Discovery issues warning to RAF

Medical scheme administrator Discovery Health says it will seek to hold the Road Accident Fund (RAF) in contempt of court if it fails to comply with this week’s Constitutional Court decision to honour claims lodged on behalf of members injured in traffic accidents.

The RAF is a state-run entity charged with covering the medical costs of traffic accident victims. On Wednesday it lost its legal battle to overturn a high court interdict secured by Discovery Health in 2022 declaring its decision to exclude claims from medical scheme members unlawful, after the Constitutional Court rejected its application to appeal the lower court’s ruling.

In a surprise turn of events, RAF CEO Collins Letsoalo told Business Day on Wednesday evening that the organisation would not resume payments to medical schemes, despite the apex court’s decision.

“We are surprised by Mr Letsoalo’s position, which appears not only to be antagonistic but also flies in the face of the clear and strong position taken by the courts,” said Discovery Health CEO Ryan Noach.

Letsoalo’s “alleged assertion that the RAF will not pay the claims of these road users who are medical scheme members is

— to the best of our understanding — contemptuous of the explicit ruling of the high court, which both the Supreme Court of Appeal and now the Constitutional Court have affirmed.

“Should the RAF fail to process these valid claims, then unfortunately, as a last resort, we would be left with no alternative but to seek to enforce the court’s ruling through a further application for a contempt and enforcement order,” said Noach.

Medical schemes have, historically, covered costs associated with their members’ traffic accidents and then been reimbursed by the RAF. But in August 2022, the RAF instructed staff to stop paying claims from medical schemes.

Discovery Health’s client schemes, which cover almost 40% of SA’s medical scheme market, have outstanding claims lodged with the RAF of about R140m, according to Noach.

The RAF on Thursday dug in its heels, saying it stands by the position it previously articulated to Business Day.

“There are no implications on the RAF following the Constitutional Court decision. The court order did not deal with any merits. It raised issues of a lack of jurisdiction,” said Letsoalo.

BLACKMAIL

When asked to respond to the medical scheme’s threat to seek a contempt of court and enforcement order if the RAF fails to resume paying medical scheme claims, he said: “They must not litigate through the media. We will not be blackmailed. If they want to go to court, so be it.”

Letsoalo said the RAF issued an internal directive on April 12 stating its legal position about prescribed minimum benefits and emergency medical conditions, and how those claims should be processed.

“That directive has neither been challenged nor set aside and thus still applies.”

He previously told Business Day the RAF’s position has always been that it will not pay

for prescribed minimum benefits and emergency conditions.

The Council for Medical Schemes (CMS), which regulates SA’s medical scheme industry, said the apex court’s decision vindicates its position.

It recently took issue with the RAF’s refusal to pay medical schemes in an article published on financial industry website FA News. The CMS argued that the RAF’s failure to pay prejudices all medical scheme members because it means there is less money available to fund their healthcare requirements.

Discovery Health challenged the RAF’s directive to stop paying medical scheme claims in 2022 in the high court, which declared the RAF’s directive to staff had been unlawful and interdicted it from implementing it. The RAF’s appeals to the high court and the Supreme Court of Appeal were dismissed, and it then sought leave to appeal to the Constitutional Court.

In parallel, Discovery Health asked the high court to compel the RAF to resume paying claims but was rejected in September on the grounds that should the Constitutional Court rule in its favour, medical schemes would be entitled to recover all the outstanding claims from the RAF, dating back to August 2022.

DISCOVERY HEALTH’S CLIENT SCHEMES HAVE OUTSTANDING CLAIMS LODGED WITH THE RAF OF ABOUT R140M, ACCORDING TO NOACH