Discovery Health says Road Accident Fund in breach of court order

Discovery Health says the Road Accident Fund and its CEO are in breach of a court order that said the fund could not withhold payments for past medical expenses covered by medical aids.

Discovery argued that the RAF simply issued new directives aimed at circumventing the order.

Discovery is seeking to compel the fund to comply with the October 2022 ruling and to put CEO Collins Letsoalo on terms to explain why he should not be held in contempt, and possibly jailed.

The RAF has denied any wrongdoing.

Judgment has been reserved.

Discovery Health had an “overwhelming case” against the Road Accident Fund (RAF) and its CEO Collins Letsoalo showing it was clearly in breach of a 2022 court ruling that the fund was not allowed to withhold payments for past medical expenses from road accident victims who had been paid out by their medical schemes.

This was the submission of Advocate Wim Trengove, on behalf of Discovery, at a special court hearing seeking to hold the fund and Letsoalo to account.

While initially Discovery, in its application before Gauteng Judge President Dunstan Mlambo and judges Ingrid Opperman and Noluntu Bam on Thursday, were seeking orders of contempt of court, Trengrove said it was now only seeking an order of “breach” and to compel compliance.

He said this would give Letsoalo a further opportunity to “have his say” as to why he should not be found in contempt and possibly jailed for it.

In 2022, Judge Mandla Mbongwe ruled in the Pretoria High Court that a new directive – effectively refusing to pay for past medical expenses of those claimants already paid out by medical aids – was unlawful.

The RAF was unsuccessful in its appeals to both the Supreme Court of Appeal and the Constitutional Court.

Trengove argued that the RAF had continued to implement the directive, regardless of the court ruling.

“We have a list of about 20 cases, all of which are in line with the Mbongwe judgment,” he said.

After the apex court refused to grant the RAF leave to appeal the Mbongwe judgment, two further “directives” came to light in which the fund seemingly sought to side-step the legal implications of the Mbongwe judgment.

Trengove said “directive two” was also raised once in litigation and was rejected. Under this directive, the fund had argued that it should not have to compensate medically insured victims if they had been paid out in accordance with prescribed minimum benefits.

“Then it produced ‘directive three’ which is equally spurious,” he said.

This was based on a section of the RAF Act, which prohibited compensation to anyone who had agreed to share compensation with another person. The fund argued that the agreement between a medical scheme and its members fell foul of this.

“But that agreement is merely an agreement to avoid double-compensation. That the medical aid pays upfront and if the member recovers (from the fund), then that member will reimburse the medical aid,” Trengove said.

He said regardless, the new directive did not absolve the fund from complying with the Mbongwe ruling.

That ruling, he said, confirmed that a claim against the fund is a claim in delict: the fund steps into the shoes of the wrongdoer, and “the perpetrator is not entitled to benefit from the insurance proceeds of the victim”.

“Our courts have held that medical schemes, for the purposes of claims, are akin to insurance, and claims cannot be taken into account when determining the quantum of liability,” Trengove said.

RAF denial

But advocate Cedric Puckrin, who appeared with advocate Gerhard Cilliers for the fund, said Trengove had argued his case “with rose-coloured glasses”.

Cilliers said the fund was entitled to implement the first directive during the period when the appeal process had been underway.

He said Discovery was arguing a new case, not an enforcement of the Mbongwe ruling, and had based it on ten examples where the fund had responded to letters of demand by claimants, indicating that it would dispute liability for any claim for past medical expenses.

Cilliers suggested that Discovery had no standing in court, and that it was up to individual claimants to take their matters to court.

He also said the ten examples did not show that the fund was in breach.

“It is not Discovery’s case that RAF is enforcing the 2022 directive. It wants you to go further and ask you to find that the subsequent directives are the same. And we submit that is not the proper process to follow. It is an abuse of the process.”

Advocate Puckrin argued that while the third directive might be “entirely wrong”, it was a different directive which could only be set aside by a separate application to the court.

He said it could not be considered a “breach” of the Mbongwe judgment.

But Judge Opperman suggested that it was just a “new piece of paper” dealing with the same issue.

“But it’s based on a new principle,” Puckrin said. “It’s far more limited.”

In reply, Trengove said the Mbongwe judgment has set out a statement of “general principle” that the fund could not free itself from paying full compensation to medical aid members.

He said Letsoalo and other fund officials had made a series of public statements which reflected their “unlawful disdain” for the ruling.

“A delinquent public body cannot insulate itself against compliance with a court order by adopting a directive in effect not to comply with it. It is contrary to the rule of law.”

Judgment was reserved.

Published originally on GroundUp.