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Sizwe curator found to be in contravention of Act

16 July 2013 Grant Newton, Sechaba Medical Solutions
Grant Newton, CEO of Sechaba Medical Solutions, the fund's administrator and managed care provider.

Grant Newton, CEO of Sechaba Medical Solutions, the fund's administrator and managed care provider.

Sizwe Medical Fund's curator, Ngubekhaya Gobinca has, following the latest finding of the Council for Medical Schemes, been found to have been negligent of not following due process with regard to scheme contributions and to have acted in contravention of

Over the last few months there has been increasing unrest amongst the members regarding various decisions which have been taken at the scheme starting with an unauthorised 30% co-payment on all options in January and a higher than average contribution increase. The co-payment was later altered in rule amendments submitted by the Curator on the 7th of May and approved by the Registar on the 8th of May this year, with the Curator admitting this had been contrary to the rules registered with the Council for Medical Schemes and thus also in contravention of the medical schemes act.

Medical Scheme rules do not make provision for an increase to contributions in excess of CPIX plus 3% without the requisite prior approval of members, regardless of whether the increase to contributions is reasonable and justifiable. In addition, to have the act ratified after the fact does not serve to validate it because the scheme rules do not make provision for such ratification of an amendment to the scheme rule that is the subject of a dispute. Gobinca has been found to have acted improperly on both these points. The law states clearly that a medical scheme cannot disregard its scheme rules and the MS Act, in order to implement decisions that would both assist the scheme in meeting its objectives. Gobinca was set the task of correcting certain very specific governance matters, but since his inception as Curator by the court has only exacerbated the situation in many cases.

Sechaba Medical Solutions, the fund's administrator and managed care provider who recently received notice based on Gobinca's decision to review all main supplier contracts only two hours after the Curator walked out and abandoned the scheme's AGM, believes the Registrar's Rulings place Gobinca as "unfit and improper" and Sechaba is presently considering its rights with a view to approaching the High Court for appropriate relief.

Grant Newton, CEO of Sechaba also confirmed that a summons had been served on Sizwe regarding the monies that have been unlawfully deducted from the administrator by the Fund at Gobinca's instructions. The thorny issue involves an outsourced document storage issue which the Curator said should have been paid for initially by Sechaba and not Sizwe. Newton says it is unfortunate the situation has come to this but Sechaba is concerned that members' interests have been seriously compromised and if the Curator is allowed to follow his plans to merge and self administer the fund they could be further prejudiced.

Gobinca has openly stated that he believes the self administration route is the way to go. Newton responds, "We have a couple of key concerns. Firstly we are concerned that the four-month notice period received will not be sufficient time to allow for a smooth transition, particularly as the current contract is now being split up. Gobinca has publically stated that Sechaba must tender for the contract and yet there is no administration tender to bid for. It has been split into a Pharmaceutical Benefit Management, Managed Care and Systems tender. Secondly one of the greatest cost drivers in our business is the branch infrastructure at the paypoints.

In terms of our legacy these have been non negotiable as the majority of our members are blue collar workers who do not have access to email and rely on the face-to-face contact.

Finally we question whether the Curator's proposed move to an in-house managed administration system will in fact save costs and not prejudice members. It is not always evident that funds that are self administered are cheaper to run. The reality is that the Fund will need to invest within the next four months in very expensive infrastructure, the cost of which Sechaba has amortised over many years. We believe the ramifications of these decisions are fraught with risks to the members and to the overall liquidity of the scheme."

The Curator in recent press reports has made sweeping statements about Sechaba's service and efficiencies, without any mention that the drop in service levels or bulking of resources have been directly related to decisions he has made relating to rules and benefits and the more recent confusion caused in his attempt to manage the recent AGM process. Newton says the termination will also prejudice Sechaba who has managed the administration and managed care for the last 35 years. Along with the impact on over 60 000 members, Newton points out that the process also puts over 260 jobs at risk.

"Throughout the tenure of the Curator, we are concerned that the various decisions outlined above have impacted significantly on the business of delivering a superior service to the members," concludes Newton.

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