Test case likely to slash state negligence payouts

• Other provinces may look to follow suit after judge finds Eastern Cape does not need to pay lump sums

A high court ruling has freed the Eastern Cape health department from paying out lump sums to victims of medical negligence, paving the way for it to care for victims in the state sector — and setting a precedent that other cash-strapped provinces could look to follow.

The judgment, in a test case in the high court in Bhisho, is expected to lead to a dramatic reduction in the scale of the medical negligence payouts made by the Eastern Cape health department to successful claimants. It will also strengthen the hand of other provinces that seek to follow suit.

BALLOONING CLAIMS

It comes as the Treasury has grown increasingly concerned at the ballooning medico-legal claims against the state, and the risk these pose to the public purse. Provinces reported contingent liabilities (the cost if all claims were successful) of R120.3bn in the 2021/2022 fiscal year, the majority of which were for severe birth injuries such as cerebral palsy.

Even though only a fraction of such claims are upheld, the payouts to successful claimants are not budgeted for and crowd out spending on personnel and vital goods and services.

Worse still, unscrupulous law firms often siphon off a significant portion of the lump sums intended to cover private sector care for medical negligence victims, leaving claimants to fall back on the state sector.

LAWYERS’ FEES

Citing testimony from Eastern Cape treasury official Godfrey Howes, judge Rob Griffiths said up to 40% of the payouts made by the Eastern Cape health department to a single law firm between 2015 and 2021 were lost to lawyers’ fees.

His ruling, handed down last week, builds on a 2021 Constitutional Court judgment that established the principle that the government could provide medical negligence victims with the services they required at state healthcare facilities instead of paying one-off lump sum payments based on the cost of care in the private sector.

The high court in Bhisho has now gone a step further, upholding the Eastern Cape health department’s argument that the common law needed to be developed to accommodate this “public health remedy”, and that it had the capacity to provide care to the victim, a child with cerebral palsy.

Instead of agreeing to the more than R30m claimed on behalf of the child, Griffiths ruled that the provincial health department should pay only a lump sum of R2.1m for general damages, loss of future earnings, an adapted vehicle and modifications to the child’s home.

PRIVATE PROVIDERS

The ruling includes an undertaking by the provincial health department that if it cannot provide the goods or services the child requires, it will pay for private sector providers.

Eastern Cape head of health Rolene Wagner said the ruling had “huge significance for future disbursements” because it would dramatically reduce the amount of money being paid out

to successful claimants in future and alleviate some of the department’s budget pressures.

The Eastern Cape saw its continent liabilities for medicolegal claims increase more than tenfold between 2013/2014 and 2020/2021, rising from R3.5bn to R38.8bn during this time. It paid out R3.462bn to successful claimants over this period, according to the judgment.

MALPRACTICE

The department had paid out R921m in medical negligence claims in the 2020/2021 fiscal year alone, said Wagner.

“I think the judgment is significant as it has the potential to change how medico claims are settled,” said Rural Health Advocacy Project director Russell Rensburg. “Previously the award was based on the cost of treatment in the private sector, so [this ruling] has the potential to reduce costs,” he said.

The Eastern Cape health department would be closely watched to see if it could deliver on its promises, said a retired medico-legal adviser to the Western Cape, David Bass.

“This is an important judgment because it shows it is feasible to present this option [the public health remedy] in settling medical malpractice cases.

“There will now be a lot of scrutiny of whether the Eastern Cape health department can walk the walk,” he said.

The legal developments are just one aspect of the government’s attempts to curb medical negligence payouts.

DISCUSSION PAPER

The SA Law Reform Commission is considering public comments made in response to a discussion paper which proposes a range of measures, including replacing lump sum settlements with a structured schedule of annual payments.

Once that process is completed, the government is expected to draft legislation updating the 2018 State Liability Amendment Bill, which was rejected by parliament’s justice committee last year because it wanted the commission to finish its work first.

UNSCRUPULOUS LAW FIRMS OFTEN SIPHON OFF A SIGNIFICANT PORTION OF THE LUMP SUMS INTENDED TO COVER PRIVATE SECTOR CARE