The Board of Healthcare Funders (BHF) says it will appeal a judgment dismissing its application to compel the Council for Medical Schemes (CMS) to permit medical schemes to offer low-cost benefit options (LCBOs).
LCBOs are pared-down plans excluding the expensive treatments included in the Prescribed Minimum Benefits (PMBs).
The 99-page judgment was handed down in the High Court in Pretoria on 1 April. Acting Judge Lesibana Ledwaba rejected the application on both procedural grounds and the merits.
The BHF, which represents about 40 schemes and medical scheme administrators that serve some 4.5 million beneficiaries, brought the application against the CMS, the Registrar of Medical Schemes, and the Minister of Health.
The BHF sought several orders, including:
- Declaring certain decisions by the CMS and/or the Registrar – such as granting exemptions to health insurance providers under section 8(h) of the Medical Schemes Act (MSA), imposing a moratorium on medical schemes offering LCBOs, and refusing to entertain LCBO exemption applications – as irrational, unreasonable, and/or unlawful under the Promotion of Administrative Justice Act (PAJA) and section 1(c) of the Constitution.
- Declaring the CMS and the minister’s failure to develop and implement LCBO guidelines as irrational, unreasonable, and/or unlawful.
- Directing the CMS to grant general exemptions or consider individual exemption applications for medical schemes to offer LCBOs without PMBs.
“Our intention in compelling the CMS to permit medical schemes to offer LCBOs is to enable broader access to affordable private medical cover for lower-income South Africans,” the BHF said yesterday.
It said LCBOs represent an immediate, practical, and sustainable solution to expand private healthcare access to an additional 10 million South Africans who cannot afford full medical scheme cover but are paying out-of-pocket-expenses for private healthcare providers.
The BHF said it remained committed to constructive engagement with all stakeholders, including the CMS and the Department of Health. “Collaboration between the private and public sector is the only way to ensure a healthcare system that works for all.”
The CMS welcomed the judgment but said it “does not necessarily claim or see this as a victorious moment”.
“We have extended a hand to [the] BHF on several occasions to resolve their displeasures with our policy and regulatory decisions as highlighted by the court,” said Dr Musa Gumede, the Registrar of Medical Schemes.
He drew attention to Ledwaba AJ’s observation that, “South Africa has embarked on a journey to introduce universal healthcare coverage for all the citizens. The Council is required to control and co-ordinate the activities of medical scheme in a manner which is complementary to national health policy.”
Gumede said the judgment “re-affirms the CMS support in collaborating with the entire private healthcare industry to address any policy dimensions concerning primary healthcare in the private healthcare sector”.
Ledwaba AJ rejected the application on procedural and substantive grounds, an overview of which is provided below.
In limine findings
The court’s rejection of the application rested on three points in limine: locus standi, late application and failure to exhaust internal remedies, and non-joinder. (In limine refers to matters that are addressed by a court at the preliminary stage of a legal proceeding, before the main issues or merits of the case are considered.)
Lack of locus standi
Ledwaba AJ found that the BHF lacked the legal standing (locus standi) to bring the application. It examined whether the BHF met the requirements under section 38 of the Constitution, which allows various categories of litigants to approach a court for infringements of rights.
The BHF failed to demonstrate a direct and substantial interest in the relief sought, either in its own right, on behalf of its members, or in the public interest.
The BHF claimed to represent about 40 medical schemes and 4.5 million beneficiaries, asserting it acted in its own interest, on behalf of its members, and in the public interest. However, it provided no specific mandate or resolution from these schemes authorising the litigation.
The BHF, as a non-profit company, did not sufficiently establish its own legal interest separate from the schemes it claimed to represent: “Own-interest litigant referred to section 38(a) of the Constitution must show that the decision it seeks to attack has the capacity to affect its own legal right or its interest,” the judgment states.
Regarding public interest standing, the BHF did not show it was genuinely acting for the public or that no other reasonable means existed to bring the challenge. “The court will be circumspect in affording an applicant standing for the purpose of public interest. Such applicant must show that she or he is genuinely acting in the public interest.”
As an agent, the BHF could not claim the rights of its principals (the medical schemes) in its own name. “It is generally accepted that as a representative of its principal, an agent cannot institute proceedings against a third party in its own name.”
Late application and failure to exhaust internal remedies
Ledwaba AJ found the BHF’s application was filed outside the 180-day period prescribed by section 7(1) of PAJA, and the BHF failed to exhaust internal remedies under section 50 of the MSA, without demonstrating exceptional circumstances for an exemption.
The respondents argued that the clock started with Circular 9 of 2022 (25 January 2022), meaning the 180-day period lapsed by 24 July 2022, before the application was filed on 6 August 2022, without a condonation request.
The BHF countered that the period began when it received reasons in May 2022 or when the CMS refused reasons in March 2022, placing the filing within 180 days.
The court rejected this, noting that section 7(1)(b) of PAJA suspends the period only where no internal remedies exist, which was not the case here because of section 50 of the MSA, which provides for the internal remedy of an appeal, with the result that there was no suspension of the running of 180 days.
Section 7(2) of PAJA mandates the exhaustion of internal remedies unless exceptional circumstances justify an exemption, which the court found lacking. The BHF’s pending appeal under section 50 and its claim of a delay in the appeal process did not suffice.
Non-joinder
The court held that the BHF failed to join necessary parties – health insurance providers and medical schemes with direct and substantial interests – rendering the application defective.
The test for joinder is whether a party has a legal interest that may be prejudicially affected by the judgment.
About 10 insurance providers with 500 000 members would be impacted if exemptions were set aside, as requested by the BHF.
The BHF argued it sought relief only against the respondents, not the insurers, and was unaware of their identities. The court dismissed this, noting the relief would terminate the exemptions, affecting the insurers.
Findings on the merits
Despite upholding the points in limine, the court proceeded to evaluate the merits, finding the BHF’s case unsubstantiated.
Exemptions for health insurers
The BHF challenged the CMS’s decision to extend the exemptions – under Circular 9 of 2022 and Circular 16 of 2024 – that allow health insurers to sell insurance policies that cover primary healthcare services. The BHF argued this was irrational and unlawful and was not approved by a Council resolution.
The court found that the exemptions were lawfully granted by the CMS under section 8(h) of the MSA, and the BHF had not supported its case of a procedural irregularity.
Alleged moratorium on LCBOs
The BHF alleged that a moratorium prevented medical schemes from offering LCBOs, seeking its review and setting aside.
The court found that no current moratorium existed, and the BHF failed to substantiate its claim that any medical schemes have submitted an application that was rejected on the basis of the alleged moratorium.
Refusal to entertain LCBO exemption applications
The BHF claimed the CMS refused to consider LCBO exemption applications from medical schemes, seeking a directive to compel such consideration.
The court found that the CMS lawfully processed applications, and no blanket refusal was proved.
Failure to develop and implement LCBO guidelines
The BHF argued that the CMS and the Minister of Health’s delay in developing guidelines for LCBOs was irrational and unlawful, breaching constitutional duties.
The court found that the delay was not irrational, and the Minister of Health was still considering the CMS’s LCBO report, which did not recommend the implementation of LCBOs.
Constitutional and PAJA claims
The BHF alleged a breach of section 27 of the Constitution (right to healthcare) and sought review under PAJA.
The court found the BHF did not prove a constitutional breach or PAJA grounds for review. The respondents’ actions were not irrational or unlawful, and they acted in terms of the discretion granted by the MSA and in conformity with national health policy.
Well done to CMS