The Road Accident Fund (RAF) pulled no punches in a statement issued this week when it responded to a “legal review” published by the Council for Medical Schemes (CMS) concerning the fund’s dispute with Discovery Health.
The “so-called legal review” was “misinformation”, and the “right thing” was for the regulator to withdraw it, the fund said.
It told the CMS to “stay in its lane and stick to its mandate” under the Medical Schemes Act (MSA).
The RAF’s statement also took the opportunity to hit back at “vitriolic” attacks and “propaganda” aimed at frustrating the fund’s attempts to realise the objectives of its 2020-25 Strategic Plan. From now on, the fund would tackle this “misinformation” head-on.
Discovery Health and the RAF are engaged in litigation over reimbursements for claims arising from motor vehicle accidents. In August last year, the RAF issued a directive stating it would reject claims for medical expenses where these expenses have already been paid by a medical scheme.
Earlier this month, the 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 MSA.
Read: CMS weighs in on Discovery’s dispute with RAF over members’ claims
The RAF’s statement took exception to what it called the CMS’s irregular actions in issuing an opinion on a matter that is before the courts.
The CMS has no jurisdiction in a court matter between Discovery Health (a medical schemes administrator) and the RAF (a social security fund), the media statement said.
If the CMS “really wanted” to provide medical scheme members with clarity, it could have joined the proceedings as a friend of the court or as a joint applicant on the side of Discovery, the fund said.
It said the disclaimer at the end of the CMS’s article “is rather embarrassing, as it does nothing to cure these actions that are ultra vires, and the resultant misinformation”.
The CMS said on Thursday that it will not comment on the RAF’s statement. “Our position, as stated in our previous commentary, remains unchanged.”
‘Subrogation does not apply’
The RAF said it is a social security fund, not an insurer. It quoted from section 2.3.3 of Directive 1 of 15 February 2011 (“Financial supervision of the RAF Act”) issued by the then Financial Services Board:
“In assessing the viability and sustainability of the RAF and its compliance with the provisions of the STI [Short-term Insurance] Act identified under paragraph 2.2, consideration will be given to the status and nature of the RAF as a public entity that is fundamentally a social security fund.
In assessing the RAF’s compliance with the prudential requirements of the STI Act, consideration will be given to the fact that:
- the RAF’s business model is not based on insurance principles as the premium payable (in this case the fuel levy) does not directly correlate to the benefits provided; and
- the national government is the RAF’s insurer of last resort.”
The RAF said it should be clear that subrogation is an insurance principle and therefore does not apply to RAF. “The interpretation of the CMS of this principle is misplaced and misleading, and it would seem quite deliberately.”
CMS challenged
The statement said the authors of the “misinformation” tried to justify their “impermissible” conduct (opining on a matter that is before the courts) by stating that medical scheme members have sought clarity from the CMS on the dispute.
The RAF challenged the CMS to produce evidence to support its contention that members have “always sought clarity or a position from the CMS”. In any event, it said, the CMS, “as a responsible regulator”, could have told these members that the matter is “remote to its mandate”.
It also questioned how a regulator can “act to clear any anomalies” on “matter remote to its mandate”.
‘No arrangements’ between the RAF and schemes
The RAF referred to the following statement in the “legal review”: “Medical scheme members usually do not always have full understating (sic) of the arrangements between RAF and medical schemes.”
The fund said it seemed like the authors “are also wondering in the wilderness” because no such arrangements exist between the RAF and medical schemes. The RAF challenged the authors to produce evidence of such arrangements.
Some medical schemes, including Discovery Health Medical Scheme, “have been demanding that their members claim against a social security fund, RAF, and once they receive the proceeds, they then must hand over those proceeds to the medical scheme. Should the members not hand over the proceeds, then their membership is terminated! This they do with the blessing of the CMS. The medical scheme members have no choice but to adhere to the demands or be kicked out of the schemes,” the statement said.
“There is no provision in the RAF Act for this backhanded scheme of arrangements [sic], and medical schemes are not claimants in terms of the RAF Act. What is worse is that these goes [sic] against the letter and spirit of section 29(1)(o) of the MSA and regulations 7 and 8 of the MSA regulations.”
The RAF criticised the CMS’s “legal review” for not directly referencing and quoting from the RAF Act, MSA, the MSA regulations, and relevant case law.
“When interpreting the MSA provisions, the following is paraphrased: ‘MSA further obliges medical schemes to pay for prescribed minimum benefits (PMBs), which include any emergency medical condition, under which motor vehicle claims could fall, in full.’
“The omission is very obvious, and this is found in CMScript, a publication of the CMS, issue 8 of 2014, where it states: “Regulation 8 stipulates that any benefit option offered by a medical scheme must pay in full for the diagnosis, treatment, and care of the PMBs. No co-payments may be charged, and no deductibles be used.”
‘No right’ to be reimbursed for PMBs and medical emergencies
The RAF said medical schemes have no right to be reimbursed for the PMBs and emergency medical conditions, particularly from a social benefit fund. “The authors simply ignore these facts without any rationale.”
The statement said that when Discovery Health was “challenged” in 2014 about these reimbursements, the following was stated in FIN24 on 27 October 2014:
- “Discovery does not differentiate between medical claims resulting from a motor vehicle accident and claims resulting from any other accident or illness.”
- “If, however, the member does not receive any compensation from the RAF, Discovery will remain liable for the costs of the treatment subject to the chosen plan type of the member and will never require that the member repay these funds to the scheme.”
- “All Discovery Health members are guaranteed coverage in respect of their medical costs incurred as a result of a motor vehicle accidents (as with all other benefits) in line with their plan choice and in terms of the prescribed minimum benefits which all medical schemes cover.”
The RAF said these statements raise the question, what has subsequently changed?
“There is sudden alliance, unholy it seems, between the regulator and the regulated entry to misinform the medical schemes members, with the CMS stating in this recent article that: ‘Therefore, the CMS cannot condone a situation where members of medical schemes are forced to be out of pocket due to non-payment of medical costs by RAF where these have since been paid out by medical schemes.’”
The RAF reiterated that medical schemes have a legal obligation to adhere to the MSA and its regulations, and the PMBs and emergency medical conditions must be paid in full without deductibles and co-payments.
‘Lies and more lies’
The RAF said it has observed “a disturbing trend of bullying and misinformation” concerning its new model articulated in its 2020-25 Strategic Plan.
“It would seem it has become a norm that those that are unsuccessful in trying to frustrate the objectives of the RAF strategy to resort to misinformation which at first looked to us like confabulations. It is always an attempt to portray the RAF as an organisation that is in disarray, recalcitrant, and “an organisation in a crisis”.
This may refer to the memorandum on the “crisis” at the RAF released last month by lawyers from 10 organisations. The National Assembly’s Standing Committee on Public Accounts has highlighted a number of problems at the RAF after visits to the fund’s branch offices.
“One will struggle to find facts in all these attacks; it is purely misinformation, lies and more lies. When faced with the real facts, the culprits simply disappear, only to re-emerge later with another wave of misinformation.
“We posit that this is deliberate; and the perpetrators are not innocent and ignorant South Africans; they are mostly experienced and seasoned professionals,” the RAF said.
All this is unfair since raf doesnt pay primiums .the primium payer must receive the medical expenses