RAF squares up against medical schemes

The Council for Medical Schemes (CMS) is of the opinion that the Road Accident Fund (RAF) should pay for qualifying road accident-related medical expenses that are incurred by victims, whether they are medical scheme members or not. And at first glance, the courts agree, with both the High Court and the Constitutional Court (CC) supporting Discovery Health’s petition that the RAF should pay.

Courtroom drama aplenty

Some background is needed before we unpack the CMS, RAF and Discovery Health interpretations of an 18 October 2023 CC ruling. The current wrangle started on 12 August 2022, when the RAF issued an internal directive that no payments could be made to claimants for road accident-related medical expenses if their medical scheme had already covered these expenses. As most FAnews readers will know, the RAF is funded through a R2.18 per litre fuel levy. It seems fair, therefore, to conclude that the RAF was attempting to shift some of its legislated and taxpayer-funded liabilities onto private medical schemes. 

After an unsuccessful attempt to engage with the RAF on this directive, Discovery Health secured an interdict from the High Court declaring the RAF stance ‘unlawful’, around October 2022. All ensuing attempts by the RAF to overturn the High Court decision have failed, culminating in the aforementioned CC ‘slap down’. Commenting on the CC ruling, departing Discovery Health CEO, Ryan Noach, said: “The ruling means that medical scheme members retain the right and entitlement to claim medical expenses from the RAF, in accordance with the RAF Act, and over a century of common law precedent”. He added that the CC ruling was “a victory in the public interest for all members of medical schemes”. 

In a responding media release, the RAF lambasted Discovery’s view, stressing that the CC had not upheld the initial High Court decision. Rather, the CC “concluded that [the RAF’s request for leave to appeal the decision] did not engage the jurisdiction of the CC, and that leave to appeal must be refused”. This writer, though not schooled in law, was slightly confused by the RAF’s stance. Surely, he mused, if your leave to appeal is refused, then the original High Court decision stands? 

An admission of sorts?

The RAF seems to think that the original High Court decision to set aside an internal RAF directive was moot. “We have, for more than a year now, amended the position contained in that directive to [that of] assessing each claim on its merits, and rejecting the payment of prescribed minimum benefits (PMBs) and emergency medical conditions which are obligations of medical schemes in terms of the Medical Schemes Act (MSA) and Regulations, specifically Section 29(1)(o) and Regulation 7 and 8,” said RAF CEO, Collins Letsoalo. He added that the RAF will pay any other medical costs incurred by claimants who are medical scheme members. 

The RAF media release also shared a paragraph from a North Gauteng High Court judgement, dated 22 September 2023, which reads that “neither Discovery nor the medical schemes it represents have a right to directly claim from the RAF, the right to compensation being that of the member claimants as the road accident victims”. Letsoalo pointed out that “medical schemes are not insurers, but social benefit organisations governed by the MSA and clearly differentiated through the demarcation regulations issued by National Treasury in December 2023”. Furthermore, they wrote, the demarcation framework buttressed the industry’s principles of open enrolment and community rating. 

Medical schemes regulator weighs in

Discovery Health has since issued a short, non-confrontational statement in which it acknowledged the RAF media release, before noting that the medical scheme administrator had “an entirely different understanding of the CC ruling, as guided by counsel”. They declared they would not argue the matter further in the media, and would in time turn to the courts for the necessary clarity. Reading between the lines, it seems the myriad court actions have ‘dumped’ Discovery Health and the RAF back to the start of their dispute. But their sniping did not go unnoticed by the medical schemes regulator, the CMS, who also issued a media statement on the matter. 

“In normative terms, the CMS is not obliged to release commentary on matters remote to its mandate, however, as a responsible regulator, it became a necessary act to clear any anomalies,” they wrote. “In terms of the MSA, medical schemes undertake liability in return for a contribution, by among others granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health services”. To paraphrase: schemes are obliged to pay medical expenses incurred for PMBs and emergency medical conditions, including those arising from road accidents; but are also bound to limit those expenses wherever possible. 

The CMS said that most medical schemes provided for the handling of motor vehicle claims in their rules, holding that members of medical aids can claim compensation from the RAF for such claims, and any future healthcare services which may arise. “It is also common cause that where RAF is responsible for claims which a medical scheme has paid in terms of its rules and the MSA, that the RAF should refund to such medical scheme the amounts paid,” they said. This meant that members of medical schemes who would have claimed directly from the RAF and received compensation for such claims, must also pay such amounts back to the medical scheme. 

A common-sense comment on subrogation

Other views contained in the CMS media release include that should the RAF fail to refund a medical scheme member for road accident-related medical expenses, that the medical scheme remained liable for the costs of treatment, subject to the registered scheme rules; that schemes could not try and recover funds from members where no recovery had been made from the RAF; and that schemes could attempt to recover such amounts directly from the RAF. 

“Subrogation allows medical schemes to minimise losses as a result of these claims and keep members’ contributions reasonable, by holding responsible parties accountable,” they wrote. “It also prevents members from being unjustifiably enriched, since they should not receive double compensation from both medical scheme and RAF”. Honestly, dear reader, the matter seems quite cut and dried. Applying some common sense we can state, with confidence, that since medical scheme members are also taxpayers, they should benefit from the blanket coverage afforded by the RAF Act. 

And sticking with the CMS’ position, it should not be possible for a medical scheme member to recover funds from the RAF for expenses already paid by the medical scheme, nor for the medical scheme to chase the member for a failing of the RAF recovery process. Perhaps that explains why the CMS concluded: “The refusal to refund medical schemes by the RAF is not in line with the provisions of the MSA, and it is not in the interest of beneficiaries of medical schemes”. 

Writer’s thoughts:

It is common knowledge that the Road Accident Fund (RAF) is drowning under debt. In fact, around the time we penned this, the Sherriff of the Court was circling the RAF head office to seize assets on behalf of a handful of disgruntled claimants. What is the RAF trying to achieve through its ongoing legal shenanigans? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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