After the Bell: Take Road Accident Fund claims with a pinch of salt

Days before the Road Accident Fund (RAF) appeared before the Standing Committee on Public Accounts in Parliament and lost its Supreme Court of Appeal challenge against the Auditor-General’s finding that it ignored existing accounting standards and material misstatements, the RAF rustled up its “financial outcomes”, trumpeting that its 2020-2025 strategic plan was working just swell and it was finally on a sustainable financial path.

Worth highlighting is that one of the findings of the AG was that the RAF was not aligned with its core mandate to pay compensation, as required by the RAF Act.

Nevertheless, in its financial report, the RAF bemoaned the fuel levy, which has remained “stagnant” at R2.18/litre for the third consecutive year. It said money owed on settled claims had dropped from a peak of R16.2-billion in the 2019/20 financial year to R8.3-billion in 2023/24  and that it had recorded a deficit of R1.6-billion (2022/23: R8.4-billion), which again it blamed on the fuel levy.

The RAF claimed it had cumulatively saved R24-billion on legal costs in the past four years. And yet, Gauteng Judge President Dunstan Mlambo reported that in a single month the RAF racked up more than R240-million in legal fees for cases heard in just one court — the Gauteng Division of the High Court in Pretoria. The earliest trial date available in that province for RAF cases is now October 2029.

This claims backlog “remains a challenge”, the fund conceded, as almost 80% of claims submitted do not have sufficient information and certified copies of documents to enable the RAF to investigate — including the onerous RAF 1 Form, despite the fact this form was declared illegal by the high court in Pretoria on 20 March.

The transport minister was furthermore ordered to come up with a new version of the form within six months and the court ruled that claimants could resubmit their claims using a simpler version of the form, effectively giving thousands of unsuccessful claimants a second stab at securing compensation for their injuries.

Whether this financial report passes muster — the AG has said compliance with key legislation remains a key concern for the RAF, particularly in terms of the quality of its submitted annual financial statements — is beside the issue.

The public has little sympathy for the fund — which has been technically insolvent since the mid-1990s because it is inundated with claims and chooses to settle 99% of claims on the steps of court (according to Professor Hennie Klopper, professor emeritus at the University of Pretoria, who leads Aprav’s Rescue RAF Initiative) — or for disreputable “ambulance chasers”: personal injury lawyers who get rich off others’ misery.

Reporting on its RAF investigation before Parliament on 18 September, the Special Investigating Unit (SIU) said it was investigating 102 law firms that had received duplicate payments worth around R340-million. Several lawyers had apparently cooperated with the SIU and signed acknowledgements of debt.

Those lawyers must be held accountable and must certainly answer for swindling crash victims and their families.

However, not all lawyers are the same and it’s unfair to tarnish them all with the same brush.

What the RAF has now done appears to be nothing short of an attempt to deflect attention from the heat it is facing from its political bosses and the AG.

Dastardly schemes

Because we know bulls**t baffles brains, the fund is accusing personal injury lawyers of coming up with dastardly schemes to avoid paying claimants.

In a press release headlined: WARNING!!! UNSCRUPULOUS ATTORNEYS ARE GIVING GROCERIES AND TRANSPORT MONEY TO CLAIMANTS, A SCHEME AIMED AT SWINDLING THEM OF THEIR RAF CLAIMS (capitalisation all theirs), the fund says it has received complaints about attorneys who pay claimants amounts significantly lower than what was paid to them.

“This is an illegal scheme that benefits the law firms rather than the claimant. The scheme includes borrowing monies to cover living expenses such as buying groceries and paying for transport while the claim is being finalised, then claiming back the money with exorbitant interest from the claimant’s RAF compensation,” the vague and sensationalist press release reads.

It said claimants do not hear from their attorneys, are forced to sign documents that are not explained to them and are not informed about the “undertaking that they may use for medical needs while waiting for compensation, and/or not having access to their funds for about five years after compensation has been paid.”

In one case, the RAF apparently reported Spruyt Incorporated Attorneys to the Legal Practice Council and helped several claimants to open criminal cases against the law firm after Spruyt was paid R241,000 but paid the claimants only R10,400.

Many wrongs don’t make a right, but the RAF is a massive part of the problem. Failure/refusal to pay claimants — when it is obligated to do so within 180 days — forcing them to wait in many cases almost 5½ years for payouts and expecting them to complete onerous, illegal documentation when the average victim is illiterate, is not correct, proper or ethical.

Lawyers say that in many cases, desperate victims turn to them and “bridging companies” for help because when the cupboard is bare, you’ve lost your income, you’re being strung along and you can’t even afford taxi fare to get to a hospital for care, people become desperate.

It is also not uncommon for practitioners to pay their clients in two or more instalments, depending on the payment frequency of the RAF.

In essence, the root cause of the RAF’s funding crisis is not its ineptitude, litigiousness, dereliction of a basic duty to compensate victims and massive legal bills, although those are certainly the obvious problems: it is the state of road safety in South Africa, the lack of law enforcement and the fact that motorists are distracted, intoxicated and driving unroadworthy vehicles.

If the Transport Department focuses on reducing the road crash rate and promoting traffic safety, the demand for RAF compensation will dramatically decline. DM