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TRANSPORT PORTFOLIO COMMITTEE
8 June 2005
ROAD ACCIDENT FUND AMENDMENT BILL: DELIBERATIONS; INTERNATIONAL MARITIME ORGANISATION CONVENTIONS: RATIFICATION
Documents handed out:
Explanatory Memorandum on Accession to the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation and Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms on the Continental Shelf
Road Accident Fund Amendment Bill: version as of 9 June 2005
The Chairperson provided background information on the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, and Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms on the Continental Shelf. These two conventions had been formulated by the International Maritime Organisation (IMO) in 1988. They were aimed at addressing maritime terrorism or acts of piracy. Due to historical circumstances, South Africa had not ratified these two conventions. The two conventions would be up for review in October 2005. In order to be fully involved in the review process, South Africa needed to ratify the 1988 conventions first. After a brief discussion, the Committee recommended that Parliament support the ratification of the two conventions.
The Committee then considered the newest version of the Road Accident Fund Amendment Bill. During the deliberation, Members raised various questions and concerns. These included how the Road Accident Fund (RAF) Board would be constituted once the Amendment Bill was passed; whether the job requirements outlined in the Act should be diluted so that an effective RAF Chief Executive Officer (CEO) could be appointed; and what implications the Amendment Bill would have on tariff negotiations between the RAF and private medical service providers. Members also deliberated on, and discussed issues, around the Amendment Bill’s cap of R160 000 per annum, which would be used to calculate the lump sum payments that would be made to claimants that had serious injuries. The main issue discussed by the Members related to the section of the Amendment Bill that dealt with the establishment of medical assessment panels. Members felt that these panels had the potential to be costly and would possibly create further delays in the compensation process, especially if they had to review every single claims case. The Chairperson suggested that the panels rather perform a moderator function, which would involve sampling doctors’ reports that had been submitted in claims cases. Through this, the panels would be able to ensure that standards were maintained. The Chairperson noted that the next Committee deliberation on the Amendment Bill would take place in August.
International Maritime Organisation conventions
The Chairperson provided background information on the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation and the Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms on the Continental Shelf. These two conventions had been adopted by the International Maritime Association (IMO) in 1988. South Africa at that stage had not been a member of the IMO, which meant that it had never ratified the conventions. Nonetheless, in terms of a 2001 United Nations Security Council resolution all countries, including South Africa, were legally bound to accept the terms of the two conventions.
In 2004 Cabinet had moved to adopt the two conventions. However, constitutionally, in order to accede to the conventions, Cabinet was obliged to refer the conventions to Parliament. The Chairperson further noted that in October 2005 there would be an IMO conference where these two conventions would be reconsidered and amended. In order to participate in the conference as a full member, South Africa needed to have acceded to the two conventions. This would require a parliamentary process. This process needed to be completed at least ninety days before the start of the conference.
The Chairperson stated that the Office of the State Law Advisor had analysed the two conventions. The Chairperson commented that the State Law Advisors had found that acceding to the conventions would not adversely affect South African maritime law. The two conventions bound countries to act against maritime terrorists in terms of their national law. The conventions also attempted to define which countries had a right or were obliged to act if a ship or fixed platform was seized. Indeed, the conventions outlined that the country where the ship was registered had a right to act, a country whose citizens were seized with the vessel had a right to act, and the country in whose waters the vessel was seized was obliged to act.
The Chairperson asked if there were any questions on the two conventions.
Mr S Farrow (DA) commented that in 2003/2004 Parliament had passed anti-terrorist legislation, which applied to ports and harbours. He asked whether the State Law Advisors had taken this legislation into account when they suggested that the two conventions be acceded to.
The Chairperson felt that the 2003 anti-terrorist legislation was aimed at ports and harbours within South Africa, and would not be in conflict with the two conventions. Indeed, he felt that the legislation was passed in order to comply with the conventions.
Mr A Ainslie (ANC) proposed that the Committee support the South Africa’s accession to the two conventions. This was seconded by Mr Farrow.
The Chairperson suggested that the Committee compile a report to indicate to Parliament that it supported the ratification of the conventions. The report could include various comments from the Committee. In particular, the report should note that the Committee supported the clause in the preamble to the first convention, which stated that acts of ship crews fell outside of the auspices of the convention. This would avoid the danger of industrial actions being defined as acts of terror. Similarly, the Committee report should note that the conventions should not be used by major powers as an excuse to act unilaterally or dangerously. It was important that anti-terrorism was not used as a pretext for infringing on people’s rights.
Road Accident Fund Amendment Bill
The Chairperson stated that the Amendment Bill had been sent to the State Law Advisors after the last Committee meeting. The process of finalising the Amendment Bill was reaching completion. There was, however, still ongoing work on the Amendment Bill.
The Chairperson asked Ms M Du Toit (Director: Policy Advocacy and Co-ordination, Department of Transport) to guide the Committee through the deliberation process on the new version of the Amendment Bill.
Ms Du Toit commented that the long title of the Amendment Bill had been shortened. The clause, which extended liability to a third party, had also been removed from the Bill.
Clause 10: Appointment of the Board
Ms Du Toit commented that the Amendment Bill would alter the way that the Road Accident Fund (RAF) Board was constituted. The current Act stipulated that the Director-General, or a Department senior official who had been designate for a "particular purpose", could serve on the Board. At the request of the Department the new Director-General would not be sitting on the RAF Board but would rather be involved in oversight. The Department, therefore, requested that the phrase "particular purpose" be removed from the Act. This would mean that the Department would not have to furnish particular reasons for a Department senior official, other than the Director-General, serving on the Board. Currently, a Department senior official who substituted on the Board did not have full powers due to the phrase "for a particular purpose". The removal of the phrase would allow them to sit on the Board as members.
Mr Ainslie asked whether the Director-General would remain on the RAF Board once the Amendment Bill was passed.
Ms Du Toit replied that once the Amendment Bill was passed either the Director-General or another designated Department senior official could sit on the Board. The Amendment Bill would merely remove the part of the clause that stipulated that a Department senior official, other than the Director-General, could only sit on the Board for a particular purpose.
Mr Farrow commented that the Committee had requested the presence of the Director-General on the RAF Board in order for her to play an oversight role. He questioned how the Amendment Bill would affect this.
The Chair responded that the Director-General would still perform an oversight role.
Mr Farrow enquired whether a Department senior official substituting for the Director-General on the Board would have full voting rights.
Ms Du Toit responded that she would have to examine this issue further and provide an answer to the Committee at a later meeting. However, the Director-General currently had full voting rights.
Mr L Mashile (ANC) felt that it was problematic that the Director-General had full voting rights. If the Board took a decision, which the Department felt was incorrect, the Director-General would be in a difficult position.
Ms Du Toit noted that the Amendment Bill stipulated that in order for Board members to extend their terms they would need to be formally re-appointed. She further noted that if a Board member was repeatedly re-elected they could remain on the Board indefinitely. Board members would also be able to leave and return to the Board, at a later stage, if they were re-nominated.
The Chairperson commented that this would allow for continuity on the Board, but would also allow Board members that did not perform to be replaced.
Ms Du Toit commented that the amendments to sub-clause (10) (a) (i) also clarified the situation whereby the Minister would invite stakeholders, through the Government Gazette and national print media, to nominate prospective Board members.
Mr Farrow felt that the Department needed to report to the Committee on the individuals that had been nominated as Board members. This could be used as an oversight mechanism to avoid people with a conflict of interest serving on the Board.
The Chairperson asked whether Mr Farrow was suggesting that the Minister should publish a list of Board nominees. Mr Farrow affirmed this.
The Chairperson noted that the Committee was entitled to know who the nominees were even if a list was not published. Nonetheless, publishing a list of nominees would allow for greater transparency.
Mr Ainslie enquired whether the Act contained sections that dealt with the removal of members from the Board.
Ms Du Toit responded that Section 10 (3) of the Act provided the Minister with the power to remove problematic Board members and replace them for the remainder of the term.
Clause 12: Appointment of the CEO
Ms Du Toit noted that the Committee had indicated that it was concerned about the limited number of candidates that could be appointed as RAF Chief Executive Officer (CEO). This was because the job requirements in the Act stipulated that the CEO needed to be experienced in the management of motor vehicle accident insurance or motor vehicle accident compensation matters. Ms Du Toit stated that in order to increase the pool of possible candidates, the Amendment Bill stipulated that prospective candidates only needed to be experienced in the broader compensation or insurance fields, and not specifically in the motor accident sector.
Mr Farrow felt that the removal of the requirements, which stipulated that the prospective CEO needed to be experienced in the motor vehicle accident sector, could be problematic. It was possible that due to this change a CEO that was incompetent could be appointed.
The Chairperson stated that he disagreed. The position of the CEO required an individual who had management skills and not necessarily a thorough knowledge of road accident compensation or insurance. Mr Ainslie added that a good manger was needed for the position of CEO. He stated one could get a specialist in motor vehicle accident compensation and insurance, but if they did not have management abilities they would fail in the position of CEO.
Mr Farrow stated that he agreed that the CEO needed to possess management skills, but they also needed a thorough understanding of motor vehicle accident compensation and insurance. Currently, the RAF was being mismanaged because RAF management lacked the necessary knowledge. He therefore felt that the CEO’s job requirements should not be diluted by the Amendment Bill.
The Chairperson replied that the problems with the RAF were not due to the managers lacking knowledge of road accident compensation and insurance. Rather, the problems had arisen because of poor management and corruption. The Committee simply wanted a CEO that could build a good team and manage people effectively. The Chairperson added that the Committee could return to this issue when the processes around the Amendment Bill were being finalised.
Clause 17: Liability of Fund and Agents, and Tariffs
Ms Du Toit noted that the Minister had agreed to remove the R100 000 cap placed on general damages. The Department found that the financial implications of the removal of the cap were limited. It was reasonable for the cap to be removed in the case of serious injuries. Nonetheless, the process of setting the medical threshold for what could be considered a serious injury needed to be secured.
Ms Du Toit added that the Department had adopted the Committee’s suggestion that the assessment process should be decentralised. Nonetheless, Clause 17 (1A) (a) of the Amendment Bill still stipulated that the Minister could make provisions for the method of assessment.
Ms Du Toit noted that there had been significant changes to Clause 17 (1A) (b). These which included altering the subsection to read: "The assessment shall be carried out by a medical practitioner registered as such under the Health Professions Act, 1974 (Act No. 56 of 1974), who shall be accredited with the Fund in a prescribed manner". This would allow for accreditation regulations to be implemented.
Ms Du Toit stated that the amendments to Clause 17 would also allow for the establishment of medical assessment panels. These panels would assess the seriousness of claimants’ injuries. The panels would also have the ability to call on experts to assess specific injuries. Each province would have a medical panel, which would consist of a RAF representative and one or more medical experts. Ms Du Toit noted that at the previous meeting the Committee was concerned that the establishment of panels would cause further delays in the compensation process. Ms Du Toit noted that the Department would examine this issue.
Mr Farrow enquired about the costs of the panels. He felt that establishing panels consisting of experts could be extremely costly.
Ms Du Toit answered that the present compensation process was very expensive for both the claimants and the RAF. Indeed, 12% of all RAF costs related to assessing claimants’ injuries. The new system outlined in the Amendment Bill would save the RAF about R1 billion. This was because only claimants with serious injuries would be compensated under the new system. Presently only 17% of claimants had serious injuries. The money saved through the new system would be allocated for the establishment and operations of the panels.
The Chairperson added that the Committee needed to receive a comprehensive report on the Department’s calculations regarding the possible savings of the proposed new system.
Mr Farrow was concerned that the panels would be another layer of bureaucracy, which would delay the evaluation of compensation claims. The desire to implement provincial and review panels would also lead to huge problems.
Ms Du Toit responded that the Amendment Bill would not be retrospective. The backlog of 450 000 claims would not be assessed by the panels. Only claims submitted after the Bill was passed, would be assessed by the panels. There would also only be a need for provincial panels and not a review panel.
Mr Farrow stated that he had not referred to the backlog of RAF claims. On average, the RAF handled 91 000 claims per annum. He felt that these panels simply would not be able to review 91 000 claims a year. It would be too time consuming. The implementation of the new system would create massive delays.
Mr Farrow asked what recourse a claimant would have if the panel decided that his/her injuries were not serious.
Mr Farrow questioned whether the RAF would appoint the members of the medical panels. Ms Du Toit replied that the Minister would be responsible.
Mr Farrow and Mr Mashile asked who would pay the people that served on the medical panels. They felt that if the panel members were paid by the RAF there could be a conflict of interest and perhaps the panels would not be objective. Ms Du Toit responded that the RAF would fund the costs of the panels.
Mr Ainslie noted that sub-clause 1A (a) stated that a claimant’s "circumstances" would be considered when deciding whether their injuries were serious. He asked what kind of "circumstances" would be considered. Two people could have the same injury yet their differing circumstances could affect whether their injuries were serious or not. For example, a person that had to walk to work in a rural area could be severely affected by a broken ankle, while someone that had access to transport in an urban area could be relatively unaffected by the same injury. Panels consisting of medical experts alone would be unable to effectively assess such circumstances. Perhaps the panels needed to include social workers and community members in order to effectively consider a person’s circumstances.
Ms Du Toit responded that both the doctors, that would initially assess a claimant’s injuries, and the panels, that would overview the doctors' assessments, would need to consider the claimant’s medical injuries and environmental circumstances. It was planned that individuals from "medical fields" would serve on the panels, which would include psychologists and physiotherapists. She then suggested that perhaps the reference to "medical fields" could be altered in the Amendment Bill. However, the Department did not want to make the definition of who could serve on the panels too broad.
Mr Ainslie commented that the rulings of the panels would depend on the quality of doctor reports. In urban areas this would not be problematic as most people had access to doctors. However, in rural areas doctors were often overworked and under resourced. He stated that this could result in doctors poorly assessing patients in rural areas. Similarly, due to circumstances, the reports from rural doctors could possibly be of a poorer standard. The panels would then be deciding on the validity of the claims from such poor reports. This could discriminate against rural claimants.
Ms Du Toit responded that the panels would not take the doctors’ reports at face value. They would rather be investigating the doctors’ reports. If a doctor continuously submitted substandard reports to a panel, the panel would be able to recommend that the doctor be stripped of his or her accreditation.
The Chairperson noted that in the future, the RAF would compensate claimants that had serious injuries. He asked how one would define a serious injury. Only compensating for serious injuries could be both attractive and problematic.
The Chairperson noted that injured people would still have recourse to the common law once the Amendment Bill was passed. He suggested that perhaps the panels did not have to examine every single case. They could rather operate as moderators. This would mean that they could rather sample doctors’ reports and claims cases. This would allow the panels to ensure that certain standards were being maintained and that precedents were being set. In a sense the panels could become review mechanisms. The panels could almost operate as forensic entities. This would reduce both the costs of the panels and possible delays in handling claims cases. Mr Mashile added that this would also make it easier to determine the annual costs of the panels.
Ms Du Toit stated that this was an excellent proposal. The Chairperson added that if the proposal was accepted, the RAF and Department would have to prescribe how the panels would function.
Ms Du Toit stated that she would undertake a cost benefit analysis of implementing moderator panels.
The Chairperson then analysed his own proposal. He enquired whether the RAF would gain anything from moderator panels.
Ms Du Toit responded that the Department was concerned that if the claims process was decentralised, the Department would lose control. In such circumstances the definition of "serious injury" could be altered over time. The Department also felt that the new system needed to have the ability to expose certain doctors who were submitting fraudulent reports. Moderating panels would not pick up every case, but they would ensure that the threshold definition of a "serious injury" would be maintained. Indeed, a similar system worked very well in New Zealand.
Mr Farrow stated that the time frames that panels would be allocated to examine cases needed to be stipulated. If time frames were not specified, the new system could be open to abuse from the people serving on the panels.
Mr Farrow questioned whether the proposed moderator panels would be established at a national level or at a provincial level.
The Chairperson questioned whether one could regard the moderator panels as panels. This needed to be explored further. The Chairperson then enquired whether anything would prevent the RAF from establishing a semi-permanent forensic entity.
Ms Du Toit responded that if the route proposed by the Committee were followed, the panels would not be mandated to prevent certain claimants from receiving damages. The panels’ function would rather be to review doctors’ reports and return them if they were unacceptable. The panels would also have the ability to demand that doctors who continuously submitted poor reports improve their standards. Ms Du Toit noted that claimants’ cases, where the extent of their injury was obvious, would not have to be referred to a panel. Similarly, because moderator panels would be sampling reports from the accredited doctors, they would not have to be a mandatory step in each claims process. This would mean that the time it took for a claimant to claim damages would not be affected.
Mr Farrow added that moderator panels could be used as anti-corruption mechanisms.
The Chairperson noted that the idea of having moderator panels needed to be seriously examined.
Ms Du Toit then addressed amendments that had been made to the subsections that related to medical tariffs. She noted that the Amendment Bill made provisions for private healthcare providers to be compensated in terms of the reference price list contemplated in the National Health Act. The National Health Act tariffs were not prescriptive, but could be used as a basis for negotiation. Thus, the tariffs would be negotiated between the RAF and the various private medical service providers.
Mr Mashile enquired whether the Amendment Bill would allow the RAF to determine the tariffs.
The Chairperson felt that the RAF would be well positioned to negotiate tariffs because it was a large entity. Ms Du Toit added that presently medical care providers were charging the RAF in excess of the private rates. This was due to the fact that the RAF payments were delayed. The RAF was attempting to implement tighter payment schedules, which would strengthen its bargaining hand.
Mr Mashile enquired what would happen if the RAF failed to negotiate the tariffs down. He asked what fall back the RAF would have.
The Chairperson replied that the tariffs in the National Health Act would be used as the ceiling in the bargaining process. Ms Du Toit added that the RAF would use the tariffs as a basis for negotiation. Some private medical service providers had already indicated that if the RAF could provide payments timeously, then medical tariffs could be reduced immediately.
Ms Du Toit noted that the Amendment Bill provided for the payment for emergency care either to the victim or service provider. This would allow the victim to at least claim some of the costs back from the RAF if a private provider charged above the tariffs.
Mr Mashile asked whether this meant that victims would have to pay for the difference themselves.
Ms Du Toit stated that the victim would have to pay the difference. The Department would attempt to build the RAF’s capacity to ensure that most medical centres were covered by the tariff agreements. This would possibly avoid a situation where an accident victim would need to pay the difference.
The Chairperson stated that no one wanted a situation where ambulance crews refused to treat accident victims because they were not covered by a medical aid. He noted that if the RAF could guarantee the payment of at least some of the costs, then the chances of such a situation arising would be limited. The Chairperson added that possible problems could also arise around the definition of "emergency medical treatment".
Mr Farrow noted that the Hospital Association of South Africa (HASA) had suggested that terms, such as "emergency treatment", be defined in the Amendment Bill.
Ms Du Toit replied that the Department was very wary of defining medical conditions or terms.
The Chairperson noted that HASA was being opportunistic. They had attempted to get the Health Department to define certain medical conditions and terms. The Health Department, however, had not defined the medical terms and conditions as HASA had requested. HASA was now hoping that the Department of Transport would define the terms. However, it was not the responsibility of the Department of Transport to define medical terms.
Mr Farrow noted that HASA had raised concerns about the transfer of a patient’s records from one facility to another.
Ms Du Toit replied that the Department had received HASA’s proposal regarding the transfer of patients’ records. It was, however, difficult to incorporate their proposal into the Amendment Bill.
Ms Du Toit discussed the alterations that had been made to Clause 17(4)(b) that dealt with compensation for the future loss of income. She noted that installment payments would not be provided to claimants. The RAF would rather pay a lump sum to claimants. This lump sum would be calculated up to the date that the claimant reached the age of 65. In the case where the claimant had dependants, an age of 21 was used to calculate the compensation sum. Compensation would also be capped to a sum not exceeding R160 000 per year. However, due to inflation this figure would need to be adjusted on an annual basis.
The Chairperson noted that the Committee wanted the clause to read "R160 000 in real terms". This would take inflation into account. He asked whether "in real terms’ could be used in the Amendment Bill.
Mr H Smuts (State Law Advisor) noted that the Amendment Bill provided for the Minister to adjust the figure of R160 000 upwards. He added that he would examine the implications of adding "in real terms".
Mr Farrow enquired what would happen if someone was injured who was over 65, but still working.
Ms M Du Toit responded that the payment would not stop because compensation was a lump sum payment. The age of 65 was used for the actuarial calculations of the lump sum payment.
Mr Farrow asked whether this could be specified in the Amendment Bill.
Ms Du Toit replied that it could be specified in the Amendment Bill.
Clause 18: Funeral Compensation
The Chairperson noted that the funeral compensation for the families of accident victims was fixed at R5 000 in the Amendment Bill. He asked whether this figure was fair.
Ms Du Toit replied that the Department did not feel strongly about the fixed amount of R5 000. The amount of R5 000 was not a major cost to the RAF. The Amendment Bill stipulated R5 000 because a specified amount allowed for rapid payment.
Mr Mashile asked how the amount of R5 000 had been decided on.
Ms Du Toit responded that the figure of R 5000 was reached though averaging funeral cost claims.
Mr Farrow suggested that the compensation be left at R5 000.
Clause 26a: Amendment of Certain Amounts
The Chairperson noted that the insertion of Clause 26 A into the Amendment Bill would allow the Minister to alter the compensation amount of R160 000 according to inflation.
The Chairperson asked why the term "may" and not "must" had been used in Clause 26A (1).
Mr Smuts noted that "may" was used to provide the Minister with the authority to act. If "must" was used it would compel the Minister to act. It would then become necessary to specify the time period within which the Minister should act. If the time period was not specified, then the Minister would be compelled to act every time inflation rose or fell, which would be problematic.
The Committee then debated the value of using "may" as compared to "must".
The Chairperson stated that issues around "may" and "must" needed further consideration. He suggested that the Committee empower the Minister by using "may", and in sections which required oversight "must" could be used. One also needed to remember that the Amendment Bill was the Department’s initiative. As a result, the Chairperson stated that he was satisfied with the use of "may" as the Department would act on its own legislation.
The Chairperson noted that the next Committee meeting on the Amendment Bill would be held in August. In the interim, the Committee needed to meet with the State Law Advisor regarding the constitutionality of the changes. The Chairperson noted that the avenue of private litigation would remain closed, which was the goal of the Amendment Bill. The cap of R160 000 per year would also remain. These stipulations amounted to the removal of certain rights, but they were reasonable. The Chairperson noted that the maintenance of the current cap for compensation for passengers could also be a deprivation of a right. Similarly, if one cap was removed, all the caps would have to be removed. The Chairperson asked the State Law Advisors to examine these issues. The Chairperson also asked the Department to work on the Committee’s recommendations regarding the possibility of altering the panels to modulator panels. The Chairperson asked if the Committee could be kept up to date on developments.
The meeting was adjourned.
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