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[2016] ZAFSHC 223
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Hospital Association of South Africa NPC v MEC for Health for the Free State Province (A45/2015) [2016] ZAFSHC 223 (22 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Appeal
No.: A45/2015
In
the appeal between:-
THE
HOSPITAL ASSOCIATION OF SOUTH AFRICA NPC
Applicant
and
THE
MEC OF HEALTH FOR THE FREE STATE PROVINCE
Respondent
CORAM:
MOLEMELA, JP
et
MUSI, J
et
DAFFUE,
J
JUDGMENT
BY:
MOLEMELA, JP
HEARD
ON:
25 JULY 2016
DELIVERED
ON:
22 DECEMBER 2016
Introduction
[1]
This is an application brought by the applicant, the Hospital
Association of South Africa NPC (“HASA”), to review
and
set aside the decision of the respondent, the Member of the Executive
Council of Health of the Free State Province (“the
MEC”)
to promulgate the Regulations Governing Private Health Establishment
No 78 of 2014 (“the Regulations”).
[2]
The Regulations referred to above were promulgated in terms of the
Free State Hospitals Act 13 of 1986
[1]
(“the Hospitals Act”), which empowers the Member of the
Executive Council for Health (“MEC”) to
establish,
maintain and manage provincial hospitals
and
to regulate, restrict or prohibit the establishment of private
hospitals and other private healthcare establishments.
[3]
Prior to 9 September 2014, the regulations that were in operation
were the Regulations Governing Private Hospitals and Unattached
Operating Theatre Units (as amended) Regulation R158 of 1 February
1980 (“the 1980 Regulations”). On 9 September
2014,
regulations were published in a Provincial Gazette (“the 2014
Regulations”), which repealed and replaced the
1980
Regulations. These are the regulations which gave rise to the dispute
under consideration.
[4]
HASA attacks the procedure followed by the MEC leading to the
publishing of the regulations. It contends that the
promulgation
of the 2014 Regulations was not preceded by any
meaningful consultation process. It avers that the 2014 Regulations
are convoluted,
poorly drafted and introduce sweeping changes to the
manner in which private hospitals and other private health
establishments
are established and regulated in the Free State
Province.
[5]
HASA further contends that several provisions of the 2014 Regulations
are cast in impermissibly vague terms. It also alleges
that the
regulations will have a chilling effect on the creation and extension
of private hospitals and other health establishments
in the province,
restricting patients’ rights to access health care services.
It argues that the regulations in effect
require private hospitals to
compensate for deficiencies in the state healthcare system in order
to be registered or licenced.
HASA seeks an order reviewing and
setting aside the 2014 Regulations in their entirety on the basis
that they are unlawful, irrational
and unreasonable. The order sought
is hinged on the application of the principle of legality on account
of their vagueness and
on the provisions of the Promotion of Access
to Justice Act (PAJA).
[6]
The MEC asserts that the procedure followed by its officials was
fair, as the regulations were preceded by two notice-and-comment
periods. The MEC maintains that none of the regulations are
impermissibly vague. He also denies that Regulation 14 imposes
impermissible public obligations on private hospitals.
The nature of the review
application
[7]
It must be pointed out from the outset that the relief sought by the
applicant in its review application is for “the setting
aside
of the decision of the respondent, the MEC of Health for the Free
State Province (“the MEC”) to promulgate the
Regulations
Governing Private Health Establishments No 78 of 2014.” The
nature of the relief sought as set out in the Notice
of Motion was
never amended. The MEC is empowered to make regulations in terms of
section 16
[2]
of the Free State Hospitals Act. This power is not in conflict with
any national legislation. There is thus no legal impediment
that
precludes the MEC from publishing any regulations.
[8]
It is evident from HASA’s Heads of Argument that its attack is
directed at the regulations on account of their vagueness
and that it
does not question the power to promulgate the regulations. In its
Answering Affidavit, the MEC introduced its opposition
of the review
application as follows: “I have read the founding papers. The
purpose of this affidavit is to set out the grounds
upon which I
oppose the application to review and set aside the final
regulations.” It is evident from the tenor of the entire
Answering Affidavit that the MEC did not understand the dispute to be
confined to determining whether the MEC has the power to
promulgate
regulations or not, but rather as seeking the setting aside of the
regulations on account of their alleged vagueness
or their onerous
nature.
[9]
Given the nature of the dispute, pertaining as it is to regulations
intended to regulate healthcare, and the fact that there
is no
prejudice to the MEC, it is in the interests of justice that
substance be put over form, and that the dispute be adjudicated
upon
notwithstanding the flaws pertaining to its categorisation. The
conclusion that there is no prejudice to the MEC is based
on the fact
that the MEC did not raise any objections relating to the relief
sought. It is also clear from the MEC’s averments
that he
understood the dispute to be about the validity of the 2014
Regulations and not about the power of the MEC to promulgate
them.
That this is the case the MEC indeed came to meet is also borne out
by the fact that the MEC proffered that if this
court were to find
that HASA’s objections pertaining to specific provisions of the
2014 regulations have merit, then the
appropriate remedy would be to
set aside those specific regulations and not the regulations as a
whole. There is therefore sufficient
basis to adjudicate the dispute.
The issues to be decided
[10]
The issues to be decided are, firstly, whether the process leading to
the 2014 Regulations was procedurally fair and, secondly,
whether
such regulations are rational, reasonable and lawful.
Locus Standi
[11]
HASA indicated in its papers that it is bringing this application in
its own interest, the public interest and the interests
of its
members. The MEC accepts that HASA has the right to challenge
the legality of the regulations “on grounds that
apply to it or
on objective grounds” but disputes its right to direct such a
challenge on behalf of its members. According
to the MEC, “if
a HASA member believes that its representations were not considered,
then it is the HASA member that must
apply to review and set aside
the regulations.”
[12]
In
Ferreira
v Levin NO;
Vryenhoek
v Powell NO
[3]
,
O’Regan
J stated that the relief sought in public law cases in the new
Constitution era ‘
is
generally forward-looking and general in its application, so that it
may directly affect a wide range of people”
In
Kruger
v President of the Republic of South Africa
[4]
the court held that where significant legal uncertainty exists, the
need for legal certainty could provide sufficient interest
for
standing where the legislative regime in question was of “
direct
and central importance”
to the field in which the litigant practiced and where it undermined
the administration of justice. More recently, in
Genesis
Medical Scheme v Minister of Health (Medi-Clinic Southern Africa
(Pty) Ltd and others as applicants to intervene;
Treatment
Action Campaign NPC and others as amici curiae)
[5]
,
HASA
applied for, and was granted, leave to intervene as a respondent.
The main application concerned the interpretation and
application of
the provisions of the Medical Schemes Act and regulations.
HASA’s standing to intervene was based on
its having a direct
and substantial interest in the relief sought in the main
application. HASA was able to intervene without its
members having to
take part individually.
[13]
In light of the authorities mentioned in the preceding paragraph, I
am persuaded that HASA has established a basis for challenging
the
legality of the 2014 Regulations not only in its own interest but
also on behalf of its members. It therefore has the requisite
locus
standi
.
Procedural Fairness
[14]
During the hearing of the application, this court was referred to the
Record of the Decision. It is evident that draft regulations
were put
out for comment on 29 June 2012. It would appear that only two
private bodies submitted representation on the draft.
Some
changes were made to the draft and on 18 July 2014 the revised draft
regulations were published with a notice calling for
comments.
Seven organisations made comments on the 2014 draft regulations.
The regulations under consideration were
thereafter promulgated.
Although HASA attacked procedural fairness on various grounds, it
states in its Heads of Argument
that it persists in its procedural
unfairness challenge to the 2014 Regulations only to the following
extent: that the regulations
were published following a perfunctory
and inadequate public comment process in circumstances where the MEC
failed to pay any heed
to the substance of the comments received from
HASA and its members, resulting in the promulgation of regulations
that are riddled
with the very same errors that were identified in
submissions made to the MEC prior to their promulgation.
[15]
It is established law that the question whether a fair procedure is
followed depends on the circumstances of each case.
[6]
HASA could not refute the MEC’s contention
that some of the comments made by its members in the second
notice
period were subsequently adopted and incorporated into the
regulations. The fact that some of HASA’s concerns were
not
accommodated should not, without more, lead to a conclusion that such
concerns were not considered. This view is buttressed
by the
following remarks made by Chaskalson CJ in
Minister
of Health and Another NO v New Clicks South Africa (Pty) Ltd &
Others
are
apposite
[7]
:
“
As
Lord Mustill points out, “the principles of fairness are not to
be applied by rote identically in every situation.”
It cannot
be expected of the lawmaker that a personal hearing will be given to
every individual who claims to be affected by regulations
that are
being made. What is necessary is that the nature of the concerns of
different sectors of the public should be communicated
to the
law-maker and taken into account in formulating the regulations.
…Where laws are made through legislative administrative
action, the procedure of publishing draft regulations for comment
serves this purpose. It enables people who will be affected by
the
proposals to make representations to the law-maker, so that those
concerns can be taken into account in deciding whether or
not changes
need to be made to the draft.”
[16]
With regards to HASA’s argument that Regulation 14 ought not to
be included in the 2014 before regulations envisaged
in the National
Health Act
[8]
have been promulgated, I accept that Regulation 14 is in many
respects similar to section 36 of the National Health Act. I am,
however, of the view that the fact that the regulations envisaged in
the National Health Act have not yet been promulgated does
not
preclude the inclusion of Regulation 14 in the 2014 Regulations.
[9]
I am satisfied that HASA’s attack on procedural fairness
therefore lacks merit and ought to be dismissed
Are the impugned regulations
vague?
[17]
HASA has in its Founding Affidavit repeatedly described various
provisions of the regulations as vague, including Regulation
14 as
being so vague as to offend the principle of legality. The MEC
vehemently denies this allegation. The text of the impugned
2014
Regulations warrants scrutiny to determine whether they are indeed
vague. It must be borne in mind that the impugned provisions
of the
2014 regulations must not be considered in isolation but rather in
the context of the 2014 regulations in their entirety.
Before
embarking on the process of scrutinizing the impugned regulations to
determine whether they are indeed impermissibly vague
as asserted by
HASA, it is apt to first address myself to the principle of legality.
Principle of legality
[18]
The principle of legality dictates that power should have a source in
law and is thus applicable whenever public power is exercised
[10]
.
In
Affordable
Medicines Trust and Others v Minister of Health and Others
[11]
,
Ngcobo J aptly stated as follows:-
“
Regulation
18(5) was challenged on the basis that it is vague and does not
conform to the principle of legality. The doctrine of
vagueness is
one of the principles of common law that was developed by courts to
regulate the exercise of public power. As pointed
out previously, the
exercise of public power is now regulated by the Constitution which
is the supreme law. The doctrine of vagueness
is founded on the rule
of law, which, as pointed out earlier, is a foundational value of our
constitutional democracy. It requires
that laws must be written in a
clear and accessible manner. What is required is reasonable
certainty and not perfect lucidity.
The doctrine of vagueness does
not require absolute certainty of laws.
The
law must indicate with reasonable certainty to those who are bound by
it what is required of them so that they may regulate
their conduct
accordingly.
The
doctrine of vagueness must recognise the role of government to
further legitimate social and economic objectives and should
not be
used unduly to impede or prevent the furtherance of such objectives.”
(My
emphasis.)
[19]
I am of the view that the tools of interpretation laid down in a
plethora of authorities will be useful in assessing whether
the
impugned regulations are impermissibly vague
[12]
.
For purposes of providing historical context, I will highlight the
salient features of the forerunner of the 2014 (1980 Regulations).
It
is, of course, also necessary to consider other provisions of the
2014 Regulations, as this will ensure that the impugned provisions
are considered in proper context.
[20]
The 1980 Regulations principally catered for two distinct procedures.
First, there was a distinct procedure for obtaining written
approval
from the Head of Department of the Free State Department of Health
(“HOD”) for the establishment of private
hospitals or
alterations to existing private hospitals. In terms of these
regulations, any person seeking to establish a
private hospital had
to apply to the HOD for written permission to do so. Once permission
was received, the applicant would have
to submit further forms and
building plans for the HOD’s approval. Any alteration or
extension of a private hospital also
required the HOD’s written
approval. Second, all existing private hospitals required a
certificate of registration, issued
by the HOD; these certificates of
registration expired on 31 December of each year. Certificates of
registration were issued if
a hospital complied with the formal
requirements specified in Regulation 4, requiring the suitability and
safety of the premises,
staff and services provided.
[21]
I now consider
the
text of the impugned provisions of the
2014
Regulations. Regulation 3 provides as follows:-
“
3.
Registration requirements of a private health establishment
(1)
A
person may not:-
(a)
Erect,
establish, maintain, manage or control a health establishment; or
(b)
Render
or permit to be rendered, a service in a private health
establishment; or
(c)
Establish,
maintain, control or manage Step Down Facility, Rehabilitation
Facility, Dialysis Unit; or
(d)
Extend
or alter a private health establishment or the service or services
rendered in that establishment,
Unless, such person’s
application in terms of subregulations (a), (b) or (c) has been
approved and registered in the Register
for Private Health
Establishments as contemplated in Regulations 16(4) and 17(7) and a
licence has been issued in terms of Regulation
21(3).”
(2)
(3)
… valid for one calendar year.”
[22] Regulation 4 stipulates as
follows:-
“
4.
Application for registration of licence
(1)
A person who wishes to obtain the registration of a private health
establishment and
the concomitant licence or the amendment thereof
contemplated by Regulation 3, must submit to the Head of Department
an application
on the appropriate form prescribed in Annexure “A”,
together with the prescribed supporting documents.
(2)
An application must be an original, which must be hand delivered or
mailed to the
Office of the Head of Department.
(3)
An applicant may withdraw the application at any time, and the
Department is not liable
for any costs incurred by the applicant.”
[23]
Regulation 14(1) provides as follows:
“
14(1)
When considering an application in order to determine whether there
is a need for the proposed private health
establishment, the
committee may take into account the following:-
(i)
the
need to ensure consistency of health service development in terms of
provincial and municipal planning;
(ii)
the
need to promote equitable distribution and rationalisation of health
services, with a view to correcting inequities based on
racial,
gender, economic and geographical factors;
(iii)
the
need to promote an appropriate mix of public and private health care
services with a view to the demographic and epidemiological
characteristics of the populations to be served, the total and target
population in the area, their ages and gender composition,
their
morbidity and mortality profiles;
(iv)
the
bed-to-population ratios and public-to-private bed ratios in the
establishment’s feeder areas and in the surrounding health
district, region and province;
(v)
the
availability of alternative sources of health care;
(vi)
the
need to promote high-quality services which are accessible,
affordable, cost-effective and safe;
(vii)
the
need to protect or advance persons or categories of persons
designated in terms of Employment Equity Act, 1998 (Act No 55 of
1998) and the emerging small, medium and micro-enterprise sector;
(viii)
the
potential benefits of training and development with a view to the
improvement of health service delivery;
(ix)
the
probability of the financial sustainability of the health
establishment or health agency; and
(x)
the
need to ensure the availability and appropriate utilisation of human
resources and health technology.”
[24] Regulation 21 provides as
follows:-
“
21(1)
Once a private health establishment for which approval has been
granted in terms of these Regulations has
been finally constructed,
the applicant must within 30 days of such completion, request the
Head of Department in writing to inspect
by a duly authorised
inspecting officer; the establishment in order to establish that it
meets with the specifications set out
in Annexure “B”.
(2)
The
building may not be occupied before an inspection is done.
(3)
If
the Head of Department is satisfied that a private health
establishment contemplated by subregulation (1) meets with the
specifications
set out in Annexure “B”, the Head of
Department must issue to the applicant a licence for the private
health establishment.”
[25]
Even though the establishment of hospitals has been regulated for
quite some time
[13]
,
it is evident from the text of the 2014 Regulations that they
introduce a new procedure. In terms of Regulation 3(1) of
the
2014 Regulations, a private healthcare establishment must be
registered on the register for private health establishments.
An
application for registration will first be considered by an Advisory
Committee.
[14]
The Advisory Committee must then make a recommendation to the HOD,
who takes the final decision on the application after
considering the
Advisory Committee’s recommendation. If satisfied, the HOD will
enter the registration in the Register of
Private Health
Establishments. If the registration is refused, the applicant
has a right of appeal to the MEC.
[15]
A private healthcare establishment must also be licenced. The
licence that is issued is valid for one calendar year. An application
for renewal of a licence must be submitted not less than 60 days
before the expiry of the licence. Once an application for
renewal has been submitted, the HOD must ensure that an inspection is
done.
[26]
Regulation 14 of the 2014 Regulations is very similar to the
parameters laid down in section 36 (3) of the National Health
Act
[16]
, pertaining to the
issuance of a certificate of need. Section 36 of the National Health
Act has not yet come into operation, as
the Proclamation which
purported to bring this and several other sections of the National
Health Act into operation was set aside
by the Constitutional Court
at the request of the State President in
President
of the
RSA
and Others v South African Dental Association and Another,
[17]
[27]
The scoring and qualification criteria are set out in Annexure “C”
to the regulations. Annexure “C”
is a scoring sheet
that sets out various criteria and the applicable norms.
Applications are scored out of 100 with applicants
requiring a score
of 80 or above.
[28]
In terms of Regulation 35(1)(a) existing private health
establishments which were registered before the commencement of the
regulations remain registered under the 2014 Regulations.
[18]
However in terms of Regulation 35(1)(b), any alteration to a
registered establishment or services rendered requires a new
application process.
[19]
Regulation 35(2) makes provision for existing private hospitals and
their compliance with the building requirements in annexure
“B”.
Analysis of the parties’
submissions
[29]
In its Heads of Argument, HASA criticizes various provisions. It also
argues that the licencing procedures and requirements
are cast in
vague and contradictory terms, providing insufficient guidance to
decision-makers and leading to uncertainty for the
private healthcare
sector.
[30]
The MEC criticises HASA’s application for being abstract.
He argues that HASA’s Heads of Argument seek to
introduce new
review grounds that were not properly anticipated in its founding
papers. He also avers that HASA is in its
Heads of Argument is
raising new factual issues that the MEC ought to have been afforded
an opportunity to address under oath.
He furthermore criticizes
HASA for having failed to make critical averments, in its founding
affidavit, pertaining to its criticism
of the various provisions of
the 2014 Regulations.
[31]
It is necessary to assess whether HASA’s founding affidavit
passes muster. The following remarks made in
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Tourism and Others
[20]
are instructive.
“
It
is desirable for litigants who seek to review administrative action
to identify clearly both the facts upon which they base their
cause
of action and the legal basis of their cause of action.”
Although
I am mindful of the undesirability of a judgment that is overburdened
by extracts from the pleadings, I deem it necessary
to quote
verbatim
from the salient averments made in the Founding Affidavit as this
will immediately put the fallacious nature of this argument to
bed.
HASA
inter
alia
makes the following averments in its Founding Affidavit.
“
52.2
As things presently stand, HASA and its members lack the certainty to
which they are in law entitled
as to how the criteria will be
determined and applied, both in relation to the establishment of
private hospitals and also in relation
to the continued and ongoing
licensing and registration of private hospitals. There can be no
basis for requiring that HASA and
its members learn of these criteria
on a case by case basis, but instead should be told of them up front.
52.3
Furthermore, Regulation 14(1) imposes criteria that at best cannot be
applied in the same way
to the public sector and the private health
establishments and at worst cannot be applied to the private health
sector at all.”
52.3.1
This Regulation does not give recognition to the fact that private
entities build private health establishments
at great expense and
with a view to a medium to long-term position. Particularly in
circumstances where those private entities
are accountable to
shareholders and other investors- including investors who make
decisions on investments across competing opportunities,
of which
private hospitals are but one instance- in this instance there can be
no direct comparison between private and public
hospitals.
52.4
As the Final Regulations stand, they are broad and vague. It is
simply not possible, with reference
to the Final Regulations as they
read, to determine for example what would be considered “affordable”
or what would
be considered “accessible” except on a
casuistic basis. A case by case determination is not legally
cognizable and
would not provide any measure of certainty let alone
that degree of certainty that would be required to facilitate the
establishment
of and investment in new private healthcare
establishments. Regulation 14(1) is replete with examples of just
such terminology,
including “equitable distribution and
rationalization”, “correcting inequities”, “an
appropriate
mix”, “alternative sources of healthcare”,
and so on.
53.
Annexure C is the proposed adjudication tool to review applications
and is similarly irrational
and premature to the extent that it
references the Regulation 14 criteria.
55.
It is currently not possible for a person who wishes to establish a
private health establishment
in the Free State to have clarity on the
regulatory requirements and criteria under which their application
would be considered.
…
64.
The Final Regulations also have a number of unfair and illogical
results which have a disproportionately
onerous impact on private
health establishments. The decision therefore violates the
principles governing the exercise of
public power and undermines the
very objectives of the Hospitals Act and the Final Regulations.
The Department failed to
balance the needs of private health
establishments and the public with the need to regulate and monitor
private hospitals.
In doing so, the Department failed to reach
a reasonable equilibrium between the various interests.”
[32]
It is clear from the above extract that contrary to the MEC’s
criticism, HASA has laid a fairly all-encompassing factual
foundation
relating to registration, licensing, the requirements pertaining to
alterations and extensions and the generally onerous
nature of
Regulation 14. These averments warranted a full response from the MEC
pertaining to the impugned provisions and the Annexures
relating
thereto. What the MEC considers to be new grounds of review are
issues that were foreshadowed in HASA’S factual
averments. In
My
Vote Counts NPC v Speaker of the National Assembly and Others
[21]
,
the court stated as follows:-
“
It
is in any event imperative that a litigant should make out its case
in its Founding Affidavit, and certainly not belatedly in
argument.
The exception, of course, is that a point that has not been raised in
the affidavits may only be argued or determined
by a court if it is
legal in nature, foreshadowed in the pleaded case and does not cause
prejudice to the other party.”
[33]
In my view, HASA’s arguments also fall squarely within the
ambit of the averments made by HASA and quoted in the preceding
paragraphs, as well as other averments appearing elsewhere in the
Founding Affidavit. The MEC had a choice in the manner in which
he
opted to respond to HASA’s averments. He chose not to
elaborate. He must accept that this choice was made at his own peril
and not because the averments were not pleaded.
[34]
Although HASA in its Founding Affidavit averred that the effect of
the 2014 Regulations is to impose public obligations on
private
hospitals, it seemed to change tack in its Replying Affidavit when it
stated that
“
HASA
has never disputed that private hospitals may be subjected to public
duties. HASA contests the manner and extent to which the
final
regulations purport to confer public obligations on private health
establishment. That said, these aspects fall to be dealt
with at the
level of legal argument at the hearing of the application.”
In its Heads of
Argument HASA conceded that private hospitals may be subjected to
public duties. This concession was repeated
by HASA’s
counsel during the hearing the application. International law
supports the proposition that the state may
impose obligations on
public bodies in order to give effect to the right to access to
healthcare.
[35]
In General Comment 14 of the Committee on Economic, Social and
Cultural Rights
[22]
it is stated that:
‘
While
only States are parties to the Covenant and thus ultimately
accountable for compliance with it, all members of society –
individuals, including health professionals, families, local
communities, civil society organizations, as well as the private
business sector – to have responsibilities regarding the
realization of the right to health. States parties should
therefore provide an environment which facilitates the discharge of
these responsibilities….
‘
health
facilities, goods and services must be affordable for all.
Payment for health-care services as well as services related
to the
underlying determinants of health, has to be based on the principle
of equity, ensuring that these services, whether privately
or
publicly provided, are affordable for all, including socially
disadvantaged groups. Equity demands that poorer households
should not be disproportionately burdened with health expenses as
compared to richer households.”
[36]
I agree with the postulation set out above. HASA’s concession
in that regard was thus correctly made. It is therefore
unnecessary for this court to address itself to the many arguments
made by the parties in relation to an issue which is no longer
in
dispute. This court therefore moves from the premise that
private hospitals may indeed be subjected to public duties.
Criticism in
relation to Regulation 14(1
)
[37]
The challenge to Regulation 14(1) has two prongs: first, that
the assessment of ‘need’ imposes invalid public
obligations on private hospitals, obliging private hospitals to
compensate for the state’s failures to provide access to
healthcare. Second, the considerations are cast in
impermissibly vague terms that will obstruct the development of
private
healthcare and therefore hinder access to healthcare.
[38]
None of the provisions of Regulation 14 can be said to be unclear.
Considered on its own, Regulation 14(1) does not seem
to be
onerous because there is no obligation placed on any entity to build
a private health establishment or to make it available
for public
use. Furthermore, its provisions are not couched in peremptory
terms, as it stipulates considerations that “may”
be
taken into account. A wide discretion is thus given to a
committee that has expertise and the wide discretion is exercised
on
the basis of factors stipulated in Regulation 14(1)(i)-(x). None
of these factors must be applied rigidly. The provisions
of
Regulation 14(1) must be considered in conjunction with other
sub-regulations. Regulation 14(3) provides that “qualification
and scoring criteria are set out in Annexure “C”. This
warrants consideration of Annexure “C”.
[39]
Annexure C is a very integral document because it is the proposed
adjudication tool to determine, in accordance with the provisions
of
Regulation 14, whether there is a need for the proposed health
establishment. This Annexure
lists
the scoring and qualification criteria applicable to applications for
establishment of a private health facility.
It
also reflects the norm against which the application will be
considered and prescribes the number of points that must be allocated
or deducted in various scenarios. It stipulates that an applicant
must attain a minimum score of 80%, failing which it will be
ineligible for registration and licensing. Annexure “C”
is not a model of clarity.
[40]
One example that sufficiently illustrates its fatal flaw is the
considerations it prescribes as the norm in relation to the
determination of the economic viability of an area. The word “area”
is not defined. There are only two indicators stipulated,
namely
proximity to a university or an unemployment rate that is below 25%.
Both indicators earn an applicant a total of 10 points.
The form also
states that this score is “critical”. An applicant who
intends building hospital in an area where there
is no university and
where the unemployment rate is more than 25% immediately loses 10
points. This deduction is clearly irrational
when considered in light
of the obvious intended purpose of achieving a fair spread of
hospitals in all areas. This applicant would
therefore have to be
scored out of 90 instead of a 100, immediately reducing its chances
of achieving the 80% minimum score.
[41]
The MEC’s argument that Annexure C allows for an applicant to
motivate where less points are allocated has no merit because
the
factors that the decision maker will take into account when deciding
on the motivation for not complying with this “critical”
requirement are unclear. Guidance is necessary here so that those
considering the applications do not act arbitrarily. I am fortified
in this view by the following remarks made by O’Regan, J in
Dawood
and Another v Minister of Home Affairs and Others
[23]
:
“
The
scope of discretionary powers may vary. …Discretionary powers
may also be broadly formulated
where
the factors relevant to the exercise of the discretionary powers are
indisputably clear
.”
(My emphasis).
Since Regulation 14(1) must be considered in conjunction with
Annexure “C”, this regulation (Regulation
14(1)) as it
currently stands does not, with reasonable certainty to all those who
are bound by it, reflect what is required of
the applicants of
private health establishments and lends itself open to a case by case
consideration of applications with no certainty
of outcome. It leaves
room for arbitrariness. It cannot be expected that certainty should
be provided by way of disgruntled applicants
approaching court on
review. Litigation is costly and is often protracted due to the
hierarchy of the courts.
Criticism in relation to
Regulation 2, 3 and 4
[42]
Regulation 2(1) provides that the 2014 Regulations apply to all
private health establishments in the Free State. While Regulation
2(2) provides that the MEC may grant a private health establishment
exemption from all or any of the provisions “if good
grounds
exist”, there are no criteria set out for the exercise of that
discretion.
In
my view, setting out criteria is necessary, given (i) the wide
definition of health establishment and (ii) the provisions of
Regulation 3 which require an application for registration even where
an extension or alteration of a “private health establishment
or services rendered in that establishment” is intended. These
regulations could have far-reaching consequences for
medical
practitioners who intend running a small practice. (My emphasis).
[43]
HASA contends that there is no clarity on the procedure to be
followed, the requirements that must be satisfied, or the identity
of
the decision maker in respect of licence renewals. It avers
further that the distinction between registration and licensing
is
confusing and contradictory throughout the regulations. HASA contends
that the fact that Regulation 4 mentions “registration
of a
licence” gives the impression that licensing comes before
registration. That being the case, and given the provisions
of
Regulation 21(1) which stipulates that licensing should take place
only once the private health establishment has been finally
constructed, the risk to investors would be too high as they could
expend a lot of resources on a building, only for the application
for
a licence to be denied. According to HASA, this would have a chilling
effect on private hospitals.
[44]
The texts of Regulation 3 and 4 speak for themselves. There is an
obvious conflation between registration and licensing. I
find it
extremely astounding that the MEC persisted in arguing that that is
not the case. Regulation 3(1) as it currently stands
is ambiguous as
it prohibits and criminalises the erection or variation or extension
of a private health establishment before the
application has been
“approved and registered” and yet, by using the
conjunctive “and”, adds the
requirement of
licensing in terms of Regulation 21(3), which read with Regulation
21(1) requires dictates that licensing can only
take place once the
private health establishment has been finally constructed and is
available for inspection.
[45]
In trying to advance a lucid understanding of how the regulations
pertaining to registration and licensing ought to be interpreted,
the
MEC in fact demonstrates that he, too, does not understand the full
import of the applicable regulations. The MEC states as
follows:-
“
After
a private health establishment
has
been constructed
,
an applicant will be required to apply for a
licence
in terms of regulation 21. At this stage, the only relevant enquiry
is whether the private health establishment meets the specifications
in annexure B to the final regulations.”
[24]
(My emphasis)
[46] However, the above is later
contradicted by the MEC as follows:-
“
Regulation
3 requires that persons may only
erect
,
establish, maintain or control health establishments
if
they have a licence to do so
and
have been registered to do so.”
[25]
....
“
To
register a new health establishment, the application process set out
in regulation 4, 5, 15, 16 and 17 (if necessary) must be
followed. If
successful, the application process culminates in the proposed health
establishment being registered in a register
of Private Health
Establishments.
During
this process, the licence application is also subjected to assessment
under regulations 4, 5, 6, 14, 15, 16 and 17 but no
final licence is
issued at this stage
.”
[26]
(My
emphasis).
[47]
It is clear that on the MEC’s own version, there is vagueness.
The
MEC’s contention that the distinction between registration and
licensing emerges with sufficient clarity from the regulations
has no
merit.
The
vagueness in the registration and licensing process does not end
here. It is compounded by the provisions of Regulation 6
[27]
,
which
refers
to “application of a licence” without mentioning
registration.
[48]
The MEC’s argument that Regulation 14 has no application to
registered private healthcare establishments because Regulation
14
applies only “at the outset” is devoid of any merit. It
is clear from the provisions of Regulation 3(1) that Regulation
14 is
triggered once an application for approval of an alteration or
variation of health establishment or services is made. It
therefore
cannot be said that this regulation applies only at the outset.
[49]
Furthermore, it was argued on behalf of the MEC that “nowhere
in the affidavit does he address the process for or considerations
relevant to applications to alter or extend a hospital’s
building or services”. However, at para 45 of the Heads of
Argument filed on behalf of the MEC, it is stated that “it is
correct that Regulation 14(1) applies to the alteration and
extension
of buildings
and services
”. The MEC’s problems are
compounded by the fact that the word “services” is not
defined in the 2014 Regulations.
[50]
In my view, the vagueness of the Regulations mentioned above is of
such a nature that it cannot be said that applicants for
private
health establishments are in a position to know what is required of
them so that they may act inaccordance with that knowledge.
Considered
against the backdrop of the judgment of the Constitutional Court in
Affordable
Medicines Trust and Others v Minister of Health and Others
[28]
,
Regulation 14 simply does not pass muster.
[51]
I am of the view that the attack regarding the following regulations
is unjustified. HASA quibbles about the expenditure that
its members
may have to incur for the annual renewal of the licence and argues
that the period of validity of the licence ought
to be longer.
Notably, the predecessor to the 2014 Regulations, namely the 1980
Regulations, required the issuance of a renewable
certificate of
registration by the HOD, which could be cancelled for failure to
comply with certain conditions.
[29]
Significantly the issuance of the certificate of registration could
be withheld if such registration was not in the public
interest.
[30]
The proprietor also had to give particulars regarding the location of
the hospital premises.
[52]
The applicable regulations must not be read in isolation but in
conjunction with the forms prescribed by the regulations.
Form
4 includes the details that an applicant for renewal must submit to
the HOD. Unlike the forms for applications for new
acute and
sub-acute private health establishments and for extensions to such
licences there is no requirement for Form 4 to “provide
detailed reasons in accordance with the criteria as set out in
Regulation 14 as to why this application should be approved.”
It is clear that the application forms and the inspection process
indicate what is required from a licence holder seeking renewal
of
their licence. I do not find the requirement for annual renewal of
the licence to be onerous. Neither do I find any inadequacies
in the
renewal procedures in the regulations. It is also evident that there
is no contradiction between Regulation 24(4) and Regulation
9(h).
Regulation 9(h) is not intended to give the committee the power to
renew licences. HASA’s criticism of
this regulation is
therefore unfounded.
Remedy
[53]
The vagueness of various provisions of the 2014 Regulations has
already been brought to the fore in earlier paragraphs of this
judgment. The question is whether the vagueness of the impugned
regulations can somehow be salvaged by this court. The Constitutional
Court has held that “where it is possible to separate the good
from the bad in a statute and the good is not dependent on
the bad,
then that part of the statute which is good must be given effect to,
provided that what remains carries out the main object
of the
statute.”
[31]
Courts should ideally seek to strike out or read down specific
regulations rather than striking out an entire regulatory
scheme.
[54]
Having considered the impugned regulations, I am of the view that in
as far as Regulation 2, 3, 4 and 6 are concerned, there
are only a
few patent errors and these are capable of correction by reading in
or down. The phrase “
and
a licence has been issued in terms of Regulation 21(3)”
could
be excised from Regulation 3. Although a heading of a provision is
not determinative of its meaning, the heading to Regulation
4
“
Application
for registration of a licence
”
somehow contributes to the vagueness. This ambiguity could be cured
by deleting the words “of a licence” in
the heading. The
reference to the phrase “
and
the concomitant licence”
in
Regulation 4(1) also adds to the ambiguity. Similarly, Annexure “A”
would have to be amended by excising the reference
to a licence.
[55]
It is evident that once changes are made to Regulations 3, 4 and the
Annexures already alluded to earlier, Regulation 6 would
also warrant
attention. It seems to me that Regulation 6 is the only provision in
the regulations that deals with publication of
the application. When
the whole registration and application process is considered, it
would seem that Regulation 6 was intended
to apply to an application
for
registration
,
not an application for a license. Why would members of the public
have to comment only once the private health establishment has
been
finally constructed? What would the value of such comments be? The
MEC’s response pertaining to the criticism directed
at
Regulation 6 suggests that he does not realise this flaw, for in his
defence of Regulation 6 as it currently stands, he states
that the
MEC may grant an applicant an opportunity of responding to the public
comments by asking for additional information in
respect of the
“application” as contemplated in Regulation 5(1)
[32]
.
Be that as it may, I am of the view that the vagueness in Regulation
6 can be remedied by replacing the words “application
for a
licence” with the phrase “application for registration”.
[56]
An insurmountable challenge for the MEC, in my view, is the content
of Annexure “C”, an important but flawed document
that
constitutes the tool for determining the scores to be allocated in
respect of the criteria mentioned in Regulation 14. Clearly,
this
document needs much more than reading in or reading down or replacing
words or phrases. This court must be mindful of the
warning sounded
in
Kalil
NO and Others v Mangaung Metropolitan Municipality and Others
[33]
,
where the court, with reference to the case of
Natal
Joint Municipality Pension Fund v Endumeni
[34]
,
stated as follows:
“…
although
it may of course at times be necessary to correct an apparent patent
error in the language used in a statute or regulation
in order to
avoid an identified absurdity, courts should be slow to alter the
words actually used and must guard against the ‘temptation
to
substitute what they regard as reasonable, sensible or business-like
for the words actually used’, thereby legislating
rather than
interpreting.”
[57]
Since Annexure C is the adjudication tool pertaining to the criteria
set out in Regulation 14, the flaws identified in Annexure
C impact
on Regulation 14 as a whole. The upshot, then, is that it is
currently not possible for prospective applicants who wish
to
establish private health establishments in the Free State to have
clarity on the regulatory requirements and criteria under
which their
applications would be considered. I am of the view that any attempt
at salvaging Regulation 14 by reading in or reading
down will
probably offend the doctrine of separation of powers. A remittal of
the regulations to the MEC seems to be the only practical
option
here.
Costs
[58]
In the exercise of my discretion pertaining to costs, I have taken
into account that each party is partially successful. The
appropriate
order under the circumstances is for each party to pay its own costs.
Order
1.
Regulations
2, 3, 4, 6 and 14 of the 2014 Regulations and the Annexures relating
thereto are set aside.
2.
The
order in 1 above is suspended for a period of six months to enable
the MEC to effect amendments to the 2014 Regulations.
3.
Each
party to pay its own costs.
___________________
M.
B. MOLEMELA, JP
Musi,
J and Daffue, J concurred with the judgment.
On
behalf of applicant:
Adv. B. Leech SC
with C Steinberg
Instructed by:
Symington & De
Kok
BLOEMFONTEIN
On
behalf of respondent:
Adv. A. Cockrell SC
Instructed by:
State Attorney
BLOEMFONTEIN
/eb
[1]
This
is in terms of Section 16(1)(i) of the Free State Hospitals Act 13
0f 1996, which provides:-
“
16
(1) The responsible Member may make regulations with regard to-
(a)
......
(b)
......
(c)
......
(d)
......
(e)
......
(f)
......
(g)
......
(h)
.....
(i)
private hospitals,
nursing
homes,
maternity
homes
or
other
similar
institutions
where
nursing
is carried
on
for
the
benefit
of
patients
accommodated
therein
and
where
fees
are
charged
by
the
owner or lessee of any such hospital, home or institution in respect
of nursing services rendered to such patients or where
contributions
are made by such patients towards the cost of such services-
(i)
regulating, restricting or prohibiting the establishment or running
of such hospitals, homes or institutions;
(ii)
prescribing
minimum standards with which such hospitals, homes or institutions
shall comply;
(iii)
relating
to the registration and inspection of such hospitals, homes or
institutions;
(iv)
prescribing
the fees to be paid, the registers to be kept, the certificates to
be issued and any other requirements to be complied
with in
connection with the registration of such places;
(v)
relating
to patients who may be accommodated therein;
(vi)
relating
to the registration of persons in charge of such hospitals, homes or
institutions, and the furnishing of returns or particulars
of
patients admitted thereto and persons employed therein; and
(vii)
providing for the refusal to register, or the removal from the
appropriate register of, any such hospital, home or
institution
which the responsible Member or any specified person or class of
person may consider unsatisfactory on specified
grounds;”
[2]
See
footnote 1
supra.
[3]
1996
(1) SA 984 (CC).
[4]
2009
(1) SA 417 (CC).
[5]
[2015]
4 All SA 302 (WCC).
[6]
Minister
of Education, Western Cape and Another v Beauvallon Secondary School
and Others
2015 (2) SA 154
(SCA) at para [19].
[7]
2006
(2) SA 311
(CC) at 381E-I.
[8]
Act 61 of 2003
[9]
See Minister of Health
and Another NO v New Clicks South Africa (Pty) Ltd
2006 (2) SA 311
CC at para [146].
[10]
AAA Investments (Pty) Ltd v
Micro Finance Regulatory Council and Another 2007 (1) SA 343 (CC).
[11]
[2005] ZACC 3
;
2006 (3) SA
247
(CC) a
t para 108.
[12]
Natal Joint
Municipality Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) at para 17-26
[13]
I
n
terms of the 1980 regulations
[14]
This is in
terms of Regulation 15.
[15]
This is in
terms of Regulation 17.
[16]
Section 36
of the
National
Health Act 61 of 2003
provides as follows:-
“
Certificate
of need
36 (1) A person may
not-
(a)
establish,
construct, modify or acquire a health establishment or health
agency;
(b)
increase
the number of beds in, or acquire prescribed health technology at, a
health establishment or health agency;
(c)
provide prescribed health services; or
(d)
continue to operate a health establishment or health agency after
the expiration of 24 months from the date this Act took
effect,
without being in possession of a certificate of need.
(2)
A person who wishes to obtain or renew a certificate of need must
apply to the Director-General in the prescribed manner and
muspt ay
the prescribed application fee.
(3) Before the
Director-General issues or renews a certificate of need, he or she
must take into account-
(a)
the need to ensure consistency of health services development in
terms of national, provincial and municipal planning;
(b)
the need to promote an equitable distribution and rationalisation of
health services and health care resources, and the need
to correct
inequities based on racial, gender, economic and geographical
factors;
(c)
the need to promote an appropriate mix of public and private health
services;
(d)
the demographics and epidemiological characteristics of the
population to be served;
(e)
the potential advantages and disadvantages for existing public and
private health services and for any affected communities;
(f)
the need to protect or advance persons or categories of persons
designated in terms of the Employment Equity Act, 1998
(Act No. 55
of 1998), within the emerging small, medium and micro-enterprise
sector;
(g)
the potential benefits of research and development with respect to
the improvement of health service delivery;
(h)
the need to ensure that ownership of facilities does not create
perverse incentives for health service providers and health
workers;
(i)
if applicable, the quality of health services rendered by the
applicant in the past;
(j)
the probability of the financial sustainability of the health
establishment or health agency;
(k)
the need to ensure the availability and appropriate utilisation of
human resources and health technology;
(I)
whether the private health establishment is for profit or not; and
(mi
if applicable, compliance with the requirements of a certificate of
non-
(4)
The Director-General may investigate any issue relating to an
application for the issue or renewal of a certificate of need
and
may call for such further information as may be necessary in order
to make a decision upon a particular application.
compliance.
(5) The
Director-General may issue or renew a certificate of need subject
to-
(a)
compliance by the holder with national operational norms and
standards for
(b)
any condition regarding health establishments and health agencies,
as the case may be; and
(i)
the nature, type or quantum of services to be provided
by the health
(ii)
human resources and diagnostic and therapeutic
equipment and the establishment or health agency;
deployment of human
resources or the use of such equipment;
(iii)
public private partnerships;
(iv)
types of training to be provided by the health establishment
or health
(v)
any criterion contemplated in subsection (3).
(6) The
Director-General may withdraw a certificate of need -
(a)
on the recommendation of the Office of Standards Compliance in terms
of section 79(7)(6);
(b)
if the continued operation of the health establishment or the health
agency, as the case may be, or the activities of a health
care
provider or health worker working within the health establishment,
constitute a serious risk to public health;
(c)
if the health establishment or the health agency, as the case may
be, or a health care provider or health worker working within
the
health establishment, is unable or unwilling to comply with minimum
operational norms and standards necessary for the health
and safety
of users; or
(d)
if the health establishment or the health agency, as the case may
be, or a health care provider or health worker working within
the
health establishment, persistently violates the constitutional
rights of users or obstructs the State in fulfilling its obligations
to progressively realise the constitutional right of access to
health services.
(7)
If' the Director-General refuses an application for a certificate of
need or withdraws a certificate of need the Director-General
must
within a reasonable time give the applicant or holder, as the case
may be, written reasons for such refusal or withdrawal.”
[17]
2015 (4) BCLR 388
(CC).
[18]
“
(1)(a)
Subject to the provisions of paragraph (b), a health establishment
which, at the commencement of these Regulations, was
validly
registered in terms of any applicable legislation, is deemed as
being registered in terms of these Regulations.”
[19]
“
(
b)
Any
alteration to a private health establishment referred to in
paragraph (a) or the services rendered therein must be applied
for
in terms of these Regulations, the provisions of which apply to such
alteration.”
[20]
[2004] ZACC 15
;
2004 (4) SA
490
(CC) at para
[27]
.
[21]
2016 (1) SA
132
(CC) par [177].
[22]
www.refworld.org/pdfid/4538838d0.pdf
(28/11/2016).
[23]
2000 (3) SA 936 (CC).
[24]
Para 69.3
of Answering Affidavit.
[25]
Para 71.1 of Answering
Affidavit.
[26]
Para 71.2 of Answering
Affidavit.
[27]
Regulation
6, provides as follows:-
“
6.
Publication and comments
(1)
The
applicant must within 30 days prior to submission of an
application
for a license
,
publish notification in a section of a daily newspaper circulating
in the area where the service exists or is to be provided
or the
project exists or is to be located.
(2)
The
notice must inform members of the public where the application may
be inspected and must specify that any interested party
has 30 days
from the date of publication of the notice to submit written
comments to the Head of Department.
(3)
The
Head of Department must notify the applicant where comments have
been received and provide the applicant with copies of the
comments.
(4)
No
application may be accepted unless accompanied by proof that the
publication has been made within the prior 30 day period.”
[28]
supra
[29]
Regulation
18 of Regulation 158 of 1980.
[30]
This was in
terms of Regulation 4(5) of the 1980 Regulations.
[31]
Johannesburg City Council v
Chesterfield House (Pty) Ltd…Also see
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd
2006 (2)
SA 311
(CC) at para [16].
[32]
Regulation 5(1) provides that
“
the Head of
Department must within 7 working days of receipt of the receipt of
an application contemplated by Regulation 4(1)
consider the
application to determine whether it has been properly completed or
whether any additional information is required”.
[33]
2014 (5) SA
123
(SCA) at para 20.
[34]
2012 (4) SA 593
(SCA) at para [18]