SCA Judgment: RAF Prohibited From Medical Scheme Deductions

• The Supreme Court of Appeal ruled that the Road Accident Fund cannot reduce or deny claims for medical expenses already paid by a medical scheme.
• The judgment confirms that medical scheme members, who contribute to the RAF via the fuel levy, should not be disadvantaged by their medical cover.
• The SCA immediately interdicted the RAF from making deductions based on medical scheme payments.
• Directives issued by the RAF in April and November 2023, which attempted to circumvent a previous court order, were declared invalid.
• This ruling enables medical schemes, including Discovery Health, to confidently recover past medical expenses from RAF claims.

This landmark SCA judgment confirms the Road Accident Fund's obligation to fully compensate road accident victims for past medical expenses, irrespective of whether a medical scheme initially covered those costs.

The Supreme Court of Appeal (SCA) has issued a definitive ruling, confirming that the Road Accident Fund (RAF) is prohibited from reducing or refusing valid claims for medical expenses incurred by road accident victims simply because those costs were initially covered by a medical scheme. This significant SCA judgment RAF medical scheme deductions decision was handed down by a full bench of the court, with Judge Tati Makgoka presiding alongside Judges Caroline Nicholls, Phillip Coppin, and acting Judges Esther Steyn and Fiona Dippenaar, all concurring in the outcome.

Discovery Health CEO Ron Whelan highlighted that this ruling reinforces the fundamental principle that individuals should not face disadvantages due to their medical scheme coverage. He emphasized that medical scheme members, like all motorists, contribute to the RAF through the fuel levy, and their insurance status does not absolve the RAF of its statutory obligations. The court's reasoning clarified that the arrangement between a medical scheme and its member, where the scheme pays expenses and the member subsequently reimburses the scheme upon claim settlement, does not constitute 'sharing the proceeds' of a claim. Consequently, such reimbursement agreements do not fall under the exclusionary provisions of the RAF Act.

Crucially, the SCA immediately interdicted the RAF from implementing any deductions from compensation paid to claimants on the basis that their medical expenses have been, or will be, covered by their medical aid schemes. This means lawyers representing road accident victims must ensure that claims for past medical expenses are not reduced or rejected by the RAF on the basis of medical scheme payments, as this SCA judgment confirms the RAF's obligation to pay.

Beyond the core issue of medical expense deductions, the SCA's judgment also addressed the RAF's attempts to circumvent prior judicial orders. The court explicitly confirmed that a state organ cannot re-litigate an issue that has been conclusively determined by issuing new directives under different labels or with altered reasoning. Directives specifically designed to bypass a court order are deemed invalid, even if they have not been formally set aside through a separate legal process. This aspect of the ruling strongly reinforces the authority of the judiciary, as enshrined in Section 165 of the Constitution.

The SCA further issued an interdict against the RAF and its then-chief executive, Collins Letsoalo, preventing them from giving effect to specific directives issued on April 13, 2023, and November 2, 2023. These invalid RAF directives had followed an earlier order by Judge Mbongwe on October 27, 2022. Discovery Health had previously contended that these directives perpetuated the RAF's non-compliance with Judge Mbongwe's order by continuing to reject claims for past medical expenses RAF claims on the grounds that medical schemes had already covered the costs.

Discovery also alleged that Letsoalo and the RAF had sought to circumvent the judgment by adopting a new, undisclosed 'phantom' directive on April 13, 2023. This alleged directive reportedly concerned medical schemes' obligations under the Medical Schemes Act to provide prescribed minimum benefits (PMBs) for emergency treatment to their members. This part of the ruling underscores that compliance officers at the RAF must immediately cease implementing any directives that attempt to circumvent this ruling.

The implications of this SCA judgment are far-reaching, particularly for medical schemes and claimants seeking compensation for Road Accident Fund medical expenses. Discovery Health CEO Ron Whelan noted that the ruling restores the capacity of the Discovery Health Medical Scheme, the 19 restricted medical schemes administered by Discovery Health, and other schemes across the industry to recover past medical expenses through their members' RAF claims. These recoveries are crucial as they ensure that costs for which the RAF is legally responsible are indeed borne by the RAF, rather than being shifted to medical schemes or individual members. Medical schemes can now confidently recover these expenses from RAF claims.

In a clear directive, the SCA ordered the RAF and its former chief executive, Collins Letsoalo, to take all necessary steps to implement the judgment within 14 days of the ruling. Furthermore, they are required to provide a written report to the registrar of the SCA and Discovery Health's attorneys detailing their compliance with the order and the specific steps taken for its implementation. The court also awarded costs against both the RAF and Letsoalo, signaling the seriousness with which the judiciary views the RAF's conduct in this matter. Moneyweb's request for comment from the RAF regarding the judgment received no response by the time of publication.

Lawyers representing road accident victims must ensure that claims for past medical expenses are not reduced or rejected by the RAF on the basis of medical scheme payments, as this SCA judgment confirms the RAF's obligation to pay. Medical schemes can now confidently recover these expenses from RAF claims, and compliance officers at the RAF must immediately cease implementing any directives that attempt to circumvent this ruling.

Source: Original reporting via Moneyweb