the Fund’s liability for past medical expenses brings to three the decisions by the Western Cape Division of the High Court that have gone against the RAF since the Full Bench’s majority decision in December last year.

The majority decision was the outcome of an application by Discovery Health for a declarator that the RAF was in breach of an order handed down in October 2022. In that order, Judge Mandla Mbongwe declared unlawful a directive issued in August 2022 (the first directive) in which the RAF instructed its employees not to make any payments to claimants if their medical scheme had already paid for their medical expenses arising from a road accident.

The medical scheme administrator also sought a declarator that the RAF’s reliance on two directives it issued subsequent to Judge Mbongwe’s order perpetuated its breach of that order.

The majority decision found no evidence that the RAF’s directives constituted a breach of Judge Mbongwe’s order.

Read: Discovery to appeal ‘far-reaching’ judgment in favour of RAF

In the two cases that came before the High Court in Cape Town, the plaintiffs claimed for damages under the following headings: past hospital and medical expenses; future medical expenses; past and future loss of earnings/earning capacity; and general damages. By the time the matters were heard, all that remained for determination was the claim for past medical expenses.

The two matters were heard together, although they were not consolidated.

One of the plaintiffs, Abdullah Jaffer, was a member of Bonitas Medical Aid, and the other, Ian Rudman, was a member of Discovery Health Medical Scheme (DHMS).

Jaffer’s past medical expenses came to R786 620.71 and Rudman’s to R107 158.87. Both plaintiffs confirmed that most of these expenses were covered by their respective medical schemes.

In its amended pleadings, the RAF contested the claims, mainly on the ground that if a plaintiff’s past medical and hospital expenses have been paid by a medical scheme, the Fund is not liable to compensate the member because the plaintiff suffered no loss by the indemnification of the scheme.

RAF did not produce the ‘confidential’ directives

In her decision handed down on 20 March, Judge Nobahle Mangcu-Lockwood noted that the RAF’s defence relied exclusively on the majority decision by the High Court in Pretoria. A “significant feature” of the judgment was its detailed discussion of the second and third directives, which were apparently issued by the RAF on 13 April 2023 and 2 November 2023, respectively.

Judge Mangcu-Lockwood said neither directive was pleaded or produced in evidence. “In fact, upon my enquiry, I was informed that the RAF refused to make them available to the court, on account of their confidentiality. There is accordingly no basis in this judgment to apply those directives or to rely on them.”

She said the first directive, which was the subject of Judge Mbongwe’s order, also did not apply in the cases before her. It was undisputed that the first directive applied from 2 August 2022 to 28 November 2022. The two matters pre-dated that timeframe. Rudman’s accident occurred on 1 January 2018 and his RAF claim was lodged on 21 October 2020. Jaffer’s accident was on 2 February 2019 and his claim was lodged on 6 June 2019. Therefore, the RAF could not rely on any of the directives discussed in the decisions by Judge Mbongwe and the Full Bench.

The Esack judgment

Judge Mangcu-Lockwood said the majority decision by the Full Bench did not overturn Judge Mbongwe’s findings. Both the Supreme Court of Appeal (SCA) and the Constitutional Court refused to grant the RAF leave to appeal against Judge Mbongwe’s order and judgment. Therefore, Judge Mbongwe’s conclusions were final and res judicata (“a matter already judged”). The majority decision itself is the subject of an appeal to the SCA.

She referred to the decision handed down by the High Court in Cape Town in February, which found that the majority decision has not altered the legal landscape in the RAF’s favour.

That case involved a DHMS member, Anwar Esack, who was injured in a motor vehicle accident in December 2015. Esack died in May 2020 before the matter was finalised, and his estate was substituted by his executrix and spouse. Esack claimed R115 436.14 for hospital, medical, and related expenses, and the court upheld his claim.

Read: Majority judgment ‘does not alter’ RAF’s liability for medical scheme members’ claims

Judge Mangcu-Lockwood said that in Esack, the RAF also introduced amendments to its plea that were similar to those introduced in the cases before her, relying substantially on the majority decision.

The High Court rejected the RAF’s arguments, having regard to the development of the common law principle of res inter alios acta (“a matter between others is not our concern”) in terms of which a claimant’s right to compensation arising from the Road Accident Fund Act may not be diminished by third-party payments.

Judge Mangcu-Lockwood said the court in Esack declined to follow the majority decision for several reasons, one of which was that it did not follow the principle of stare decisis (“to stand by things decided”) by following the decisions of the SCA and the Constitutional Court. Notable among those was the SCA decision in Bane and Others v D’Ambrosi, which concluded that the Medical Schemes Act (MSA) did not have the effect of depriving plaintiffs of their claims for hospital and medical expenses in delictual actions.

In any event, as the judgment in Esack indicated, the Full Bench was not required to, and did not, decide the issue of deductibility of payments made by a medical scheme from compensation to be paid to road accident victims.

“It is therefore clear, based on the very recent authority from this Division, that the defences raised by the RAF, which were introduced by way of the amendments, cannot avail it,” Judge Mangcu-Lockwood said.

Authority from the Western Cape Division

In addition, Judge Mangcu-Lockwood said there is “considerable authority” emanating from the Western Cape Division on the lawfulness of RAF directives that purport to reject medical expense claims that have been paid for by a medical scheme.

She referred to two cases in which the RAF relied on the first directive: Van Tonder v Road Accident Fund (2023) and Gunther v Road Accident Fund (2024).

The court in Van Tonder concluded that the case authorities went against the position adopted by the RAF in the directive. Despite applications for leave to appeal all the way to the Constitutional Court, the RAF was unsuccessful.

The same arguments were raised in Gunther, and the court similarly dismissed the RAF’s defence, which also relied on the majority decision, as well as Regulations 7 and 8 of the MSA read with section 19(d)(i) of the RAF Act. That case also set out a comprehensive study of the case law, including Van Tonder, which went against the RAF’s position adopted in the first directive.

Judge Mangcu-Lockwood concluded there was no doubt that the arguments raised by the RAF in the present matters went against long-established authorities, and they must accordingly fail. The majority judgment went against these established authorities, and the Western Cape Division has declined to follow it. “I consider myself bound by these authorities,” she said.

She ordered the RAF to pay the plaintiffs’ claims for past medical expenses, plus interest, as well as costs on the attorney-client scale.