Council for Medical Schemes challenges court ruling over Medipos status

The medical schemes industry regulator has challenged the Pretoria high court’s decision to lift the provisional curatorship on the SA Post Office (Sapo) medical scheme Medipos, saying the judge erred and should have confirmed the curatorship.

Medipos is a small scheme available only to post office employees and their dependants. The scheme ran into financial difficulties after the Post Office became insolvent and failed to pay members’ contributions on time.

In August 2021, the Post Office’s outstanding contributions to Medipos were more than R600m and members face the threat of having their medical benefits suspended.

The Council for Medical Schemes (CMS) successfully applied to the court to place the scheme under provisional curatorship in February 2023, arguing that it was on the brink of financial collapse and that there were severe governance failures.

Medipos did not oppose the application at that stage.

The scheme was placed under provisional curatorship, the board of trustees was suspended and justice Ephraim Kudumela was appointed as the scheme’s provisional curator.

Judge Brenda Neukircher heard the trustees’ challenge to the provisional curatorship on June 10 and handed down her ruling uplifting it on July 19.

She found that no substantive governance issues arose from the board’s actions. It had acted in the interests of its members by obtaining a court order against the Post Office in September 2021 to obtain outstanding contributions and subsequently instituting enforcement proceedings to ensure the money was paid, she said.

Financially stable

The trustees had refused to write off the Post Office’s historic debt and ensured the board remained quorate by quickly replacing trustees who resigned. “These are not actions of a supine board,” Neukircher said.

The scheme was financially stable as the business rescue practitioners appointed were ensuring contributions were paid timeously, and the scheme’s solvency ratio had never dropped below the statutory minimum of 25%, she said.

While it was not surprising that the provisional curatorship application had been granted, it could not be confirmed as the sole reason to do so appeared to be to allow the curator to call a special general meeting to elect new trustees, she said.

CMS spokesperson Stephen Monamodi said the basis for the application for leave to appeal was that the judge had misdirected herself regarding the facts and applicable law and erred in some of the findings.

The Post Office’s business rescue practitioners said that monthly premiums were now being paid to Medipos in full and on time, and members still enjoyed the two-thirds subsidy from their employer. A total 3,800 staff were now members of Medipos, said joint business rescue practitioner Anoosh Rooplal.

Medipos was paid 12c in the rand as per the business rescue plan, and a further 18c in the rand would be paid subject to obtaining further funding from Treasury, he said.

The Board of Healthcare Funders (BHF), an industry association for medical schemes, said the CMS’ decision to appeal against the ruling was regrettable and might constitute wasteful expenditure.

“We will be consulting our legal team to see how we can bring in this into the current complaint against the regulator,” said BHF head of research Charlton Murove, referring to a 10-page letter sent by the BHF to the CMS and the health minister earlier this year.

In its complaint it accused the medical schemes regulator of abusing its power, wasting money on unnecessary litigation and failing to conduct regular reviews of the mandatory benefits schemes must provide to their members.

kahnt@businesslive.co.za