Road Accident Fund Amendment Bill: adoption

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Transport

07 September 2005
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

 

Department of Transport presentation - Overview of Impact
Department of Transport briefing on current version of Bill
Committee Memorandum of Understanding
Road Accident Fund Amendment Bill, penultimate draft
Road Accident Fund Amendment Bill - version as voted on 7 September 2005
Road Accident Fund Amendment Bill - version as voted on 7 September 2005 (pdf version)

SUMMARY
The Department of Transport provided an overview of the envisaged Road Accident Fund (RAF) Amendment Bill, and highlighted key issues and points of debate. Two hypothetical examples of accidents were also provided to clarify certain issues regarding the impact of the proposed legislation. Members considered the Bill in its entirety. It was decided that general damages for serious injuries would be paid out as a lump sum. Future loss of income could be paid by instalments after agreement. Claims for loss of income would be limited to R160 000 per annum. The Fund would adjust the amounts awarded on a quarterly basis to counter the effect of inflation. Claims for emergency treatment could qualify for additional tariffs over and above the public sector tariff. Such tariffs would be subject to negotiation between the Fund and the private service providers. The Fund would not be liable for claims for emotional shock experienced by witnesses not involved in the accident. A key intention of the Bill was to limit the liability of the Fund on excessive claims.

The Bill was unanimously adopted with amendments and will be debated in the National Assembly in October.

MINUTES

Department of Transport briefing - Overview of Impact of Proposed Amendments
Ms M Du Toit ( Director: Policy Advocacy and Co-ordination) provided detail on various case studies to illustrate the impact of the proposed amendments on the Road Accident Fund. Practical examples were provided of two hypothetical accidents. The legislation's impact was assessed in terms of three categories namely drivers, owners and passengers (see document).

Discussion
Mr Farrow (DA) asked what impact the proposed amendments would have on the tourist industry and tour operators that transported foreign tourists.

Ms Du Toit responded that the amendments would result in changes within the insurance industry whereby citizens and tour operators would seek additional insurance to cover against liability towards foreign visitors.

Ms Khunou (ANC) asked whether reliance on common law claims was practical as many wrong doers would not be in a position to pay damages.

Ms Du Toit replied that guilty parties would have to pay the claim and assets could be confiscated. The liability would motivate the need for additional insurance.

Ms B Thomson (ANC) referred to the case of a taxi driver that was involved in a collision with a tourist and asked what compensation could be expected.

Ms Du Toit reiterated that the Fund was responsible for claims for South African citizens only. If a foreigner were a victim of an accident that a SA citizen was responsible for, then assets of the SA citizen could be confiscated through a common law claim.

The Chairperson reminded Members of the intention of the amendments which was to reduce the liabilities of the Fund by removing potential claims for damages by foreign visitors directed at the Fund. The objective to reduce the Fund's liabilities had unfortunately opened up citizens to new risk from foreign claimants.

Ms Thomson asked how future loss of income could be proved if an individual had no present income or means of proving level of income.

Ms Du Toit responded that no physical proof was needed and an affidavit could be secured from a police station to verify income. Witnesses could also be used to corroborate the evidence. The presence of a large non-formal economy did exacerbate problems within the system.

Mr Swathe asked what would transpire in the case of a student that had suffered serious injury and whose earnings potential would be adversely affected.

Ms Du Toit responded that the RAF would consider the future earnings potential of a student. She drew the Committee's attention to the document that outlined two hypothetical accidents. The consequences to driver A and B of the accident were described, the assessment process was explained as was the liability of the RAF in terms of the Bill. Detail was also provided on the impact on various passengers and pedestrians.

Ms Khunou provided the example of a lower-income person being admitted to a private hospital for emergency treatment that required payment up front. She asked how the process would unfold given the long period of repayment by the RAF.

Ms Du Toit responded that the time frame between the accident and the claim payment presented problems but claimants could consult attorneys to assist the process who would receive payment for services as a portion of the pay-out.

Mr Farrow added that the long period taken for processing claims also placed extreme pressure on attorneys to recover litigation costs.

Ms Du Toit replied that payment would only commence once the merits of the case had been determined and the cause of the accident had been confirmed.

Mr Farrow referred to a Road Accident Fund (RAF) pamphlet in circulation that stressed only funeral costs would be covered in the case of a pedestrian death. He questioned the additional information provided by the Department that included support payments to dependants.

Ms Du Toit asserted that loss of support claims would be covered by the RAF, in addition to funeral costs.

The Chairperson noted that the RAF had agreed to follow up on the issue of the pamphlet to ascertain the validity of the claims.

Ms Du Toit reiterated that no general damages would be paid by the Fund without evidence of a serious injury.

Mr Swart (DA) added that the hypothetical cases raised crucial issues that required further deliberation.

Ms du Toit noted that the broken ribs as referred to in the second case would not be regarded as a serious injury.

Ms Khunou asked how the Panel would determine whether an erroneous medical certificate had been issued and the extent of the fault.

Ms Du Toit replied that the Panel did not give any input over the amount of the claim nor the serious injury definition. The Panel was tasked with regulating the accredited medical practitioners to ensure compliance with the regulations. The merits of an accident were difficult to assess if the account was of a one-sided nature.

Mr Swart sought clarity on the second hypothetical case which did not make sense. He asked whether the detail provided was accurate. Clarity was sought on the definition of a serious injury.

Ms Du Toit commented that the issues were complicated and certain injuries would have a variable impact on different bodies. The nature of serious injuries had to be clearly defined to prevent anomalies in application. A loss of a limb or brain damage could be construed as a serious injury. A ruptured spleen would not have the same effect.

The Chairperson agreed that the issues were complicated and presented challenges at the level of implementation. The intention of the Amendment Bill was to eliminate non-serious injuries from general damages claims and the nature of the definition would be determined by practice. The legislation should ensure that minor injuries were not included within general damages claims. The Committee would monitor the process in future and ensure compliance with regulations.

Mr Farrow asked for clarity on whether a driver had a claim against the RAF in the case of a collision with a pedestrian in terms of the proposed amendments.

Ms Du Toit confirmed that the presence of another wrongful driver was necessary to ensure a claim against the Fund.

The Chairperson noted that the example provided in case two was incorrect as the driver would not receive a 50% apportionment as the pedestrian was at fault and the driver would have no claim against the RAF.

Ms Khunou asked whether women's rights were adequately covered within the Bill. Housewives with dependants would struggle to provide proof of income in the case of the death of a spouse due to an accident. Steps were needed to prevent abuse of the Fund from foreign claimants.

The Chairperson stated that the Fund could not change the socio-economic landscape within South Africa. The intention of the Fund was to assist innocent parties to restore their lives to an adequate level of normality as evident prior to the accident. The RAF should not contribute to further social inequity or discriminate against certain individuals. A social security net would be put in place but responsible road use had also to be promoted.

Mr Swart asserted that a broken ankle could be construed as a serious injury for a rural woman with dependants. However, the present definition would not award general damages and the woman would have no recourse against the driver in terms of the common law claim.

Mr Farrow added that recent public hearings had exposed two contentious issues. These were the confusion around the serious injury definition and the proof of income for certain categories of people.

Ms Du Toit responded that the system had been extensively studied by the Department, and additional litigation potential and concomitant costs remained a concern. The Fund had to operate within the existing common law litigation framework. The current compensation system created problems for rural women that the Fund could not address.

Mr Swart stated that attorneys would have to recover costs by means of litigation due to the removal of entitlement for costs of compensation. The removal of general damages from non-serious injuries would have a major impact on the rural areas.

Ms Du Toit responded that the Fund could contribute to legal costs but the Department had warned the RAF of certain undesired consequences. The Department wanted to avoid continual legal work that provided payment for lawyers but did not result in benefits for the claimants.

Mr Mashile referred to the high level of unemployment and suggested that the Department consider this when formulating legislation. Flaws in legislation should be addressed up front. He asked how the confusion around income estimation could be resolved.

The Chairperson declared that the Fund did accept affidavits from informal workers and a future loss of income calculation would be employed. Members would monitor the implementation of the legislation to determine efficacy.

Mr Farrow asked whether the proposed legislation was not creating additional problems such as increased litigation.

The Chairperson stated that the intention of the Bill was to reduce excessive general damages claims. However, certain difficulties would remain that would have to be tackled at a later stage.

Ms Du Toit agreed that the amended serious injury definition was intended to reduce claims. The assessment of serious injuries and the future medical costs assessment would be conducted by the same person thus preventing further activity. The Fund expected a significant amount of litigation around general damages initially but this would decline as case law established precedence and solidified a working definition. The Fund would not be liable for party to party costs unless the courts instructed it. The RAF wanted to rebalance payments in favour of the claimants and away from professionals involved in the process.

Clause by clause consideration of the Bill
The Committee went through the final version of the Bill to identify key issues and note final proposed amendments.

Ms Du Toit reminded Members that all foreigners would be excluded from claims but such individuals would have access to the common law to seek redress. Ms N Msomi (Deputy Director General-Department of Transport) added that the exclusion of foreigners from the Fund was intended to reduce its liability. However, certain unintended consequences would arise that would be addressed in time.

Clause 17
The Chairperson asked whether the Bill should allow for a negotiated settlement regarding payment of claims if the Fund faced financial difficulties.

Mr Mashile stated that the option of instalments would result in further delays for claimants in receiving vital compensation.

The Chairperson confirmed that general damages would only be paid by way of a lump sum. Assessment of injuries would be carried out by a registered medical practitioner. The compensation of a third party for non-pecuniary loss would be limited to a lump sum payment. The assessment of injury should be directly linked to the social circumstances of the victim and should not be strictly an "anatomical" investigation. The liability of the Fund to party to party costs would be determined by the courts and the circumstances of the indigent would be taken into consideration. The removal of party to party costs from the Bill would place additional risk upon legal practitioners.

Clause 17 (b)
The Chairperson stated that payment for future loss of income would be by lump sum or instalments as agreed between the parties.

Ms Du Toit asserted that Members had to distinguish between medical costs for treatment received and undertakings that covered future medical expenses. Home-care treatment would be included within undertakings. She asked whether members wanted past losses to also be paid by way of instalments. Future medical expenses tended to be large and she proposed that past losses be included within the clause.

Mr Swart stated that future loss of income had always been paid by lump sum and proposed that the clause allow for both lump sum and instalments.

The Chairperson agreed that lump sum or instalments by agreement would be retained in respect of future loss of income.

Clause 17 4(c)
Mr Swart noted that the clause contained unclear wording that required clarification. He asked whether victims would be confined to a maximum claim of R160 000 per annum for loss of income irrespective of annual salary. The need for claimants to bear a portion of the loss could be construed as unconstitutional.

Ms Du Toit referred to two interpretations regarding loss of income. One version focused on the current amount earned after the accident and limited that to R160 000 and the other took the percentage of the loss into account and applied that percentage to the limited amount. For example, a 50% loss in income would result in a payout of R80 000. The second version was regarded as the most appropriate in terms of fairness.

Mr Swart stated that the legislation should clearly declare maximum loss as R160 000.

The Chairperson concurred that the legislation should be clear on the matter and stress that the loss would be limited to R160 000.

Ms Du Toit agreed that the loss of income would be considered rather than gross income and the actual loss would not exceed R160 000 per annum to limit the liability of the Fund.

Clause 17 (4A) (a)
Mr Farrow reminded Members of recent reductions in public tariffs that would further disadvantage claimants. He proposed that the legislation allow for negotiation between the Fund and the private service provider regarding a claim for emergency treatment within a private institution. He cautioned that individuals sometimes required private treatment particularly within an emergency situation.

The Chairperson proposed that the legislation allow for negotiation on emergency treatment tariffs between the service providers and the Fund. Compensation should be regarded as reasonable and the RAF could use its market position to reduce private tariffs.

Ms Du Toit suggested that the tariff for emergency treatment could be increased to overcome the risk experienced by the service providers.

The Chairperson stated that the Committee should be concerned about possible exclusion of individuals from emergency treatment as a result of public tariffs.

Ms Msomi asserted that discussions had been held with the private sector regarding emergency treatment. Private facilities expressed unhappiness over the application of the public tariff to emergency treatment. The delay in payments was also cited as a point of concern.

Mr Farrow reiterated that the legislation had to be fair and allow for the private sector to recover certain costs expended by means of emergency treatment. The further reduction in public tariffs also compounded the dilemma.

The Chairperson stated that the RAF would be given a mandate to negotiate a tariff for emergency treatment with private service providers but no agreement would result in a reversion to (a) , that is , the application of public tariffs. Clarity would be provided on the type of service providers to be included. A (b) would be inserted into the Bill to allow for negotiation of tariffs for emergency treatment that involved reasonable compensation for costs incurred. No agreement would result in a reversion to public tariffs.

Clause 8
The Chairperson stated that the Bill would exclude witnesses at a distance from the accident from claims to the Fund but allow for access to compensation through the common law.

Clause 9
The Chairperson stated that the Fund would provide a common law claim for all as a substitute should the Fund become bankrupt.

Mr Swart stated that the exclusion of road users from general damages with no serious injury coupled with no recourse to the common law placed citizens at a disadvantage.

Mr Mashile asked whether claimants would receive similar amounts in payment from the Fund and the courts in terms of common law claims.

The Chairperson reminded Members that the courts would tend not to award large amounts in the common law for emotional shock.

Ms Du Toit declared that the Fund would pay for emotional expenses as part of medical treatment.

Mr Mashile asked what amount of claim could be expected from the Fund for emotional shock suffered by a person involved in an accident as opposed to the amount likely to be awarded within the common law.

The Chairperson reiterated that the intention of the legislation was to reduce the liability of the RAF from excessive claims. The Fund should not be perceived as a soft target.

Clause 11
Ms Khunou asked whether the current method of assessment for medical practitioners would remain.

Mr Farrow sought clarity on whether the resolution of disputes would be regulated by the Minister.

The Chairperson responded that disputes regarding the assessment of serious injuries would be regulated by the Minister.

Ms Khunou asked whether any punitive measures were in place to deal with corruption within the Fund.

Ms Msomi responded that the criminal law framework provided recourse for corrupt activities perpetrated by Board members and other frameworks were in place to prevent abuse of funds. The Minister could issue regulations to plug any gaps in the system and ensure overall governance of the RAF.

The Chairperson confirmed that the Fund would have the leeway to negotiate with private service providers to decide on reasonable compensation for emergency treatment payments. A variance in the tariff provided could be contemplated. No agreement would result in a reversion to public tariffs.

Voting on the Bill
The motion of desirability was read out to Members and unanimously adopted. The Amendment Bill was adopted with amendments. The Bill will be debated in the National Assembly in October.

The meeting was adjourned.

 

 

TRANSPORT PORTFOLIO COMMITTEE
7 September 2005
ROAD ACCIDENT FUND AMENDMENT BILL: ADOPTION

Chairperson:

Mr J Cronin (ANC)

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