Ruling in dispute between Road Accident Fund and Discovery Health over claims

In October last year, the High Court in Pretoria interdicted the Road Accident Fund (RAF) from implementing an internal directive to reject all claims for medical expenses where these expenses were paid by medical schemes, not by the claimants.

The interdict was the result of an urgent application by Discovery Health, the largest administrator of medical schemes in South Africa.

Read: RAF ordered to pay medical expense claims covered by medical schemes

The RAF, which covers the medical expenses of road accident victims, brought an application for leave to appeal against the decision.

This week, the High Court dismissed, with costs, the RAF’s application.

The decision provides medical schemes and their administrators with the assurance that they can continue to claim from the RAF on behalf of their members.

“The setting aside of this unlawful directive protects medical scheme members from having to pay twice for protection against medical expenses associated with road accidents – through the fuel levy and then again through their medical scheme contributions. [RAF levy is R2.18 a litre.]

“This ruling therefore benefits all medical scheme members across the entire industry and is strongly in the public interest,” Discovery Health’s chief executive, Dr Ryan Noach, said.

In court papers submitted when it brought its application last year, Discovery said the RAF’s directive could result in medical schemes losing about R500 million a year.

Interdict contravenes the RAF’s mandate

In his judgment handed down on 23 January, Judge Mandla Mbongwe said the RAF functions and exercises its powers within the confines of the provisions of the RAF Act.

The directive was based on a measure extraneous to the provisions of the RAF Act, namely, the Medical Schemes Act (MSA) and “the way in which medical schemes operate in terms of the MSA”. Its “purported exoneration” of the RAF from its liability to compensate, in full, the victims of vehicle accidents was ultra vires (exceeding its legal power or authority) and unlawful, he said.

The MSA and how medical schemes operate were “not legitimate sources” for seeking leave to appeal.

Judge Mbongwe said the MSA is intended to do “no more” than to govern the relationship between medical schemes and their members, on the one hand, and the providers of medical services to members, on the other.

“The emergence of a third party in the relationship between the scheme and its member through wrongful conduct/negligent driving that causes the hospitalisation and medical treatment of the scheme’s member, and thereby occasioning the incurring of medical expenses by the scheme, entitles the scheme’s member to a claim for any loss suffered, in terms of the RAF Act.”

Judge Mbongwe said it would be neither desirable nor justified to give the words “any loss suffered” a restrictive meaning, to exclude past medical expenses incurred by the scheme, or any other party for that matter, on behalf of its member or a victim of a motor vehicle accident. Such expenses would not have been incurred, but for the wrongful conduct the RAF Act obliges the RAF to pay for.

“Just like their members, the medical schemes are entitled to be placed in the position they would be in had the motor vehicle accident not occurred. That the schemes claim through their members via subrogation should be of no concern to the RAF if the relevant invoices and, if necessary, the member’s written undertaking to pay the recovered past medical expenses to the scheme, is furnished to the RAF,” he said.