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[2021] ZAWCHC 5
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Steyn v Registrar of Medical Schemes (23378/2018) [2021] ZAWCHC 5; 2021 (3) SA 551 (WCC) (25 January 2021)
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 23378/2018
In
the matter
between:
MIGNON
ADELIA
STEYN Applicant
and
REGISTRAR
OF MEDICAL SCHEMES
First Respondent
COUNCIL
FOR MEDICAL
SCHEMES
Second Respondent
THE
APPEAL BOARD ESTABLISHED ITO
SECTION
50 OF THE MEDICAL SCHEMES ACT Third
Respondent
PROFMED
MEDICAL SCHEME
Fourth
Respondent
Date
of Hearing: 2 November 2020
Delivered
Electronically: 25 January 2021
JUDGMENT
LEKHULENI
AJ
INTRODUCTION
[1]
The legal saga between the applicant and the respondents has taken
many twists and
turns and has eventually landed before this court for
adjudication. In this application, the applicant seeks an order to
review
and set aside the rulings of the first to the third
respondents made on 27 February 2017, 08 February 2018 and 25 August
2018 respectively
in terms of sections 47 – 50 of the Medical
Aid Scheme Act 131 of 1998 (“
the Act”
)
.
[2]
At the hearing of this matter, it was settled between the parties
that in fact, the
decision that is sought to be reviewed and set
aside is the one granted by the Appeal Board on 25 August 2018.
[3]
The applicant sought relief that the third respondent’s ruling
and / or order
of 25 August 2018 be substituted with the order that
fourth respondent’s termination of the applicant’s
membership
under membership number 10118222, and / or that of her
dependents is unlawful and set aside; and that this court should
order the
fourth respondent to honour the contractual commitments to
the applicant and / or her dependents under the policy that governs
the said membership. Alternatively, that this court grants an
order directing that the orders of the first, second and third
respondents be substituted with an order that the fourth respondent’s
termination of the applicant’s membership and
that of her
dependents is unlawful and should be set aside and that this court
should order the fourth respondent to honour the
contractual
commitments to the applicant and / or her dependents under the policy
that governs the said membership.
[4]
This application is opposed only by the fourth respondent
(“
Profmed”
). Although the first to the third
respondents initially opposed the relief sought, they however
withdrew their opposition and filed
a notice to abide by the outcome
of these proceedings. The crux of this application, as it will appear
fully in the course of this
judgment, is whether the decision of
Profmed to cancel the applicant’s medical insurance membership
can be successfully reviewed
and set aside.
FACTUAL
MATRIX
[5]
During November 2015 the applicant applied for membership with
Profmed. When doing
so, she completed an application form which was
to include certain disclosures of her medical condition which
underlie the dispute
in this matter. In completing the necessary
application form, the applicant was assisted by her husband. It is
common cause that
a representative of Profmed, one Ms Susan Brits,
also assisted her in the completion of the application form. The
applicant and
her dependents were subsequently accepted as members of
Profmed. The membership commenced on 01 January 2016. During
the
year 2016, the applicant and her dependents attended to several
medical procedures which amounted to R400 000 (
Four hundred
thousand rand
) and the applicant and her medical practitioners
submitted claims as such to Profmed and the latter refused to honour
these claims.
[6]
On 07 November 2016, Profmed terminated the applicant’s
membership on the basis
that non-disclosure
of
certain ailments
has
been established in respect of gastric ulcer, breast aspiration,
wrist pains and hip problems. On 08 November 2016, Profmed
informed
the applicant
by
email of the decision it has taken to terminate her membership due to
non-disclosure of the ailments on her part and that the termination
would be effective from the inception date of 01 January 2016.
Profmed also informed the applicant that any authorisation granted
or
any claim paid would be reversed and that the applicant will be
liable for the amounts in question or that the Profmed would
reclaim
those amounts from the applicant.
[7]
Aggrieved by this decision, the applicant appealed that decision to
the Registrar
for Medical Schemes (“
the Registrar”)
.
In a written response to the appeal addressed to the Registrar dated
13 December 2016, Profmed averred that when the applicant
completed
the application form, she failed to disclose the following:
7.1
that she had an MRI lumbar spine on 03 December 2015;
7.2
that on 02 February 2015 she had a breast aspiration by Prof.
Apffelstaedt;
7.3
that on 04 March 2015 the applicant had a gastroscopy and colonoscopy
for
gastric ulcers and;
7.4
that on 4 September 2016 the applicant was admitted for migraine,
abdominal
pain, and a gastric ulcer.
[8]
After considering the matter, the alleged non-disclosures and the
relevant case law,
the Registrar concluded that the gastroscopy and
the colonoscopy were material in the matter and that they should have
been disclosed.
In the opinion of the Registrar, a reasonable person
in the position of the applicant would have considered the
information omitted
reasonably relevant to the assessment of the risk
by Profmed. The Registrar opined further that had this information
been disclosed,
Profmed would have been aware of the risk and
assessed the risk accordingly and this may have included underwriting
the condition
and imposed a waiting period. The Registrar eventually
found that Profmed’s decision to terminate the applicant’s
membership
was justified in the circumstance
s
as envisaged in section 29(2)(e) of the Act.
[9]
Dissatisfied with the decision of the Registrar, the applicant
appealed the Registrar’s
decision to the Council for Medical
Schemes
(“the Council”)
in terms of section 48 of
the Act. She filed the necessary affidavit as prescribed in section
48(3) of the Act and set out all
her defenses to the three grounds
raised by Profmed before the Registrar. Profmed however did not
deliver any opposing affidavit
before the Council but instead only
filed written heads of argument. The Council considered the matter
and also considered an application
form which the applicant had
subsequently made to Momentum Medical Scheme (“
Momentum”)
upon termination of her membership with Profmed in which she made
further disclosures which were not made when she applied for
membership with Profmed. The Momentum application form was attached
to the applicant’s appeal affidavit in terms of section
48(3)
of the Act to the Council. The applicant stated that the reason for
annexing the Momentum application form to this appeal
was because
after Profmed repudiated her claim, she applied for membership with
Momentum, a competitor of Profmed. With Profmed’s
repudiation
in her mind, she decided to err on the side of caution by disclosing
all of the purported conditions that Profmed alleged
that she was
suffering from with additional conditions that she was not in fact
suffering from but which she thought may constitute
a condition.
[10]
At the hearing before the Council, the Profmed’s legal
representative relied on the Momentum
form submitted by the applicant
to the Council despite a vociferous objection by the applicant’s
legal representative. The
reason for the objection was that the
applicant was prejudiced as this was not the case she was prepared to
meet at the hearing.
The applicant’s legal representative
argued that this was a classical case of a trial by ambush. The
Council found that the
MRI scan and breast aspiration were not
matters which gave rise to any duty to disclose. The Council further
found that although
the gastritis was not as serious as gastric
ulcer, it was nevertheless a sufficiently serious condition that
warranted disclosure
by the applicant in the Profmed application. The
Council further found that the failure to disclose a hip arthroscopy
in 2015 also
constituted a material non-disclosure. It eventually
dismissed the applicant’s appeal.
[11]
The applicant thereupon lodged a further appeal as contemplated in
section 50(3) of the Act to
the Appeal Board (“
the Appeal
Board
”). The Appeal Board considered the decision of the
Council and upheld it in respect of the MRI scan and the breast
aspiration
and found that they were not material. In respect of the
non-disclosure of gastritis, the Appeal Board found that the
non-disclosure
of that condition was material in that it prevented
Profmed from applying condition-specific waiting period in their risk
assessment
and risk management measure. The Appeal Board also
considered the objection to the use of the information disclosed in
the applicant’s
Momentum application form and found that it was
entitled to consider those aspects for two reasons.
First
,
Profmed became aware of this information later when the applicant
applied to another medical scheme being Momentum.
Second
, the
Appeal Board found that it had to consider those aspects as this was
a wide appeal. The Appeal Board found that the failure
to disclose
the hip arthroscopy was relevant for the same reason it gave for
gastritis. The Appeal Board eventually concluded that
the decision of
the Council was correct and that Profmed had validly terminated the
applicant’s membership. This decision
is essentially the
subject of this application.
APPLICANT’S
GROUNDS OF REVIEW
[12]
The applicant’s review application is premised on both the
common law and the Promotion
of the Administrative Justice Act 3 of
2000
(“PAJA”).
In terms of the common law, the
applicant contends that the Council and the Appeal Board contravened
the fundamental principle
of natural justice, that of giving both
sides an opportunity to be heard before a finding is made (
audi
alteram partem
principle).
[13]
The applicant’s grounds of review in terms of PAJA can
succinctly be summarised as follows:
13.1
That
the decision of the Appeal Board was materially influenced by an
error
of law as contemplated in section 6(2)(d) of PAJA;
13.2
That
the ruling of the Appeal Board was arbitrary and / or capricious as
contemplated
in section 6(3)(iv) of PAJA;
13.3
That
the ruling of the Appeal Board was not rationally connected with the
reasons given by the Appeal Board, as contemplated in
section
6(2)(f)(ii)(dd);
13.4
That
the Appeal Board took irrelevant considerations into account and
ignored
relevant considerations, as contemplated in section 6(2)(e)(iii);
and/ or;
13.5
That
the Appeal Board’s conclusion was not rationally connected to
the
reasons
given for it, as contemplated by section 6(2)(f)(cc) of PAJA.
ISSUES
TO BE DECIDED
[14]
This court is therefore enjoined to consider the following:
14.1
Whether
the Appeal Board, complied with the
audi
alteram partem
principle
when it dismissed the applicant’s appeal. Put differently,
whether the hearing before it was procedurally fair;
14.2
Whether
the Appeal Board was correct in finding that the applicant had
a
duty to disclose the hip arthroscopy and the gastritis and that the
non-disclosure thereof was a material condition which justified
Profmed to cancel the insurance contract between the parties; and
14.3
Whether, the court should remit the matter to the Appeal Board for
rehearing or to substitute the decision
of the Board with its own
finding, should the decision of the Appeal Board be reviewed and set
aside,
PRINCIPAL
SUBMISSIONS BY THE PARTIES
[15]
Mr Steenkamp for the applicant argued that Profmed flip flopped on
its reasons for the repudiation
of the contract.
It
was his argument
that the reason advanced by Profmed for the termination of the
contract as reflected in the email addressed to the applicant on
07
November 2016 differed materially with the reasons it advanced to the
Council.
The
Counsel
contended
that on 07 November 2016, Profmed relied on the non-disclosure of the
gastric ulcer, breast aspiration, wrist pain and
hip problem, as its
ground for repudiating the contract.
It was
further
contended that before the
Council,
Profmed
relied on non-disclosure of additional conditions, namely, MRI lumbar
spine, breast aspiration, gastroscopy and colonoscopy.
The applicant’s
Counsel
argued
that when the matter was heard before the Council, Profmed’s
legal representative persisted with his reliance on the
additional
grounds of hip arthroscopy, possible heart murmur and kidney stones
as the grounds for repudiation.
Counsel
for the applicant
objected
to the reliance by Profmed on the new grounds as these additional
grounds were not relied upon in the proceedings before
the Registrar
and only came to light during the Appeal hearing before the Council.
The reasons for the objection was that the applicant
had suffered
prejudice due to the fact that she had not been given an opportunity
to give evidence on these additional grounds.
[16]
Mr Steenkamp further argued that the Chairperson of the Council noted
his objection but did not
make a ruling at the time nor in his
eventual ruling. Counsel also asserted that he raised the same
objection before the Appeal
Board but this tribunal outrightly
dismissed this objection on the basis that Profmed only became aware
of the information later
from the applicant and that the appeal
before it was a
wide
appeal.
In Counsel’s view, the decision of the Appeal Board was flawed
in that the applicant was not given an opportunity to give
evidence
on these additional grounds and this is offending against the
audi
alteram partem
rule.
It was
stated
that the Appeal Board made a ruling against the applicant in respect
of the hip arthroscopy without giving the applicant
an opportunity to
give evidence. More importantly, that there was no evidence before
the Appeal Board that the applicant suffered
from the hip
arthroscopy. As far as gastritis is concerned, he submitted that
Profmed failed to prove that the non-disclosure of
this condition was
material to warrant a repudiation of the contract. It is on the
strength of these grounds that he
asked
this
court to review and set aside the decision of the Appeal Board.
[17]
Mr Van Reenen for Profmed argued that the case before this court is
not an appeal but a review
and that the applicant cannot simply argue
that the decisions taken were incorrect. The reasons advanced by
Profmed for the repudiation
of the contract were widened when the
applicant placed further information before the Council. Mr Van
Reenen argued that the applicant
was expected to disclose full
information of any ailments/conditions/illnesses/symptoms no matter
how insignificant they seemed
as required by Profmed’s
application form which forms the basis of the contract between the
parties.
It was
argued
further that medical schemes in particular Profmed, relied on the
bona
fides
of their clients and the applicant’s disclosure of any
condition had to be full and to be made in good faith. Counsel
contended
that it was common cause that the applicant was diagnosed
with
gastritis
following a gastroscopy and colonoscopy. The gastroscopy and
colonoscopy were carried out on 04 March 2015 which is within
the
twelve months prior to the applicant’s application for
membership with Profmed on 06 November 2015.
It was
submitted
that this condition was sufficiently serious that it required the
applicant to have disclosed it when she completed the
application
form.
He
agreed
with the views expressed by the Appeal Board that the materiality of
the non-disclosure lies in the fact that Profmed, which
may not
refuse to accept an applicant as a member, was denied the opportunity
to make an accurate assessment of the risk and imposing
a specific
waiting period it was legally empowered to impose where it had been
aware of a pre-existing medical condition.
[18]
With regard to
the hip arthroscopy, Mr Van Reenen contended that the argument that
Profmed raised a new issue and that the applicant was effectively
ambushed was misplaced because it was the applicant who introduced
the evidence in her Momentum application form as contained in
her
affidavit placed before the Council.
It was
argued further that the applicant failed to deal with the evidence
when she had the opportunity to adduce evidence before the Appeal
Board in terms of section 50 of the Act.
It
was
submitted
that the court should therefore dismiss the applicant’s
application
with costs.
ANALYSIS
AND RELEVANT LEGAL PRINCIPLES
[19]
For the sake of brevity and completeness, I will deal with the issues
in this matter ad seriatim.
Was
the
Appeal Hearing before the Appeal Board procedurally fair
[20]
It is not in dispute that when the applicant completed the
application form for membership with
Profmed she was assisted by Ms
Susan Brits
(“Ms Brits”)
, a representative of
Profmed. It is also not in dispute that the applicant depended on Ms
Brits to guide her in filling in the
relevant application form. Ms
Brits was invited to access all medical records of the applicant and
the applicant tendered her co-operation
in this regard, including the
signing of whatever form as may be necessary so as to waive her right
to privacy. It is also not
in dispute that the applicant depended on
Ms Brits for her vast knowledge in the medical and insurance
industry.
[21]
As explained above, after the applicant’s medical insurance was
repudiated, the applicant
applied to Momentum for medical insurance.
It was only in this application form that the applicant indicated
that she suffered
from gastric ulcers; that she had been diagnosed
with kidney stones approximately three years prior to the completion
of the form;
that she was diagnosed with possible heart murmur years
prior to her membership with Profmed;
and she disclosed that she had undergo
ne
hip arthroscopy in 2015. The applicant had not disclosed all these
conditions in the Profmed application form. The applicant
avers that
the reasons she made these disclosures in the Momentum application
form after Profmed repudiated her claim, was caution.
She erred on
the side of caution by disclosing all of the purported conditions
that Profmed alleged she was suffering from together
with additional
conditions that she was not suffering from
that
which
she thought may constitute a medical condition. The applicant
thereupon attached the Momentum application form to her appeal
papers
to the Council so as to make the point that Profmed was contriving
reasons to repudiate her claim and that its competitor
Momentum, did
not deem any of these conditions material enough to limit her
membership.
[22]
It is worth noting that Profmed relied on these additional grounds in
particular the hip arthroscopy
during the appeal hearing before the
Council and also before the Appeal Board. The Appeal Board found that
the applicant clearly
suffers from arthritis, most likely
osteoarthritis, affecting large joints such as knees, hips and
wrists. It also found that the
applicant did not disclose this to
Profmed and that this was a material non-disclosure. This finding was
made despite the fact
that the applicant raised an objection to a
trial by ambush. The Council noted the objection and failed to make a
ruling on it.
Similarly, the Appeal Board noted the objection but
found that this was a
wide
appeal in
volving
a complete re-hearing of or fresh determination on the merits of the
matter with or without additional evidence or information
– See
Golden
Arrow Bus Services v Central Road Transportation Board
1948 (3) SA 918
(A) at 924;
S
A Broadcasting Corporation v Transvaal Townships Board and Others
1953 (4) SA 169
(T) at pp 175-6. In other words, this was not
an
appeal in the ordinary strict sense of a re-hearing on the merits but
limited to the evidence or information on which the decision
under
appeal was given, and in which the only determination is whether that
decision was right or wrong - See
Health
Professions Council v Emergency Medical Supplies
(435/09)
[2010] ZASCA 65
(20 May 2010) at par 8;
Commercial
Staffs (Cape) v Minister of Labour and another
1946
CPD 632
at pp 638-641).
[23]
It is my
considered
view that the Appeal Board should have allowed the applicant to lead
evidence on the hip arthroscopy. In my judgment,
the Appeal Board
committed a gross irregularity by failing to properly adjudicate on
this objection, especially bearing in mind
that the subsequent
finding had an adverse effect on the applicant. The Appeal Board
erred in failing to give the applicant an
opportunity to give context
to the disclosures she made in the Momentum application form and to
present evidence to rebut the argument
of Profmed, which was only
disclosed and presented at the hearing of the matter.
[24]
While I am aware that the application form disclosing further
conditions was introduced by the
applicant, this however did not
preclude her from leading evidence on the reasons for these late
disclosures. Had that have been
done, the Appeal Board would have
been placed in a much better position to make an informed decision
after all the issues before
it were properly ventilated. Furthermore,
the Appeal Board found that the hip arthroscopy was not the original
ground for Profmed
to repudiate the applicant’s insurance
contract and that this information came to the attention of Profmed
extremely late.
Section 50(4) of the Act provides that any person who
lodges an appeal under subsection (3) shall submit with his or her
appeal
written arguments or explanations of the grounds of appeal. In
compliance with this section, the applicant filed written heads of
argument and at paragraph 19 of those written submissions, the
applicant in the alternative to her written submissions applied
for
leave to lead additional evidence with regard to new grounds raised
by Profmed or to lead evidence with regard to any other
submissions
and allegations made by Profmed. In my view, the argument by Mr Van
Reenen that the applicant did not apply to lead
evidence when she has
expressly done so in her papers is, with respect, misplaced and
devoid of substance and falls to be rejected.
[25]
In my opinion, the Appeal Board made a finding against the applicant
without
giving
her the opportunity to lead evidence or to be heard, particularly in
relation to the hip arthroscopy and / or the contents
of the
information that was disclosed to Momentum when she made an
application for a medical cover. It must also be
stressed
that the argument about the hip problem, which was originally one of
the grounds for the repudiation of the insurance agreement,
was
abandoned in writing by Profmed in their letter dated 13 December
2016 addressed to the Registrar. Clearly, the applicant approached
the matter before the Council on the basis that the hip problem was
no longer an issue in dispute as same was abandoned as a ground
of
repudiation. The hip arthroscopy on the other hand was only raised
during argument at the Council and the Appeal Board. In my
view, the
Appeal Board did not properly bring its mind to bear on this
objection. The appeal board only ruled on this objection
in its final
judgment, thus denied the applicant the opportunity to lead evidence
or weigh her options. Therefore, in my opinion,
the decision of the
Appeal Board to the effect that the non-disclosure of the hip
arthroscopy as reflected in the Momentum application
form was
material to warrant a repudiation of the medical insurance contract
by Profmed, infringed on the applicant’s right
to procedural
fairness, and in particular, the
audi
alteram partem
rule.
[26]
In
De Lange v Smuts
[1998] ZACC 6
;
1998 (3) SA 785
(CC) at para 31, Mokgoro
J, stated as follows:
“
Everyone
has the right to state his or her own case, not because his or her
version is right, and must be accepted, but because,
in evaluating
the cogency of any argument, the arbiter, still a fallible human
being, must be informed of the points of view of
both parties in
order to stand any real chance of coming up with an objectively
justifiable conclusion that is anything more than
chance.”
[27]
Both the Council and the Appeal Board did not properly adjudicate on
the applicant’s objection.
To this end, I agree with the views
expressed by the applicant’s counsel that the appeal bodies,
particularly the Appeal
Board, effectively allowed Profmed to convert
an admission into a denial during oral argument, without allowing the
applicant to
provide any context or to present countervailing
evidence in respect of the hip arthroscopy.
[28]
Section 47(1) of the Act requires a Registrar, where a complaint has
been lodged with the Council,
to furnish the party complained against
(Medical Aid Scheme) with full particulars of the complaint and to
request that such party
to furnish the Registrar with written
comments within 30 days of such notice or on such time as the
Registrar may allow. Section
48(1) of the Act requires any person,
who is aggrieved by any decision relating to a settlement of a
dispute or complaint in terms
of section 47(1), to appeal to the
Council. Section 48(3) of the Act provides that an appeal to the
Council shall be in the form
of an affidavit directed to the Council
whereas an appeal to the Appeal Board in terms of section 50(4) of
the Act is lodged by
filing written arguments or explanations of the
grounds of his appeal. Unlike section 47(1), sections 48 and 50
dealing with appeals
to the Council and to the Appeal Board
respectively, are silent on whether a respondent (medical scheme) is
obliged to file a response
in the form of an answering affidavit to
the grounds of appeal lodged in terms of section 48(3) or written
submissions in response
to the grounds of appeal filed in terms of
section 50(4). However, both sections empower the chairpersons of
these institutions
to determine the procedure for the hearing.
[29]
Despite the
shortcomings in the Act, it is my considered view that the Appeal
Board
was
in
correct
in relying on the new facts raised by Profmed at the eleventh hour or
during argument without giving the applicant an opportunity
to
respond or to give context to it. It was not permissible in my view
for the Appeal Board to consider the disclosure in the Momentum
form
in isolation, divorced it from the context of the case which the
applicant was answering. In view of the adverse effect and
the
seriousness of the consequences of its decision, the Appeal Board
should have adopted a more inquisitorial attitude and took
extra
caution to elicit the truth - See
Turner
v Jockey Club of South Africa
1974 (3) SA 633
(A). It could have done this by calling for
evidence on the latest information that was placed before it by
Profmed during
argument.
[30]
In
Administrator, Transvaal v Theletsane
[1990] ZASCA 156
;
1991 (2) SA 192
(A),
the respondent filed an answering affidavit which went further than
was necessary to answer the case that was presented in
the founding
affidavit. The applicant in that matter sought to rely on the
additional facts so as to raise a new argument. The
court disallowed
the applicant’s reliance on these additional facts as it found
would prejudice the respondent given that
it was not the case the
respondent was called upon to answer.
[31]
On a conspectus of all the evidence placed before this court, I am
satisfied that the applicant
was prejudiced in that she was called
upon to answer a case during the hearing of the matter which was not
pleaded. In my view,
the Appeal Board procedurally erred in allowing
Profmed to raise this argument at the late stage without affording
the applicant
an opportunity to respond thereto by presenting
evidence in rebuttal. The Appeal Board erred in making a ruling on
the objection
in its final judgment without a proper argument of the
said objection.
[32]
Additionally, what I find surprising and startling in the Appeal
Board’s decision is that
it concluded that the applicant
suffered from arthritis, most likely osteoarthritis, affecting large
joints such as knees, hips
and wrists. The Appeal Board made this
finding despite the fact that there was no evidence,
viva
voce
or otherwise, placed before it either by the applicant or Profmed to
the effect that the applicant had suffered from any of those
conditions. It
is therefore not clear where the Appeal Board obtained this
information from and on what basis in law or fact the
Appeal Board
made such finding. It would seem though that the Appeal Board made
these far-reaching and extensive findings without
them being
supported by any medical evidence.
[33]
However, what is more concerning is that this finding was made
without the Appeal Board being
apprised with the results or the
outcome of the applicant’s hip arthroscopy.
From the evidence placed
before court, I could not find any document that supports the appeal
Board’s finding other than the
applicant’s mention of
arthritis in her hand written notes on the Momentum application form.
To this end, I consider the
views expressed in
Minister
of Lan
d
Affairs and Agriculture v D and F Wevell Trust
2008 (2) SA 184
(SCA) at para 43, to be apposite in this matter where
the court
stated:
“
It
is not proper for a party in motion proceedings to base an argument
on passages in documents which have been annexed to the papers
when
the conclusions sought to be drawn from such passages have not been
canvassed in the affidavits. The reason is manifest -
the other party
may well be prejudiced because evidence may have been available to it
to refute the new case on the facts…In
motion proceedings, the
affidavits constitute both the pleadings and the evidence… and
the issues and the averments in support
of the parties’ cases
should appear clearly therefrom.”
[34]
In my view, if the Appeal Board allowed the applicant to present
evidence,
it
would have been furnished with a response on affidavit regarding the
applicant’s hand written notes of the Momentum application
form. The Appeal Board would have been placed in a better position to
determine if the non-disclosure was material or not. It must
also be
mentioned that it was also open to the Appeal Board to invoke the
provisions of section 50(9) of the Act to call for evidence
for the
purposes of ascertaining the issue of arthroscopy like it did in
Govender
NO v Profmed Medical Scheme and others
[2012] JOL 28654
(GNP) at para 39. It could have summoned witnesses,
including Dr Bosch, who treated the applicant. The Appeal Board could
have
examined Dr Bosch as a witness and called for the production of
books and related documents relating to the examination of the
applicant.
[35]
In
Turner v Jockey of South Africa
1974 (3) SA 663
(A), the
Court found that a domestic tribunal was fundamentally unfair because
members of the inquiry Board drew conclusions from
their own
observations and film of the race without disclosing this to the
accused jockey. The court found that it was unfair towards
the
appellant to be suddenly confronted with a serious additional charge
after evidence was already presented at the enquiry.
[36]
In
casu
, the applicant was confronted with a finding that
adversely affected her based on facts which were not properly
presented and ventilated
before the tribunal. In my view, the Appeal
Board took irrelevant considerations into account when it dismissed
the applicant’s
appeal. The Appeal Board ignored relevant
considerations as envisaged in section 6(2)(e)(iii) of PAJA in that
it ignored the outcome
of the hip arthroscopy which was readily
available. I am further of the view that the hearing before the
Appeal Board was procedurally
unfair as contemplated in section
6(2)(c) of PAJA and must therefore be reviewed and set aside. This
leads me to the second issue
for consideration.
Whether
the Appeal Board was correct in finding that the applicant had a duty
to disclose the hip arthroscopy and the gastritis
and that this was a
material condition which, if not disclosed, justified Profmed to
repudiate the insurance contract
[37]
Section 29(2)(d) and (e) of the Act provides that a Medical Scheme
shall not cancel or suspend
a member’s membership or that of
his or her dependents, except on the grounds of committing any
fraudulent act or the non-disclosure
of material condition.
The
general rule is that he who asserts must prove. Thus in this case,
the onus to prove the non-disclosure lies with Profmed.
[38]
It is trite that
at common law, an insured, when requesting insurance cover, must make
a full and complete disclosure of all matters
material to the
insurer’s assessment of the risk. Failure to do so will entitle
the insured to reject a claim under a policy
and to treat it as void.
In
Regent Insurance
v King’s Property
(5/2014)
[2014] ZASCA (176) 21 November 2014 at para 20, the court observed
that “legislation has been enacted, however, to
preclude
insurers from treating misrepresentations that are trivial, and more
recently non-disclosures that are trivial, as grounds
for avoiding
insurance contracts and rejecting claims”.
[39]
To this end,
section
29(2)(e) of the Act allows a Medical Aid Scheme to terminate a
membership on the basis of the non-disclosure of material
information. The meaning of material information for the purposes of
section 29(2)(e) of the Act in my view entails the all-encompassing
information which is pertinent and relevant to a Medical Aid Scheme
in assessing the risk posed by a prospective insured who is
applying
for membership. This presupposes that a contractual risk undertaken
on the strength of false information or misrepresentation
may be a
ground for the repudiation and the renunciation of a subsequent
contract. However, the non-disclosure must be material
to warrant a
cancellation of the contract. If the non-disclosure is immaterial,
the Medical Aid institution may not repudiate or
cancel the
contract. The test for materiality as envisaged in section
29(2)(e) relates to the assessment of risk by the insurer.
In
Qilingele
v South African Mutual Life Assurance Society
1993(1)
SA 69 (A) at 75, the court observed that ‘the enquiry as to the
materiality of the misrepresentation is consequently
not conducted in
abstracto, but is focused on a particular assessment. It therefore
follows that the evidence of the underwriter
who attended to that
assessment is not only relevant but may prove crucial. So, too, the
evidence that the insurer had a particular
approach to risks of the
kind in question would be relevant and could be cogent.’
[40]
As discussed above, the onus rests on Profmed to prove materiality
and that the non-disclosure
or representation by the applicant
induced it to conclude the contract and to assume the risk it
otherwise would not have accepted.
The question is whether a
reasonable person in the position of the applicant would have
considered that the risk, if any, (hip
arthroscopy) should have been
disclosed to Profmed - See
Mutual
and Federal Insurance Co Ltd v Oudtshoorn Municipality
1985
(1) SA 419
(A) at 435G-I. The applicant avers that she underwent a
hip arthroscopy during June 2014 and approximately 17 months prior to
the
completion of the Profmed’s application form. The result
thereof showed that she had no indisposition and /or ailment to her
hip. This MRI scan procedure, was merely a diagnostic tool to
determine whether, if anything was amiss
with
her hip. She avers that this did not constitute treatment, nor does
undergoing it necessarily meant that one is suffering from
a medical
condition. She submitted a medical report of Dr Bosch in support of
her contention. The applicant further contended that
had the Appeal
Board afforded her the opportunity to present evidence, she would
have led evidence that the hip arthroscopy did
not constitute
treatment and that she had no condition in her hip. There was no
evidence presented before the Appeal Board or before
this court to
rebut the evidence that the applicant underwent a hip arthroscopy in
2014 and that there was no problem with her
hip. In fact, this
averment was not denied or disputed by Profmed. Moreover, section 29A
(7) of the Act provides that:
“
A
medical scheme may require an applicant to provide the medical scheme
with a medical report in respect of any proposed beneficiary
only in
respect of a condition for which medical advice, diagnosis, care or
treatment was recommended or received within the
12
month period ending on the date on which an application for
membership was made.
”
(
My underlining for
emphasis)
.
[41]
In my view, pursuant to the guidelines set out in the above section,
there was no duty upon the
applicant to disclose a procedure which
she underwent in 2014 which was performed almost two years before her
application to Profmed.
However and most importantly, when the
applicant completed the Profmed application form, she was assisted by
Ms Brits, a representative
of Profmed. The applicant waived her
rights to privacy and allowed Ms Brits to obtain all her medical
records. Ms Brits advised
the applicant that any
affliction
that predated 12 months prior to completing the form need not be
mentioned in the form. In my opinion, Profmed is
estopped
from
relying
on the non-disclosure. Its representative made
representations
to the applicant. The applicant believed in the truth of the
representations, and she trusted Ms Brits and acted
in terms of the
representations - See
Aris
Enterprises (Finance) v Protea Assurance Company Limited
1981
(3) SA 274
(A) at 291D.
[42]
Furthermore, from the totality of the evidence, there was no duty
upon the applicant to disclose
that she had a hip arthroscopy in 2014
especially when the court considered the provisions of section 29(2)
which requires a prospective
insured to only disclose a medical
condition
that is material. There is no duty on a prospective applicant for
medical insurance in terms of the Act to disclose a condition
that is
immaterial or non-existent. In my opinion, the hip arthroscopy that
the applicant underwent was so immaterial to warrant
a cancellation
of the contract. The reliance of the Appeal Board on this ground in
dismissing the applicant’s appeal was
therefore misplaced. The
Appeal Board’s finding in my view is glaringly in conflict with
the permissive provisions of section
29A (7) of the Act.
[43]
With regard to
gastritis,
it is common cause that this condition was not disclosed by the
applicant in the application form. It is also common
cause that the
Profmed application form that the applicant signed, did not mention
this condition whereas the form provided amongst
others that it is
essential to declare all conditions /illness/symptoms, no matter how
insignificant they may seem. It also provided
that disclosure is not
limited to the example conditions listed in the form.
[44]
As contained in their letter dated 07 November 2016 addressed to the
applicant, Profmed initially
repudiated the applicant’s
contract on the basis that she failed to disclose that she suffered
from gastric ulcer. In their
formal written response to the Registrar
dated 13 December 2016, Profmed stated that the applicant had
gastroscopy and colonoscopy
for gastric ulcer. The Registrar of the
Medical Aid Scheme erroneously found that the applicant indeed
suffered from gastric ulcer.
This confusion was clarified by the
applicant when she appealed to the Council and to the Appeal Board.
The applicant
averred
in her papers that although she underwent both a gastroscopy and a
colonoscopy, she was however diagnosed with gastritis
and not with
gastric ulcers.
In
addition, she
was
not placed on any medication and did not suffer any further symptoms
after she was discharged.
The
applicant a
lso
stressed the difference between gastritis and gastric ulcers. The
applicant’s
version
in this regard was supported by a laparoscopic and vascular surgeon,
Dr Etienne Swanepoel, who confirmed that gastritis
is an irritation
and inflammation of the stomach lining and is indeed a very common
condition with about 50 per cent of the population
suffering from it.
Gastric ulcers on the other hand is an open sore in the lining of the
stomach and is indeed a more serious condition.
According to Dr
Swanepoel, the purpose of the gastroscopy and colonoscopy is merely
to ascertain and diagnose a potential medical
condition and it does
not constitute a treatment
per
se
nor does undergoing it meant that one is necessarily suffering from a
medical condition.
[45]
The Appeal Board found that the applicant was indeed suffering from
gastritis and not gastric
ulcers. It also accepted that gastritis is
relatively less serious but more common condition than gastric ulcer.
The Appeal Board
found that in terms of section 29A(2)(a) of the Act,
a medical scheme may impose a condition-specific waiting period of up
to 12
months upon a potential member or his / her dependents, except
for a condition that is covered within the Prescribed Minimum
Benefits.
It found that an uncomplicated gastritis is not covered
within the Prescribed Minimum Benefits. It concluded that
non-disclosure
of gastritis is material in that it prevented Profmed
from applying condition-specific waiting period in their risk
assessment
and risk management measures.
[46]
The Prescribed Minimum Benefits referred to by the Appeal Board are
contained in the Regulations
of the Act, and are listed in Annexure A
of the regulations. If I correctly understood the ruling of the
Appeal Board, all ailments
and conditions that are not prescribed in
the Regulations must be disclosed during application. The impression
created by this
ruling is that if the insured fails to disclose an
immaterial condition that does not appear on the list, then the
Medical Scheme
may lawfully repudiate the medical insurance. For
those reasons, the Appeal Board found that the applicant had a duty
to disclose
gastritis because gastritis is not listed as a prescribed
minimum benefit in the regulations. With respect, this ruling is
flawed
and in conflict with the prescribed provisions of section
29(2)(e) of the Act.
[47]
In my view, the provisions of section 29(2)(e) are very clear and
unambiguous. This section does
not refer or make mention of
Prescribed Minimum Benefits as a test to be invoked regarding
materiality. In terms of this section,
a Medical Scheme cannot revoke
or suspend a member’s membership or that of his/ her dependents
except on the ground of non-disclosure
of material information. In
Regent Insurance Co Ltd (supra)
the court held that the onus
is always on the insurer to prove the materiality of the
non-disclosure and that the non-disclosure
in fact induced it to
conclude the contract. It is common cause that in this case, Profmed
did not lead evidence to prove the materiality
of the alleged
non-disclosure of the gastritis and that such non-disclosure induced
it to contract with the applicant. In my view,
the Appeal Board paid
no heed to these authorities and its conclusion in this regard
represent a grave misdirection and has resulted
in the failure to act
in accordance with the correct interpretation of the section
29(2)(e). In my view, its decision must be reviewed
and set aside as
its finding was influenced by an error of law as contemplated in
section 6(2)(d) of PAJA. This leads me to the
determination of the
last issue.
Whether
to remit
the
m
atter
to the Appeal Board or to Substitute
[48]
Mr Van Reenen argued that in the event the court finds favour with
the applicant’s argument,
the matter should be remitted to the
Board for hearing. Mr Steenkamp however argued that the correct
approach for the court to
adopt in this case is to substitute its
ruling with the one contemplated in the Notice of Motion. Section
8(1) of PAJA affords
the court a wide discretion to grant any order
in judicial review that is just and equitable. In terms of section
8(1)(c)(ii)(aa)
of PAJA a court may after setting aside an
administrative action, either remit it for reconsideration by the
administrator or in
exceptional cases, may substitute the
administrative action without remitting it.
[49]
This case has been adjudicated upon by multiple forums. In my view,
to refer this matter back
to the Appeal Board will be of no
consequence. Instead, it will exacerbate incurring unnecessary costs
and the delay of justice
for the applicant. This court has all the
relevant information placed before it to substitute the decision of
the Appeal Board.
Furthermore, I am of view that nothing will be
gained if the matter is remitted to the Board for hearing especially
in the light
of the findings made above that there is only one
conclusion that should have been reached by the Appeal Board, namely
that the
applicant’s appeal should have been upheld.
ORDER
[50]
In the result, having read all the documents filed and having heard
arguments from both parties,
the following order is granted:
1.
The
Appeal Board’s ruling / order of the 25 August 2018 is hereby
reviewed and set aside.
2.
The
termination by Profmed of the applicant’s membership under
membership number 10118222, and or that of her dependents,
is
declared unlawful and is set aside.
3.
Profmed
is ordered to honour the contractual commitments vis-à-vis the
applicant and or her dependents under the policy that
governs the
said membership.
4.
Profmed
is ordered to pay the costs of suits, including the costs attendant
to the employment of counsel.
LEKHULENI
AJ
ACTING
JUDGE OF THE HIGH COURT
Appearances
:
For
the Applicants:
Advocate J.P. Steenkamp
Instructed by:
Carlo Swanepoel Attorneys
(Ref: Mr. C.
Swanepoel)
For
the 1
st
to 3
rd
Respondents:
Abide the Court’s decision
For
the 4
th
Respondent:
Advocate
D. Van Reenen
Instructed by:
Knowles Husain Lindsay Inc.
(Ref: Mr. N.
Taitz)