Resolution no longer an administrator and managed care organisation

The Council for Medical Schemes (CMS) had granted temporary accreditation to Resolution Health (Pty) Ltd and Resolution Administrators (Pty) Ltd in October 2008, subject to conditions.

In May 2009 the CMS decided not to approve their application for accreditation as a managed healthcare organisation and medical scheme administrator respectively.

The North Gauteng Division of the High Court of South Africa today dismissed – with costs – the application by Resolution Health (Pty) Ltd and Resolution Administrators (Pty) Ltd for an urgent interim order which was to declare that the temporary accreditation granted in 2008 be extended pending their appeal or possible review application to set aside the decision of the CMS not to approve their application for accreditation in May 2009.

Judge E. Bertelsmann was particularly scathing of the manner in which the two entities had conducted their affairs.

He lamented the fact that Resolution Administrators (Pty) Ltd was at no stage entitled by law to render administration services but proceeded to do so despite the fact that its directors knew it is unlawful to render such services without accreditation from the CMS. The directors of Resolution Administrators (Pty) Ltd knowingly allowed the administrator to commit a criminal offense for financial gain. The judge expressed further concern that the administrator had been receiving contributions from members of the medical scheme into an account under its own name instead of that of the scheme, in flagrant contravention of the provisions contained in Regulation 23 of the Medical Schemes Act (Act 131 of 1998) that contributions should be held in an account in the name of the scheme.

The CMS had been raising concerns with the management of both entities for several years. Today the Court took note of these and, without making a determination on them, said that “[t]he mere existence of these complaints is enough to create a sense of unease regarding the applicants’ business practices”.

Resolution Health (Pty) Ltd and Resolution Administrators (Pty) Ltd have three months within which to transfer their functions to another provider/s of such services or to the medical scheme itself. This is to ensure a seamless transition to new service providers that will protect the interests of the members of the scheme.

Members of Resolution Health Medical Scheme are advised that the two entities in question are separate from the scheme which has its own governance structures in place.

Even though the judgment does not relate to the scheme directly, this Office will be engaging with the scheme to ensure that all areas of non-compliance that have been identified are satisfactorily addressed.