Compensation Commissioner for Occupational Diseases: Strategic & Annual Plans 2011

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14 June 2011
Chairperson: Mr B Goqwana (ANC)
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Meeting Summary

The Compensation Commissioner for Occupational Diseases (CCOD) presented its strategic plans for 2011-2015 and its Annual Performance Plan to the Committee. This was a body based, and partially funded by the Department of Health (DoH), but this was the first year in which the Standing Committee on Public Accounts recommendations that it draw separate strategic plans were being put into effect. Its specific mandate was to compensate miners who contracted a lung related illness, and were therefore unable to continue work. The CCOD had been plagued by qualified audit reports, poor staff morale, high vacancy rates, and poor public perception, but was trying to implement a turnaround strategy, which would include having the relevant legislation amended to improve the processes, and allow for the current lump sum payments to be structured rather in the form of a pension, with further suggestions to levy all mines unless they could provide sufficient reasons for exemption (such as absence of toxic dust). Particular challenges included insufficient capacity to deliver, which had led to large backlogs, fraud, lack of consensus among stakeholders and declining interest rates.

Members questioned how much the mines were contributing, what amounts were unpaid and what contributions were made by the Department of Health. Although some Members expressed the view that the mandate of the Fund should perhaps be prevention, not compensation, and that it may be more appropriate for it to fall under the Department of Labour, the CCOD reiterated that neither of these were mandated under the legislation. Members questioned how and by whom the claims amounts would be assessed, the process and procedures for finalisation, and questioned also how long it took, on average, to finalise claims, how large was the backlog and when it might be cleared. They also asked about use of third parties and lawyers assisting claimants and noted the problems of fraud. Several Members expressed their concern at the very high vacancy rates, asked when these would be filled, noted that the vacancies had resulted in qualified audits, and asked also how it was intended to address staff morale. The inspection processes, and reasons for seeking amendments to the Act, which the Committee supported, were also examined. Members were also interested in hearing why CCOD was not working in the Western Cape, asked about the working relationship between the mines and CCOD, and sought clarification on the Eastern Cape Project, which the Chairperson indicated should be discussed at a separate meeting, as this involved agreements made by the Department of Labour. A possible payment mechanism for foreign miners was outlined. The Committee expressed its support for the turnaround strategy, and would support amendments to the Act, but also felt that Parliament should improve its oversight over the CCOD, involve the Chamber of Mines also in future meetings with CCOD and accompany it on some mine inspections. It was also recommended that although the Committee understood the need to verify claimants, the claims process should be made less cumbersome.  

Meeting report

Compensation Commissioner for Occupational Diseases: Strategic & Annual Performance Plans 2011
Ms Pumla Mzizi, Commissioner, Compensation Commissioner for Occupational Diseases, presented the Strategic Plan, covering 2011/12 to 2014/15, and the Annual Performance Plan (APP) for 2011 of the Commission (CCOD or the Commission) to the Committee.

Ms Mzizi outlined the mandate, to have accessible and high quality compensation systems for miners who, due to the nature of their work, acquired lung related diseases. The CCOD operated out of one national office. Its administrative costs were covered by the Department of Health (DoH). This was the first financial year in which the CCOD had drawn up plans separate from the DoH, as a result of the recommendations by the Standing Committee on Public Accounts (SCOPA) to improve reporting.  

Ms Mzizi outlined some of the challenges facing the CCOD, which she said included an inadequate organisational structure, poor public image and persistent audit qualifications. As a result of these, a four-pronged turnaround strategy had been developed. It was intended to amend the Compensation for Occupational Injuries and Diseases Act (the Act), to improve corporate governance and risk management, to re-engineer the business process and to further develop the capacity of the Compensation Fund. All of these efforts were geared towards the primary objective of having a streamlined administrative system to process claims.  She highlighted that revenue management, risk management and improving the internal controls were key to combating fraud.

Ms Mzizi went on to explain that the reason for amending the Act was to enable beneficiaries to be paid properly. At present claimants were paid in a lump sum, which was inappropriate. It was instead proposed that the payment method should change to one that was similar to a pension.

She further noted that part of creating a seamless administrative system was to transform the institutional culture to become more focused towards service delivery, to hire skilled staff and establish accountability at all levels of the organisation.

Some of the risks associated with the plans were the current inability to deliver, due to lack of skills, fraud, the failure by stakeholders to reach consensus, and a declining interest rate. The Annual Performance plan set out the targets to be achieved. Some of these targets for the next three years included the filing of quarterly reports, holding interactive forums, workshops, the appointment of the Committee, filling current vacancies, enhancing the IT system to enable funds to be settled better, and finalising the amendment and implementation of the Act.

She concluded by stating that the backlog in settling claims had been building for ten years, and that it would take some time before the claims process was up-to-date.

Ms Mzizi reiterated that the strategic plan and the Annual Performance Plan both aimed to ensure that claimants were paid accurately and efficiently, that the turnover time for finalising claims was reduced, and that the benefit amounts finally paid were optimal.

Ms Precious Matsoso, Director General, Department of Health, stated that there were two pieces of legislation pertaining to occupational injuries and illnesses. These pieces of legislation were administered by the DoH and the Department of Labour respectively. She added that the Taylor Report proposed a mechanism for alignment.

The Chairperson asked how much the mines were contributing to the Fund. He also asked what amounts were received by the CCOD from the Department of Health.

Ms Mzizi responded by referring the committee to slide 18 of the presentation, which detailed the revenue of the CCOD. She said that the CCOD received levies from 260 mines, and from non-tax revenue, which referred to investments and interest on investments. Transfers from the DoH covered administrative costs, and amounted to a figure of R18 million. Inspectors from the Department of Mineral Resources (DMR) would inspect mines, and determine if a mine should be controlled or not. Mines that were controlled had to pay a levy. She proposed that all mines should be controlled, unless they could provide good reasons to be exempt from paying a levy.

The Chairperson then asked how much was paid out in claims, and who would determine whether a mineworker had an occupational related illness. He asked if the beneficiaries of deceased miners could get compensation.

Ms Mzizi noted that every two years a miner had to be examined for lung disease. The Medical Bureau for Occupational Health Diseases would determine whether a miner was considered ill, and would issue that miner with a medical certificate that would entitle him or her to receive compensation for work-related disease where appropriate. She noted that if a miner died before receiving compensation, the lungs were examined in an autopsy. If it was determined that the cause of death was a lung related illness caused by working in a mine, the miner’s beneficiaries were compensated. In addition, a miner would be compensated if he/she contracted tuberculosis (TB) and was hospitalised for a period of six months, and if a lung related illness progressed to ‘second degree’, where the lungs were incapacitated by 40% or more, making it difficult for a miner to work.

The Chairperson asked for comment on the health systems in rural areas.

Mr M Hoosen (ID) queried if the role of the CCOD, being a subsidiary of the DoH, should not be more concerned with prevention of lung disease, rather than compensation.

Ms Mzizi responded that the mandate of the CCOD, as set out in its founding legislation, was to compensate miners who had lung related illness caused by working in a mine.

Ms B Ngcobo (ANC) found it interesting that the Commissioner had mentioned that the staff needed to be motivated to become more service delivery-orientated. She thought that the process of compensation was bureaucratic and this led to delays. She agreed that the current Act was clumsy and needed to be amended. She also asked if the claimants tended to use lawyers or third parties.

Ms Mzizi responded that some applicants claimed directly while others preferred to hire lawyers or third parties. She added that the use of third parties was problematic, as not only was fraud a concern, but it had been reported that third parties charged up to 25% of the compensation money in fees. These concerns should be addressed when the Act was re-drafted.

Ms Ngcobo was pleased that SCOPA had made recommendations on the CCOD, especially given the number of qualified audit reports it had received. She remained concerned about vacancies, and wanted to know what strategies were being used to hire and retain staff.

Ms Mzizi responded that the CCOD had experienced challenges in trying to hire a qualified financial administrator, because of salary limitations. The salary the government offered made it difficult to attract the best and most suitable individual.

The Chairperson asked about the assessment process, and wanted greater clarification on how ‘dust in the mines’ was measured, to determine if this was the cause of lung related illnesses. He also questioned who would determine what levy had to be paid by each of the mines.

Ms Mzizi responded that the Department of Mineral Resources inspected the mines, and this was the reason why the Inspector of Mines chaired the CCOD Risk Committee. The levy that a mine must pay was calculated by multiplying the number of risk shifts worked by the gazetted amount. Inspectors from the CCOD would visit the mines to make sure that the number of risk shifts worked tallied with the number declared. She added that in addition to these inspectors, a second set of inspectors from the Department of Mineral Resources would be sent to check dust levels. She gave her opinion that there was not a great deal of value in the CCOD site inspection as in practice the mines would give the inspectors the same information that they had declared in the forms already filed. It would be useful if these inspectors could be re-deployed to assist with finance work.

Ms. E More (DA) asked if the Commissioner was permanently appointed.

Ms Mzizi responded that she had signed a three-year contract.

Ms More asked for a perspective on the Aurora mine, and queried if it was indeed necessary to amend the Act. She proposed that it would be better to fix “broken” structures.

Ms Mzizi confirmed that the Aurora mine was one of those that did need to pay a levy, but this was currently unpaid and regarded as a bad debt. Currently, mine workers only needed to have health examinations every two years, even if the mine closed and they were retrenched.

With regard to the necessity to amend the Act, Ms Mzizi said that there was a need to bring it up to date. She reiterated her view that every mine should be obliged to pay a levy, unless it could produce good reasons for why it should be exempt. In addition, workers were currently paid a lump sum as compensation and this was not in line with the intention of the Act, which was to provide financial support to those unable, for health reasons, to continue working, and this was the reason she recommended moving from paying a lump sum to a controlled pension. In addition, the collection of levies was flawed, and the calculations were very labour-intensive, placing a burden on the structure. Amending the Act would improve the turnaround times.

Ms More also asked about the numbers of mines in the country and the number that paid a levy. She asked why the risk committee had not been functioning for two years.

Ms Mzizi responded that there were currently 1541 mines in South Africa. Of these, 260 mines paid a levy. The number of controlled mines had not increased, as the risk management team in the Department of Mineral Resources had not been operational.

Ms More asked how Ms Mzizi hoped to change the attitudes of her staff. She questioned if the CCOD’s goals were aligned to those of the DoH.

Ms Mzizi said that the CCOD spoke to one goal of the DoH, which was to strengthen the public health sector, and improve its effectiveness. She added that the CCOD receives a great deal of support from the DoH, and gave the example that the DoH had managed to appoint committee members in less than seven days, as the Department understood that these sorts of structures were important and needed to be in place.

Ms More asked about the impact of fraud by collusion.

Ms Mzizi noted that reports had indicated that third parties sold information to claimants. As a result the CCOD did not communicate with third parties. Measures had been put in place to reduce fraud, including taking of fingerprints. Fewer payments were made where there was suspicion of fraud.

Ms More asked how often the mines would be inspected.

Ms More asked about the educational programmes and preventative strategies of the CCOD.

Ms Mzizi said that it was not within the mandate of the CCOD to address prevention strategies, as that task lay with the DoH. The process with the CCOD would begin only when a miner had a certificate confirming a lung related illness.

Mr M Waters (DA) was of the opinion that prevention should be a priority area for the CCOD.

Mr Waters (DA) asked about the figures of the current backlog and asked what timeframe was envisaged to eradicate the backlog. He also asked how long it took to process an application, pointing out that the Public Protector set a timeframe of six months for applications to be processed.

Ms Mzizi answered that it would be difficult to set a specific date by which the backlog could be cleared. The process would be slowed down if applicants submitted incomplete documentation, and more time would be added if the CCOD experienced difficulties in contacting the claimants, which made it very difficult to assess a specific timeframe.

Mr Waters said that he did not think this was a good enough response. The Public Protector had set a timeframe of six months.

Ms Mzizi said that no claims could be paid if the documents were not correct, and supporting documents, like pay slips, were needed before any action could be taken. She noted that CCOD had already put into action some of the Public Protector’s recommendations in regard to the Adjudicating Committee addressing the asbestos cases.

Mr. Waters again asked for the current backlog numbers, and asked about the average length of time taken to process an application.

Ms Mzizi said that she was making an estimate, and thought that the number was about 13 000 claims. It would take, on average, three years to process an application. However, if all the documents were in order, it would take roughly a month to process.  In the past, compensation amounts were paid into the bank accounts of third parties, but now payments were made directly into the accounts of the applicants. It would take about a month to fulfil all the processes to ensure that the bank account and claimant details matched.

Mr Waters noted that the SCOPA report had showed that the DoH was not providing sufficiently robust oversight over the CCOD, and queried if the CCOD should not fall under the Department of Labour.

Ms Mzizi responded that the DoH was in fact helping to implement the recommendations made. She added that there had never been any formal suggestion that the CCO should amalgamate with the Department of Labour, or be brought under its auspices.

Mr Waters sought clarification on the phrase ‘political influence’, which was named as one of the risks in the strategic plan.

Ms Mzizi said that the “political influence” would be required to ensure that the Act was properly re-drafted.

Ms M Segale-Diswai (ANC) raised concerns about TB, which was an infectious disease, and wanted to know about the prevention strategy for miners.

Ms Segale-Diswai asked why CCOD was not operating in the Western Cape.

Ms Mzizi responded that the Western Cape was excluded from CCOD’s area of operations because it did not have mines, a large concentration of miners, or communities situated near mines. The CCOD focused on where the claimants were based.

Ms Segale-Diswai requested more details on the working relationship between the mines and CCOD.

Ms Mzizi said that the CCOD was working with the Chamber of Mines, and the advisory committee constituted representatives from six mines and six union representatives. These interactions happened on a quarterly basis. At times there was tension in the forums, as the Act failed to foresee and cater for the varied goals and objectives of the different bodies. The CCOD had also been working with the Compensation Commissioner for Occupational Injuries and Diseases, and representatives from both bodies had undertaken joint visits to the mines, to explain and educate miners on the difference between them.

Ms Kenye (ANC) asked for an analysis of the TB and HIV infection rates amongst miners.

Ms Kenye sought clarification on the R54 million Eastern Cape project. She felt there was little or no consultation and information sharing regarding the project.

The Commissioner answered that the Eastern Cape project fell within the scope of the Department of Labour. She added that if information was not filtering through this had to be addressed, as she understood that there had to be quarterly reports. She was also uncertain if the project was still continuing and was under the impression that the project may have ended. 
Ms More wanted clarification on the number of vacancies at the CCOD.

Mr Waters enquired about the strategy to improve financial management. He felt that the 40% vacancy rate at top management echelon was problematic. He thought this vacancy rate had increased since the CCOD had last reported to the Committee, and commented that this would lead to lack of efficiency. He pointed out that if only one mine inspector was employed, it would be nearly impossible for all the mines to be visited.

Ms Kenye also enquired about the strategy to combat the poor public perception, low staff morale and the high vacancy rate at CCOD.

Ms Mzizi said that it was important, in regard to the HR, to “plug the holes” where money was flowing out illegally. She planned to implement prevention plans and policies so that employees could be disciplined where necessary. She added that the DoH was unable to help with the staffing problem, and that this was being outsourced.  

The Chairperson asked what prevention strategies the mines were adopting to prevent lung related illnesses.

The Commissioner responded that she could not answer this question as it was beyond her scope.

Ms Ngcobo asked if foreign nationals were paid and how the CCOD dealt with their particular set of circumstances.  She also asked if miners injured on site were paid in accordance with the Workman’s Compensation Act. She enquired if chest X-rays were done when miners were examined.

Ms Mzizi  answered that foreign nationals were paid but that there was great difficulty in verifying their documents. CCOD was looking into a mechanism whereby payments could be made to a body set up in a foreign country. For instance, if a body was set up in Mozambique for Mozambican miners working in South Africa, CCOD would make the transfer directly to that body, who would have the task of verifying documents and compensating the miners. She explained that the COIDA Act had replaced the former Workmen’s Compensation Act. She also said that since CCOD was dealing with lung related illness, chest X-rays were done.

Mr. Waters wanted to know how many of the 260 mines were in arrears with their levies and if any legal action had been instituted against them.

Ms Mzizi responded that on 31 May 2011, the CCOD would have to submit its financial records to the Auditor-General, and at the moment all the accounting records were was in the process of being finalised. Only once this was done could she provide the exact number of mines in arrears.

Ms More, returning to Ms Mzizi’s previous suggestion on levies, asked what might be regarded as acceptable reasons for a mine to be exempt from paying a levy.

Ms Mzizi responded that the mines would have to prove that their dust levels were not sufficiently high to contribute to illness.

Ms Kenye asked what plans the Commissioner had to prevent future qualified audits, and what caused the audit qualifications.

Ms Mzizi responded that the main cause of the audit qualifications had related to staffing. The CCOD did not have enough people to complete all the tasks. She highlighted that at present there was a 42% vacancy rate in the finance section, and it was necessary to strengthen its capacity by hiring appropriately qualified staff.  and that they needed to beef up capacity and hire appropriately qualified staff. However, the issue of pay was a stumbling block.

The Chairperson summarised that the Committee supported the turnaround strategy. Members would be prepared to look at the Act and make amendments to ensure that matters could flow more smoothly. People, especially in rural areas, did not know their rights, and that it was up to the Members of Parliament (MPs) to educate their respective constituencies.

The Chairperson felt that Parliament needed to improve its oversight of the CCOD. He also recommended that MPs should accompany the CCOD on mine inspections. He further proposed that representatives from the Chamber of Mines should attend the next meeting with the CCOD in Parliament.

The Chairperson acknowledged that it was important for documents to be properly verified to avoid corruption, but said that it was often very difficult for the less-literate people to obtain documents. He thought that a simpler process could be instituted. He feared that those in need of benefits might be denied them because they found them too difficult to access.

The Chairperson also summarised that the R54 million Eastern Cape project began many years ago, under the former-Transkei administration, and although money had been transferred to the then-Transkei government, there was no way to verify the claimants, so that when the Department of Labour took over, a decision had been made to pay anyone who had worked in a mine. He proposed that a separate meeting be arranged to discuss this project.

The meeting was adjourned.


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