Bonitas, Medscheme clash over scope of CMS investigation

Medscheme says the Council for Medical Schemes (CMS) has expanded its investigation into Bonitas’s procurement processes to include the medical scheme’s most recent appointment of Momentum Health as administrator and Private Health Administrators (PHA) as its managed-care provider.

Bonitas, on the other hand, has labelled this as “misinformation”.

“The Council for Medical Schemes has not contacted the scheme regarding any formal expansion of the scope of its section 44 investigation,” Bonitas said.

The announcement came as the Medscheme withdrew its High Court application seeking to halt implementation of those appointments, saying it had accepted the CMS’s written assurances “in good faith” that the information and evidence it had submitted in the litigation, together with the latest procurement processes, would now form part of the regulator’s investigation.

Until now, the CMS’s section 44 investigation had centred on two earlier procurement processes – Bonitas’s 2022 appointment of PHA to administer its BonCap option and the 2024 award of its marketing, sales, and distribution contract to Agile Business Solutions. Both the CMS and Bonitas had previously said the later appointments of Momentum Health and PHA fell outside the scope of that investigation.

According to Medscheme, the CMS has now provided written assurance that it has “expanded its current investigation relating to prior tenders to include the most recent tender processes”.

However, in response, Bonitas noted that although the CMS investigation into earlier 2022 and 2024 tenders remain ongoing, both the regulator and Bonitas have previously confirmed that the more recent appointments of Momentum Health and PHA fall outside that investigation’s original scope.

“Despite the impression that may have been created, Bonitas is not aware of any change in the regulatory status. Bonitas remains fully committed to co-operating with the CMS with respect to all lawful regulatory matters,” Bonitas said.

Medscheme launched the High Court application in December last year, seeking to prevent Bonitas from implementing the new administration and managed-care contracts until the CMS had completed its investigation. The transition nevertheless went ahead on 1 June while the litigation remained unresolved, after which Bonitas, Momentum Health, and PHA dealt with significant operational challenges during one of the largest administrator transitions in South Africa’s medical scheme industry.

Having accepted the CMS’s assurances, Medscheme said it would now allow the regulatory process to take its course.

“We now look to the CMS to speedily conduct its investigation and to apply appropriate sanctions, should this be aligned with its findings,” the administrator said.

How the dispute reached this point

The CMS launched its section 44 investigation in late 2025 after a preliminary inquiry into Bonitas’s procurement processes. Initially, the investigation focused on two earlier procurement decisions – Bonitas’s 2022 appointment of PHA to administer its BonCap option and the 2024 award of its marketing, sales, and distribution contract to Agile Business Solutions.

Around the same time, Medscheme approached the High Court seeking an urgent interdict to preserve the status quo by preventing Bonitas from implementing its newly awarded administration and managed-care contracts until the CMS had completed its investigation.

When Moonstone asked the CMS in February whether the investigation should delay those appointments, the regulator drew a clear distinction between the two processes. It said the investigation related to the earlier procurement decisions and did not consider it appropriate for Bonitas to postpone appointing new service providers while the investigation continued.

Read: Bonitas’ dispute with Medscheme heads to court

Bonitas likewise maintained that the appointments of Momentum Health and PHA resulted from a separate procurement process that fell outside the scope of the section 44 investigation.

The litigation itself, however, soon encountered delays. In March, the application was removed from the urgent roll by agreement between the parties after becoming bogged down in procedural disputes, with the expectation that it would later be specially allocated for hearing once the outstanding interlocutory issues had been resolved.

As a result, the case was never heard on its merits before the planned implementation date.

Read: Bonitas-Medscheme court battle stalls as application removed from urgent roll

Bonitas said the application had never been genuinely urgent, noting that it was removed from the urgent court roll in March 2026 and that, once the transition to the new service providers was implemented on 1 June, the interdict sought by Medscheme had become moot. The scheme described Medscheme’s withdrawal as a “capitulation”, alleging that the administrator was unable to produce evidence of the alleged wrongdoing in the court proceedings.

Bonitas also questioned Medscheme’s motives, arguing that it was seeking to protect its commercial interests after losing contracts worth about R1.8 billion a year. The scheme said the litigation had resulted in unnecessary legal costs borne by members and that it would seek legal advice on recovering those costs.

A difficult transition

Even while the litigation remained pending, Medscheme said it accelerated planning during April for a responsible wind-down of its services should Bonitas proceed with the transition.

Bonitas proceeded with the transition on 1 June, ending Medscheme’s 44-year role as administrator. The changeover was followed by widespread operational disruption, with members reporting difficulties obtaining hospital and specialist authorisations, accessing chronic medication, reaching support channels, and using digital platforms. At the time, Medscheme said it had repeatedly warned against a “clean-cut” transition, while Bonitas attributed many of the problems to unresolved legacy matters and data anomalies identified during the handover.

Read: Bonitas members caught in service disruption after administration switch

Read: Medscheme rejects Bonitas’s explanation for post-transition disruptions

The transition also prompted further engagement from the CMS. In response to Moonstone’s questions in June, the regulator confirmed that it had engaged with both Bonitas and Medscheme regarding the operational challenges. It said Bonitas had submitted a recovery plan and indicated that “the plan appears to be bearing fruit”.

Read: CMS reviewing Bonitas complaints, says recovery plan appears to be bearing fruit

This week, Medscheme said it had anticipated the complexity of what it described as South Africa’s largest administrator transition and had recommended a phased approach to ensure authorisations and claims payments continued uninterrupted, arguing this would have been in the best interests of Bonitas’s members and healthcare providers. It said Bonitas rejected the proposal and proceeded with the transition on 1 June without explaining its reasons.

Responding to criticism of the post-transition difficulties experienced by some members, Bonitas said operational stability has now been achieved. It said additional capacity has been deployed across key service areas and that backlogs in claims processing, oncology authorisations, and medical savings account refunds have been cleared.

Attention shifts to the regulator

Meanwhile, attention increasingly shifted from the court proceedings to the CMS investigation.

According to Medscheme, the CMS initially decided to pause its investigation while the court application was under way because it did not wish to become involved in what it regarded as a commercial dispute.

The administrator said it wrote to the regulator, emphasising that the court application was intended to preserve the status quo pending the CMS investigation and that the two processes were complementary rather than mutually exclusive.

The parties exchanged further correspondence throughout June. According to Medscheme’s timeline, the CMS confirmed on 19 June that a regulatory enquiry and inspection remained under way.

Medscheme subsequently wrote to the regulator recording its understanding that the investigation would include the 2025 procurement process, before the CMS confirmed on 30 June that the information already provided by Medscheme was being considered as part of its assessment.

By then, however, the contracts had already taken effect. Medscheme said the written assurances it had received from the CMS meant it would withdraw the litigation and allow the regulatory process to continue.

The dispute now moves to the regulator

Although the transition to Momentum Health and PHA has already taken place, the procurement and governance questions that gave rise to both the litigation and the CMS investigation remain unresolved.

The High Court never reached the stage where Medscheme’s allegations of procurement irregularities, governance shortcomings and conflicts of interest could be tested. Bonitas has consistently rejected those allegations, maintaining that the procurement process was independently conducted and lawfully concluded.

“Medscheme’s evidence-backed allegations against Bonitas and PHA remain unanswered. This evidence has not been examined or challenged in court,” the administrator said.

According to Medscheme, however, the work done during months of litigation will not be lost. It says the written assurances from the CMS mean that the information and evidence assembled for the High Court proceedings – including affidavits, supporting documents, and other material relating to the procurement processes – will now be considered as part of the regulator’s ongoing investigation.

Rather than starting afresh, Medscheme says the CMS will be able to build on the material already before it. The administrator said this “paves the way for the CMS to continue to pursue its investigation to the fullest extent” and added that it is “encouraged that the CMS has the authority and power to examine Bonitas’s records and internal documents to the fullest extent it deems necessary”.

Bonitas reiterated this week that every decision relating to the appointment of Momentum Health and PHA was taken in the best interests of members and in accordance with its procurement processes.

It said independent reviews had been conducted to provide additional oversight and added that its 2025 annual financial statements were approved without qualification. According to Bonitas, its auditors also conducted a value-for-money review of the new contracts and confirmed that they had been concluded at arm’s length.

Moonstone has asked the CMS to confirm whether the scope of its section 44 investigation has formally been expanded to include the procurement process that resulted in the appointments of Momentum Health and PHA.