RAF amendments ‘will result in higher medical scheme contributions’

Posted on

While Discovery Health and the Road Accident Fund (RAF) wait on the Constitutional Court’s ruling on whether the fund will be allowed to appeal a High Court decision, it seems as if another legal avenue is being pursued to get an internal directive, issued by the fund in August last year, into law: the Road Accident Amendment Bill.

As the RAF Act currently stands, the fund is liable for compensating all road accident victims for medical expenses they incur (provided they weren’t solely responsible for causing the accidents). The Act does not provide for the exclusion of benefits that a victim of a motor vehicle accident has received from a medical scheme for past medical expenses.

Typically, schemes cover the initial medical expenses incurred by members who are injured in road accidents. Once the RAF has settled an accident victim’s claim – which can take years – the scheme will be reimbursed for medical expenses covered by the RAF.

In an internal communiqué dated 12 August 2022, the RAF’s acting chief claims officer instructed regional managers to ensure that their teams assessed claims for past medical expenses and reject the claims if a medical scheme had already paid them.

Discovery took the RAF to the High Court and in October last year succeeded in interdicting the fund from implementing its directive.

The High Court and the Supreme Court of Appeal dismissed applications by the RAF for leave to appeal against the judgment.

The RAF subsequently petitioned the Constitutional Court for leave to appeal. Discovery has opposed the RAF’s application. The Constitutional Court has yet to make a ruling.

Impact on medical scheme members

Enter the Road Accident Amendment Bill.

Published by the Department of Transport on 8 September, the Bill proposes a complete restructuring of the RAF, moving away from a “compensation” to a “social benefits” structure.

Dr Ryan Noach, the chief executive of Discovery Health, said the draft amendments seek to impose a number of changes that Discovery believes are “regressive and represent a reduction of benefit for road users on an inappropriately selective basis”.

Noach said prohibiting the reimbursement of expenses paid for by medical schemes is one of many amendments that would deprive road accident victims of their rights to full compensation. If the amendments become law in their current form, road accident victims could be deprived of most of the compensation to which they are currently entitled.

Legal experts have warned that the Bill – if it becomes law in its current form – will severely impact the rights of drivers, passengers, and pedestrians to claim compensation for injuries they suffer in a motor vehicle accident.

A direct proposal that will greatly affect the medical schemes industry is captured in the amendment to section 19 of the principal Act, which deals with liability exclusions.

Under the proposals, the amendment Bill adds a list of circumstances that are explicitly excluded from receiving this compensation, or “benefits”, as it were. One of these includes zero liability on the fund where “the third party’s medical aid cover or medical insurance cover provides cover in relation to the treatment of the third party’s injuries sustained in the motor vehicle accident and to the extent that cover is provided for assistive devices and related works, goods and services”.

Sound familiar?

Advocate Justin Erasmus, the chairperson of the Personal Injury Plaintiff Lawyers Association (Pipla), says this will have a major implication for medical schemes and their members if it is accepted into law.

Erasmus says there will be no reimbursement of expenses covered by a medical scheme.

“We predict this will drastically increase premiums, with dire consequences for all medical aid members.”

Nicolette Koch, partner at law firm Adams & Adams, concurs. Koch says the recovery of past medical expenses paid for on behalf of a member from the RAF has been a significant income stream for medical schemes.

“Excluding liability for medical expenses paid for by medical aids will mean a significant reduction in the income stream of the medical aids, with a resultant increase in membership premiums, to recover the loss of this income stream.”

Koch says there is a risk that medical schemes may become unaffordable for many members, forcing them to receive treatment in already overburdened state hospitals.

“Accordingly, there will be an increased cost of healthcare to road users who are medical scheme members who would continue to pay fuel levies plus higher medical scheme premiums. Medical aid schemes may even exclude claims for medical expenses arising from motor vehicle accidents.”

And then unlike the current dispensation, all future medical claims will have to be pre-authorised by the RAF or they will not be paid. Erasmus predicts this will create serious time lags for victims who urgently require care.

Kirstie Haslam, director of DSC Attorneys, adds that currently all medical and related expenses reasonably incurred that arise directly from the relevant accident are covered.

“The Bill provides for the introduction of a prescribed tariff for such expenses, which will not cover the actual costs incurred (or to be incurred),” Haslam says.

Taxi industry and short-term insurance

But it is not only the medical schemes industry and its members who stand to be negatively affected.

Under the amendment to section 19, there is zero liability on the fund where “the vehicle operator’s passenger liability insurance cover provides cover in relation to the passengers injured or killed in the motor vehicle accident”.

In other words, if passengers are injured in vehicles covered by public liability insurance, the RAF would be indemnified because the claim would lie against the owner and/or insurance company.

This is sure to ruffle feathers in the taxi and short-term insurance sectors.

Haslam explains that the passenger liability cover exclusion will inevitably necessitate premium increases and possible exclusions.

“Taxis are a predominant resource for members of the public to commute to and from work, and the proposed legislation unfairly discriminates against the working classes who are reliant on such services,” she says.

In the meantime, while the Constitution Court mulls over its ruling on whether the RAF will be allowed to appeal the High Court decision handed down on 26 October, the fund has not resumed paying the past medical expenses of scheme members injured in motor vehicle accidents since the fund issued an internal directive in August last year.

In June, Discovery Health failed to secure a court order compelling the fund to pay claims for medical expenses where these expenses were paid by medical schemes, not by the claimants.

The High Court said in June that Discovery had not made out a case that it would suffer irreparable harm until the Constitutional Court heard and decided on its dispute with the RAF.

Earlier this month, the Council for Medical Schemes (CMS) published a “legal review” of the matter, written by the regulator’s senior manager for legal services, John Letsoalo, and benefits management senior analyst Mpho Sehloho.

Among other things, the authors said they believed the RAF’s directive is not in line with the Medical Schemes Act (MSA).

Last week, the RAF hit back at the schemes regulator, saying that its “so-called legal review” was “misinformation”, and the “right thing” was for the regulator to withdraw it.

It told the CMS to “stay in its lane and stick to its mandate” under the MSA.

Read: RAF amendments will severely curtail the rights of road accident victims, say experts