The Council for Medical Schemes (CMS) expects to complete by the end of August its section 44 investigation into Bonitas’s 2022 appointment of Private Health Administrators (PHA) to administer the BonCap option and its 2024 marketing, sales, and distribution contract with Agile Business Solutions. Separately, the regulator is conducting a section 43 inquiry into the appointment of Momentum Health as administrator.
The update follows Moonstone’s report on differing interpretations of the scope of the section 44 investigation after Medscheme withdrew its High Court application against Bonitas.
Read: Bonitas, Medscheme clash over scope of CMS investigation
The legal dispute dates to September 2025, when Bonitas announced it would replace Medscheme, its administrator of 44 years, with Momentum Health from 1 June this year, while appointing PHA as its managed-care provider. In December 2025, Medscheme approached the High Court for an interdict to prevent the implementation of those contracts pending the outcome of the regulator’s investigation.
The application was removed from the urgent court roll by agreement in March 2026 after procedural disputes delayed the matter, allowing the transition to proceed on 1 June.
Medscheme withdrew the application earlier this month.
In a media statement issued on 16 July, Medscheme said it had accepted written assurances from the CMS that the information and evidence submitted during the court proceedings, together with the latest procurement processes, would form part of the regulator’s investigation. Bonitas disputed that interpretation, saying the CMS had not advised the scheme of any formal expansion of the section 44 investigation.
Responding to Moonstone’s questions, the CMS has now clarified that two separate regulatory processes are under way.
The section 44 investigation remains confined to Bonitas’s earlier procurement decisions and is expected to conclude by the end of August. By contrast, the more recent appointment of Momentum Health as administrator is being assessed through a section 43 inquiry into compliance with Board Notice 73 of 2004.
Unlike the existing section 44 investigation into Bonitas’s earlier procurement decisions, the section 43 inquiry relates specifically to the change of administrator. The CMS said such inquiries are initiated whenever a medical scheme appoints a new administrator to assess compliance with Board Notice 73.
Earlier procurement decisions remain under section 44 investigation
The section 44 investigation dates to late 2025, when the CMS launched a formal investigation following a preliminary enquiry into Bonitas’s procurement processes. It focuses on two earlier procurement decisions: the 2022 appointment of PHA to administer the BonCap option and the 2024 award of the scheme’s marketing, sales, and distribution contract to Agile Business Solutions.
Read: Bonitas commits to co-operating with CMS investigation
The investigation later became central to Medscheme’s legal challenge against Bonitas’s decision to appoint Momentum Health as administrator and PHA as managed-care provider.
Medscheme argued that the earlier procurement decisions and the later appointments formed part of a broader pattern involving the same decision-makers and alleged governance failures, procurement irregularities, and conflicts of interest. It maintained that the new contracts should not be implemented until the CMS had completed its investigation.
Bonitas consistently rejected those allegations. It maintained that the appointments of Momentum Health and PHA resulted from a separate procurement process that was independently verified and lawfully concluded, and the section 44 investigation concerned only the earlier procurement decisions.
The CMS similarly indicated at the time that it would be unreasonable to expect the scheme to delay key appointments while the investigation ran its course.
Read: Tensions rise as Bonitas and Medscheme clash ahead of court showdown
New appointment being assessed through a section 43 inquiry
The regulator also confirmed that Bonitas’s appointment of Momentum Health as administrator does not form part of the section 44 investigation.
Instead, the CMS said it is assessing compliance with Board Notice 73 regarding the procurement process.
“The scope [of the section 44 investigation] was not extended, and no communication was issued either to Bonitas or Medscheme advising on the extension of scope,” the CMS said.
The regulator explained that whenever a medical scheme changes administrator, it is notified of the appointment and initiates a section 43 enquiry to assess compliance with Board Notice 73.
Board Notice 73 requires medical schemes to follow a fair and reasonable process when appointing an administrator, considering factors such as cost, capacity, experience, and financial soundness. It also prohibits the appointment of an administrator in which a trustee, employee, or other officer has a direct or indirect financial interest.
Evidence may still inform the regulator’s assessment
The CMS also clarified how it would deal with the information and evidence assembled for the High Court proceedings, after Medscheme said this material would now form part of the regulator’s assessment.
According to the regulator, any information submitted by Medscheme will be considered as part of the section 43 inquiry. If the section 43 inquiry develops into an investigation, the information, if still relevant, will also be considered.
The regulator further rejected Medscheme’s assertion that it had paused its investigation while the litigation was under way.
“The investigation is ongoing and was never paused,” the CMS said.
