Top court hands medical schemes an RAF win

The Constitutional Court has rejected the application by the Road Accident Fund (RAF) to appeal against a high court ruling compelling it to resume payments to medical schemes. This puts a final nail in the coffin to RAF efforts to stop honouring claims from medical schemes for members who have been injured in traffic accidents.

The apex court’s decision has industrywide implications, as it provides medical schemes and their administrators with legal assurance that they can continue a long-standing practice of covering their members’ medical bills for injuries sustained in traffic accidents, and then claiming the money back from the RAF.

It may also influence the outcome of the RAF Amendment Bill, released for public comment in early September, which proposes that medical scheme members become ineligible for cover from the fund.

The RAF is a statutory body established to cover the medical expenses of road accident victims and is funded by a fuel levy of R2.18 per litre of petrol sold.

It has been locked in a legal battle with medical scheme administrator Discovery Health, which challenged its shock decision in August 2022 to unilaterally cease reimbursing medical schemes.

Discovery Health — which has 19 clients, including Discovery Health Medical Scheme and 18 smaller restricted schemes — won an urgent high court application in 2022 to have the fund’s internal directive to stop paying medical schemes declared unlawful and set aside, but was then fought by the RAF all the way to the Constitutional Court.

Discovery Health has previously said RAF’s refusal to pay was costing it R2m a day.

“The Constitutional Court ruling means that medical scheme members retain the right and entitlement to claim medical expenses from the RAF, in accordance with the act and over a century of common law precedent,” said Discovery Health CEO Ryan Noach.

“An important fairness and equity principle … has prevailed, and represents a victory in the public interest for all members of medical schemes in SA.” The decision to stop paying claims constituted “clear discrimination” against medical scheme members, who paid the same fuel levies towards the RAF as all

other road users, he said.

Discovery Health’s client schemes are owed about R140m by the RAF, said Noach.

RAF CEO Collins Letsoalo said the organisation will not resume payments of expenses that had been paid by medical schemes. “Our position has always been that we will not pay for prescribed minimum benefits and emergency medical conditions, as prescribed by the Medical Schemes Act,” he said.

This position had been “unequivocally confirmed” by a North Gauteng High Court ruling in September, he said.

After the 2022 high court ruling compelling the RAF to resume payments to medical schemes, it sought leave to appeal — first in the Pretoria high court and then after that bid failed, at the Supreme Court of Appeal, which also denied it leave to appeal. The RAF then applied to the Constitutional Court for leave to appeal.

Parallel to this, Discovery Health applied to the high court in Pretoria, asking it to instruct the RAF to resume payments pending a Constitutional Court decision. The high court rejected Discovery Health’s application in September, on the basis that if the top court ruled in its favour, medical schemes would be entitled to recover all outstanding valid claims from the RAF.

On Wednesday the Constitutional Court rejected the RAF’s application to appeal, saying the matter does not concern the jurisdiction of the court.

It awarded a full cost order to Discovery Health.

The development was welcomed by the Board of Healthcare Funders (BHF), an industry association for medical schemes and administrators that does not include Discovery Health.

The RAF’s efforts to exclude medical scheme members from the fund’s benefits are unreasonable, said BHF head of research Charlton Murove.

The Constitutional Court’s decision aligns with the BHF’s critique of the Road Accident fund Amendment Bill that it submitted last month, he said.