Major blow to medical aid members in South Africa

Medical aid group Discovery suffered a blow at the Gauteng High Court, having its case to force the Road Accident Fund (RAF) to reimburse it for claims dismissed.
The ruling was handed down by the North Gauteng High Court, with a dissenting judgement included.
The medical scheme has been paying for its members’ medical costs related to accidents. However, the group would then ask its members to claim from the RAF and pay the money back to Discovery.
The RAF argued that it is not liable for these fees, and its current management ended the practice with a directive issued in 2022. The directive was effectively a refusal by the RAF to pay for past medical expenses of claimants who had already been paid out by medical aids.
This resulted in legal action from Discovery.
In 2022, the High Court ruled that the RAF’s directive was unlawful, and the fund failed to challenge the ruling in the Supreme Court of Appeals and the Constitutional Court.
However, in the interim, the RAF subsequently issued two further ‘internal’ directives in April and November 2023 to side-step the ruling.
The April directive required the RAF’s employees to first ascertain whether a claim fell within prescribed minimum benefits or emergency medical conditions, and only where it was neither, would a claim be processed and honoured if successful.
The November directive pointed to sections of the RAF Act, which prohibited compensation to anyone who had agreed to share compensation with another person. The fund argued that the agreement between a medical scheme and its members fell foul of this.
The fund continued to refuse payment to Discovery based on these new directives, which brought about more legal action.
In June 2024, Discovery sought a new court order to force the RAF to comply with the 2022 ruling, arguing that it still held and that the new directives did not circumvent this.
It is this case that has now been dismissed.
“At the heart of the matter was the RAF’s liability for the payment of accident victims, who are members of medical schemes in circumstances where such expenses have been settled by a medical scheme,” the RAF said.
In its application, Discovery Health asked the court to force the RAF to comply with the earlier order to pay these disputed medical expenses. However, the court found that the second and third directives did not fall under that order and remained in effect.
In addition, the court was also unconvinced that Discovery could enforce its rules and regulations on third parties like the RAF—especially because it was a state-run fund, not an insurer. The state was not obligated to reimburse a medical scheme like Discovery for what is effectively an agreement between it and its members.
“The rules published by the Discovery Medical scheme are only for its members and the scheme and not third parties like the RAF. The rule dealing with recovering from the RAF what the scheme has paid in discharge of its contractual and statutory obligations is a rule of Discovery Medical Scheme’s own making. It cannot bind third parties, including the RAF,” the court said.
The court reasoned this by referring to the Government Employees Medical Scheme (GEMS), the third largest medical scheme in the country, which it said “does not oblige members in its rules to claim any past medical expenses from the Fund”.
The majority ruling is a blow to Discovery’s drive to get the RAF to pay up, but it does not necessarily mean the end of the road.
According to the ruling, because the second and third directives were never considered in the original ruling (and thus also not considered by the SCA or Constitutional Court), they could still be challenged and set aside on their own merits.
A dissenting view from Judge Ingrid Opperman held that the second and third directives were internal documents intended to be kept out of public view and from the courts—and supported Discovery’s view that the directives were issued in tandem with the appeals processes to effectively evade the ruling.
The judge was scathing of the RAF’s conduct, saying the fund was making a mockery of the courts by purposefully evading rulings and withholding information from the apex court.
Ron Whelan, CEO of Discovery Health, noted with concern the judgment handed down by the Gauteng High Court in the matter of Discovery Health versus the Road Accident Fund.
“Discovery Health respectfully disagrees with the judgment delivered by Mlambo JP and Bam J and aligns with the dissenting judgment by Opperman J.
“Given the far-reaching implications of the judgment, Discovery Health intends to apply for leave to appeal and believes the matter warrants the attention of the Supreme Court of Appeal,” he said.
The full ruling can be read below:
The article has been updated to include Discovery Health’s statement regarding the ruling.