New twist in Discovery Health’s feud with RAF

Medical schemes will have to stomach losses of up to R2m a day after the high court in Pretoria dismissed Discovery Health's bid to compel the Road Accident Fund (RAF) to immediately process medical scheme members’ legitimate claims until the Constitutional Court decides on the dispute.

SA has about 800,000 road accidents every year, according to data collated by the department of transport, translating to about 2,200 crashes daily.

Medical schemes have historically submitted claims to the RAF after footing the bill for members injured in road accidents.

However, the RAF shocked the establishment in August when it announced that it would no longer pay for past hospital and medical claims issued by members of medical aid schemes.

Angered by the directive, Discovery interdicted the RAF in October from implementing an internal directive to reject all claims for medical expenses where these expenses were paid by medical schemes, not by the claimants.

The RAF then approached the Supreme Court of Appeal for leave to appeal. However, the country’s second-highest court dismissed its application for lack of a prospect of success.

The RAF has since approached the Constitutional Court for recourse. Discovery, which claimed medical aids are losing R2m daily due to the RAF’s unlawful directive, went back to the high court seeking an order forcing the fund to immediately resume payments until the apex court decides on its appeal.

Losses

Discovery argued that since the decision in August, medical aid schemes had lost R138m and this would climb to R500m if the decision were allowed to stand for a year.

Discovery’s latest financial results show that 58 out of every 100 medical scheme members in SA are the group’s clients.

The group has already warned that if the RAF’s position prevails, medical aid schemes may find it viable to exclude claims for medical expenses arising from car accidents.

The company, which administers 18 restricted medical schemes and Discovery Health Medical Scheme, the largest open medical scheme in SA, also argued that the non-refund by the RAF of past medical expenses could result in members not being able to access other medical treatment due to their coverage limit and medical savings being exhausted.

The high court said on Monday that Discovery had not made out a case that the industry would suffer irreparable harm until the country’s apex court heard and decided on its dispute with the RAF.

“The allegation by the applicant that every time the alleged unlawful tender is accepted and settled, the medical schemes are deprived of the potential to recover the past medical expenses where they had already paid, which thus results in irrecoverable losses to them, such settlement agreements therefore inflicting harm to the medical schemes that is irreparable cannot be factually substantiated.

“The agreement that is entered into between the medical schemes and its members is not based on the fact that the medical schemes will be reimbursed of the benefits that they pay to the members. The payment of benefits is instead dependent on the monthly premiums that the medical schemes receive from their members.”

Discovery Health CEO Ryan Noach said the dismissal of the application was unfortunate.

“Discovery Health confirms it will be appealing this judgment, but it is important to remember that this decision has no bearing on the fact that the RAF directive has been declared unlawful. The judgment from the Pretoria high court in October 2022, which was also supported by the Supreme Court of Appeal in March this year, remains in force,” Noach said.

“We remain highly optimistic that the Constitutional Court will find in favour of Discovery Health, which will be to the benefit of all medical scheme members, to ensure fairness and equity in the RAF claims handling processes.”

Correction: June 27 2023
An earlier version of this story said Discovery’s losses would amount to R2m per day. This figure, however, is for the entire medical scheme industry.

khumalok@businesslive.co.za