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[2021] ZAGPPHC 357
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Ramba and Another v Government Employees Medical Scheme and Another (88884/2016) [2021] ZAGPPHC 357 (17 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH
COURT OF SOUTH
AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO:
88884/2016
DOH
5 MAY 2021
NOT
REPORTABLE
NOT
OF INTEREST TO OTHERS
REVISED
In
the matter of
JOHANNES
RAMOBA FIRST
PLAINTIF
KGAKGAMOTSO
MOKOKA
SECOND
PLAINTIFF
and
THE
GOVERNMENT EMPLOYEES MEDICAL SHCEME
FIRST DEFENDANT
METROPOLITAN
HEALTH GROUP
SECOND DEFENDANT
JUDGMENT
THIS
JUDGMENT
HAS
BEEN HANDED
DOWN
REMOTELY
AND
SHALL
BE CIRCULATED
TO THE
PARTIES
BY WAY
OF EMAIL. ITS DATE AND TIME
OF
HAND DOWN SHALL
BE DEEMED TO
BE 17 MAY
2021
Bam
AJ
1.
Plaintiffs filed an amended declaration (the declaration) in
pursuance
of a monetary judgment against first and second defendants
jointly and severally, the one paying the other to be absolved, in
respect
of alleged supplies of pharmaceutical drugs and services to
members of first defendant and the dependents of those members .
Second
defendant filed an exception to the declaration on the basis
that it lacks the necessary averments to sustain a cause of action
against it (second defendant).
2.
Second
defendant
avers that
it is an
accredited
administrator
as set
out
in section
58 of
the
Medical
Schemes
Act
[1]
,
(the Act)
,
and
as
the
plaintiffs'
claims
are
based on
section 59
(2) of
the
Act
,
which deals
with
liability of
a medical
scheme
to make
payment to a supplier of services within 30
days of
receipt of a valid claim,
the
declaration as it currently stands discloses no cause of action
against it. The declaration
fails
to
establish
a
legal
nexus
between the
plaintiffs'
claims
and
second
defendant.
Based
on
the
aforementioned
grounds
, second
defendant
states
that the
plaintiffs'
claims
cannot
succeed
against
it
as
there
are
no
provisions
in the Act
that
provide for
the liability of an administrator for supplies
and
services
rendered to
members of
the first
defendant.
Second
defendant adds that the overall duty to ensure that the operation and
administration
of a
medical scheme
is
conducted lawfully
rests
with
the
board
of
trustees of
a
scheme
.
Second
defendant
asks
this court
to
uphold
the exception with
costs
.
3.
Before I consider the plaintiffs' response , there is some dispute
between the parties as to whether this ground of exception had been
previously determined . Both parties agree that it had been
raised,
but plaintiff suggests that it had not been determined. Owing to the
view I take of the matter, I do not deal with this
issue.
4.
The plaintiffs submitted that their declaration must be read as a
whole along with the relevant provisions of the Act as cited in the
declaration . As a starting point, plaintiffs refer to the
definition
section of the Act which defines an administrator as: 'any person who
has been accredited by the Council for Medical
Schemes (the Council)
in terms of section 58 ,
and shall where
any
obligation
has been
placed on a
medical
scheme
in
terms
of
this
Act,
also
mean
a
medical
scheme
(emphasis mine).'
5.
They state that pursuant to the provisions of sections 59 (1), read
with 59 (2) of the Act, the plaintiffs' pharmacies were entitled to
render supplies and services to the first defendant's members
and or
their beneficiaries. They also state that the second defendant has
been approved by the Council to provide,
inter
alia
,
membership and claims management services as well
as financial and operational information through its administrative
agreement
with the first defendant. As such, second defendant is
responsible for,
inter alia
,
receiving,
processing and paying claims made by suppliers of relevant health
services rendered to members of first defendant.
6.
. Plaintiffs point to the words ,
'and shall, where
any
obligation
has been
placed on a
medical scheme
in terms of this Act,
mean
a
medical scheme'
and submit that the plain
mischief in broadening the definition of an administrator , as is
apparent from the words set out in bold
above , was to ensure that
where an obligation is placed on a scheme in terms of the Act , the
administrator shall be deemed to
be a scheme, otherwise the
additional words would be rendered nugatory. Plaintiffs conclude that
in terms of the provisions of
section 59 the Act , read with the
relevant regulations, the defendants were obliged to pay the amounts
claimed, subject to the
schemes rules and the members' benefits, to
those members to whom services were rendered. Where payment was not
so made, [to the
members in other words] it was to be made to the
plaintiffs' pharmacies , which rendered the health services , within
30 days after
the day of receipt of the claims by the first and or
second defendant. They asked that this court dismiss the
exception with
costs.
Discussion
7.
A cursory
glance at chapter 6 of the relevant regulations
[2]
,
which
deals with administrators ,
read
with
section
58
of
the
Act
,
conveys
the
rigorous
and
intrusive nature
of
the
process
that
aspirant
administrators
of
medical
schemes
must
subject
themselves
to. By
way
of example.
in
terms
of
regulation
17, an
application
for
accreditation
as
administrator
must be
accompanied
by,
inter
alia,
a
report
prepared
by the
auditor
indicating
whether
or
not the
administrator
's system
of
financial control
is
adequate
for
the
size
and
complexity
of
the
medical
scheme
to
be
administered
. The
application
must
also
include
a
copy
of
the
proposed
administration
agreement
between the administrator and
the medical
scheme
concerned
.
The council
must
satisfy
itself that
the
applicant
administrator
meets
the
requirements
of fit
and
proper and
whether
it
has
the
resource
s
,
systems
,
skills
and
capacity
to
render
the
administration
services
. The
administrator
must
further
be
financially
sound
.
In terms
of
regulation
18,
prior to
commencing
activities
as
administrator
, the
medical
scheme
must
enter into
a
written
agreement
with
the
administrator
in
which
the
terms
and
conditions
of the
administration
of the
medical
scheme
are
recorded.
The
agreement
must
provide
for,
inter
alia,
the
scope
and
duties
of the
administrator
.
It must
further
provide
that
the
administrator
,
on
behalf
of the
medical
scheme
,
must
administer
the
business of a medical scheme
in
accordance
with the
Act
and the
rules of
the medical
scheme.
It should
also
provide for
the
basis
on which
the
administr
a
tor
is to
be
remunerated
. As
is apparent
from
chapter
6,
administrators
must
continue to meet these stringent
requirements
each time
they
apply
for
accreditation
after
24
month
s
.
8.
The real
nature
and
extent
of
the
relationship between a
medical
scheme and
an
administrator
is
elegantly
captured in
this
extract of
the SCA
in
Sechaba
Medical Solutions&
Others
v
Sekete
&
Others
[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 .'
9.
It is true that , apart from those schemes where a decision has been
made to handle the administration internally, undoubtedly informed
not only by the schemes' financial muscle but the know- how,
and the
ability to skillfully manage risk, the daily fulfillment of the legal
obligations of a medical scheme is achieved through
independent
administrators such as the second defendant and a few others.
Ordinarily, and this the court can take judicial notice
of, as the
information is publicly available in the case of those schemes that
are administered through intermediaries , it is
the administrator
that discharges the obligations of a medical scheme , including those
set out in regulations 5 and 6 and in section
59 .
10.1
note the submissions
by second
respondent
that overall, the duty to ensure that the operation
and
administration
of
the
medical
scheme
is
conducted
lawfully
rests with
the
scheme's
board
of
trustees.
It
is
true
that
the
board
of
trustees of
a
medical
scheme
is
accountable
for
the
overall
governance
of
a
scheme,
but two
points
must be
born
in
mind.
First,
trustees
are not
day
to
day
employees
of
a
scheme and
neither do
they
interact
with providers and pay claims.
Second,
the
submission cannot
take
away
the
reality
that
administrators
are
the
heartbeat
of
many
schemes
that
are
managed
through
intermediaries
as
mentioned
by
the
court
in
Sechaba
,
to the
extent
that
if one
were
to take
away
the
administrator
,
it would
spell
disaster
for most
schemes
.
These
comments
should not
be
read
to
mean
the
presence
of
an
administrator
makes the
conduct
of
a
medical
schem
e
's
business
perfect.
For further
insight,
into the
role of
administrators, one
need not go
further
than the
records of
the Section 59 Investigation, including the Commissio
n
's
Interim Report which was
produced
for and on behalf of the Council
[4]
.
Conclusion
11.
I accordingly conclude that the exception must fail.
Order
12.The
exception is dismissed with costs.
NN BAM
ACTING
JUDGE
OF THE
HIGH COURT,
PRETORIA
APPEARANCES:
PLAINTIFFS'
COUNSEL:
Adv
Wessels
SC &
Adv
BDK
Attorneys
Instructed
by: %
Jacobsen Levy Inc
Orient
Street
Pretoria
DEFENDANT'S
COUNSEL
: Adv
Magan
Instructed
by: Norton
Rose Fulbright South
African Inc.
% Macintosh Cross
Farquharson
Arcadia , Pretoria
DATE OF HEARING: 5 MAY
2021
DATE
OF JUDGMENT:
17 MAY 2021
[1]
Act 131 of 1998 as amended
[2]
GNR.1262
of
20 October
1999, as
amended
[3]
(216/2014)
[2015]
ZASCA
8
(11
March
2015)
at
paragraph
6
[4]
https://cmsinvestigation
.org.za