A judgment handed down by the Pretoria high court on Tuesday in favour of the Road Accident Fund (RAF) could result in the fund claiming hundreds of millions, if not billions, of rand from Discovery Health.
RAF CEO Collins Letsoalo said in an interview on Wednesday the amount to be claimed from Discovery for past payments paid out was “much, much more” than the R500m a year Discovery claimed it had lost due to RAF nonpayment. The claims would date back to when Discovery first started claiming from the RAF, which was probably in the early 2000s. “We want our money,” Letsoalo insisted, adding the necessary calculations would be done.
“As per its obligation, Discovery Health paid for the medical costs of its members involved in car accidents. But in a strange twist, the medical scheme [would ask] its members to claim from the RAF and pay these monies back to Discovery. This practice was stopped in its tracks by the management and Discovery responded by running to the courts to reinstate its gravy train,” the RAF said.
Discovery indicated it intended to take the judgment on appeal.
At issue in the case was the lawfulness of two directives issued by the RAF prohibiting payments of claims of accident victims who are covered by medical schemes.
The directives were issued after an October 2022 judgment by judge Mandla Mbongwe, which ruled the first RAF directive was unlawful as the RAF was not entitled to reject liability for a claim for past medical expenses solely on the grounds that a medical aid scheme had already paid out those expenses. The RAF’s applications to the Supreme Court of Appeal and the Constitutional Court for leave to appeal against Mbongwe’s judgment were refused.
The first directive was to the effect that all claims for past medical expenses lodged by claimants whose medical schemes had already settled them should be rejected on that basis alone. The Mbongwe judgment interdicted the RAF from relying on the first directive to reject claims for the disputed medical expenses.
The second directive required the RAF’s employees to first ascertain whether a claim fell within prescribed minimum benefits (PMBs) or emergency medical conditions (EMCs) and only where it was neither, would a claim be processed and honoured if successful. This directive was based on medical schemes’ statutory obligation to honour claims for PMBs and EMCs and that no medical scheme’s rules could coerce members to recover these from the RAF.
The third directive stated the RAF was not obliged to compensate anyone for any loss or damage where a third party had undertaken to pay a claim.
The central issue of the case was the RAF’s liability for the payment of past medical expenses of road accident victims who are members of medical schemes, in circumstances where such expenses have been settled by the medical scheme. The RAF was refusing to pay these disputed medical expenses.
Discovery sought a declaratory order that the RAF was in breach of the Mbongwe judgment. It argued in the Pretoria high court the second and third directives fell within the ambit of the Mbongwe judgment and were therefore likewise unlawful. It argued all that had changed with the new directives was that the RAF had concocted new justifications for the same decision.
The RAF, Discovery said, was required to reimburse the medical scheme for costs it paid to its members involved in motor vehicle accidents.
The RAF argued that directives two and three were binding as they did not fall within the scope of Mbongwe’s ruling.
Judges Dunstan Mlambo and Noluntu Bam ruled against Discovery, saying the two directives were lawful. Discovery was ordered to pay the costs of the case, including the costs of two counsel. However, judge Ingrid Opperman lodged a dissenting view, saying the directives did fall under the Mbongwe judgment.
The judges said Discovery’s rule dealing with recovering from the RAF what the scheme had paid out in discharge of its contractual and statutory obligations was a rule of its own making and could not bind third parties, including the RAF.
“We are unable to conclude that Mbongwe J ruled that in every instance, without exception, the RAF will forever be liable for past medical expenses involving road accident victims who are members of medical aid schemes,” the judgment on Tuesday read.
The second and third directives did not breach the Mbongwe judgment and remained operative. The declaratory relief sought by Discovery Health could not be granted, the judges said.
Opperman dissented, arguing that the second and third directives did fall within the scope of the Mbongwe judgment and it was therefore unlawful for the RAF to reject a claim for past medical expenses on the grounds that a medical aid scheme had already paid out those expenses. The RAF was therefore in breach of the judgment.
“The statutory obligation of medical aids to pay PMBs and EMCs does not detract from the RAF’s obligation to do what its statute obliges it to do, as the Mbongwe J decision affirmed,” she said.
Discovery Health CEO Ron Whelan said the company agreed with Opperman’s dissenting judgment and would apply for leave to appeal.
“Unfortunately, the RAF not paying claims is a discrimination against all medical scheme members [not just those of Discovery Health Medical Scheme] who are also road users and who pay the same fuel levies towards the RAF as all other road users.
“Discovery Health’s legal action has sought to ensure that all valid claims of all medical scheme members in South Africa injured in road traffic accidents are paid in accordance with the RAF Act,” the company said.
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