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[2015] ZASCA 8
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Sechaba Medical Solutions and Others v Sekete and Others (216/2014) [2015] ZASCA 8 (11 March 2015)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 216/2014
In
the matter between:
SECHABA
MEDICAL SOLUTIONS (PTY)
LTD
.......................................................
First
Appellant
JAN
JOHANNES LOUIS
SPIES
...............................................................................
Second
Appellant
GEN-HEALTH
MEDICAL SCHEME
(IN
LIQUIDATION)
......................................................................................................
Third
Appellant
and
WILLIAM
SEKETE
....................................................................................................
First
Respondent
MASTER
OF THE HIGH
COURT
........................................................................
Second
Respondent
LIFE
HEALTHCARE GROUP (PTY)
LTD
............................................................
Third
Respondent
EMH
OPERATING COMPANY (PTY)
LTD
........................................................
Fourth
Respondent
ANTHONY
PIETER BROWN
NO
............................................................................
Fifth
Respondent
EUGENE
PELSER
NO
...............................................................................................
Sixth
Respondent
JOHAN
CHRISTOFFEL JOUBERT
NO
.............................................................
Seventh
Respondent
PETRUS
JOHANNES OOSTHUIZEN
NO
...........................................................
Eighth
Respondent
KLAAS
CHRISTIAAN VAN DER WALT
NO
.........................................................
Ninth
Respondent
EDWARD
LAWRENCE GURNELL
NO
.................................................................
Tenth
Respondent
HENDA
LOOTS
NO
............................................................................................
Eleventh Respondent
(in
their capacities as trustees of the LCM TRUST)
PEGLERAE
HOSPITAL (PTY)
LTD
....................................................................
Twelfth
Respondent
GLYNNWOOD
HOSPITAL OPERATING
COMPANY
(PTY)
LTD
.....................................................................................
Thirteenth
Respondent
WESTCOST
PRIVATE HOSPITAL (PTY)
LTD
...........................................
Fourteenth
Respondent
PRETORIA
NORTH SAME DAY SURGICAL
CENTRE
PARTNERSHIP
...................................................................................
Fifteenth
Respondent
MIDDELBURG
HOSPITAL
LTD
......................................................................
Sixteenth
Respondent
LIFE
COSMOS HOSPITAL (PTY)
LTD
......................................................
Seventeenth
Respondent
ISIVIVANA
HEALTH (PTY)
LTD
...................................................................
Eighteenth
Respondent
LIFE
BIRCHMED SAME DAY SURGICAL
CENTRE
PARTNERSHIP
................................................................................
Nineteenth
Respondent
WILGEHEUWEL
HOSPITAL (PTY)
LTD
......................................................
Twentieth
Respondent
WILGERS
HOSPITAL
LTD
..........................................................................
Twenty-first
Respondent
METROPOL
HOSPITALS (PTY)
LTD
....................................................
Twenty-second
Respondent
FLOHOC
INVESTMENTS (PTY)
LTD
......................................................
Twenty-third
Respondent
BORDER
HOSPITALS (PTY)
LTD
..........................................................
Twenty-fourth
Respondent
LIFE
BAYVIEW HOSPITAL (PTY)
LTD
....................................................
Twenty-fifth
Respondent
ROBINSON
PRIVATE HOSPITAL
HOLDINGS
(PTY)
LTD
...............................................................................
Twenty-sixth Respondent
ST
MARY’S PRIVATE HOSPITAL
(PTY)
LTD
..................................................................................................
Twenty-seventh
Respondent
Neutral
citation:
Sechaba Medical Solutions
& others v Sekete & others
(216/2014)
[2015] ZASCA 8
(11 March 2015)
Coram:
NAVSA ADP, SHONGWE and WALLIS JJA and DAMBUZA and
MAYAT AJJA.
Heard
:
27 February 2015
Delivered
:
11 March 2015
Summary:
Medical scheme – liquidation –
proof of claims – claim by healthcare provider – whether
claim lies against
medical scheme – authorisation of treatment
by medical scheme – whether creates a contract between
healthcare provider
and medical scheme – ss 26(1)
(b)
and 59 of
Medical Schemes Act 131
of 1998
– effect.
ORDER
On
appeal from:
North Gauteng
High
Court (Murphy J sitting as court of first instance):
1.
The appeal is dismissed with costs, such costs to be paid by the
first appellant and the liquidators jointly and severally, the
one
paying the other to be absolved.
2.
No costs in relation to the appeal shall be
recovered or paid out of the assets of Gen-Health Medical Scheme.
JUDGMENT
Wallis
JA (Navsa DP, Shongwe JA and Dambuza and Mayat AJJA concurring)
[1]
Gen-Health Medical Scheme (Gen-Health), the
third appellant, was a medical scheme with some 13 000 members
duly registered
in terms of the Medical Schemes Act 131 of 1998 (the
Act). On 12 October 2010 it was placed in final liquidation. Prior to
that
it had been under curatorship since at least 2008. The first
appellant, Sechaba Medical Solutions (Pty) Ltd (Sechaba), was the
administrator in respect of Gen-Health. After Gen-Health’s
liquidation, and pursuant to a court order obtained by the
liquidator,
Sechaba was appointed to compromise or admit claims by
Gen-Health’s members against the scheme in liquidation. Claims
totalling
some R28 million had been proved in the liquidation
pursuant to its efforts in this regard. Although Mr Spies is
reflected
in the heading to this judgment as the second appellant he
played no role in the litigation and had settled his dispute with the
third respondent.
[2]
The third respondent, Life Healthcare Group
(Pty) Ltd (Life Healthcare) represents 18 medical facilities and
hospitals that rendered
services to Gen-Health’s members prior
to its liquidation. On its own and their behalves it submitted 19
claims totalling
in the aggregate a little over R5 million for
proof at a special meeting of creditors on 20 February 2012. In due
course the
first respondent, Mr Sekete, an assistant master of the
high court, admitted those claims as proved claims in the
liquidation.
That prompted Sechaba and Gen-Health to bring review
proceedings to challenge his decision. The application failed before
Murphy
J in the high court and this appeal is with his leave. Neither
the Master nor Mr Sekete have played any part in the appeal.
[3]
Originally
the application was pursued on a variety of grounds. Sechaba and
Gen-Health said that Mr Sekete committed a number of
irregularities
in relation to the conduct of meetings of creditors and the admission
of Life Healthcare’s claim. His actions
were said to be
contrary to the provisions of the Insolvency Act 24 of 1936
[1]
(the
Insolvency Act) in
regard to the conduct of meetings of
creditors and to constitute unlawful administrative action in terms
of PAJA.
[2]
None of these
grounds were pursued in the high court. Instead the proceedings were
treated as a review in terms of
s 151
of the
Insolvency Act. Sechaba
and Gen-Health contended that Mr Sekete should not have accepted Life
Healthcare’s claim as a proved claim on the ground
that the
affidavit in proof of the claim failed to disclose any lawful basis
for a claim by Life Healthcare against Gen-Health.
[4]
Before turning to the merits, I must
examine the entitlement of Sechaba to institute these proceedings,
whether as the primary applicant
or at all. Its involvement in the
liquidation arose from a court order authorising it to prepare and
submit on behalf of members
of the scheme claims in liquidation in
respect of their unresolved claims against Gen-Health. It had
discharged that duty and the
claims submitted on behalf of members
had been admitted to proof. Its interest thereafter is unclear. Yet
it was the first applicant
in the review and the first appellant in
this appeal. It claimed to represent the members on whose behalf it
had submitted claims,
but it disclosed no basis for doing so and, on
the face of it, its opposition to the admission of Life Healthcare’s
claims
was not in the interests of those members. Their interest was
for Gen-Health to provide the benefits to which they had been
entitled
by virtue of their membership of the scheme and the
contributions they had made. To the extent that Life Healthcare’s
claims
were satisfied their obligations to Life Healthcare would be
pro tanto
discharged.
Resisting Life Healthcare’s claims meant leaving members to pay
their own medical bills to Life Healthcare in
full, and to do so
before receiving whatever dividend would be paid by Gen-Health. A far
more sensible solution for members of
Gen-Health would have been to
arrive at a situation in the liquidation where the maximum amount was
paid to Life Healthcare leaving
them with as little as possible to
pay over and above that amount.
[5]
Sechaba
had no interest of its own for instituting the review proceedings.
Counsel could furnish no explanation for Sechaba’s
involvement
in this litigation, much less for the clear impression that it was
the driving force behind it. Over and above that,
Mr van der
Westhuizen, one of the liquidators, deposed to the founding
affidavit, without any affidavit from a representative of
Sechaba.
This is quite extraordinary. As pointed out in the only text on
the law governing medical schemes in South Africa:
[3]
‘
The
relationship between a scheme and its administrator is usually so
close that without its administrator, the scheme cannot fulfil
its
obligations to its members or in any other manner conduct business as
a scheme. In practice, it is the administrator that conducts
the
daily affairs of a scheme and the acts or omissions of the
administrator are the acts and omissions of the scheme. A medical
scheme does not have its own employees to pay claims and process
membership applications and changes in beneficiaries. It does
not
have its own information technology systems, financial reporting and
management systems and human resources … Most medical
schemes
are little more than paper entities with a principal officer, a board
of trustees and a bank account, and therefore they
are literally
dependent on their administrators for their daily operations.’
[6]
Mr van der Westhuizen’s affidavit was
extremely cryptic as to the manner in which Gen-Health had dealt with
claims by healthcare
providers prior to its liquidation. He did not
say whether it received claims directly from those healthcare
providers or whether,
as many medical schemes do, it had facilities
for the healthcare providers to submit claims directly to it by
electronic means,
which claims would be processed through its
computer systems. He made no mention of its previous dealings with
Life Healthcare.
This was in the face of evidence that the latter
would contact its staff telephonically on admission of a patient to
obtain pre-authorisation
for the rendering of services to that
patient. The statement that these allegations were too general to
attract a response was
simply evasive.
[7]
The liquidator had standing to challenge
the decision by the assistant master to admit Life Healthcare’s
claims to proof.
However, his reasons for doing so are obscure and do
not appear from the affidavits, which were principally directed at
attacking
the manner in which the assistant master dealt with the
claims. In argument it was suggested that the liquidators were
concerned
about payments being duplicated by being made to both Life
Healthcare and members in respect of the same claims. It was also
said
that the liquidators were concerned whether the services had in
fact been rendered and whether the correct tariffs had been charged.
But Sechaba did not say that there would be any difficulty in
examining the claims by Life Healthcare and correlating them with
those of individual members. Nor did it say that there would be any
difficulty in verifying those claims, whether as to validity
in terms
of the scheme’s rules, or as to quantum. Counsel could not
refute the suggestion from the bench that it would have
been a
relatively straightforward practical matter to compare Life
Healthcare’s claims with Gen-Health’s records and
to
match the claims of members with those submitted by Life Healthcare.
Where claims overlapped they could be treated as one for
the purpose
of determining the dividend payable on the global claim and paying it
to the party entitled thereto. In any event this
type of logistical
issue was not raised as the reason for instituting review
proceedings.
[8]
Against that background it is necessary to
express disquiet at the fact that time, better spent on winding up
the affairs of the
scheme, has been wasted on this litigation, which
does not appear to benefit the people most disadvantaged by
Gen-Health’s
liquidation, namely its members. No other creditor
has come forward in opposition to the admission to proof of Life
Healthcare’s
claims. What is more, the admission of the claims
was merely for the purposes of proof. After investigation the
liquidator could
have approached the Master to reject them if a basis
for rejecting them had emerged. Having said that I turn to deal with
the merits
of the litigation.
[9]
A
review of a decision by the Master in terms of
s 151
of the
Insolvency Act is
the broadest kind of review, where the court enters
upon the question decided by the functionary and determines it
afresh.
[4]
The question before
Mr Sekete was whether Life Healthcare had provided proof of a valid
claim. It must be remembered that, in deciding
that it had, Mr Sekete
was not determining the validity of the claim. The claim still needed
to be scrutinised by the liquidators,
who could, if not satisfied
with it, ask the Master to reconsider it.
[5]
Thereafter both Gen-Health and any other interested person would
still be entitled on proper grounds to object to the liquidation
and
distribution account, including Life Healthcare’s claim,
[6]
and, if not satisfied with the Master’s response to their
objection, could challenge that decision before the high court.
[7]
[10]
It
is no doubt for that reason that the cases say that all that a
creditor need do, in submitting a claim to proof, is to provide
proof
on a prima facie basis that it has a valid claim. The matter was
dealt with by Roper J
[8]
when he
said:
‘
The
admission of a claim by the presiding officer is in a sense only
provisional, because under
sec. 45(3)
the trustee may dispute the
claim notwithstanding its admission by the presiding officer.
Furthermore, the presiding officer does
not adjudicate upon the claim
as if he were a Court of Law; he is not required to examine the claim
too critically (
Hassim Moti & Co v
Insolvent Estate Joosub & Co
.,
1927
T.P.D. 778
at p. 781), or to require more than
prima
facie
proof (
Aspeling
v Hoffman's Trustee
,
1917 T.P.D. 305
at
p. 307). It is by no means inconceivable that he might be satisfied,
on the evidence advanced by the creditor, that the latter
had a
prima
facie
case, or even more than such a
case, notwithstanding the declared opposition of the trustee to the
claim.’
The
proper approach is to decide whether the claimant has disclosed
sufficiently the essential particulars of the claim being advanced.
Technical objections are not lightly upheld.
[9]
Even if the claim is admitted as a proved claim at the meeting of
creditors it must then be scrutinised by the liquidator in terms
of
s 45(2)
of the
Insolvency Act and
if the liquidator disputes the
claim a report must be made to the Master, who will either confirm or
alter the previous decision
admitting the claim as a proved claim. If
the Master confirms that decision then the liquidator must include
the claim in the liquidation
and distribution account, but the
account is subject to objection by the insolvent – in this case
– Gen-Health, and
any other interested person.
[10]
[11]
Under
s 44(4)
of the
Insolvency Act
Life
Healthcare’s claim had to be proved by way of an affidavit
in a form corresponding substantially with Form C and setting out
the
nature and particulars of its claim. The affidavit stated that Life
Healthcare operated a number of divisions and subsidiaries
and
through these it operated medical facilities and hospitals to which
patients were admitted for treatment. The affidavit went
on as
follows:
‘
5.
In respect of each division … the patients admitted for health
care signed admission forms in terms of which they:
5.1
recorded that their medical aid to which they belonged was
Gen-Health;
5.2
indicated which form of cover they had with Gen-Health;
5.3
warranted that they were a “
currently, paid-up member of
Gen-Health”
and furthermore authorised the creditor to
submit its statement of account to Gen-Health for payment on his/her
behalf.
6.
It is submitted that the very purpose of a party holding medical aid
cover is so that when they are admitted to any medical facility
of
the creditor for care and medical treatment, the costs associated
with such medical treatment and particularly the medical facility’s
costs in providing such treatment are insured by the medical aid
concerned.
7.
If regard be had to section 59 of the Act, a medical scheme such as
Gen-Health could, subject to the provisions of the Act and
the rules
of the medical scheme concerned, pay to a member or a supplier of a
service any benefit owing to that member or supplier
of the service
within 30 days after the day on which the claim in respect of the
benefit was received by the medical scheme.
8.
Accordingly, and by virtue of the provisions of the Act and the fact
that each of the patients who received medical treatment
from the
medical facilities of the creditor … were paid-up members of
Gen-Health, it is submitted that the creditor has
the right to claim
payment of the monies due, owing and payable to it consequent upon
the medical services rendered from Gen-Health.’
[12]
Sechaba and Gen-Health argue that the claim
advanced by Life Healthcare was based on the provisions of s 59
of the Act and
that the section does not entitle a healthcare
provider to claim directly from its patient’s medical scheme,
even if the
patient authorises the healthcare provider to submit its
account directly to the medical scheme. Life Healthcare disputes this
contention. In addition it had another string to its bow. In its
answering affidavit filed in the review it said:
‘
The
claims submitted by and on behalf of the Life Group are premised on
medical and hospital services that were rendered by the
Life Group to
members of Gen-Health prior to its liquidation. Those services are
rendered, firstly, upon a declaration by the member
concerned that he
is a fully paid up member of a medical scheme (in this case
Gen-Health) and, secondly an authorisation by Gen-Health
itself (via
its administrators) that the services may be provided and will be
paid for by Gen-Health. These authorisations take
the form of
telephonic confirmation of various codes that identify the service or
procedure to be undertaken by the member concerned.’
Neither
Sechaba, which was the claims administrator for Gen-Health, nor
Gen-Health itself, disputed these allegations. Life Healthcare
argued
that on these facts their claims were underpinned by contracts
concluded, in relation to each patient and member of Gen-Health,
between Life Healthcare and Gen-Health, in terms of which the latter
accepted liability for and agreed to pay for the services
rendered to
its members.
[13]
Murphy J upheld that submission and he was
correct to do so. The whole purpose of a healthcare provider
seeking pre-authorisation
from a medical scheme before rendering
services to a patient is to obtain the assurance that the medical
scheme of which that person
is a member will pay its account once the
treatment has been rendered. Gen-Health’s own schedule of
benefits, as set out
in various of the documents in the papers,
showed that pre-authorisation was a requirement for many forms of
procedure and particularly
a requirement in respect of services
rendered in hospitals and clinics. It is the hospital or clinic that
seeks this authorisation
and it does so in its own interests, not
those of the patient. That is what was said in the answering
affidavit and that alone
sufficed to establish a contractual
foundation for these claims.
[14]
In
my view, Hugo J correctly described the consequences of a healthcare
provider seeking and obtaining authorisation from a medical
scheme to
render services to a member of that scheme, when he said in
Margate
Clinic
:
[11]
‘
When
the scheme gives the hospital an authorisation to treat, that
authorisation must clearly be limited by the scheme's own rules.
What
the scheme undertakes to do as against the hospital is to comply with
its contractual obligation as against its member. …
The upshot
of this is that what the scheme undertakes to do, is to pay the
hospital in accordance with the applicable tariff, provided
it is
bound to do so as against its member.’
[15]
The
review had to fail on that simple ground alone, but there was a more
fundamental reason why it had to fail, flowing from s 26(1)
(b)
of the Act dealing with the relationship between a medical scheme and
its members and the obligations assumed by the scheme towards
its
members. This spells out the obligations that a medical scheme bears
towards its members. It provides that it shall ‘assume
liability for and guarantee the benefits offered to its members and
their dependants in terms of its rules’. This makes it
clear
that the liability of the medical scheme does not exist in
substitution for the liability of the member, but as an adjunct
to
it.
[12]
But a meaning must be
attached to the statement that the scheme ‘assumes liability
for’ the benefits to which the member
is entitled.
[16]
The benefits to which members of a medical scheme are entitled are
the benefits set out in its published schedule of benefits.
The
scheme assumes liability for those benefits. The effect of the
appellants’ argument is that it merely assumes a liability
to
reimburse the member for the amount of such benefit, once quantified.
In other words, adopting an expression applicable to some
insurance
policies, it is a ‘pay to be paid’ form of insurance. On
the other hand, Life Healthcare’s argument
is that the
obligation goes further and is an obligation to pay the healthcare
provider to the full extent of the benefit. The
undertaking given,
and statutory obligation owed, to its member is that it will pay the
healthcare provider itself, not that it
will reimburse the member for
what the member has paid. On that argument the ‘benefit’
referred to in s 26(1)
(b)
is the act of discharging the obligation incurred by the member to
the healthcare provider when receiving medical treatment. When
a
medical scheme authorises the provision of services, on enquiry by a
service provider, and undertakes to pay the service provider
it is
discharging its obligation to its member to provide the benefits set
out in its schedule of benefits .
[17]
A reading of Gen-Health’s schedule of
benefits makes it clear that the benefits it provided were not
restricted to refunding
the member with the amount of the benefit,
leaving the member to pay the healthcare provider. The benefits were
that the scheme
would itself pay the healthcare provider to the
extent reflected in the schedule of benefits. That is apparent from
those items
dealing with situations where the cost of the service
exceeded the amount of the benefit. The schedule said that in that
event
the member would ‘co-pay’ the difference between
the cost of the service and the stipulated benefit. If the scheme
were not itself going to pay the service provider the reference to
‘co-pay’ would not make sense.
[18]
To understand the nature of a benefit
conferred on a member under a medical scheme as being primarily to
pay the member’s
health service providers for their services,
is reinforced by the fact that in addition to assuming liability for
the benefit the
scheme must ‘guarantee’ the benefit. The
expression ‘guarantee’ does not make sense in a situation
where
the scheme’s only obligation is to reimburse its member
for the amount of any benefit. What then would it be guaranteeing?
A
guarantee is an obligation given by one party on behalf of another to
discharge that other’s liability to a third party.
And that
seems to me precisely what a medical scheme is obliged to do. It is
obliged to guarantee to its members that it will discharge,
to the
extent of the benefits set out in the schedule of benefits, their
liability to the healthcare providers who render services
to the
members.
[19]
This
approach accords with the ordinary way in which medical schemes
function in this country. The member consults a healthcare
provider
and the latter submits an account to the member’s medical
scheme, which pays the healthcare provider.
[13]
Sometimes it will pay the account in full and debit its member with
any shortfall and sometimes it will pay the benefit only, leaving
the
healthcare provider to recover the balance from the member.
[14]
In either event it assumes liability for and guarantees the benefit
by paying the healthcare provider.
[20]
Construing
the obligations of medical schemes in that way constrains them to
function in a manner that is consonant with the social
realities of
this country. By far the majority of people are not in a position,
after paying their medical aid subscriptions, to
fund medical
treatment from their other resources and seek reimbursement from
their medical scheme. They are dependent for their
ability to obtain
such treatment on the fact that the cost will be borne by the medical
scheme. And that is reinforced by the fact
that the schemes enter
into agreements with doctors, pharmacies, clinics and other
healthcare providers to establish preferred
provider networks and
other systems for the provision of medical services.
[15]
Gen-Health did this as appears from its schedule of benefits, which
refers to its ‘Preferred Provider Network’ and
its
‘Managed Care Provider’. The founding affidavit described
these arrangements as ‘Designated Service Provider
Agreements’
and accepted that services rendered by service providers under such
agreements would be paid for directly by
Gen-Health.
[21]
But a construction of s 26(1)
(b)
is not the only basis for reaching the conclusion that medical
schemes are obliged to pay their members’ medical bills in
accordance with the scheme benefits. Sections 59(1) and (2) of the
Act are explicitly to this effect and, in addition, make it
clear
that this obligation is one owed to the service providers themselves.
They read:
‘
CHARGES
BY SUPPLIERS OF SERVICE
(1)
A supplier of a service who has rendered any service to a beneficiary
in terms of which an account has been rendered, shall
notwithstanding
the provisions of any other law, furnish to the member concerned an
account or statement reflecting such particulars
as may be
prescribed.
(2)
A medical scheme shall, in the case where an account has been
rendered, subject to the provisions of this Act and the rules
of the
medical scheme concerned, pay to a member or a supplier of service,
any benefit owing to that member or supplier of service
within 30
days after the day on which the claim in respect of such benefit was
received by the medical scheme.’
[22]
Section 59(1) recognises that a healthcare
service provider will ordinarily render its account directly to the
medical scheme. That
is why it obliges the service provider, in
addition, to furnish an account or statement directly to the member.
This it does ‘notwithstanding
the provisions of any other law’.
One law that springs to mind immediately is the provisions of
s 20(1)
(i)
of the Value-Added Tax Act 89 of 1991, which prohibit a supplier from
issuing more than one tax invoice for each taxable supply.
The
medical scheme will want such an invoice, as the VAT payable to the
service provider will then be included as input tax in
its VAT
returns. So the second invoice issued to the patient is issued
notwithstanding the provisions of that other law. But that
in turn
indicates that the medical scheme is liable to pay the service
provider.
[23]
Section 59(2) of the Act expressly
recognises that the medical scheme may pay the service provider
directly. It was submitted that
it was only obliged to do so when the
service provider was party to a designated service provider
agreement. However, there is
nothing in the language or the context
of the section that warrants us reading such a limitation into it.
The section says that
what is payable is ‘any benefit owing to
that member or supplier of service’. It is plain therefore that
a benefit
may be owing to the service provider. That can only be
because the claim of the service provider arose in circumstances
where the
service provider was entitled to advance that claim against
the medical scheme and the scheme was obliged to pay it. A claim
cannot
be owed if the party that owes it is not obliged to pay it.
[24]
The shift in language between s 59(1)
and s 59(2) is a helpful pointer to this being the correct
interpretation of this
section. Section 59(1) refers to the account
or statement of the service provider. But s 59(2) says that
where an account
has been rendered it is the benefit that is payable,
not the account. That in turn refers back to the benefit mentioned in
s 26(1)
(b)
of the Act, for which the scheme assumes liability and payment of
which it guarantees.
[25]
The high court thought that the effect of
s 59(2) was to give the medical scheme a choice between, paying
the amount of the
benefit to the member, or paying it to the service
provider. But if the benefit is owing to the service provider, which
is what
the section says, I fail to see on what basis it can be said
that the medical scheme is not obliged to pay the service provider.
To my mind that is in accordance with the relationship between the
member and the medical scheme. Scheme members are not primarily
expecting to receive a sum of money from the scheme, as a result of
their having sought medical treatment. They become members
in the
expectation that the scheme will pay their medical bills to the
extent of the benefits for which they contract. It seems
to me that
when a member obtains medical services and arranges for the service
provider to submit their account to the medical
scheme, they are
authorising the medical scheme to pay the service provider and not
the member. The position is different where
the member pays the
service provider directly and seeks reimbursement. That is the
alternative contemplated by s 59(2), namely
payment to the
member. Again this reflects common practice in the industry. Where a
member seeks reimbursement of the account of
a service provider the
medical scheme will not ordinarily sanction such payment without
receiving proof that the service provider
has been paid.
[26]
We
were referred in argument to the provisions of regulations 5 and 6 of
the regulations made under the Act.
[16]
These are the regulations dealing with the rendering of accounts and
the manner of payment of benefits. I do not intend to set
them out or
canvass them in any detail. It suffices to say that they entirely
support the exposition of the legal obligations of
a medical scheme
set out above.
[27]
For those reasons I am satisfied that the
appeal must fail. I make the following order:
1.
The appeal is dismissed with costs, such costs to be paid by the
first appellant and the liquidators jointly and severally, the
one
paying the other to be absolved.
2.
No costs in relation to the appeal shall be
recovered or paid out of the assets of Gen-Health Medical Scheme.
M J D WALLIS
JUDGE
OF APPEAL
Appearances
For
appellants: B H Swart SC
Instructed
by:
Jaco
Roos Attorneys, Pretoria
E
G Cooper Majiedt Inc, Bloemfontein
For
third to twenty-seventh respondents: M A Chohan SC
Instructed
by:
Werksmans
Attorneys, Johannesburg
Symington
& de Kok, Bloemfontein
[1]
These provisions are applicable to the liquidation of Gen-Health by
virtue of the provisions of s 53 of the Act read with
s 339
of the Companies Act 61 of 1973.
[2]
The
Promotion of Administrative Justice Act 3 of 2000
.
[3]
D
Pearmain
The
Law of Medical Schemes in South Africa
(Loose-leaf, Original Service, 2008) para 8.3.1, pp8-5 to 8-6.
[4]
Nel
and Another NNO v The Master (Absa Bank Ltd and Others Intervening)
2005
(1) SA 276
(SCA) paras 22 and 23.
[5]
Section
45
of the
Insolvency Act.
[6
]
Section 111(1)
of the
Insolvency Act.
[7
]
Section 111(2)
of the
Insolvency Act.
[8
]
Cachalia
v De Klerk NO and Benjamin NO
1952
(4) SA 672
(T) at 675E-F. See also
Marendez
v Smuts
1966
(4) SA 66
(T) at 72 D;
Rabinowitz
v De Beer NO
1983
(4) SA 410
(T) at 412E.
[9]
Hassim
Moti & Co v Insolvent Estate Joosub & Co
1927 TPD 778
at 781.
[10]
Section 111
of the
Insolvency Act.
[11
]
Margate
Clinic (Pty) Ltd v Genesis Medical Scheme
2007
(4) SA 639
(D) at 642E.
[12]
According to
D
Pearmain, op cit, para 7.1, p 7-2 there can be contractual
relationships between healthcare providers and medical schemes
that
release the member from any liability to the healthcare provider,
but these are not the norm.
[13]
Pearmain, op cit, para 7.1, p 7-2.
[14]
Pearmain
op cit, para 7.11, p 7-44 says that some medical schemes will not
pay any claim in excess of the tariff in the schedule
of benefits
but will pay the member the amount of the tariff benefit. Whether
that is permissible is not a question that arises
in this case.
[15]
D Pearmain, op cit, para 7.3, pp 7-6 to 7-7 describes a variety of
such relationships.
[16]
Medical Schemes Act Regulations
, GN R1262, GG 20566, 20 October
1999.