The Registrar of Medical Schemes and the Council for Medical Schemes (CMS) have failed to secure court orders interdicting Netcare Plus and Discovery Health from selling prepaid healthcare vouchers.
The Registrar and the CMS, on one hand, and Netcare Plus and Discovery Health, on the other, have been in a dispute over the legality of the vouchers since they were launched in 2020.
The vouchers are intended for people who do not belong to a medical scheme or scheme members who have depleted their medical savings accounts.
Netcare Plus, a division of private healthcare company Netcare, launched its general practitioner (GP) voucher in July 2020, with Discovery following in December. Netcare sells two additional vouchers: for consultations with optometrists and dentists. Medical schemes administrator Discovery sells vouchers for consultations with GPs and nurses.
Almost immediately, the Registrar issued directives to Netcare Plus and Discovery ordering them to stop selling the vouchers because they were conducting the business of a medical scheme without being registered as such.
Netcare Plus and Discovery believe the prepaid vouchers are not medical schemes.
In response to the directives, Netcare Plus and Discovery Health availed themselves of the appeal process provided for in section 49 of the Medical Schemes Act (MSA). This process has yet to be concluded.
In July last year, the Registrar and the CMS approached the High Court seeking orders declaring that Netcare Plus and Discovery Health were undertaking the business of a medical scheme relative to the prepaid vouchers and interdicting them from continuing to sell the products. To obtain these orders, the applicants had to show they have the authority to end the MSA appeal process and approach the Court for relief.
The Registrar and the CMS submitted that the appeal process could continue for years, while the allegedly unlawful products will continue to be sold.
MSA appeal process must continue
In a ruling handed down on 13 October, Judge Mandlenkosi Motha dismissed the application, saying the CMS and the Registrar had failed to make out a case for an exemption based on the Promotion of Administrative Justice Act.
Judge Motha said it was neither in the interest of justice to deny Netcare Plus and Discovery Health their internal rights of appeal nor was it in the public interest to ignore the provisions of the MSA.
The “kernel” of the CMS and the Registrar’s case was that it takes years to hear these appeals, but the progress of these appeals was “entirely in their hands”, he said.
The MSA provides for an appeal to an Appeal Board (section 50) after a matter has been dealt with by the Appeal Committee (section 49). The Appeal Board consists of three people: two experts in the field of medical schemes and a person with knowledge of the law, such as a retired judge.
“Surely, skipping this process impoverishes the court of the informative input from experts in the field […] The argument that the matter will eventually come to this Court is a non-starter and must be stated to be rejected. Taken to its logical conclusion, it means [the] applicants might as well skip this Court and approach the Constitutional Court, as the matter will end up there.”
Judge Motha granted a punitive cost order against the applicants, which means they must pay Discovery and Netcare’s full legal costs on the attorney-client scale.
Comment from the parties to the dispute
In a statement following the judgment, the CMS said the issue of the vouchers went beyond the parties cited in the High Court application. Therefore, it would have been properly addressed by a decision of the Court, which sets a precedent, than by a decision of the Appeals Committee, which does not.
Nevertheless, the CMS will abide by the judgment and “is looking forward to the hearing before the Appeals Committee”.
NetcarePlus’s managing director, Teshlin Akaloo, said NetcarePlus does not operate as a medical scheme, and its vouchers and health insurance products were expressly designed to fall outside the scope of the MSA.
“We have sought legal advice regarding our products and remain confident that they fully comply with the applicable legal framework. We note that the CMS has until 3 November 2023 to potentially file an appeal on any aspect of the case,” Akaloo said.
Dr Ryan Noach, the chief executive of Discovery Health, said: “Based on Discovery Health’s assessment, supported by extensive legal advice, we do not concur with the CMS’s view that Discovery prepaid health vouchers are doing the business of a medical scheme. The vouchers are simply a means for consumers to purchase healthcare services at a predetermined price, giving consumers predictability and certainty in the costs of those services. They also meet an important societal need to improve the affordability and accessibility of primary healthcare to more South Africans.”
Despite the “significant demand” for the vouchers, Discovery Health has limited its marketing and distribution of the product, pending the resolution of the CMS’s concerns, he said.
Noach said the High Court’s ruling was of a technical nature, relating only to the process undertaken by the CMS, not to the specific merits of the argument regarding the product.
“Discovery Health is awaiting the matter to be set down by the CMS Appeal Board. We have been awaiting this appeal since the CMS concerns first surfaced in 2020. We hope that this ruling from the High Court will ensure that this matter can now be heard promptly by the CMS Appeal Board so that there are no further delays to re-launching this product, which has the potential for significant societal benefit,” he said.
