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[2016] ZAGPPHC 85
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Government Employees Medical Schemes v Appeal Board of the Council for Medical Schemes and Others (2973/2015) [2016] ZAGPPHC 85 (29 January 2016)
IN
THE
HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
DATE:
29/01/2016
CASE
NO: 2973/2015
In
the matter between:
GOVERNMENT
EMPLOYEES MEDICAL
SCHEMES
Applicant
and
APPEAL
BOARD OF THE COUNCIL FOR MEDICAL SCHEMES 1st
Respondent
REGISTER
FOR MEDICAL
SCHEMES
2nd Respondent
ALFRED
MOKODITOA
3rd Respondent
NTEBENG
MOKODITOA
4th Respondent
JUDGMENT
Baqwa
J
[1]
This is an application for an order reviewing and setting aside the
decision of the Appeal Board of the Council for Medical
Schemes (the
first respondent) to dismiss the applicant's appeal against a
decision of the Appeal Committee.
[2]
The Government Medical Scheme (the applicant) further seeks an order
upholding the applicant's decision to terminate the membership
of
Alfred Mokoditoa (the third respondent) and dismissing his appeal
against that decision and ancillary relief.
[3]
The background to this application is as follows: The applicant is a
restricted medical scheme registered in terms of the Medical
Schemes
Act 131 of 1998 ("the MSA") and Ntebeng Mokoditoa (the
fourth respondent) is the primary member of the applicant
with the
third respondent being a dependant.
[4]
The fourth respondent alleged that the applicant had wrongfully
terminated the membership of the third respondent as a result
of
submissions of fraudulent claims by the latter.
[5]
The third respondent who is a pharmacist by profession owned four
pharmacies which rendered services to the applicant's members.
The
causus belli
relates to fraudulent claims submitted on behalf
of the applicant's members through one of the pharmacies, Tshwane
Pharmacy.
[6]
The applicant alleged that the
modus
operandi
used in these fraudulent activities included submitting claims
for items not covered by the medical scheme, claiming for items or
medicine not actually supplied to members, claiming for other items
to cover shortfalls on chronic medicine and members receiving
cash in
exchange for phantom claims.
[7]
Pursuant to a complaint by the fourth respondent, the Registrar of
Medical Schemes (the second respondent) had found in favour
of the
third respondent and directed that the applicant re-instate the third
respondent.
[8]
The applicant appealed against the decision of the second respondent
to the Appeals Committee of the first respondent but was
unsuccessful.
[9]
The applicant lodged a further appeal against the Appeals Committee's
decision to the first respondent but was also unsuccessful.
The first
respondent upheld the decision of the Appeals Committee with the
result that the third respondent continued to be a dependant
member
of the applicant.
[10]
In summary, the first respondent found that:
10.1
the applicant was precluded from relying only on the MSA to terminate
the third respondent's
membership for any fraudulent act not related
to the third respondent's dependant membership of the scheme.
10.2
Rule 12.5.1 (read with Section 29 (2)) provides for termination of
membership for fraudulent
claims by a person acting in their capacity
as a member of the scheme.
10.3
The rules of the applicant, with specific reference to 12.1.5 ought
to be read together
with Section 29 (2) of the MSA.
10.4
Even if it was accepted that the third respondent perpetrated the
alleged fraud, he had
not done so as a dependant member and as
such, he was not in contravention of Section 29 (2) (c) and (d) and
Rule 12.5.1
which do not permit the termination of membership in the
circumstances of the third respondent's case.
[11]
The applicant submits that the fact of the third respondent having
committed fraud or otherwise is not for consideration in
the present
application and that this application ought to deal with questions of
law and not fact.
[12]
The submission by the applicant is however not entirely correct.
Issues of law may play a preponderant role in the review but
such
issues cannot be considered
in vacuo
precisely because
it was the factual considerations that ultimately resulted in the
term_ination of the third respondent's membership.
[13]
It is however correct that the specific question before the first
respondent was whether the second respondent was correct
in
concluding that Section 29 (2) and Rule 12.5.1 of the Rules do not
extend to submissions of fraudulent claims by dependants
in their
capacity as service providers. The first respondent was therefore not
called upon to make a specific finding relating
to the commission of
fraud and it cannot be faulted for not making such a finding.
[14]
In order to decide whether the first respondent's decision is
reviewable or not it is necessary to briefly analyse the regulatory
environment in which the applicant operates with reference to the MSA
and the Rules.
14.1
That environment has already been traversed both in the heads of
argument and in the address
by Counsel today.
14.2
It is
"sensible and
business-like"
as submitted by counsel for the applicant Mr Tsatsawane to treat
Section 29 (2) as a stand-alone section - which could have been
used
by the applicant in terminating his membership without any provision
for such in its rules. It would however in my view fly
in the face of
the Endumeni Municipality decision which cautions judges not to yield
to the temptation of reading into laws what
seems sensible but is not
intended or stated in the legislation. The introductory words to
Section 29 (2) read
"A
medical scheme shall not
cancel or suspend
a member's
membership
or that of any
of
his
or
her
dependants,
except
on
the
grounds
of
- ...."
Clearly that section is in line with what both Counsel for the
respondents stated with reference to the Act namely
that it was
enacted to regulate business between a scheme and its members and not
other parties such as service providers.
There is no reference
whatsoever to a service provider in Section 29 (2). If Mr
Tsatsawane's submissions are accepted I would have
to read the words
service provider into that subsection.
14.3
In my view, upon a reading of the Act it is quite clear that the
Rules do not have to be literally
a mirror image of the Act. The fact
therefore that the provisions of Section 29 (2) are not included
under Section 29 (1) does
not
ipso
facto
create
a stand-alone status to Section 29 (2). That much is indicated by the
very introductory words of that section which means
therefore that
Section 29 (2) remains within the broader scheme of things which is
indicated in the preamble to the Act, namely
to regulate matters
between the scheme and its members and no other parties.
See
Natal Joint
Municipal
Pension
Fund v
Endumeni
Municipality
2012
(4) SA 593
(SCA) at para 18 where the following was stated:
"
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary rules
of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production.
Where
more than one meaning is possible each possibility must be weighed in
the light of all these factors. The process is objective
not
subjective. A sensible meaning is to be preferred to one that leads
to insensible or unbussinesslike results or undermines
the apparent
purpose of the document. Judges must be alert to, and guard against,
the temptation to substitute what they regard
as reasonable, sensible
or businesslike for the words actually used. To do so in regard to a
stat'!te or statutory instrument is
to cross the divide between
interpretation and legislation. In a contractual context it is to
make a contract for the parties other
than the one they in fact
made."
[15]
Rule 4.5 defines
"beneficiary"
as being "a
Member or a Dependant duly
registered as
such
in
accordance with
these
Rules".
[16]
Rule 4.13 defines
"Dependanf'
as "a
person
who qualifies as a Child
Dependant or
as
an
Adult Dependant of
a
member
in
accordance with
the definitions in
these Rules and the
provisions of Rule 6
hereof
and who
is accepted and
registered as
a
Dependant of
such a
member of
the Scheme, for so
long
as
such
person's registration is
approved and
current
in
accordance with these Rules."
[17]
Rule 4.23 defines a member as follows: "a
member is any
person
who is eligible
to be a member
of the scheme in terms of Rule 6 of the Rules or who is
registered as such by the scheme."
[18]
The MSA defines a beneficiary as "a
member
or a
person
admitted as a dependant of the member."
[19]
As can be observed from the provisions of the MSA and the Rules, a
membership relationship is created between the scheme and
a member
concerned which entitles the member to derive benefits from the
services provided by the scheme. This relationship defines
the
environment and parameters within which the scheme and the member
interact. It does not permit the involvement of a third party
not
referred to in the Act or the Rules.
[20]
The relationship between the third respondent and the applicant was
as a service provider.
[21]
The third respondent's relationship with the applicant is as a
dependant of the fourth respondent.
[22]
There is no definition of a service provider in the rules. Rule 4.14
defines a
"Designated
Service Provider' .
That
being a category of healthcare providers who form part of a preferred
list of providers which members are required to utilise
for the
provision of services. The third respondent does not fall within this
category.
[23]
Rule 15.5 provides for the procedure to be followed whenever there is
a query regarding an account, statement, claim or other
request for
reimbursement from a healthcare provider:
"
The
scheme shall notify the relevant member and the healthcare
provider,
within thirty (30) days after receipt thereof
and state the reasons
for such an opinion.
The
scheme shall afford such member and
provider
the opportunity to resubmit such corrected account or statement to
the scheme within sixty (60) days following the date
from which it
was returned for correction."
[24]
Rule 15.6 provides for the suspension of a claim or request for
reimbursement to a provider when there is alleged fraudulent
action
by a member or any of his/her dependants or the provider.
Alternatively, in terms of Rule 17.4 the scheme may make payment
of
the claim in full or pay a portion thereof at the discretion of the
Board.
[25]
This is the procedure which the applicant ought to have followed
regarding any queried claims by Tshwane Pharmacy as a service
provider. There is no provision for suspension of membership as a
form of sanction or penalty.
[26]
Paragraph 6 of the decision of the first respondent reads as
follows:
"6.
The relevant portion
of Rule
12.
5.
1
reads:
"The
Board may ... terminate the membership of a Beneficiary whom the
Board finds guilty of abusing the benefits and privileges
of the
scheme by presenting false claims or making a material
misrepresentation . . ..."
While
the Rule does indeed provide
for the termination
of membership
for "false claims'',
the difficulty for the applicant is that as the Rule reads,
the person
whose membership
is
sought to be terminated must have committed fraud in his/her capacity
as
a
member
of the applicant;
that
much is clear from the context.
Surely, it is only
when one is acting in one's capacity as
a
member that
one can be
"guilty of abusing
the
benefits and privileges
of the scheme"; the
"benefits and privileges"
which are not to be
abused are those attaching to, and enjoyed by,
a
member in
his/her capacity
as such.
There is
nothing in the Rule, as it stands, providing
for the
termination of membership
where
a
member has
committed fraud in any capacity other than in their capacity as
a
member of the scheme;
there must be
a
nexus
between
the act of fraud and the fact of being
a
member.
Where, as
in casu,
the
third respondent
allegedly committed fraud in his
capacity as
a
service provider,
the connection
above is missing."
[27]
On a conspectus of the provisions of the MSA and the Rules referred
to above, the facts of the case and the excerpt quoted
from the
decision of the first respondent, it is self-evident that there was
no misdirection or irregularity on the part
of the first
respondent in reaching its decision. On the other hand the respondent
appears to have had a thorough grasp of the
law in a manner that
cannot justify a review of that decision.
[28]
The applicant omitted to pursue then, a number of options which were
at its disposal. It could have instructed its members
to deal only
with the approved service providers to the exclusion of the Tshwane
Pharmacy. If it was satisfied that Tshwane Pharmacy
was involved in
unprofessional or criminal conduct, 1t could have reported the matter
to the South African Pharmacy Council or
the South African Police
Service. It would appear that these steps have now been taken.
[29]
It would indeed appear, in retrospect that the applicant misconstrued
its own rules by conflating the capacity of a beneficiary
who
received membership benefits
qua
member and the capacity of a
service provider who provided services to members of the scheme
without proper reference to the rules
and subjected them to the same
sanction or penalty.
[30]
In the circumstances, I find that the decision of the first
respondent was the correct one and it does not fall to reviewed
or
set aside. It is accordingly upheld.
[31]
In the result the following order is made:
The
application for review is dismissed with costs which shall include
the cost of counsel.
_____________________________
S.A.M
BAQWA
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Date
of H
earing:
28 January 2016
Date
of J
udgment:
29 January 2016
For
the Applicant:
Adv. K. Tsatsawane Adv. J. Raizon
Instructed
b
y:
Gildenhuys Malatji Inc.
For
the 1st & 2nd Respondents:
Adv. N. Rajab-Budlender
Adv. P. Pillay
Instructed
b
y:
The Appeal Board for Medical Schemes Norton Rose Fulbright South
Africa Inc.
For
the 3rd & 4th Respondents:
Adv. B. L. Manentsa
Instructed
b
y:
Matojane Malungana Inc.