Road Accident Fund Amendment Bill: hearings

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18 May 2005
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report


18 May 2005

Mr J Cronin (ANC)

Documents handed out:
Road Accident Fund PowerPoint presentation
Hospital Association of South Africa submission
South African Medical Association presentation
Draft Road Accident Fund Amendment Bill [B – 2004]
Department PowerPoint presentation

The Committee was briefed by the Road Accident Fund (RAF), the Hospital Association of South Africa (HASA) and the South African Medical Association (SAMA) on their submissions regarding the Road Accident Fund (RAF) Amendment Bill. The Department then responded with a summary of the amendments proposed.

The Committee asked for clarification on litigation by the RAF, issues regarding foreign claimants, tariffs and consultations, but it was unable to address medical terminology and definitions. Major issues still to be dealt with in the Bill related to tariffs, caps, alignment of the Bill with other pieces of legislation, and its constitutionality.


Road Accident Fund submission

Dr Saths Cooper, the Chairperson of the RAF Board, presented an overview of what had been happening at the Fund; gave some claims statistics; outlined the strategic objectives the RAF had adopted in order to be responsive to its statutory mandate; and mentioned key achievements in 2004/05. He then made some comments on the legislative amendments, saying that the RAF supported the notion of medical panels, regulated tariffs, tax-free instalments, mediation and arbitration and capping claims.

Mr S Farrow (DA) said that the RAF had a massive amount of legally trained personnel and that many of these were absorbed from private practices for large salaries. He asked why there was such a need for a litigation process for a body that was meant to quicken the claims process. The Fund was structured in such a way that there would be resistance to any claim submitted by nature of the type of employees, so he suggested that they look to increasing administrative capacity. He referred to the global benchmarks that Dr Cooper mentioned and said that many foreigners come to South Africa for treatment. Precedents had been set in the courts stipulating the levels of claims for certain injuries, and these should set the set the benchmark to be used rather than global benchmarks quoted in dollars and pounds.

Dr Cooper said that the Board had taken a resolution to restructure the RAF in July 2004 and that firms engaged in road accident fund work also recruited from the ranks of the RAF. Most people could not afford a lawyer, so by employing so many legal personnel, the RAF was addressing that issue. To that end, they had decided to outsource undertakings to be more cost-effective. Global benchmarks, developed by the WHO, were used so that medical conditions could be classified according to a system recognised all over the world. Medical tourism did happen in places where people could not wait for treatment at home, and it was cheaper for them to come to South Africa to have it dealt with right away. That argument could not be used in this dispensation, because most people in South Africa were reliant on public facilities. In road accidents, if a person was first taken to a private facility, they would be passed on to the public system if they were unable to pay. The RAF had developed a Book of Quantum that incorporated every catalogued injury and used court precedent to classify the severity of the injury and the amount the claim was worth. This prevented subjectivity in claims settlement and was a work in progress that would be improved.

The Chairperson outlined the main points that had been raised by the RAF. They had indicated that 12 members of the Board was too few. They supported the notion of medical panels, but should provide some examples of how they could be established. They supported tariffs, but thought they were best left to regulation. They suggested tax-free instalments. They raised the issue of jurisdiction in claims litigation and they were supportive of mediation and arbitration. They were asking for a resolution on others using the name of the Road Accident Fund and would like to remove old and suspect cases from their files. The Chairperson said that these issues would be difficult to legislate and might best be sorted out in practice. The RAF supported the party-to-party issue raised in the bill and underlined the importance of the Contingency Fees Act. He was unclear what they were saying in regards to general damages, but that they were in favour of the cap. Foreign claims were a particular issue, but they would have to be aware of the number of migrant workers from the rest of Africa that contribute to the economy and the fund in order to include them in benefiting from the fund.

Dr Cooper said that external consultants had said that 12 Board members seemed to be a reasonable number. It was an issue of continuity, and it was difficult to commit the Board to understanding the RAF if the term was too short. The proposal indicated a maximum of one renewable term of three years. It would be best to have some kind of rotational system, so that the whole Board would not be replaced all at once. In terms of panels, they were suggesting that professionals would participate in determining benchmarks. Certain professionals would be members of the panels and would be used to make a diagnosis that would be accepted by both parties. Costs for litigation had been increasing, so the RAF had put up a tariff for arbitration, which the legal profession had accepted. They felt that the Minister should regulate the fees that would become part of the party-to-party costs in order to avoid the padding of billing. People from SADC countries and perhaps all of Africa should be treated the same as South Africans, but people from other places should not. The low amount for funeral expenses had previously been questioned and its purpose was to add to providing for the funeral, not to fully cover it. The best way to do this would be through regulation.

Ms R Mashigo (ANC) asked what other strategies or programmes were in place besides Arrive Alive to promote safety and whether they have had any impact on prevention.

Mr Farrow said that safety was important because if there were fewer accidents, there would be fewer claims. In the mediation and arbitration pilot project in the Western Cape, tariffs had been set, so he asked if there had been abuse of that process or if problems arose because it was open-ended. He asked for more information on that and on the two-tiered processes taking place if mediation failed. He asked whether there was not a process to get old cases out of the system, whether the RAF had not responded to these cases or if there was some other problem.

Mr Cooper said that the RAF had four objectives. The one they had least activated was that of safety. In terms of prioritisation, that was a primary issue, but the RAF had been an insolvent body in crisis when the Board took over. Safety was also contained in other legislation, but there had not been co-ordination of these activities until recently. They were committed to Arrive Alive and other proactive programmes such as a media campaign and support for the Road Traffic Management Corporation. The RAF would like to apportion funds to other agencies that can deal with safety more effectively. The Board had considered a notice announcing a gradual removal of files and were doing an independent file validation branch by branch in order to see where they were. Court time was spent with RAF matters when it should not be, but less than 1% of the cases actually went to trial. Both sides had firms of attorneys on standby, which was wasteful expenditure when so many cases were resolved on the eve of going to trial. They felt that a compulsory mediation process would resolve some of these issues. The current arbitration process did not make mediation central and arbitration had been one-sided. Mediation also incurred costs for facilities that were not paid when going to court, and higher awards were made in arbitration than in court, but with revised rules and tariffs this process could work. The two-tier system was a problem. The merit of the case was decided in one forum and the quantum was decided in another, which essentially created two cases out of one. If this were changed, it would shorten case turn-around time.

Mr Farrow said that they had talked about instalments to promote cash flow, so he asked if they had looked at the implications of restructuring on capacity and means to put that in place.

Mr Cooper said that if costs were contained and there was not so much litigation, money would be going directly to the claimants. Since June, most people had agreed to instalments. The maximum time was a year of equal instalments and they did have the systems to cater for that. This did not apply to medical supplier claims, which they had also been working to remove from the system. These had previously been regarded as claims, which gave a false idea about the level of claims being dealt with, but were now considered supplier invoices.

Hospital Association SA submission
Adv Worrall-Clare, HASA Executive Officer: Legal Affairs presented the response of HASA to the Amendment Bill. He gave an introduction to HASA, outlining its commitment to an economic and social system of healthcare that was based on principles of equality and justice. He dealt with the Bill in terms of medical tariffs and the provision of emergency medical care, noting areas in which the RAF should provide other health care benefits. His legal opinion was that the amendments made some important changes, but he raised concerns over prescribed tariffs and mentioned the need for privacy and confidentiality to be maintained.

Mr Farrow said that there was no standardisation between different areas in South Africa, which would cause a major complication in negotiation of the fixed price for the tariffs. There was a cost incurred in emergency medical treatment in stabilising a patient, who may then be moved based on their ability to pay. He asked who made the decision to move the patient.

Adv Worrall-Clare said that that decision was made by the treating practitioner and that HASA would not interfere in the clinical diagnosis of the practitioner or put the patient in jeopardy.

Mr Farrow asked what outstanding funds were currently owed to them by the RAF.

Adv Worrall-Clare said that the amount varied from hospital to hospital. Life Health Care had quoted over R26 million, Medi-Clinic was owed less than that and smaller independent hospitals varied. When HASA made policy statements, they tended to lump all hospitals together, and when making reference to large groups, they sometimes forgot the smaller, independently owned hospitals, which may be more exposed to emergency health care provision. Smaller hospitals were in competition with larger ones in terms of costs, and may have a harder time coping.

The Chairperson said that some of the issues raised, such as the definition of emergency medical treatment, could not be attended to by the Transport Committee, but there was a parallel process being undertaken to deal with those issues. The RAF legislation needed to take that process into account. Other useful issues included the right to information, the right of the fund to enter into agreements and issues of tariffs. The right to make agreements could be subject to abuse, but it was desirable. Tariffs were perhaps best negotiated for specific geographical relevance and the specific provider. The Committee did not like to leave too much to regulation because that disempowered Parliament, so regulation and negotiation both needed to be examined. Transfer from private to public care was also not a Transport issue, but was best left to the entities involved, their codes of ethics and the RAF. Arrangements between the RAF and preferred service providers must not include emergency treatment, in case of profiling at the scene of the accident, but this would be difficult to sort out with legislation.

Adv Worrall-Clare said that he had suggested that agreements be subject to some form of accreditation, such as whether the provider followed HASA’s ethical code. HASA wanted to be considered a partner in the delivery of health care services, but not to the extent that they be asked to ignore aspects that were important to them. If the amendment was to work, the Committee should embrace the tariff negotiating structure, but the amendment referred to consultation, not negotiation. He supported what the Chair was saying, but strongly recommended to the Board that they consider negotiation as a significant commitment in partnering with different sectors.

SA Medical Association submission
Dr Johann van Zyl, Head of the Private Practice Unit at SAMA, outlined the portions of the amendment bill dealing with general damages and specific damages and described the legislative framework, which included the Health Professions Act, the Medical Schemes Act and the National Health Act. He then touched on the National Health Reference Price List, exclusions and limitations, claims against others and regulations. SAMA supported the general principles of the amendment, but had some criticisms.

Mr Farrow said that there seemed to be a number of Acts that laid down tariffs in respect of what could be paid by service providers, which appeared to contradict the need for a review panel. In Dr Cooper’s presentation, he had said that their submission had been subjected to consultation with stakeholders. There seemed to be a great difference in approach and understanding between the RAF and SAMA, and he asked whether Dr van Zyl’s presentation had also come out of consultation.

Dr van Zyl said that, from their perspective, the only body that was legally mandated to publish fees was the Medical Dental Professional Board. Those fees were used as an ethical guideline and that was the basis for the negotiation that both he and Adv Worrall-Clare spoke about. From there they needed to work out a set of fees that would govern the agreement, but those fees should be the basis for negotiation involving the review panel. There had been widespread consultation in open forums, which included the Department of Transport and the RAF.

Mr Farrow asked about the right to claim excesses over and above tariff when a third party was involved. He asked if someone was treated who was eligible for a claim under the RAF and had a medical aid package, would the claim be against the medical aid and not the slower RAF. This could mean that there was a parallel process where people with medical aid were ignoring any claims against the RAF in order to avoid transfer to a hospital with lower standards.

Dr van Zyl said that that aspect of the legislation was confusing. Benefits would only be paid to the extent that the Fund was able to or could afford to pay. In cases where the Fund was unable to pay, one could claim from another party. This left room for capping and prescribing tariffs to the detriment of the claimant and needed to be cleaned up.

Adv Worrall-Clare said that there were two statutory provisions for a tariff in the medical professional council. There was also one provision within the Competition Act, which recognised the right of dental technicians to publish a tariff. Other than that no other tariff was formally recognised in the law. The need for a review panel only spoke to health professionals, not health care providers such as hospitals. The Medical Schemes Act provided that emergency medical treatment was a prescribed minimum benefit for which there must be payment and there was no question of co-payment. In terms of emotional stress and shock, the suggested amendments might be inconsistent with mental health care legislation, which stated that when it came to benefits for a mental health care user, there should be no discrimination in how those benefits were rolled out. This depended on whether emotional shock qualified as a mental health condition.

The Chairperson said that the issues were complicated with the introduction of fault/no-fault and serious injury. Definitions for emergency medical treatment were not comprehensive, and more of a gesture of what might be covered, but the Transport Committee was reluctant to become involved in legislating medical language. There were issues raised in terms of 65 years as the cut-off age for future loss of earnings and 21 years for dependants, and these should be returned to when engaging with the Department. Payment for future loss of earnings was not intended as a type of pension, but a lump sum payment that may be paid over a couple of instalments. They needed to clean up issues surrounding the reinforcement of tariffs in order to lean toward the process of consultation and negotiation. He asked for feedback from the Department.

Department briefing
The Department was represented by Ms du Toit, Director: Policy, Advocacy and Co-ordination. She outlined and explained the additions and omissions that had been made to the Bill, and presented some funding statistics.

Mr Farrow asked if they would take heed of the issues that had been raised at this meeting and whether there would be another submission.

Ms du Toit said that there was a need for a further submission, specifically to deal with tariffs and financing of the fund. They would also need to align the Act with other existing pieces of legislation.

Ms Mashigo asked if guardians had been taken into consideration in payment for the continuous maintenance of dependants whose parents were both killed in an accident.

Ms du Toit said that the responsibility for that money and for looking after the needs of the minor rested with the Department of Justice. The Guardian’s Fund lay within justice legislation but was applicable in Ms Mashigo’s scenario.

The Chairperson said that related to that were issues about equal amounts to dependants, but the Committee would need to read through the new version to understand the detail that they had heard from the Department and the other submissions. It seemed the legislation would not change much more except in the few areas mentioned by Ms du Toit.

Mr Farrow said that in the first proposal for amendments, consultation had been key, so he asked if statistics and information given in the RAF presentation had been taken into account and whether the Department had been consulting with the RAF. He asked if the process of establishing panels and review committees had been examined in terms of affordability. The presentation from the Department mentioned figures that the Committee had not seen, so he asked to be given those in order to see whether the plans were viable.

The Chairperson suggested that they be given access to the budget statistics given in the presentation. He also requested that the Constitutional Litigation Unit give an opinion on the Bill in regards to the party-to-party issue and issues of thresholds and caps, future loss of earnings and general damages.

The State Legal Advisor, Mr Smuts, said that that was possible and could be done within three weeks.

Mr Farrow said that they should also look at alignment with the other Acts mentioned, such as the Mental Diseases Act.

The Chairperson said that the State Law Advisor’s Office was there to make sure that there was no overlap in various pieces of legislation and that the constitutionality issues were of particular concern. If the legislation was deemed appropriate by the legal advisors, the Committee would still need to debate the amendments, particularly in reference to caps. This new version of the amendment bill did not deal with mediation and arbitration.

Mr Farrow said that it also did not deal with foreigners.

The Chairperson said that caps would cover foreigners, but if the caps were removed, the Bill would have to deal with that. The Committee would like to keep mediation and arbitration in mind. It seemed that the Department had no problem with that, but that it might be more costly than expected. There was no need for legislation in that respect, so it could be debated further down the line. Members of the Committee and other stakeholders had all expressed their support for it.

Mr Farrow asked if something needed to be done in terms of jurisdiction.

Dr Cooper explained that this was the issue of where the claim was lodged to avoid any hint of collusion, conflict or favouritism of certain firms dealing with certain offices.

The Chairperson said that they could ask the Department to look into that.

Mr Farrow said that they should also look into the sharing of medical information.

The Chairperson said that he saw the value in developing definitions of serious injury and emergency treatment, but was sceptical of the Committee’s ability to do that. They had asked for the Constitutional Litigation Unit to look at the legislation and had set aside 25 May 2005 to continue working with the Department, looking at the new draft step by step in light of these submissions.

Ms du Toit said that she would make the budget figures available to the Committee and that the total savings would be R512 million over five years.

The meeting was adjourned.


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