Discovery wins SCA appeal against RAF medical expense deductions

The Road Accident Fund (RAF) has been interdicted with immediate effect by the Supreme Court of Appeal (SCA) from making any deductions from compensation paid to claimants on the basis that their medical expenses have been or will be paid by their medical aid schemes.

The SCA issued this ruling in a judgment handed down on Friday to an appeal lodged by Discovery Health.

The appeal related to a December 2024 judgment of a full bench of the High Court in Pretoria dismissing Discovery’s request for an order declaring the RAF to be in breach of a previous high court order related to the fund’s liability for the payment of the past medical expenses of road accident victims who are members of medical schemes.

The SCA on Friday set aside and replaced the judgment of the High Court by declaring that the RAF and former RAF CEO Collins Letsoalo are in breach of the court’s order and judgment dated 27 October 2022 and “of their constitutional duty to obey and implement the judgment”.

The 27 October 2022 judgment by Judge Mbongwe declared unlawful a 12 August 2022 RAF directive, which instructed RAF employees not to make any payments to claimants if their medical aid scheme has already paid for their medical expenses arising from a road accident.

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The SCA on Friday further interdicted the RAF and Letsoalo, with immediate effect, from giving effect to the directives they issued on 13 April 2023 and 2 November 2023.

These two directives were issued by the RAF following Judge Mbongwe’s order on 27 October 2022.

Discovery claimed these directives perpetuated the RAF’s breach of that order by continuing to reject claims for past medical expenses because the victim’s medical aids have already paid them.

It further claimed Letsoalo and the RAF have sought to circumvent the judgment by adopting a new ‘phantom’ directive on 13 April 2023, which it has refused to disclose to Discovery.

This ‘phantom’ directive related to the obligations of medical schemes under the Medical Schemes Act to provide PMBs (prescribed minimum benefits) for emergency treatment required by medical scheme members.

The SCA ordered the RAF and Letsoalo to take all necessary steps to comply with the judgment within 14 days and to report their compliance in writing to the court’s registrar and Discovery Health’s attorneys.Costs were awarded against the RAF and Letsoalo.

The judgment of the full court of the High Court dismissing Discovery’s application, which it has now successfully appealed to the SCA, potentially had significant implications for medical aid members in the form of higher medical aid premiums.

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Discovery Health previously indicated that medical schemes incur an irrecoverable loss of about R500 million per year when the RAF fails to pay medical scheme members for past medical expenses incurred in road accidents.

Judge Mbongwe listed the consequences for Discovery Health’s scheme members and their clients if the RAF directive was implemented, and recorded that the rejection of claims to pay past medical expenses to claimants meant that:

Medical aid schemes would no longer receive reimbursement for past medical expenses incurred for the treatment of their clients, whose rights to recover these expenses from the RAF were set to be taken away.
Medical aid schemes would suffer a significant, unplanned loss of income, requiring them to reassess and increase monthly premiums payable by their clients to ensure the schemes’ sustainability.
Members would be prejudiced in that they would contribute to the RAF fuel levy but would not receive full compensation from the RAF in the event of sustaining injuries caused by the wrongdoing of a negligent driver.
Medical aid schemes might find it viable to exclude claims for medical expenses arising from motor vehicle accidents, which would entitle RAF claimants to claim for past medical expenses, but this in turn would undermine the very purpose of the schemes because members would be forced to incur the costs upfront and claim later.

Judge Tati Makgoka, with SCA judges Caroline Nicholls, Phillip Coppin, Esther Steyn, and acting judge Fiona Dippenaar concurring, said on Friday the agreement between medical aid schemes and their members provides that the medical aid scheme pays the claimant’s medical expenses and, when the claim is settled, the member reimburses the medical aid scheme.

Judge Makgoka said reimbursement is not the same as sharing proceeds.

“Accordingly, an agreement between a medical aid scheme and a member who claims under the RAF Act to reimburse the medical aid scheme for past medical expenses does not fall within the provision’s scope,” he said.

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