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Omnihealth liquidators to pay the R33 million back to Omnihealth members

21 May 2007 Registrar of Medical Schemes

The Supreme Court of Appeal has ruled in favour of the Registrar of Medical Schemes and refused an application for leave to appeal by liquidators of the defunct Omnihealth medical schemes.

On 30 January 2007, the Registrar obtained an order in the Pretoria High Court compelling the Omnihealth liquidators to pay the R33 million of medical savings accounts back to Omnihealth members.

Since then, they have made attempts to have the ruling reversed, first by lodging a leave to appeal with Transvaal Provincial High Court, then with Bloemfontein Supreme Court of Appeal. Both appeals were dismissed with costs.

In the decision handed down on the 30 January, Judge J du Plessis found in favor of the Registrar and maintained that Omnihealths rules, which serve as an agreement between the member and the scheme, stated that the balances in the PMSA shall at all times remain the property of the member.

These moneys should either paid to the next scheme that also has the PMSA or paid in cash back to the members

The learned judge made the following order:

* That the credit balances in the Omni health personal medical savings accounts constitute trust money per provisions of Protection of the Funds Act (Financial Institutions Act, Act 28 of 2001);
* The liquidators of Omni health should pay to KwaZulu Natal Medical Scheme such portion of PMSA funds, including interest that has accrued, to Omni health members who joined KZN Medical Scheme;
* The liquidators should pay such portion and interest to former members of Omnihealth who did not become members of KZN Medical Scheme. These payments have to be effected within 60 days of the issuing of the order; and
* The liquidators were also ordered to pay the Registrars costs, which shall include costs of two counsels.


Commenting on the Supreme Court of Appeal decision, Registrar of Medical Schemes, T. Patrick Masobe, called on the liquidators to stop being equivocal and pay the money to the former Omni-health members immediately.

Masobe said that the former Omni-health members should have been refunded their medical savings accounts balances many months ago; there should be no further delays.

"The legal challenge by the liquidators was incongruous with their responsibility towards the former members of Omnihealth. This Supreme Court decision is now the end of the line; they now have to do the right thing and pay out these money without any further delays," says Masobe.

Background:

Omnihealth was declared insolvent with no prospect of recovery and placed under liquidation on 29 November 2005. Two liquidators, Lazarus Mpanana Ledwaba and Alta van Wyk were appointed to handle the liquidation process. The scheme had PMSA balances amounting to R33 million that were owed to members.

The Registrar ordered the liquidators to pay these amounts to members and their new scheme, a request that the liquidators refused as they elected to retain the money as part of the insolvent estate. It is at this point that the Registrar launched an application to the High Court in order to prevent the prejudice to ordinary members of Omni health.

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