RAF amendments will severely curtail the rights of road accident victims, say experts

Legal experts have warned that the Road Accident Fund Amendment Bill – if it becomes law in its current form – will severely impact the rights of drivers, passengers, and pedestrians to claim compensation for injuries they suffer in a motor vehicle accident.

Established in 1997, the RAF provides compensation to the victims of road accidents.

There are more than 800 000 road accidents in South Africa every year – which translates into roughly 2 200 crashes on our roads daily – according to the South African National Roads Agency.

Advocate Justin Erasmus, the chairperson of the Personal Injury Plaintiff Lawyers Association (Pipla), says more than 5 000 “strong” objections have already been raised to the draft bill.

The association represents about 300 personal injury lawyers and is working collaboratively with a number of law societies to raise objections to the proposed amendments.

Erasmus says the changes offer very limited benefits and amount to a drastic restriction of existing rights, which will affect all South Africans, particularly the poor and marginalised.

“This is particularly concerning at a time when the country is reeling from high levels of unemployment and suffering from one of the highest motor accident rates in the world,” he says.

Restructuring of the fund

Media reports that the fund is on the verge of total bankruptcy have been making the rounds since 2004.

As the “Memorandum on the Objects of the Road Accident Fund Amendment Bill” states, the aim of the Bill is “to further limit the liability of the fund to improve the solvency and sustainability of the scheme, and to ensure a more equitable distribution of the risk assumed by the fund, the private insurance industry, and other stakeholders”.

To this end the bill includes a complete restructuring of the RAF, moving it away from a “compensation” to a “social benefits” structure where it “can provide injury and death benefits subject to prescribed limits and periodical review”. Not only will the extent (amount) of such benefits be limited but also the circumstances under which (and the duration for which) they could be claimable.

Kirstie Haslam, director of DSC Attorneys, says although the move to structured “benefits” will undoubtedly achieve this goal, the proposed changes will only make a bad situation worse.

“At a wholly unjustified cost which is at the expense of the road accident victim, who, after all, ‘pays’ for the current cover by virtue of the mandatory fuel levy.”

Haslam adds that the Bill seeks to treat the symptom and not the cause.

“The RAF is largely the author of its own misfortune by virtue of systemic administrative incompetence. A significant part of the problem is the volume of claims, which is directly attributable to our unacceptably high collision rate, which is in turn in significant part due to inadequate enforcement of traffic laws,” she says.

Haslam says, if the Bill becomes law, road accident victims will be uniquely discriminated against, compared to those who suffer harm in other circumstances, such as in train or boat accidents, in shopping centres, construction sites, holiday resorts, private homes, or because of medical negligence.

Those with the financial means may be able to take out private or additional cover for accident-related losses, but this option will not be open to the poorest of the poor, she says.

Impact on negligent driving claims

While all the proposed exclusions and restrictions suggested in the Bill will have far-reaching effects, Pipla points out a change particularly worth noting is one that will dictate when persons injured due to negligent driving will be allowed to claim, or not.

Currently, a victim is covered if injured by a negligent driver, irrespective of where the accident happens. Under the new system, the accident must have taken place on a public road. Injuries suffered in motor vehicle accidents in parking areas, sports fields, farm roads, driveways, private estates, game reserves, or any other private road will not be covered. Pedestrians crossing a highway are also specifically excluded.

Layton Beard, spokesperson for the Automobile Association of South Africa (AA), says statistics from the Road Traffic Management Corporation (RTMC) indicate that pedestrians are the most at-risk road user group in the country.

In 2022, 42% of the 12 436 deaths on the country’s roads were pedestrians; in 2021, 41% of all road deaths were pedestrians. The RTMC’s report also notes that children are seriously affected by road crashes and are particularly vulnerable as pedestrians.

Haslam adds the Bill also proscribes claims from injured persons who were struck crossing a highway (or the dependants of a person who died doing so).

“Victims of hit-and-run collisions are not covered, nor are those injured pedestrians, cyclists and motorists who test over the legal limit for alcohol.”

General damages cancelled

The Bill also proposes to do away with general damages. General damages compensation is separate from loss of earnings and medical expenses.

Haslam explains that, as things stand, claimants who meet a threshold test (of having sustained a “serious injury”) qualify for an award of general damages for pain and suffering and loss of amenities of life. She says there is no compensation for this head of damage in the Bill, even in the event of a life-changing injury.

Commenting from a medical perspective, Dr Herman Edeling, chairperson of the South African Medico-Legal Association, says this will hurt the poor in particular.

“In principle, victims can get compensation for medical expenses under section 17. However, the RAF does not pay upfront. So, if you are unemployed and have no money, or your life is devastated from the injury, you now cannot pay for treatment,” Edeling says.

He says that in terms of the amendments, you will be expected to pay for all your medical needs upfront and then claim back from the RAF.

“The general damages claim is what people use to get treatment and survive in the event of a life-changing event. With the new Bill, people will get nothing. As a medical practitioner, I believe this is immoral, and professionally, I believe it is unethical,” Edeling says.

According to Nicolette Koch, partner at law firm Adams & Adams, by removing the claim for general damages in toto, some victims may end up receiving no benefits from the RAF, even if they sustained serious injuries.

“An example may be of a pensioner or an unemployed person who was rendered a paraplegic or quadriplegic, or who may have suffered an amputation or significant brain injury.

“All these injuries have a severe impact on the victim’s activities of daily living and emotional well-being and have permanent and lasting consequences for the victim for the rest of his or her life, yet the victim will not be compensated for the pain and suffering he or she will suffer for the rest of their lives,” Koch says.

Structured benefits

Haslam says the move from a lump-sum payment to a structured benefit is another change that may hold serious repercussions for claimants.

“Currently, past and future loss of earnings and support is recoverable by way of a lump-sum payment. The Bill provides for structured benefits, with future losses payable as an annuity (monthly payments) subject to the RAF’s perpetual right to continually reassess its ongoing liability to pay,” she says.

Koch further explains that the payment of future loss of earnings is usually actuarially calculated and paid in a lump sum. She adds that a lump sum creates certainty on the final amount, while annuity payments will place an extra administrative burden on the RAF.

The amendment will also incorporate a periodical re-assessment element, which, Koch says, means that a claimant will have no certainty on whether future benefits will be payable.

“If the re-assessments are performed by RAF-appointed experts, there is no impartiality and may result in many benefits being withdrawn.”

She says this will again lead to new litigation.

“And as most claimants will not be able to afford litigation, claimants will be left destitute,” Koch says.

Erasmus warns, that once implemented, the periodical re-assessment system will also mean that if a claimant dies before the full annuities are received, the payments will stop, and their heirs will inherit nothing.

Restrictions on access to court

The amendment Bill seeks to introduce alternative dispute resolution and the establishment of an RAF Adjudicator. This is most likely aimed at reducing the fund’s astronomical litigation costs.

According to RAF’s latest available annual report (2020/21), during the 2019/20 financial year, R12.4 billion (30%) of the R41bn in annual revenue received in fuel levies was spent on administrative costs. Only R28.6bn (70%) of this revenue was paid out to claimants, excluding contingency fees paid to legal practitioners. Ten billion rand of the administrative costs was spent on legal expenses.

Haslam believes the establishment of an RAF Adjudicator will significantly restrict a road accident victim’s constitutional right of access to the courts.

“It will impose an inordinately heavy burden on a claimant – who will be unlikely to be able to secure legal representation, due to the limited scope of recoverable ‘benefits’ – to navigate a mandatory administrative process, which he or she is required to ‘exhaust’ before being permitted recourse to court action.”

Koch says experience has shown that claimants find it difficult to lodge claims directly with the RAF because of the complex nature of claims, the lack of knowledge on the part of the claimant of what a reasonable settlement would be, the inability to pay the expenses required to prove a claim, and the RAF’s inability to deal with claims proactively.

“Traditionally, claimants were therefore represented by attorneys who could overcome the aforesaid obstacles and ensure that claimants were not taken advantage of and that claimants receive the compensation that they are entitled to,” she says.

Koch adds that the RAF is quick to blame attorneys for its litigation bill. However, she says claimants and their attorneys are left with no option but to apply for trial and default judgment dates to ensure that their claims will be finalised, and on a reasonable basis.

She says the fund has not been proactive in trying to clear the huge backlog of unsettled claims.

“The RAF is approached by attorneys on a daily basis to make settlement offers, which requests are ignored. Claimants are therefore left with no other option but to go the litigious route.”

Recently, the RAF’s Pretoria branch introduced block settlements. However, Koch says each firm is only allowed to send six matters for block settlement.

“And with hundreds of other matters ready for settlement, this also doesn’t solve the problem.”

Koch questions how effective this alternative dispute resolution process will be.

“And the independence (unlike the judiciary) of the RAF Adjudicator is also a concern. Both the alternative dispute resolution and RAF Adjudicator will be an expense that the RAF does not currently pay, so a new liability (vs litigation costs) is established.”

She says if disputes cannot be resolved, they will still end up in court.

“So, it is the new costs of the alternative dispute resolution and RAF Adjudicator, as well as further potential legal costs which will be incurred. The costs for the RAF to adjudicate claims may therefore even increase, rather than decrease.”

The public has until 6 October to comment on the proposed legislation. Comments should be emailed to the Director-General of the Department of Transport for the attention of Ms Lindiwe Twala at twalal@dot.gov.za and Mr Trevor Mphahlele at mphahlelet@dot.gov.za, or hand delivered to the department in Pretoria.

Click here to download a copy of the RAF Amendment Bill.

The RAF Amendment Bill also has significant implications for members of medical schemes and the short-term insurance industry. A forthcoming article will unpack them.