Published on 8 January 2025
The Gauteng High Court dismissal with costs last month of Discovery Health’s application for an order declaring the Road Accident Fund (RAF) to be in breach of a previous High Court order was saluted by RAF CEO Collins Letsoalo, who described it as “a watershed” moment.
However, said a legal expert, it did not absolve the agency of its obligation to reimburse road accident victims for their past medical expenses.
The case dates back to 2022, when the RAF instructed its staff to reject claims from car crash victims if they had already been paid by medical schemes.
Letsoalo said Discovery Health “must know we are coming for our money they have claimed illegally from the RAF”.
He referred to paragraphs in the judgment saying the RAF was not an insurer, and said he had claimed for some time “that the RAF is a social benefit fund”.
“It’s good that this comes from the full Bench of the High Court,” he said. The judgment, handed down by a full Bench comprising Judge President Dunstan Mlambo, Judge Noluntu Bam and Judge Ingrid Opperman, who dissented, said “prescribed minimum benefits (PMBs) and emergency medical services are exclusive obligations of medical aids and the RAF is not an insurer and subrogation does not apply in this case, and medical aids are not insurers themselves”.
Subrogation allows an insurer to sue any third party legally liable for the insured loss.
Discovery Health CEO Dr Ron Whelan said the scheme was concerned by the judgment and believes the matter warrants the attention of the Supreme Court of Appeal, reports News24.
Discovery Health was also initially seeking an order that the RAF and its CEO were in contempt for their failure to implement an order handed down on 27 October 2022 by Judge Mandla Mbongwe that declared unlawful a 12 August 2022 RAF directive instructing RAF employees not to make any payments to claimants if their medical aid scheme had already paid for medical expenses resulting from accidents.
However, Discovery did not persist with the contempt application and instead asked for an order that the RAF and Letsoalo were in breach of Mbongwe’s order. Discovery was also seeking a pronouncement by the court that the RAF’s reliance on two directives it had issued subsequent to the order issued by Mbongwe perpetuates the RAF’s breach of that order.
It claimed the RAF, directed by Letsoalo, has intentionally disobeyed Mbongwe’s judgment and continues to reject claims for past medical expenses on the grounds that they have already been paid by the victims’ medical aids.
Discovery also claimed Letsoalo and the RAF had sought to circumvent the judgment by adopting a new ‘phantom’ directive on 13 April 2023, which it has refused to disclose to Discovery Health. This ‘phantom’ directive related to the obligations of medical schemes under the Medical Schemes Act to provide PMBs for emergency treatment required by medical scheme members.
Mlambo and Bam condemned the RAF for secretly issuing and implementing the directive and said the fund had a duty to disclose it before implementation. But they disagreed with Discovery Health’s claim that the principle of subrogation applies to claims submitted against the RAF by claimants.
They said any medical scheme registered under the Medical Schemes Act, among others, assumes liability for and guarantees the benefits offered to its members and their dependants in terms of the rules.
“The contract between the scheme and its members is not based on the success of a claim. On the contrary, when the scheme pays PMBs and emergency medical conditions (EMCs) it is not only discharging a contractual obligation but a statutory one,” they said.
They concluded that the legal premise of the second directive was not before Mbongwe, and for that reason, it is not struck by the res judicata rule.
They added that they were called to decide whether, by relying on the two subsequent directives, the RAF had breached Mbongwe’s judgment and ruled that the fund did not. “Discovery Health has also not made out a case to interdict these and/or to set them aside as unlawful. The result is that they remain operative,” they said.
In a dissenting judgment, Opperman said Mbongwe ruled it unlawful for the RAF to reject a claim for past medical expenses on the grounds that a medical aid scheme has already paid for those expenses.
She said whether the payment by the medical aid scheme was made pursuant to its contractual or statutory obligations does not seem to be relevant to what the RAF’s statutory obligations are, which is to pay claims.
Opperman added that where an issue has been litigated to finality between the parties, it is not permissible for a litigant to seek to obtain a reversal of the decision of the same question by advancing different reasons.
“This …. is exactly what the ‘phantom’ and third directives seek to do. In my view, the conduct of the respondents is both inimical to, and seriously subversive of, a sound and efficient system of public administration. Allowing the RAF to ‘bypass’ compliance with a judgment in these circumstances by these means would open the floodgates to directives and similar internal documents being used as a means of circumventing compliance with court orders,” Moneyweb quoted her as saying.
Not diminished
However, the judgment and dismissal of Discovery’s application does not diminish the rights of road accident victims to claim medical costs from the RAF, according to Hennie Klopper, Emeritus Professor in the Department of Private Law, University of Pretoria, who was recently singled out, with Gert Nel of Gert Nel Attorneys, by Letsoalo for criticism.
Letsoalo had accused Klopper of, among other things, being part of a campaign to “capture” the RAF.
Klopper said the judgment came at great expense to taxpayers and victims, who are left waiting for their medical costs to be paid.
“The RAF achieved nothing in terms of escaping its financial liability and will now face the challenge of ensuring that thousands of legitimate court orders are paid, as mandated by various court judgments,” he said.
He added that from the outset, he had been sceptical about the merits of Discovery Health’s action despite its well-intentioned objective of ensuring accident victims were compensated for their medical expenses by the RAF.
The RAF Act, he said, was explicit about who may claim from the fund, and medical aids do not fall under any of the categories, and thus have “no direct right of recourse”.
“The legal relationship between the RAF and road accident victims is governed by common law and remains intact. Under the common law collateral source rule, compensation from third parties – such as medical aid payouts – does not absolve the RAF of its liability to reimburse the victim for medical expenses incurred.”
Medical aids, in turn, derive their reimbursement rights from their contractual rules with members, which typically require members to claim from the RAF and refund the medical aid upon receiving payment, he said.
“In short, the dismissal of Discovery Health’s application does not diminish the rights of road accident victims to claim medical costs from the RAF.”