Less than a week to object to RAF Amendment Bill that seeks to exclude claims from medical scheme members

2 Oct 2023

Kirstie Haslam, a partner at DSC Attorneys, says the current Bill seeks to introduce alarmingly similar provisions to the Road Accident Benefit Scheme (RABS) Bill that was roundly rejected three years ago.

While lawyers and medical schemes seem to be up in arms about the Road Accident Fund Amendment Bill, the Department of Transport maintains that the measures will go a long way towards addressing the fund’s financial problems.

The Road Accident Fund (RAF) recorded a deficit of R8.43-billion for the 2022/23 financial year compared with a surplus of R428-million for the 2021/22 financial year. The fund maintains that this was largely due to the fuel levy not being increased over the past two years, whereas inflation has shot up to an average of 6.9% during 2022/23. Another factor was an increase in liability claims.

Kirstie Haslam, a partner at DSC Attorneys, said the current Bill seeks to introduce alarmingly similar provisions to the Road Accident Benefit Scheme (RABS) Bill that was roundly rejected three years ago.

“As with the RABS Bill, claims for general damages for pain and suffering are excluded. However, fault is retained in the Amendment Bill, imposing a significant burden on road accident victims to establish the RAF’s liability for what will be very limited benefits.”

Proposed exclusion of medical scheme members

Just one example is the decision to not cover any expenses already paid for by medical schemes. Currently, if you are in a motor vehicle accident and your medical scheme pays for your treatment, these expenses can be claimed back by the fund from the RAF. However, the Amendment Bill says if your treatment is covered by your medical scheme, there will be no compensation from the RAF.

The Law Society of South Africa says those who can afford it will be compelled to take out private accident cover for medical and other expenses in addition to accident benefits.

“This is likely to be very costly, as there will be no reimbursement of expenses from the [RAF). Medical aids will more than likely exclude cover, or the cost will have to materially increase to preserve the funds in the pool for all members,” the society said.

Dr Ryan Noach, the chief executive of Discovery Health, confirmed this. “On average, the medical schemes industry loses about R2-million per working day, directly impacting medical scheme reserves. Keeping in mind that these funds in medical schemes belong to the members of the scheme, this represents a discriminatory practice directly affecting medical scheme members, who are road users, electing to pay discretionary contributions from their after-tax earnings,” he said.

Discovery Health has been embroiled in legal action against the RAF since October last year, in a bid to have the RAF decision to exclude medical scheme members from making RAF claims declared unlawful. Although Discovery Health succeeded in its high court application for an interdict, the RAF then applied to the Constitutional Court for leave to appeal. The case is still pending.

Administrative and managerial incompetence

Haslam said although the professed motivation is the financial predicament of the RAF, this is in the context of the RAF having done everything in its power to keep the Auditor-General from publishing its latest results.

“What this ignores, is that after the introduction of the 2008 amendments to the RAF Act (which, inter alia, introduced a threshold for qualifying for certain damages, as well as caps on other damages), the RAF was in fact cash-flow-positive for a number of years.”

She said that it also ignored the de facto situation of rampant administrative and managerial incompetence which was endemic at the RAF, and had been loudly and repeatedly lamented in judgments throughout the country.

Comments and submissions on the RAF Amendment Bill can be sent to [email protected] and [email protected] by Sunday, 8 October. DM

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Proposed exclusion of medical scheme members

Administrative and managerial incompetence