Medshield trustees suffer judge's ire

The Council for Medical Schemes had a great deal to celebrate yesterday - not only did it win its case against former Medshield trustees, but the judge ordered the trustees to pay R1-million in legal costs.

The council, which oversees the medical aid industry, has spent the past year embroiled in legal battles with the trustees of three medical aids. It won yet another battle when Pretoria High Court Judge John Murphy ruled that the Medshield trustees, who were removed from their position in October, could not be reinstated and had to foot the legal costs of the court challenge.

Council for Medical Schemes spokesman Aleksandra Serwa said: "The judge handed down the punitive order as a mark of the court's disdain for the obstructive conduct of the trustees."

The 10trustees were removed in October after the court ruled they were a "law unto themselves" and had illegally paid R28-million to brokers to send business the scheme's way.

They had also paid themselves double wages and employed a business run by CEO Thabo Mabeta's company to collect monies owed to it from the Road Accident Fund.

On October 22 last year, the trustees filed responding affidavits to ask the court to reinstate them.

Judge Murphy said the trustees approached an ANC MP and asked him to try to derail a two-year long investigation into their misconduct by the Council for Medical Schemes.

Murphy said the MP then made a fuss about the council spending R8-million in legal fees.

Judge Murphy said considering the council regulated an industry worth more than R100-billion, this legal bill was miniscule.

"[ The MP's actions] may be reasonably construed as a calculated attempt to restrict the resources of the regulator in the hope of weakening its capacity for intervention," Murphy said.

The court found that former Medshield Principal Officer Thabo Mabeta was illegally employed as both a CEO and a member of the board, making it impossible for him to independently assess the board's decisions.

Mabeta allegedly paid himself R150000 a month as a trustee while receiving a salary of about R100000 a month as CEO.

Some of his money was "illegally" paid into a family trust and was not taxed, according to an affidavit from the council's registrar, Monwabisi Ganthso.

Murphy decided to keep the Medshield scheme of more than 200000 members under curatorship.

However, the council reassured members yesterday that the scheme was financially sound and could pay out claims.

Both Medshield and Sizwe Medical Scheme have been put under curatorship after trustees' "irregular" conduct.

Medshield did not respond to a request for comment.