Discovery Health’s second attempt to compel the Road Accident Fund (RAF) to resume paying claims from medical scheme members injured in road accidents has failed.
The High Court in Pretoria last week handed down a judgment dismissing Discovery’s appeal against a decision by the same court to reject an application for an order compelling the RAF to process claims while a decision by the Constitutional Court is pending.
Discovery, the largest medical scheme administrator in South Africa, and the RAF are engaged in litigation over the Fund’s decision, in August 2022, to reject claims for medical expenses where these expenses have already been paid by medical schemes, not members.
Discovery obtained a High Court judgment that set aside the RAF’s directive, declaring it unlawful. Judge Mandla Mbongwe judgment interdicted the Fund from implementing its directive.
The RAF applied to the High Court and the Supreme Court of Appeal for leave to appeal the judgment. Both courts dismissed the applications.
The RAF petitioned the Constitutional Court for leave to appeal, and a decision by the country’s highest court is awaited.
Discovery and the RAF issued statements that drew opposing conclusions – favourable to the merits of their respective cases – from last week’s judgment.
The Fund’s perspective
The RAF said the decision vindicated its position that Discovery has no interest or right to claim from the Fund. It quoted Judge Nomsa Khumalo’s statement that “neither Discovery nor the medical schemes it represents have a right to directly claim from the Fund; the right to compensation being that of the member claimants as the road accident victims (the medical scheme)”.
Judge Khumalo went on to say that the judgment against which Discovery brought the appeal application states that medical scheme members have recourse to enforce a claim against the Fund, while the arrangement between the medical schemes and their clients, that of reimbursement, remains viable.
She said the Court’s judgment and the judgment setting aside the RAF’s directive refer to subrogation and cession as options to be exercised between the two parties. The judgement setting aside the directive “disregarded” both options as expensive.
“However, it dispels the fact that the harm is irreparable,” Judge Khumalo said. “Discovery would rather bypass the member claimants in whom it has alleged to have no faith to do the right thing, and legally have no right to prevent from conducting their cases in whatever manner they so wish, including negotiating settlements, to secure direct payment from the Fund.”
The RAF commented: “It is apparent that Discovery Health and its clients have ‘no faith’ in medical scheme members and would rather strong-arm them into an underhanded scheme of arrangements to claim from a social benefit scheme in order to pay over the social benefit to Discovery Health and its clients.”
The Fund reiterated its position that subrogation is an insurance principle and does not apply to RAF benefits because the RAF is a social security fund.
The RAF also said the judgment confirmed its assertion that the payment for Prescribed Minimum Benefit and emergency medical conditions is not conditional upon the Fund reimbursing those expenses. Medical schemes are obliged to pay those in full without any co-payments or deductibles.
The Fund quoted from this paragraph of the judgment: “Furthermore, the Court cannot impose contractual obligations that are between the medical schemes and their members, unless there is a dispute between the parties brought before Court for adjudication. The allegation that there are rules that impose an obligation on the members of medical schemes to reimburse the scheme has not been disputed, but it is not correct to suggest that the payment of benefits to the claimants is reliant upon such obligation and also does not transfer the right to claim compensation to the medical scheme.”
Discovery Health’s view
Dr Ryan Noach, the chief executive of Discovery Health, said the administrator was disappointed by the decision to refuse leave to appeal the dismissal of its application, which was brought in terms of section 18(3) of the Superior Courts Act.
“This judgment results in an ongoing delay to the resumption of payments of valid medical claims from medical scheme members injured in road accidents, notwithstanding this discriminatory practice having already been declared unlawful by both the High Court and the SCA,” he said.
Noach said Judge Khumalo’s explanation for denying the section 18(3) application is that if the Constitutional Court rules in Discovery Health favour, medical scheme members will be entitled to recover all outstanding valid claims from the RAF, dating back to the inception of the unlawful directive. On this basis, the Court deemed the matter to be non-urgent and the need for immediate relief to be unnecessary, considering the RAF’s pending Constitutional Court appeal.
He said the dismissal of the section 18(3) application has no bearing on the fact that the RAF directive has been declared unlawful.
The medical schemes industry is losing about R2 million per working day because of the RAF’s refusal to resume processing members’ claims, Noach said.
“Keeping in mind that these funds in medical schemes belong to the members of the scheme, this represent a discriminatory practice directly affecting medical scheme members, who are road users, electing to pay discretionary contributions from their after-tax earnings.”
Discovery is confident the Constitutional Court, in line with the SCA, will find that medical scheme members retain the right and entitlement to claim medical expenses from the RAF in accordance with the Road Accident Fund Act and more than a century of common law precedent, Noach said.
Timeline of litigation between Discovery Health and the RAF
12 August 2022: The RAF’s acting chief claims officer issues an internal communiqué instructing regional managers to ensure that their teams assess claims for past medical expenses and reject the claims if a medical scheme has already paid them.
27 October 2022: Judge Mandla Mbongwe, sitting in the High Court in Pretoria, hands down a judgment declaring the RAF’s exclusion of medical scheme members unlawful. The Court interdicts the RAF from implementing its August directive.
23 January 2023: The High Court in Pretoria denies the RAF leave to appeal its October judgment.
20 February 2023: The RAF applies to the Supreme Court of Appeal (SCA) for leave to appeal.
3 March 2023: Discovery Health brings an application, in terms of section 18(3) of the Superior Courts Act, to compel the RAF to resume processing claims while the Fund’s appeal is pending.
31 March 2023: The SCA dismisses the RAF’s application for leave to appeal.
24 April 2023: The RAF applies to the Constitutional Court for leave to appeal.
26 June 2023: The High Court in Pretoria dismisses Discovery Health’s section 18(3) urgent application seeking to compel the RAF to pay claims to medical scheme members while the RAF’s application to the Constitutional Court is pending.
4 August 2023: The High Court hears Discovery’s application for leave to appeal.
22 September 2023: The High Court denies Discovery Health leave to appeal the dismissal of its section 18(3) application.
