Last week’s decision by the Constitutional Court does not seem to have ended the stand-off between Discovery Health and the Road Accident Fund (RAF) over the payment of claims for medical expenses where these expenses have already been paid by medical schemes, not members.
According to media reports, the RAF will not resume payments to medical schemes, despite the Constitutional Court’s decision on 18 October.
Read: Discovery wins in dispute with RAF over medical scheme members’ claims
The reports quote the RAF’s chief executive, Collins Letsoalo, as saying “there are no implications on the RAF” following the Court’s decision. “The court order did not deal with any merits. It raised issues of a lack of jurisdiction.”
The RAF applied to the Constitutional Court for leave to appeal a judgment by the High Court in Pretoria in October last year. The High Court declared unlawful a directive issued by the Fund in August 2022 to reject claims for medical expenses where these expenses have already been paid by medical schemes, not members. The Court interdicted the RAF from implementing the directive.
The Fund attempted to appeal the decision all the way up to the Constitutional Court, but the apex court refused its application with costs.
Following the Court’s decision, Discovery Health chief executive Dr Ryan Noach said the administrator and all related parties involved in the process of claiming from the RAF will immediately ensure that valid claims submitted to the RAF are advanced.
But Moneyweb quoted Letsoalo as saying the RAF is not in contempt of the High Court because, for more than a year, it has amended its August 2022 directive to the effect that it will assess each claim on its merits and reject the payment of prescribed minimum benefits (PMBs) and emergency medical conditions (EMCs). The Fund will pay any other medical costs by claimants who belong to medical schemes.
He claimed the MSA and its regulations – specifically section 29(1)(o) and regulations 7 and 8 – oblige medical schemes to pay for PMBs and EMCs.
“Medical schemes and their administrators are not claimants in terms of the RAF Act, and they must continue to pay for PMBs and EMCs without any deductibles or co-payments as obligated by the MSA and MSA Regulations,” Letsoalo was quoted as saying.
But Noach was quoted as saying that the PMBs are “relevant only to the conduct of medical schemes in terms of how specific conditions are funded” and “have no legal bearing whatsoever on the RAF”.
Contempt of court?
Business Live reported that Discovery Health will seek to hold the RAF in contempt of court if it fails to comply with the Constitutional Court’s decision.
It quoted Noach as saying that Letsoalo’s “alleged assertion that the RAF will not pay the claims of these road users who are medical scheme members is – to the best of our understanding – contemptuous of the explicit ruling of the High Court, which both the Supreme Court of Appeal and now the Constitutional Court have affirmed.
“Should the RAF fail to process these valid claims, then unfortunately, as a last resort, we would be left with no alternative but to seek to enforce the court’s ruling through a further application for a contempt and enforcement order.”
CMS is ‘vindicated’
The Council for Medical Schemes (CMS) said the Constitutional Court’s ruling vindicated the regulator’s position on the matter and affirmed “its stance on medical scheme sustainability support”.
Last month, the CMS published a “legal review” that said the RAF’s directive was not in line with the MSA. The RAF hit back in a scathing statement that branded the review as “misinformation” and called on the CMS to “stay in its lane and stick to its mandate” under the MSA.
Read: RAF tells medical schemes regulator to butt out of its dispute with Discovery Health
Financial impact
Discovery Health’s client medical schemes, which cover almost 40% of the medical scheme market, have outstanding claims lodged with the RAF of about R140 million, according to Noach.
The RAF recorded a deficit of R8.43 billion for the 2022/23 financial year, compared with a surplus of R428m the previous year. The Fund maintains this was largely because the fuel levy has not been increased over the past two years, whereas inflation increased by an average 6.9% in 2022/23.
The deficit was also impacted by the increase in claims liability. Letsoalo said the value of claims increased by 15% to R45.6bn in 2023 from R39bn in 2019.
