Brief Summary

Health Professions — Accreditation — Appeal against refusal of accreditation to employ healthcare professionals — Netcare Hospitals (Pty) Ltd applied for accreditation to employ radiotherapists and medical physicists but was denied by the Health Professions Council of South Africa (HPCSA) — Legal issue regarding the proper exercise of discretion by the Committee in denying the application — Court held that the refusal was not justified and set aside the decision, granting the accreditation sought by Netcare.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned two related proceedings before the Gauteng Division, Pretoria, namely an appeal and an associated review application. The principal proceeding was an appeal brought under section 20 of the Health Professions Act 56 of 1974 against a decision, taken through delegated authority, refusing accreditation to a private hospital group to employ certain registered health professionals.

The appellant was Netcare Hospitals (Proprietary) Limited (“Netcare”), a private hospital group operating oncology units. The first respondent was the Health Professions Council of South Africa (“HPCSA”). The second respondent was the Chairperson of the Undesirable Business Practice Committee, a sub-committee established under the Health Professions Act and tasked with implementing the HPCSA’s Policy Document on Undesirable Business Practices. The third and fourth respondents were the Minister of Health and the Minister of Justice and Correctional Service respectively; although they delivered notices of intention to oppose, they filed no substantive papers and were not represented at the hearing.

The dispute arose from the refusal of Netcare’s application for HPCSA accreditation to employ radiotherapists and medical physicists at Netcare hospitals offering oncology services. The general subject matter was the regulation of employment relationships between non-practitioner corporate entities and HPCSA-registered practitioners, particularly under Rule 18 of the Ethical Rules of Conduct for Practitioners Registered under the Health Professions Act, 1974 (“Ethical Rules”) and the HPCSA’s undesirable business practices policy.

In parallel, Netcare and two individual practitioners employed by Netcare (a medical physicist and a radiotherapist) launched a review under the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) seeking to set aside the same refusal decision. The court directed that the appeal and review be argued together because the issues overlapped materially. Ultimately, once the appeal succeeded on the merits, the court regarded the review as redundant and removed it from the roll.

2. Material Facts

Netcare operated 54 private hospitals in South Africa, with seven hospitals containing oncology units providing treatment for malignancies and related oncology healthcare services. For a significant period, Netcare had employed medical physicists and radiotherapists to support the functioning of these oncology units.

Under the Ethical Rules, and specifically Rule 18, a non-practitioner entity may employ an HPCSA-registered practitioner only if the employer is accredited by the HPCSA and the employment contract complies with Rule 18. The court accepted that, absent such accreditation, practitioners who accept employment with an unaccredited non-practitioner employer may be exposed to allegations of unprofessional or unethical conduct, with possible consequences including suspension or removal from the register. On the papers, Netcare was not accredited to employ medical physicists and radiotherapists, and the two individual applicants had been employed by Netcare since 2010 and 1989 respectively, creating a potential regulatory and professional risk.

On 31 January 2014, Netcare submitted a comprehensive accreditation application to the Undesirable Business Practices Committee, relying on the Policy Document’s criteria as the route for approval. Materially, Netcare placed the following factual position before the Committee: oncology services were delivered using internationally accepted protocols and advanced technology; treatment was undertaken by a team led by an oncologist; the radiotherapist and medical physicist could not initiate treatment independently; the oncologist (not employed by Netcare) determined treatment protocols and remained subject to HPCSA control; Netcare asserted that it did not control treatment decisions and could not indirectly manipulate treatment initiation or extent through the employment of these practitioners; the radiotherapists and medical physicists were salaried employees with remuneration based on experience and qualifications and without commission or volume-based bonuses; Netcare contributed to training through affiliations with tertiary institutions; independent oncology practice was said to be prohibitively expensive (in the region of R32 million); and employment was presented as beneficial to practitioners through employment security and statutory employment benefits.

The Committee considered the application on 19 March 2014 and resolved not to approve it. A letter dated 5 May 2014 from an HPCSA official conveyed that employment by corporate entities was said to be against the HPCSA ethical framework, that approval was in certain instances only conferred for “emergency purposes”, that no emergency care requirement had been established, and that Netcare should instead engage practitioners as service providers through service-level agreements.

Netcare sought further information and reasons and obtained the Committee’s minutes only after a request under the Promotion of Access to Information Act 2 of 2000. The minutes reflected that the Committee refused the application on the bases that Netcare should regularise its policy to align with HPCSA ethical rules, that no emergency care requirement had been established and that service-level agreements were recommended, and that the practitioners were able to work independently while still providing the required services. The minutes did not indicate that any extraneous evidence was received or that Netcare’s factual averments were disputed; the court proceeded on the footing that the Committee had accepted the factual content of the application.

Netcare then noted an appeal (with an extension granted by HPCSA) under section 20 of the Health Professions Act, contending in substance that the Committee misapplied the Policy Document, treated “emergency” as a determinative requirement, incorrectly concluded the application was against the ethical framework, and relied on irrelevant considerations such as the practitioners’ ability to work independently and the preference for service-level agreements over employment.

3. Legal Issues

The central legal question was whether, on the record before the Committee, the decision to refuse accreditation was right or wrong for purposes of an appeal under section 20 of the Health Professions Act 56 of 1974. This required determination of whether the Committee properly exercised the discretion contemplated by the Ethical Rules and the Policy Document when assessing an application by a non-practitioner corporate entity to employ registered practitioners.

A related question concerned the proper interpretation and application of paragraph 2.2.2 of the Policy Document on Undesirable Business Practices, including whether the Committee was entitled to treat approval as limited to “emergency” circumstances and whether a profit motive by a private hospital could be treated as an overriding disqualifier in circumstances otherwise said to comply with the ethical framework.

The dispute primarily concerned the application of law and policy to largely undisputed facts, rather than factual disputes requiring credibility determinations. It also involved an assessment of the nature of the discretion conferred on the Committee, including whether it was a “discretion in the strict sense” (calling for appellate restraint) or a broader evaluative discretion permitting the court to substitute its own decision on the merits when considering the record.

Although the court referred to the possibility that a categorical stance against private hospitals could be constitutionally problematic as potentially unfair discrimination based on profit motive, the matter was resolved through the appeal on the interpretation and application of the Policy Document and Ethical Rules on the established record.

4. Court’s Reasoning

The court began by identifying the nature of an appeal under section 20 of the Health Professions Act. Relying on Health Professions Council of SA v De Bruin [2004] 4 All SA 392 (SCA) and Emergency Medical Supplies and Training CC (Trading as EMS) v Health Professions Council of SA and Another [2013] 4 All SA 1 (SCA), it treated section 20 as creating an appeal in the ordinary sense, meaning a rehearing on the merits limited to the evidence and information that served before the decision-maker. The court accepted that HPCSA has specialist expertise and that due weight must be given to it, but also stated (in line with the authorities) that interference is warranted where the appeal principles justify it.

On the record, the court found no basis to conclude that the Committee relied on anything beyond Netcare’s application, and it noted that the Committee did not appear to have challenged the truthfulness of Netcare’s factual assertions. The court therefore assessed the refusal decision against the information Netcare had supplied and the criteria contained in the Policy Document and Ethical Rules.

A central interpretive step in the reasoning was the court’s view of paragraph 2.2.2 of the Policy Document. The court treated that paragraph as requiring the Committee to weigh a number of factors, and it agreed with the appellant’s submission that the Policy Document was not a checklist but rather a guide for the exercise of discretion. On this approach, the criteria were not, by themselves, automatically decisive in a mechanical way; rather, they informed a contextual judgment about whether the proposed employment relationship would undermine ethical standards, compromise clinical independence, introduce perverse incentives, or otherwise operate detrimentally.

The respondents argued that the Committee enjoyed a wide discretion and that the court should not interfere absent proof of capriciousness, bias, wrong principle, or lack of substantial reasons, invoking Naylor and Another v Jansen 2007 (1) SA 16 (SCA). The court rejected this as determinative in the present setting. It distinguished between a narrow discretion and a broad discretion by relying on MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) SA 620 and Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd [1992] ZASCA 149; 1992 (4) SA 791 (A). Applying those authorities, it characterised the Committee’s task under the Policy Document as a broad, evaluative discretion involving disparate and incommensurable features, which meant the appellate court was entitled to decide the matter according to its own view of the merits on the record.

Turning to the specific reasons for refusal, the court found that the Committee’s first recorded basis—that Netcare should regularise its employment policy to align with the ethical rules—did not coherently justify refusal, because Netcare’s application was itself an effort to obtain accreditation in alignment with the Ethical Rules and the Policy Document. The court treated this reasoning as logically unsatisfactory in the circumstances of an accreditation application.

The court also examined the Committee’s reliance on an “emergency” requirement. It held that emergency care was not a requirement specified in the Policy Document or the Health Professions Act as a threshold condition for accreditation. By elevating “emergency” to an effectively determinative criterion, the Committee was found to have given undue weight to a factor not stipulated as controlling, while failing to give appropriate consideration to the broader set of criteria in paragraph 2.2.2.

A further theme in the reasoning was the court’s concern that the refusal appeared to reflect a broader stance against accrediting private hospitals because they operate for profit. The court considered this difficult to reconcile with the position that registered practitioners in private practice may employ other registered professionals, even though a profit motive may also exist in that context. While the court acknowledged that one possible explanation might be the HPCSA’s jurisdictional reach over practitioner-employers, it found that, on the facts before it, this did not provide sufficient justification to refuse Netcare accreditation. The court went further to indicate that a categorical approach disadvantaging private hospitals due to profit motive, while permitting similarly profit-driven private practitioners to employ, was illogical and “possibly unconstitutional” due to unfair discrimination, though the decision ultimately rested on misdirection and improper weighting of factors rather than a definitive constitutional ruling.

In relation to the Committee’s view that the practitioners could work independently and that service-level agreements were preferable, the court treated these considerations as either irrelevant or improperly prioritised. It noted that the Committee appeared not to have given due consideration to Netcare’s submissions about the prohibitive cost of establishing an independent oncology centre and the practical benefits of direct employment for both practitioners and service delivery. The court also considered the content of Netcare’s application sufficient to dispel concerns that employment would harm patients or create incentives for overtreatment, particularly given Netcare’s assertions that treatment protocols were determined by independent oncologists not employed by Netcare, that the practitioners were salaried, and that no commission or volume-based incentives existed.

Finally, the court emphasised that even if accreditation were granted, Rule 18 continued to provide safeguards: employment contracts had to be in writing and drawn up on a basis in the interests of the public and the profession, and the HPCSA retained oversight powers, including inspection of the contracts. In that context, the court concluded that the Committee had misdirected itself as to the nature of the discretion by giving unwarranted weight to some factors and ignoring others, and that the record justified appellate interference and substitution of the correct decision.

Because the appeal succeeded and the court substituted an accreditation decision, it found that deciding the PAJA review was unnecessary. It nevertheless recorded that equal time had been spent on appeal and review argument for purposes relevant to taxation.

5. Outcome and Relief

The court upheld the appeal. It set aside the decision of the Undesirable Business Practices Committee and, by delegation, the HPCSA decision refusing Netcare’s accreditation application dated 31 January 2014.

In substitution, the court ordered that Netcare Hospitals (Proprietary) Limited is accredited to employ medical physicists and radiotherapists registered with the HPCSA at Netcare hospitals providing oncology services, in accordance with employment contracts complying with Rule 18 of the Ethical Rules.

The court ordered the first respondent to pay the costs of the appeal, including the costs consequent upon the employment of two counsel.

The review application (case number 71745/2014) was removed from the roll, and the court made no order as to costs in the review.

Cases Cited

Health Professions Council of SA v De Bruin [2004] 4 All SA 392 (SCA).

Emergency Medical Supplies and Training CC (Trading as EMS) v Health Professions Council of SA and Another [2013] 4 All SA 1 (SCA).

Naylor and Another v Jansen 2007 (1) SA 16 (SCA).

MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) SA 620.

Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd [1992] ZASCA 149; 1992 (4) SA 791 (A).

Legislation Cited

Health Professions Act 56 of 1974.

Promotion of Administrative Justice Act 3 of 2000.

Promotion of Access to Information Act 2 of 2000.

Unemployment Insurance Contributions Act 4 of 2002.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the section 20 appeal is an appeal in the ordinary sense, determined on the merits but confined to the information before the decision-maker. On the undisputed record, the court held that the Committee and HPCSA misdirected themselves in refusing accreditation by applying the Policy Document restrictively, elevating “emergency care” into a determinative requirement not contained in the Policy Document or the Act, and relying on considerations such as independent practice and service-level agreements without properly weighing the Policy Document criteria and the facts presented.

The court further held that the nature of the discretion exercised was broad, permitting the court to substitute its own decision on the merits because the Committee decided the matter on paper and the court was in as good a position to evaluate the record.

Accordingly, the refusal decision was set aside and replaced with an order accrediting Netcare to employ radiotherapists and medical physicists at its oncology hospitals subject to Rule 18-compliant contracts, with costs against the first respondent on appeal and the review removed from the roll without costs.

LEGAL PRINCIPLES

An appeal under section 20 of the Health Professions Act 56 of 1974 is an appeal in the ordinary sense, amounting to a rehearing on the merits but limited to the evidence or information that served before the body whose decision is appealed. The appellate court determines whether the decision was right or wrong on that confined record, while giving appropriate weight to the expertise of professional regulatory bodies.

In evaluating regulatory decisions under policy instruments such as the Policy Document on Undesirable Business Practices, the decision-maker must treat the listed criteria as a guide requiring contextual weighing of multiple factors, rather than as a rigid checklist or as authorising the elevation of non-stipulated requirements into decisive thresholds.

The distinction between a discretion in the strict (narrow) sense and a discretion in the broad sense affects appellate restraint. Where the discretion is broad and involves a mandate to consider disparate features and reach an evaluative conclusion, the appellate court may exercise its own discretion and substitute its own decision on the merits, particularly where the matter was determined on paper and the appellate court is in as good a position to assess the record.

Where the record shows that the decision-maker gave undue weight to some factors, ignored relevant considerations, or applied the policy framework restrictively in a manner not supported by the empowering provisions, appellate interference and substitution are justified on ordinary appellate principles.

Netcare Hospitals (Proprietary) Limited v Health Professions Council of South Africa and Others (A480/2014) [2016] ZAGPPHC 293 (28 April 2016)