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non-compliance-curatorship

Non-compliance leads to curatorship for KeyHealth

In 2020, the KeyHealth Medical Scheme was placed under provisional curatorship as a result of certain corporate governance irregularities. “The journey of restoring governance at KeyHealth Medical Scheme continues,” according to the Council for Medical Schemes (CMS) on the announcement of the curatorship confirmation by the High Court of South Africa on 25 March 2021, in a judgment by Honourable Judge Kollapen.

“This confirmation of curatorship underscores efforts which are already in motion to restore governance at KeyHealth, for the protection and benefit of its members,” said Dr Sipho Kabane, the Registrar of Medical Schemes. Curatorship is an intervention put in place by the Medical Schemes Act (131 of 1998) that empowers the Registrar of medical schemes to protect members’ interests and assets, where necessary. It involves the removal of the Board of Trustees (BoT), and the appointment of a Curator to take full management of a scheme and rectify the identified issues.

According to the CMS, KeyHealth Medical Scheme was placed under curatorship following non-compliance with several regulatory aspects of the Medical Schemes Act. Specifically:

  • The irregular appointment of the Chief Executive Officer, contravening its scheme rules;
  • Irregularities in the election of some of the scheme’s Trustees;
  • The composition of the BoT when effecting the removal of implicated Trustees – including conflict of interest and violation of the Code of Conduct of Trustees;
  • The implementation of a discriminatory incentive structure against new older members in favour of new younger members. The Registrar of Medical Schemes found that KeyHealth paid brokers R400 for signing up members younger than 50 while paying nothing when a new member older than 60 was referred.

In addition to non-compliance, other governance problems were also identified. For instance:

  • The long tenure of the existing BoT;
  • Interference by external parties in the scheme;
  • Divisions within the BoT as a result of dysfunction in the governance structure.

“The Curator’s role and mandate is to, amongst others, restore overall effective governance of the scheme, facilitating the proper election of a new BoT to oversee its affairs, whilst ensuring continued servicing of members and beneficiaries of the scheme,” according to the CMS.

Click here to access the CMS press release that includes a link to the details of the ruling.

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