High Court confirms curatorship of medical scheme

The High Court in Pretoria has confirmed the curatorship of Sizwe Hosmed Medical Scheme, reaffirming the powers of the curator and dismissing the scheme’s counterapplication with costs.

In a judgment on 9 October, Judge David Makhoba confirmed the provisional order granted on 3 September that placed the eighth-largest open medical scheme under curatorship. The ruling follows a turbulent year for Sizwe Hosmed, marked by deepening solvency pressures, regulatory non-compliance, and leadership disputes.

Judge Makhoba ruled that the earlier court order issued by Acting Judge Manamela was “clear and unambiguous”, vesting “all powers of control and management of the scheme to the provisional curator.”

The Registrar of Medical Schemes, who brought the initial urgent ex parte application on 28 August, acted in terms of section 56(1) of the Medical Schemes Act, read together with the Financial Institutions (Protection of Funds) Act.

Read: Provisional curator to advise on future of medical scheme

The appointment of Lebogang Mpakati as curator remains in effect. She will continue overseeing the scheme’s operations, restoring governance and financial stability, and reporting regularly to the Council for Medical Schemes (CMS).

Counter-application dismissed with costs

Sizwe Hosmed’s board of trustees and principal officer, Luyolo Makwabe, opposed the curatorship, arguing that the statutory management imposed in 2024 was a more appropriate remedy and that the Registrar had acted prematurely. They alleged that curatorship had caused “serious and continuing adverse consequences” for members and beneficiaries.

Judge Makhoba, however, found that neither the board nor the principal officer had locus standi (legal standing) to bring or defend the matter. Relying on the precedent set in Registrar of Medical Schemes v Keyhealth Medical Scheme and Others (2021), the Court held that once a curator has been appointed, a scheme’s board no longer has any authority to act on its behalf.

“The board of trustees and Mr Makwabe did not have locus standi to institute or defend the application,” the judge said.

The Court also found that the matter was not urgent, noting that the rule nisi return date was only a few weeks away.

Judge Makhoba further ruled that Makwabe had acted unreasonably in disregarding the earlier order and proceeding with litigation before the return date. As a result, the Court dismissed the counterapplication with costs de bonis propriis (personal liability) on an attorney-and-client scale.

“Mr Makwabe not only disregarded Manamela AJ’s order; he also acted unreasonably by not waiting for the return date of the rule nisi,” the judgment reads.

Why the Registrar sought curatorship

In court papers, the Registrar submitted that reports by KPMG and the statutory manager indicated that Sizwe Hosmed was in “a poor financial state”, and there were material irregularities and “a void in the administration” of the scheme.

The Registrar argued that continuing with statutory management was no longer viable and that curatorship was necessary “in the interest of beneficiaries and the financial soundness of the scheme.”

These concerns mirror those detailed in CMS’s earlier statement and in Moonstone’s 8 September report, which outlined Sizwe Hosmed’s deteriorating solvency:

• The scheme’s solvency ratio dropped from 36.5% at the time of the 2021 merger between Sizwe Medical Fund and Hosmed Medical Scheme to 25.45% a year later, and to below 7% by mid-2025.
• Four successive business plans were submitted to the CMS, three of which were rejected for containing “inadequate information” and unrealistic assumptions.
• A statutory manager, Joe Seoloane, was appointed in July 2024, but his final reports warned of “severe financial and operational distress, marked by critical solvency issues, regulatory non-compliance, member losses, and unsustainable claims”.

The CMS said “in order to protect the best interests of beneficiaries”, it had to act swiftly to seek curatorship.

CMS welcomes judgment

In a statement following the ruling, CMS chief executive and Registrar Dr Musa Gumede said the judgment reinforced the regulator’s authority and duty to safeguard members’ interests.

“We wish to assure all stakeholders – including members, healthcare providers, and industry partners – of our unwavering commitment to regulatory oversight, stability, and the continued operation of the Sizwe Hosmed Medical Scheme,” he said.

Gumede added that the Registrar and Council are empowered by the Medical Schemes Act and the Financial Institutions (Protection of Funds) Act to apply for curatorship where necessary “in the interest of beneficiaries and the financial soundness of the scheme.”

CMS said Mpakati will continue to lead efforts to restore the scheme’s financial stability and will advise on possible future options, including restructuring, merger, or liquidation, depending on what is in members’ best interests.

Members of the scheme may submit queries to po@sizwe-hosmed.co.za