The courts are chock full of healthcare battles

Gareth Stokes, FAnews Online Editor

If the Department of Health (DoH), Council for Medical Schemes (CMS), Board of Healthcare Funders (BHF) and South Africa’s myriad medical schemes have their way, the courts will be snowed under with healthcare issues till the end of time. It seems every s

More recently the BHF and CMS tackled one another over the requirement that medical schemes compensate their members “in full” for medical expenses incurred in the treatment of Prescribed Minimum Benefits. Although the CMS claimed victory in this matter the Court side-stepped the issue at hand and threw the case out on the grounds the BHF had no legal standing to challenge a provision in the Medical Schemes Act. The BHF has since failed to convince the Court to allow it to appeal the ruling. The Registrar of Medical Schemes and Chief Executive of the CMS, Dr Monwabisi Gantsho, dismissed the BHF case as frivolous. “The BHF is funded by member schemes that are in turn funded by the monthly contributions they receive from their members,” he said. “It is of great concern that members’ funds are being used to fight provisions which, ironically, are there to protect members’ interests!”

You lose some, and then you win some

The ink on CMS Press Release 7 of 2012 – announcing its “victory” over the BHF – was barely dry, when another Court announcement landed in our inbox. This time judgment was handed down in favour of the BHF in a copyright infringement case against South Africa’s largest open medical scheme. The Court held that Discovery Health Medical Scheme had allowed its administrator, Discovery Health Administrators, to make use of BHF’s intellectual property without authority. According to the BHF this infringement “had the potential of inflicting chaos within the area of payment of claims by medical schemes to health service providers and health facilities.”

It sounded serious – so we spent a few minutes figuring out exactly where Discovery had gone wrong. It seems the BHF owns the copyright in the Practice Code Numbering System (PCNS), in use since the 1960s to generate and maintain practice numbers for healthcare practitioners and facilities. The BHF explains: “This system is used by all medical schemes and healthcare providers across the private healthcare industry. It ensures uniformity of claims and assists in protecting medical scheme members against potential fraud. We administer the allotting and maintenance of healthcare provider practice numbers through the PCNS system under strict conditions set out by the CMS, one of which is that all users of the system contribute to funding it, and another is that the system is not-for-profit.”

Getting to the heart of the matter

What is the problem, we wondered, if the system is already widely used by medical industry stakeholders? It seems money is at the centre of the dispute. A while back Discovery resigned from the BHF… The BHF therefore contends that Discovery’s ongoing use of PCNS numbers and associated data is illegal. “It is of utmost importance that the Boards of Trustees of medical schemes are aware of the potential liability of practices which they allow, either knowingly or unknowingly not to pay the annual PCNS user fees,” said Dr Zokufa, MD of the BHF. “A cornerstone of their duties is to protect the scheme and the members of the scheme [who] will ultimately to pay the costs”, he said.

The Court interdicted Discovery from using the PCNS and instructed the scheme to deliver up all data bases, records and documents which incorporate the PCNS, which are in their possession or under their control. Discovery Health Medical Scheme and its administrator were also instructed to pay royalties to BHF for the period 1st January 2010 to date, as well as the legal costs of the case.

Is this a case of twice insured?

The Council for Medical Schemes has also brushed with Discovery Health Medical Scheme in an out of court altercation. In this case they upheld Discovery’s rights to terminate a member’s membership when the member refused to repay the scheme some R861 334 in medical expenses despite recovering R5.5 million from the Road Accident Fund (RAF). This is one of those tricky situations that could open the proverbial “can of worms” in the medical schemes and insurance space. And we were surprised that similar cases have not presented to date. It seems only fair that the medical scheme – run to the benefit of its members – be compensated in such instances. By claiming against his medical scheme and the RAF the member has received compensation for the same event twice!

Since this incident a number of allegations have been levelled at Discovery, including a claim that it pressured certain members to claim from the RAF for motor accident-related medical expenses and sign away their rights to RAF compensation equivalent to the expenses incurred by the scheme. Discovery Health Medical Scheme has since denied that it harassed one of its members and his wife into signing an undertaking to claim from the Road Accident Fund (RAF). Quoted on iol.co.za, Discovery Health chief executive officer Dr Jonathan Broomberg said Discovery Health asks its members to sign an undertaking only if the attorney who handles the claim to the RAF does not belong to a panel of attorneys with whom the scheme has an arrangement.

Judging by the CMS “Judgments on Appeal” records they must have dozens of lawyers on retainer. It seems – thanks to “other people’s money” – the main stakeholders in the local medical schemes industry have more than enough funds available to settle their differences in court. And as the industry carves out new legislation (such as the new Demarcation Regulations to clarify what constitutes the business of an insurer versus a medical scheme) and the National Health Insurance roll out looms, we can expect many more healthcare disputes to head to the High Court. We can only hope that the regulators, industry representative bodies and medical schemes keep the healthcare consumer top of mind before embarking on costly and time consuming litigation.

Editor’s thoughts: Despite the many Court decisions and regulator rulings there are still gray areas where medical schemes and insurers intersect. One example is the Road Accident Fund (RAF) which compensates for road accident-related medical expenses also covered by medical schemes. Would you agree that a medical scheme member who makes a successful claim against the RAF should reimburse the scheme for medical expenses paid? Please add your comment below, or send it to gareth@fanews.co.za