Discovery Health launches contempt of court proceedings against RAF

Medical scheme administrator Discovery Health has filed its widely expected contempt of court application against the Road Accident Fund (RAF) and CEO Collins Letsoalo for allegedly failing to comply with a judgment effectively ordering the fund to resume paying medical schemes, but the matter is only expected to be heard in 2024.

The parties have agreed the matter will not be put on the urgent roll this week, as originally requested by Discovery Health, and will jointly approach the deputy judge president of the North Gauteng High Court for a special allocation for it to be heard as soon as possible next year, according to Discovery Health’s legal team.

The RAF and Discovery Health have been locked in legal battle for more than a year after the fund directed its staff to stop processing claims from medical schemes in August 2022. The RAF is a statutory body charged with compensating victims of road traffic accidents, and had for decades reimbursed medical schemes after they had covered the health costs of their members’ road traffic accidents.

Discovery Health won an urgent high court application in October 2022 to have the RAF’s directive declared unlawful and set aside. The RAF sought to appeal, taking its fight all the way to the Constitutional Court, which declined to hear the matter.

Discovery Health has now asked the Pretoria high court to declare that the RAF and Letsoalo are in contempt of court because they have continued to implement the August 2022 directive by rejecting claims for compensation filed by medical schemes if the claimant’s scheme has already paid for the claim, including for prescribed minimum benefits and emergency conditions. It also wants the court to declare that respondents have attempted to circumvent the judgment and made contemptuous public statements.

Discovery Health has asked the court to stop the RAF and Letsoalo from implementing a further directive issued to staff in April that instructed them not to reimburse claims from medical schemes, arguing that it undermined the August 2022 judgment. It has previously said the medical scheme industry is losing an estimated R500m a year due to the RAF’s refusal to process its claims.

RAF chief governance officer Mampe Kumalo said in court papers that the RAF’s two new internal directives about medical schemes, issued in April and November, are different to the one reviewed and set aside in 2022. It was not in contempt of court because it was applying these new directives, not the old one, she said.

The RAF is a “financially ailing and inadequately funded” social welfare fund that has been “plundered by unscrupulous and greedy intermediaries who deprived the very people meant for it”, she said.

“Given that the RAF is governed by the Public Finance Management Act it must take active steps to minimise its exposure and ensure that it only pays that it is legally required to do,” she said.

Medical schemes are obliged by the Medical Schemes Act to cover prescribed minimum benefits, which include emergency care arising from road traffic accidents, she said. The RAF should not be paying for private healthcare for “privileged citizens” who belong to medical schemes, she said.

Letsoalo said in papers the RAF has limited resources, which has to be managed responsibly to protect the interests of all claimants. Almost 100,000 claims are lodged with the fund each year, and it is confronted almost daily with fraudulent and overinflated claims, he said.

kahnt@businesslive.co.za