The Supreme Court of Appeal (SCA) has barred the Road Accident Fund (RAF) from implementing directives that sought to exclude past medical expenses from compensation claims because a medical scheme had paid, or would pay, those expenses. The Court also expressly prohibited the RAF from deducting these expenses from claimants’ compensation on that basis.
In a judgment delivered on 16 October 2026, the SCA found that the RAF and its then chief executive, Collins Letsoalo, breached a 2022 High Court order and their constitutional duty to obey and implement it. It found that two later directives were “clearly contrived to circumvent the High Court’s judgment”.
The ruling confirms that payment by a medical scheme does not extinguish a road accident victim’s claim against the RAF for proven past medical expenses. Where the applicable scheme rules require reimbursement, compensation recovered for expenses already paid by the scheme may have to be repaid to it.
The SCA overturned a Full Court order that had allowed the later directives to remain in effect. It also rejected the Full Court majority’s reasoning on collateral benefits, subrogation, and the development of the common law because those pronouncements might otherwise be treated as authoritative.
The judgment has potentially far-reaching consequences for medical schemes and their members, although the Court did not quantify the amounts involved or the number and value of RAF claims that may be affected.
The unanimous judgment was written by Judge of Appeal Tati Makgoka, with Judges of Appeal Caroline Nicholls and Phillip Coppin and Acting Judges of Appeal Esther Steyn and Evette Dippenaar concurring.
Full Court’s order overturned
The SCA upheld Discovery Health (Pty) Ltd’s appeal against the judgment by the Full Court of the Gauteng Division in December 2024, set aside its order, and substituted an order granting the declaratory and compliance relief Discovery had sought.
Read: Discovery to appeal ‘far-reaching’ judgment in favour of RAF
Its reasoning largely endorsed the approach taken by Judge Ingrid Opperman in her dissenting judgment.
The RAF and Letsoalo were ordered to stop implementing the directives issued on 13 April and 2 November 2023 with immediate effect.
They were also prohibited from deducting amounts from claimants’ compensation because their medical expenses have been, or will be, paid by their medical schemes.
They must take all steps necessary to implement the judgment and report their compliance in writing to the registrar of the SCA and Discovery’s attorneys within 14 days of the order.
The RAF and Letsoalo were ordered jointly and severally to pay Discovery’s appeal costs, including the costs of two counsel. The substituted order also awarded Discovery its costs in the Full Court, including the costs of two counsel on scale C.
Dispute over expenses paid by schemes
The litigation concerned three directives issued by the RAF between August 2022 and November 2023.
The first directive was issued by the RAF’s acting chief executive on 12 August 2022 and stipulated that it must be implemented immediately. It instructed claims officers to reject claims for past medical expenses if a medical scheme had already paid them and required the RAF’s offices to use a prepared rejection letter.
Discovery challenged the directive successfully. On 27 October 2022, the High Court in Pretoria declared it unlawful, set it aside, and interdicted the RAF from implementing it.
The High Court held that section 17 of the RAF Act requires the RAF to compensate claimants for proven damages, while the Act does not provide for medical scheme benefits to be deducted when compensation is calculated.
Payments by medical schemes arise from arrangements between schemes and their members and do not release the RAF from its obligation to compensate road accident victims for proven past medical expenses.
The High Court also found that the policy would prejudice medical scheme members because they contributed indirectly to the RAF through the fuel levy but would not receive full compensation for past medical expenses if their scheme had already paid them.
The High Court subsequently refused the RAF leave to appeal.
The SCA dismissed its application for leave to appeal on 31 March 2023, and the Constitutional Court dismissed its application on 18 October 2023 because the matter did not engage its jurisdiction.
However, the RAF continued to reject claims for past medical expenses paid by medical schemes under two further directives.
Timing of directives was ‘telling’
The SCA drew particular attention to the timing and manner in which the RAF issued the later directives.
The SCA’s refusal of leave to appeal was communicated to the parties on 11 April 2023. Two days later, the RAF issued its second directive.
The RAF then applied to the Constitutional Court for leave to appeal on 24 April without disclosing that it had issued the directive 11 days earlier.
The RAF disclosed the second directive only after it had exhausted the appeal process in the Constitutional Court.
The SCA said the “irresistible inference” was that the RAF anticipated that its application might be unsuccessful.
Less than two weeks after the Constitutional Court refused leave to appeal, the RAF issued the third directive on 2 November 2023.
“The timing of both directives is telling,” Judge Makgoka wrote.
The second directive was issued without Discovery’s or the public’s knowledge. When Discovery learnt through correspondence that the RAF was relying on another directive, the Fund failed to provide a copy despite undertaking to do so.
Discovery saw the second and third directives for the first time when the RAF attached them to its answering affidavit in the subsequent litigation.
The SCA found that the RAF had “surreptitiously issued” the second directive to create another basis for continuing to reject claims for past medical expenses paid by medical schemes.
“The aim was to preserve the unlawful outcomes of the first directive,” Judge Makgoka wrote.
Different reasons, same outcome
The RAF argued that the later directives raised legal and policy issues that had not been decided in the original case.
Among other things, the second directive distinguished between expenses paid pursuant to a medical scheme’s statutory obligations and other expenses. The third relied on section 19(1)(d)(i) of the RAF Act, which excludes the Fund’s liability in certain circumstances where someone assists with or finances a claim in return for a share of the compensation.
But the SCA found that the overriding purpose of all three directives was the same: to reject claims for past medical expenses because the claimant’s medical scheme had already paid them. The later directives offered different reasons for achieving an outcome the High Court had already held to be unlawful.
The SCA held that the central issue raised by the later directives had already been finally decided between the parties (res judicata). The RAF could not reopen it by advancing new legal justifications for substantially the same outcome.
The Court also applied the “once and for all” rule. The additional arguments were available to the RAF during the original litigation and should have been presented then.
“The RAF cannot therefore rely on one directive in litigation and, when that directive is declared unlawful, conjure up another directive with a similar purpose,” Judge Makgoka wrote.
Directives were not issued in good faith
The SCA said the Full Court majority should have seen through the RAF’s “contrived stratagem” of pursuing the first directive’s unlawful objective under the guise of the second and third directives.
It rejected the majority’s finding that the RAF had issued the later directives in the lawful discharge of its statutory functions. The directives were not issued bona fide, the SCA found.
An act intended to circumvent a court order could not amount to a lawful discharge of statutory functions.
The Court said the RAF’s conduct implicated section 165 of the Constitution, which requires organs of state to assist and protect the courts and provides that court orders bind all people and organs of state to which they apply.
“The RAF’s conduct in this matter has the potential to undermine judicial authority,” Judge Makgoka said.
The Full Court majority held that the later directives were administrative action and remained effective until set aside in review proceedings. The parties accepted before the SCA that the directives constituted administrative action.
Without deciding whether that premise was correct, the SCA proceeded on that basis. It accepted that an unlawful administrative act may ordinarily have legal effect until it is set aside. But it found that this case fell within the narrow exception recognised by the Constitutional Court in Merafong City Local Municipality v AngloGold Ashanti.
The SCA said the directives had been issued solely to circumvent a court order. It added: “It is difficult to imagine more reprehensible conduct by an organ of state.”
The directives therefore had to be treated as invalid even though they had not been set aside in separate review proceedings.
Medical scheme payments remain collateral benefits
Although its findings concerning the directives were sufficient to decide the appeal, the SCA also addressed the Full Court majority’s statements about medical scheme payments and subrogation. It said this was necessary because those pronouncements might otherwise be treated as altering the common law or carrying precedential weight.
The SCA found that the majority had departed from well-established common-law principles.
The doctrine of res inter alios acta provides that benefits collateral to a claimant’s right of action are excluded when damages are calculated.
Although the deductibility of collateral benefits is generally determined case by case with reference to equity, reasonableness, and public policy, the SCA said courts have long treated medical expenses paid by medical schemes as collateral benefits that must be disregarded when damages are awarded. This means payment by a medical scheme does not extinguish the claimant’s loss for the purpose of a claim against the RAF. The RAF remains liable for proven past medical expenses.
The SCA said the long-standing application of the principle to delictual claims remained in force. It noted that the Western Cape High Court had already declined to follow the Full Court majority’s approach in Road Accident Fund v Van Wyk.
Read: Full Bench adds weight to challenges against RAF medical expense directives
Reimbursement obligations under scheme rules
In its discussion of the substantive legal issues, the SCA rejected the Full Court majority’s reasoning on subrogation. It said the principle should extend to medical scheme payments in this context, given that members may be contractually obliged to reimburse their schemes when the RAF settles their claims.
Subrogation generally enables an insurer that has covered a loss to recover the amount paid from the person or entity legally liable for it. This prevents the insured from recovering twice and places the financial burden on the party legally responsible.
In this case, the relevant scheme rules operate through reimbursement: the member claims the past medical expenses from the RAF and, once the claim is settled, reimburses the scheme for the expenses it paid.
The Full Court majority held that subrogation did not apply because neither Discovery nor the RAF was an insurer.
The SCA said the majority had asked and answered the wrong question. The relevant issue was whether payments by medical schemes should be treated in the same way as insurance payments for the purposes of subrogation and res inter alios acta.
Previous SCA authority had recognised that medical schemes are, in substance, a form of insurance. The principles should extend to subrogation in this context because the applicable scheme rules contractually oblige members to reimburse the scheme for past medical expenses it paid once the RAF settles the claim.
The judgment records that reimbursement requirements are standard in medical scheme rules, which derive statutory force from section 32 of the Medical Schemes Act and bind schemes and their members.
The practical effect is that the RAF cannot avoid liability merely because a scheme paid the healthcare provider first. For members whose scheme rules require reimbursement, compensation received for medical expenses previously paid by the scheme may have to be repaid to the scheme rather than retained by the member.
‘Reimbursement is not the same as sharing proceeds’
The SCA also rejected the RAF’s argument that an agreement requiring a member to reimburse a medical scheme fell within section 19(1)(d)(i) of the RAF Act. The provision concerns agreements under which an unauthorised third party assists with or finances the prosecution of an RAF claim in return for a portion of the compensation.
For the exclusion to apply, the third party must finance or assist with the claim, and the claimant and the third party must agree to share the compensation.
Medical schemes do neither, the SCA held.
A scheme pays the member’s medical expenses, and the member reimburses the scheme when the RAF claim is settled.
“Reimbursement is not the same as sharing proceeds,” the Court said.
The SCA also criticised the Full Court majority for effectively changing a century-old application of the common law without the RAF having pleaded for its development and without the court undertaking the required inquiry.
Before developing the common law, a court must establish the existing position and the reasons for it, consider whether the rule conflicts with the spirit, purport, and objects of the Bill of Rights, determine how it should be amended, and consider the wider consequences.
The SCA found that none of those requirements had been met.
Discovery Health and the RAF have been approached for comment. Their responses will be added when received.
