Road Accident Fund Amendment Bill: deliberations

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
3 August 2005
ROAD ACCIDENT FUND AMENDMENT BILL: DELIBERATIONS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Road Accident Fund Amendment Bill as of 3 August 2005
Road Accident Fund Amendment Bill: version as of 9 June 2005
Opinion on the Draft Road Accident Fund Amendment Bill

SUMMARY
Proposed amendments to the RAF Amendment Bill as presented by Department of Transport officials were discussed. An opinion on the constitutionality of these proposals was delivered by Advocate W Trengove.

A considerable number of fundamental issues were debated but not finalised, such as:
- the nature and duration of and compensation for emergency treatment;
- the no-fault principle in determining the quantum of compensation;
- validity of claims by foreigners;
- members of the Board to have voting rights or just ex officio;
- the maximum number of terms for Board members;
- the CEO-Board relationship;
- the definition of the powers and functions of the CEO;
- the breadwinner cap of R 160 000 per annum;
- age restrictions on benefit payments removed;
- claims by scooter and motor cycle passengers;
- the right to claim for compensation under common law
- claims for secondary (emotional shock) damage; and
- the advantages of mediation/arbitration procedures.

MINUTES

Department briefing and discussion
Ms N Msomi (Department Deputy Director-General: Transport Regulation and Public Entity Oversight, Department of Transport) reported that since the previous meeting in June, re-drafting, minor amendments, suspensive amendments and a cost/benefit assessment had been done. A new Board and an acting Chief Executive Officer, Mr Jacob Modise, had been appointed

Ms M du Toit (Department Director: Policy, Advocacy and Co-ordination) outlined the changes to the new version of the Bill and answered questions as they arose. She touched on amendments that affected constitutionality; the limitation of benefits to foreign claimants to what ordinary South Africans would get; and the definition of ‘third party’ restricted to South Africans. She noted that removal of a claims cap would expose the Fund to very large claims such as a recent claim for R93 million from a Swiss citizen.

Mr S Swart (ACDP) suggested that all claims from foreigners should be ‘knocked out’.

Mr S Farrow (DA) pointed out that excluding foreigners was a foreign policy issue, and that foreigners should be informed ahead of time. Was the cap of R160 000 not effective?

Ms du Toit replied that General Damages was not capped. A comprehensive communication campaign would be required to inform visitors and others of all changes. The financial year would run from 1 April to 31 March. The procedure for the establishment of the Board and Executive Committee was formulated.

Mr Farrow said that it was important to establish whether the representative from the Department of Agriculture on the Board would have voting rights or be there ex officio. The matter of re-appointment of Board members was important. Whereas continuity was desirable, new blood was also required. Nomination of prospective Board members by stakeholders was flawed as it could be biased.

Mr L Mashile (ANC) added that if a Board member holds office for too long it becomes difficult to replace him/her. A maximum of three terms of three years should apply.

The Chairperson felt that parliamentary oversight could deal with this issue. A balance between continuity and new blood was required.

Mr Farrow felt that unlimited power was given to the Minister. He was sceptical about Board accountability to the Portfolio Committee. A Board appointment was lucrative. He supported a two-term restriction.

Ms du Toit explained that in the appointment process it was required of the Minister to gazette the appointments for public comment, but applicants were not made known.

Mr Farrow insisted that a list of all nominated applicants should be published before the appointments were made, also to protect the Minister. The maximum delay of twice 30 days for objections was not too onerous.

Ms du Toit explained that the new Board wanted a more active role in the appointment of the Chief Executive Officer (CEO), and also to handle strategic functions.

Mr Mashile was concerned about the possibility of the Board getting bogged down. The Minister should then be able to move in by appointing a CEO.

Mr Farrow expressed his concern that the description of powers and functions for the CEO had been removed. Management functions had been taken away from the Board and not specified for the CEO.
The Public Finance Management Act was overarching.

The Chairperson doubted that the Board could handle executive functions effectively as they only met two-monthly. A description of the powers and functions of the CEO would empower him/her.

Ms Msomi pointed out that listing the functions of the CEO might limit the power of the Board to instruct that additional functions be handled by the CEO.

Ms du Toit explained that as part of the assessment of serious injury, the Medical Panel, consisting of about five people (physicians, neuro-surgeons, occupational therapists, etc) would review the processes, methods and assessments done by accredited medical practitioners. Based on the average number and sizes of claims received per annum and the cost of scrutinising reports estimated at between R 0.8 million and R9.3 million per annum, savings of R1.1 billion per annum could be effected.

Mr Mashile wanted to know what recourse the Panel had in case of a breach in assessment.

The Chairperson thought that controlling accreditation would give the Panel some leverage. The Panel would audit, sample, set standards and review.

Mr S Swart was concerned that legal advisors would from then on not be allowed to refer clients to medical specialists.

Ms du Toit explained that the amended Bill wanted to address discrimination against people with no resources, such as the rural poor and other disadvantaged people who had no access to lawyers and doctors. The time taken to finalise claims had not diminished. Continuous treatment had to be assured.

Adv Wim Trengove (Department of Transport legal consultant) opined that apportionment of compensation for expenses according to degree of blame for an accident was unfair to poorer people and unconstitutional.

Ms du Toit explained that the liability of the Fund incorporated both past and future loss of income due to an accident.

The Chairperson said that the cap of R160 000 per annum included loss of support to dependants.

Mr Farrow insisted that the R160 000 should be in real terms, and also retrospectively discounted.

Mr Mashile mentioned that emergency treatment in rural areas depended on the actions of lay people because there were often no medical practitioners around.

Mr S Swart asked what the financial implications would be if passenger claims were fully catered for.

Ms du Toit answered that a 11.2 % increase in total compensation, and a worst case estimate (no caps) of a 24% increase could result.

The Chairperson cited abuse cases where ambulance personnel had been unwilling to service injured people whom they thought were to blame for the accident.

Ms du Toit said that the Department could not afford meeting claims for secondary shock by people who had heard about the incident, or even witnessed the accident from the roadside. It was also proposed that the necessity for following the route of mediation/arbitration be removed.

Mr Farrow opposed this amendment as legal costs were as high as 45% of the claims on the RAF
which could be significantly contained by mediation/arbitration as had been proved in the Western Cape.

The Chairperson was of the opinion that a fast-track approach (mediation/arbitration) would benefit the poor to which Ms Msomi replied that the Department was not opposed, and would go back and analyse this.

Ms du Toit proposed that regulations would provide the method of assessment for serious injury, accreditation, Panel procedures and emergency medical treatment, but Mr Swart was concerned that the definition of serious injury was not included in the body of the Amendment Bill any more.

Mr Mashile thought that a penalty of maximum three months for fraud was inadequate.

Adv Trengove gave his opinion on the constitutionality of the proposed stipulations. The abolition of the option for an accident victim to claim for the balance of compensation under common law against a guilty party would be constitutional if the system of compensation, including limits, provided under the Act would be fair. Whereas motorists contributed equally through the fuel levy, capping of benefits would be fair in creating greater equality between rich and poor. Secondary (emotional shock) victims should not be excluded from instituting common law claims if these were not provided for by the RAF.

The Chairperson concluded by listing the issues that still had to be finalised. These included: Unseen stuff; ‘Golden-hour’ emergency treatment; the ‘no fault principle’; foreigners’ non-eligibility to claim; governance versus ex officio participation in Board activities; the number of terms for serving on the Board; the CEO/Board relationship; CEO powers and functions description; Undertakings; Breadwinners’ cap of R160 000 per annum on past and future earnings; the reomoval of the 65-year and 21-year age limits on compensation for breadwinners and for those maintained; passengers on scooters and motor cycles; Common Law court action limitations; a mediator/arbitrator approach; and secondary emotional shock claims.

The Chairperson announced and the Members concurred that the next meeting would be on 16 August from 10am to 1pm with a finalisation on 17 August 2005.

The meeting was adjourned.