The High Court in Cape Town has rejected the Road Accident Fund’s contention that the recent majority decision by the High Court in Pretoria means the RAF is not obliged to compensate road accident victims whose medical expenses have been covered by their medical schemes.
In December, the full bench of the High Court in Pretoria dismissed, with costs, an application by Discovery Health to declare the RAF in breach of an order relating to the Fund’s liability for medical expenses incurred by medical scheme members.
Discovery has said it will appeal against the decision.
The medical scheme administrator brought the application 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 in which the RAF instructed its employees not to make any payments to claimants if their medical scheme has already paid for their medical expenses arising from a road accident.
Discovery Health also sought a pronouncement that the RAF’s reliance on two directives it issued subsequent to the Judge Mbongwe’s order perpetuated its breach of that order.
The majority decision, by Judge Dunstan Mlambo, the Judge President of the Gauteng Division of the High Court, and Judge Noluntu Bam, found no evidence that the RAF’s directives constituted a breach of Judge Mbongwe’s order.
In a dissenting judgment, Judge Ingrid Opperman said the RAF violated its constitutional obligations by failing to comply with Judge Mbongwe’s order.
Read: Discovery to appeal ‘far-reaching’ judgment in favour of RAF
Private arrangement between the parties
The matter that came before the High Court in Cape Town involved a member of Discovery Health Medical Scheme (DHMS), Anwar Esack, who was injured in a motor vehicle accident in December 2015.
He instituted legal proceedings after the RAF failed to compensate him. 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.
Counsel for the plaintiff submitted that the fact that DHMS had paid Esack’s medical expenses was a private arrangement between the deceased and Discovery. Counsel referred to authorities that treat medical scheme benefits as a form of indemnity insurance. He argued these benefits should be disregarded for the purpose of an award for damages under the common law principle of res inter alios acta.
Res inter alios acta is a legal maxim that means “a thing done between others” or “a transaction between other parties”. It generally refers to the principle that a contract, judgment, or transaction between two parties cannot impose obligations or confer rights on a third party who was not involved in the agreement.
Changed the legal landscape
The RAF did not dispute the amount of the claim but challenged its liability on the ground that these expenses had already been paid by DHMS. The Fund submitted, therefore, that Esack did not suffer a loss, and thus it should not be liable to reimburse or compensate him.
Alternatively, if the court found that Esack did suffer a loss, the RAF argued that the expenses constituted Prescribed Minimum Benefits (PMBs) and/or treatment for emergency medical conditions (EMCs) – benefits for which Discovery is statutorily obliged to pay.
The RAF’s defence “relied heavily” on the majority decision in the Mlambo judgment, Judge Lister Nuku noted that his judgment handed down this month.
The Fund contended that this decision has altered the legal landscape regarding res inter alios acta – specifically, that when a medical scheme is statutorily bound to pay, its benefits must be deducted from any damages claim.
No difference between general benefits and PMBs/EMCs
Judge Nuku said, in his view, the Mlambo judgment has not changed the legal landscape.
He said the majority judgment is problematic for three reasons.
First, it conflicts with the doctrine of stare decisis – a cornerstone of the South African legal system that mandates lower courts follow decisions from the Supreme Court of Appeal (SCA) and the Constitutional Court.
Judge Nuku referred to the SCA’s decision in Bane and Others v D’Ambrosi (2010), which addressed the issue of the deductibility of medical scheme benefits. The SCA concluded that “the Medical Schemes Act did not have the effect of depriving plaintiffs of their claims for hospital and medical expenses in delictual actions”.
Although Bane addressed the deductibility of medical scheme benefits generally and not specifically PMBs or EMCs, the judge saw no reason to treat these categories differently.
He said the rationale in Bane – based on the statutory obligation of medical schemes to accept members on application – is very similar to the argument that claimants should not be compensated for PMBs and EMCs because schemes are likewise statutorily bound to pay.
Judge Nuku said the second problem with the majority decision is that the High Court in Pretoria was neither required to nor did it decide whether payments made by medical schemes should be deducted from a victim’s compensation.
It therefore followed that the majority decision did not support the RAF’s argument that it should not compensate Esack for the expenses paid by DHMS.
Lack of evidence on public policy considerations
The majority judgment posed the question, “Whether there are any policy considerations in favour of excluding collateral benefits received by a claimant from a medical scheme by way of payment of PMBs and EMCs, on the basis of res inter alios acta?” Immediately thereafter the majority judgment states, “We raise the following considerations without necessarily answering the question…” Having raised various considerations, the judgment concludes:
“Given the myriad of social challenges facing this developing country, is there justification based on policy considerations, fairness, and reasonableness, for the government to concern itself with protecting the interests of medical schemes?”
Judge Nuku said even if it were accepted that the issue of the deductibility of collaterals should be determined with regard to public policy considerations, fairness, equity, and reasonableness, the RAF failed to introduce any evidence on these grounds.
Instead, the Fund merely restated the principles discussed in the majority decision without substantiating the proposition that such public policy considerations should preclude the RAF from liability for compensating a road accident victim for medical expenses that have been paid by a scheme as part of its obligation to pay for PMBs and EMCs.
Final conclusion on liability
Judge Nuku reaffirmed that Esack incurred past hospital and medical expenses, which were paid by his medical scheme. For the purpose of resolving the matter, the court assumed that these expenses related to PMBs.
Applying the common law principle of res inter alios acta, the judge concluded that such payments are a private matter between the deceased and his medical scheme, and therefore, the RAF remains liable.
Partial punitive costs order
Judge Nuku ordered the RAF:
- By agreement between the parties, to pay the plaintiff’s attorneys R935 477.28 for Esack’s past loss of earnings; and
- To pay Esack’s attorneys R115 436.14 for his past hospital and medical expenses.
He also made a punitive costs order against the RAF for the plaintiff’s legal expenses incurred after 27 January 2025.
Judge Nuku said the matter could have been finalised on that date. Instead, the RAF proceeded to raise Esack’s past hospital and medical expenses, although this issue had not appeared in its pleadings.
The fact that the issue of Esack’s claim for past hospital and medical expenses was not pleaded indicated that the issue arose after the matter was certified by two judges and was therefore “an afterthought”, he said.
“However one may be tempted to adopt a sympathetic attitude towards the defendant in the sense that the defendant may have thought that the majority judgment in Discovery Health changed the legal landscape on the application of the common law principle of res inter alios acta, on any proper reading of the judgment that was not an issue that the court had to decide. By proceeding with the contrived defence, which, incidentally, mirrors one of the internal directives issued by the defendant, this resulted in the plaintiff incurring additional expenses that could have been totally avoided, and in my view the plaintiff should not be out of pocket because of the avoidable conduct of the defendant,” Judge Nuku said.
Click here to download the judgment.
