IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
( l) REPORTABLE: ~ /NO
(2) OF INTEREST TO OTHER JUDGES: ~ /NO
(3) REVISED.
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SIGNATURE
In the matter between:
04MA Y 2026
DATE
EPIONE HEALTHCARE SOLUTIONS (PTY) LTD
and
COUNCIL FOR MEDICAL SCHEMES
THE APPEAL BOARD OF THE COUNCIL
FOR MEDICAL SCHEMES
JUDGMENT
LABUSC HAGNE J:
Case No: 050811 /2025
Applicant
First Respondent
Second Respondent
[1 ] The applicant brings a review application seeking an order setting aside a
decision of the Council for Medical Schemes (CMS) of 06 September 2023 to
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dismiss an application in terms of section 8(h) of the Medical Schemes Act,
1998 for an exemption from its provisions. It also seeks an order setting aside
the decision of the Appeal Board for the Council for Medical Schemes (the
“Appeal Board”) dismissin g the applicant’s internal appeal against the
aforesaid decision. The applicant seeks a declarator that it does not carry on
the business of a medical scheme. As an alternative, it seeks a declarator
that the applicant is exempt under section 8(h) from t he provisions of the
Medical Schemes Act.
[2] The first issue in this review application is whether the business of the
applicant constitutes the business of a medical scheme. If so, it would require
registration as a medical scheme in terms of sec 20(1) of the Medical Schemes
Act,1998 (the MSA). The second issue is whether the refusal of the applicant’s
exemption application in terms of sec 8(h) of the MSA should be reviewed and
set aside.
BACKGROUND FACTS
[3] The applicant has developed a product providing for primary healthcare
services to be rendered against a monthly payment. It describes its business
as follows:
“25. The healthcare delivery model at Epione intends to flight at the
Health Villages as a Direct Primary Care (DPC) product which
will incorporate social determinants of health (SDOH) to cater for
the complete wellbeing of communities.
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26. Those subscribing or prepaying for the DPC product will pay a
fixed monthly fee for access to the following defined basket of
services:
a) Unlimited consultations with our GP in person or virtually;
b) Full access to [the patient’s] medical records via the Epione
App – epione.net;
c) Bi-annual full comprehensive primary health exam with a
GP (sc. general practitioner);
d) ECGs;
e) Detailed specialist referrals and hospital admission co -
ordination;
f) Blood draws and coordination with pathology labs;
g) Chronic disease management or hypertension, diabetes
etc.;
h) Mental health counselling with managed referrals if
required;
i) Urgent care – same day or next day care for urgent medical
issues such as sprains, cuts requiring stiches, fractures
etc.;
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j) Point of care tests such as blood sugar, HIV screening,
urinalysis etc.”
[4] The applicant distinguish es its product from the service offering of other
medical schemes. The applicant seeks to stress the preventative nature of its
offering. Its product includes medical emergencies and mental health
counselling, which cannot be described as preventative, but the core focus is
preventative.
[5] The applicant’s position is that its product offering does not fall within the
definition of the business of a medical scheme. It nevertheless applied for an
exemption from the Medical Schemes Act, expecting the CMS to confirm its
primary position that it does not need an exemption as it does not conduct the
business of a medical scheme. The position of the CMS and the Appeal Board
is that the applicant does conduct the business of a medical scheme, and the
exemption application was refused.
THE EXEMPTION APPLICATION
Section 8(h) of the Medical Schemes Act
[6] The CMS’s power to exempt in terms of section 8(h) reads as follows:
“The Council shall, in the exercise of its powers, be entitled to –
…
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(h) exempt, in exceptional cases and subject to such terms and
conditions and for such periods as the Council may determine,
a medical scheme or person upon written application from
complying with any provisions of this Act;”
[7] The primary purpose of this power is to deal with exceptional cases requiring
special consideration as to terms and conditions and the period for which the
exemption may apply.
[8] It is apparent that the applicant regards its product offering as exceptional and
seeks a permanent exemption.
[9] Its motivation as to why exceptional circumstances exist is however based on
trying to demonstrate that the services of the applicant do not constitute the
business of a medical scheme.
Why the applicant says it is not a medical scheme
[10] The applicant distinguishes its DPC model from medical scheme cover by
contending that it does not pool risk as a medical scheme does.
[11] Secondly, it states that its care focus is preventative whilst medical scheme’s
care focus is curative. The applicant contends that the number of visits to a
medical practitioner in its offering is unlimited, whereas a medical scheme
member’s number of visits depends on the type of medical scheme involved.
The applicant’s clients have twice yearly mandatory health checks, while this
does not apply to members of a medical scheme.
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[12] Medical schemes are not profit driven. By contrast, the applicant is driven by
the goal of deriving profits.
[13] The applic ant contends that a medical scheme has no relationship with
medical professionals. The applicant distinguishes the position of the
applicant. It promotes direct relationships between patients and their primary
healthcare providers on the group of clinicians with whom the applicant works.
This distinction, however, is that the applicant appoints a pool of clinicians with
whom it has a contractual relationship, contrary to a medical scheme. The
applicant does not deal with medical schemes appointin g designated service
providers in respect of prescribed medical benefits.
[14] The third distinction is that there is no third party payment, billing or co -
payment associated with the provision of primary healthcare services.
[15] The fourth distinction is that the DPC product contemplates certain mandatory
medical expenses and does not cater for unforeseen medical services.
[16] The fifth distinction is that the DPC product costs the same for both rich and
poor, while medical schemes have different offerings at varying costs to
members.
[17] The applicant motivates an exemption, should the CMS have a different view
in the following terms:
“2.19.3 We submit the following information as de monstration of
exemptional (sic) circumstances;
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2.19.3.1 As demonstrated in 2.11.3 and expanded upon in
annexure B, the pilot was a significant success and
demonstrates the need for a value based approach to
primary healthcare service provision and
reimbursement. The DPC product addressed that
need – cost saving benefits for patients, better quality
patient/doctor relationships and improved
reimbursement models for doctors.
2.19.3.2 The DPC product is not the same as a medical
scheme benefit. Neither Epione nor the Health
Villages provide financial cover for the medical
expenses of patients.
…
2.19.3.5 Patients directly access primary care (in the form of
GP consultations or one of the other services listed in
paragraph 2.14.1 above) from the Health Villages with
the management support of Epione.
2.19.3.6 Epione is a for-profit company, and the business does
not belong to any members; and
2.19.3.7 Neither Epione nor the Health Villages collectively
pool good and bad risks.”
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THE CMS DECISION
[18] These contentions were rejected by the CMS. The CMS found:
“9. The onus is on the applicant, Epione to demonstrate exceptional
circumstances in support of the exemption application and
based on what was put forward, we regret to inform you that the
decision of the Council is to decline the application for the
following reasons:
9.1 Epione does not meet the requirements for an
exemption to be granted in terms of section 8(h) of the
MS Act as it was found that there are no exceptional
circumstances justifying the granting of an exemption.
9.2 DPC product is a new product and therefore not
covered by the Exemption Framework.
9.3 Epione has alternative options such as brin ging an
application for registration as a medical scheme in
terms of section 24 of the MS Act – subject to
compliance with the MS Act which should include the
provision of prescribed minimum benefits (PMBs).
9.4 Previous similar exemption applications where
applicants have attempted to launch primary
healthcare products that do not meet the requirements
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of the MS Act have been declined by the Council on
the grounds that no exceptional circumstances exist for
such.
9.5 The introduction of an LCD O is a policy issue, one
which will be dealt with by the executive authority of the
Council and cannot be seen to be circumventing a
policy process by granting exemptions. Section 7(b) of
the MS Act requires the Council to control and
coordinate the funct ioning of medical schemes in a
manner that is complementary to national health
policy.”
THE APPEAL BOARD DECISION
[19] Dissatisfied with the decision of the CMS, Epione on 06 November 202 3
appealed to the Appeal Board. On 15 July 2024 the appeal was heard and on
18 October 2024 the Appeal Board delivered its ruling, dismissing the appeal
and confirming the Council’s decision.
[20] The Appeal Board also referred to the fact that the applicant, instead of
demonstrating exceptional circumstances, sought to distinguish its product
from the business of a medical scheme. The Appeal Board found that the
service that Epione provides is a service that is regarded as the business of a
medical scheme. They consequently need to register as a medical scheme
and comply with the regulations, including the provision s of prescribed
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minimum benefits, specialist coverage, hospitalisation etc. and all the other
regulations that the MSA cover.
GROUNDS OF REVIEW OF THE CMS DECISION
[21] The applicant contends that the CMS was materially influenced by an error of
law in terms of section 6(2)(d) of PAJA, in misconstruing the meaning of “the
business of a medical scheme”.
[22] Secondly, the decision of the CMS was taken for a reason not authorised by
section 8(h) of the MSA, as contemplated in section 6(2)(e)(i) of PAJA.
[23] The third ground was that the CMS took a decision by taking into account
irrelevant consideration as contemplated by section 6(2)(e)(iii) of PAJA. The
first irrelevant consideration was the taking into account of various
misapprehensions, namely that Epione had failed to show exceptional
circumstances and incorrectly finding that the exemption framework applies to
the DPC product, the irrelevant finding that Epione has alternative options.
[24] The applicant contends fourthly that the CMS decision was taken arbitrarily or
capriciously as contemplated in section 6(2)(e)(vi) of PAJA. The applicant
states the following:
“The CMS closed its eyes to and ignored arguments mounted
strenuously before it. The CMS decision rested on matters that were
factually and legally wrong. These misapprehensions covered both
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components of both decisions, namely the interp retative leg as well as
the exemption leg.”
[25] The fifth ground is that the CMS decision is not rationally connected to the
purposes for which it was taken (section 6(2)(f)(ii)(aa) to (dd) of PAJA).
[26] The sixth ground of review is that the decision of the CMS was so
unreasonable that no reasonable person could have so exercise its decision-
making power as contemplated in section 6(2)(h) of PAJA.
GROUNDS OF REVIEW OF THE DECISION OF THE APPEAL BOARD
[27] The applicant contends that t he Appeal Board made an error of law in
misconstruing the business of a medical scheme in its application to the
applicant (section 6(2)(d) of PAJA). The Appeal Board is alleged to have made
an error of fact and law by suggesting that the applicant operates in an
unregulated market (section 6(2)(d) of PAJA).
[28] A comparison of grounds of review reflects an overlap of reasons . It suffices
to state that the grounds of review were the same as the attack on the decision
of the CMS.
RUBBER STAMPING
[29] In a supplementary founding affidavit, the applicant focuses on an interna l
memorandum directed to the CMS containing a recommendation to deny the
application. The primary attack on this document is that it does not deal with
the applicant’s primary contention, that the applicant does not undertake the
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business of a medical scheme. The memorandum assume s that it is
rendering a service falling within the ambit of the business of a medical
scheme. The applicant disputes the contention.
[30] The applicant contends that both the CMS and the Appeal Board made the
same mistake, i.e. they blindly accepted that, but for an exemption, the
applicant would be conducting the business of a medical scheme. This is
discussed in the discussion section below.
THE DEFENCE
[31] In its answering affidavit the CMS explains why its position is that the applicant
does conduct the business of a medical scheme. The applicant’s product and
the business of medical schemes have common factors:
31.1 The applicant proposes to supply healthcare services to its clients in
exchange for a contribution which is called “the subscription”;
31.2 A medical scheme requires a contribution to pay for the value that the
medical scheme offers;
31.3 The medical scheme undertakes liability associated with the provision
of related healthcare services in exchange for the payment of money
by the member through its contributions;
31.4 The relationship is that of debtor/creditor. The medical scheme
receives the contributions as part of its business;
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31.5 Contributions are received by the medical scheme as deb ts the
medical scheme owes to the member in return for the services it has
yet to render;
31.6 The applicant receives its contribution on the undertaking that the
client will receive healthcare services according to the terms of their
agreement. The subscription fee is not refundable and is exclusively
reserved, like in a medical scheme, for a futu re occurrence. That
occurrence is the provision of a relevant healthcare service. This is a
liability to the applicant t hat dictates an order to defray expenses
associated with healthcare services;
31.7 The applicant proposes to pay for service that fall exclusively within
the definition of relevant healthcare services.
[32] The CMS’s conclusion is that, based on these factors, the applicant is a
provider of prepaid healthcare services to the member.
[33] The CMS raises a specific defence, the unreasonable delay in instituting this
application (178 days after the decision was taken).
[34] It is contended that the applicant unduly delayed, despite being within the
period of 180 days, provided for in section 7 of PAJA.
[35] As the CMS could not point out to any prejudice to it arising from the
applicant’s failure to launch these proceedings earlier than it did, I do not
intend deciding the matter on this ground. The application was brought
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timeously and although there may have been some delay, it did not prejudice
the respondents.
DISCUSSION
[36] This matter demonstrates the difficulty in creating and lawfully offering new
products in the healthcare sector. The sector is highly regulated, and there are
circumstances where meritorious new offerings may falter, due to the
constraints imposed by statutes such as the MSA . However, absent a
challenge to the relevant provisions of the MSA, they need to be complied
with.
[37] There has been a dispute whether Epione, in applying for an exemp tion in
terms of sec 8(h) of the MSA , has not implicitly conceded that its business is
that of a medical scheme.
[38] Its exemption a pplication sets out in express terms the basis on which it
applies for an exemption:
“1.1 By way of introduction, Epione Healthcare Solutions Proprietary
Limited ("EHS" or "Epione") is a private company established
with the objective of developing, owning and operating
healthcare facilities in Africa. Its mission is to enable access to
quality, affordable, sustainable and patient -centric healthcare
services.
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1.2 EHS is not a medical scheme and does not provide services
generally associated with that of a medical scheme. However,
given the broad definition of the ‘business of a medical scheme’
in the Medical Schemes Act, 1998 (the ‘MSA’), it is arguable that
the services provided by EHS may fall within that definition. Out
of an abundance of caution, and to the extent that the Council
for Medical Schemes ("the CMS") is of the view that EHS is
conducting the ‘business of a medical scheme ’, EHS hereby
applies for exemption from the provisions of the MSA as
provided for in section 8(h) of the MSA.”
[39] The only concession has been that it is arguable that the services provided by
the applicant fall within that definition. I decide the issue afresh.
[40] The “business of a medical scheme” is a defined term in the MSA and reads
as follows:
'business of a medical scheme' means the business of undertaking, in
return for a premium or contribution, the liability associated with one or
more of the following activities:
(a) Providing for the obtaining of any relevant health service;
(b) granting assistance in defraying expenditure incurred in
connection with the rendering of any relevant health service; or
(c) rendering a relevant health service, either by the medical
scheme itself, or by any supplier or group of suppliers of a
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relevant health service or by any person, in association with or
in terms of an agreement with a medical scheme.”
[41] The definition is put to the test when commercial, financial and insurance
products related to healthcare services compete in the healthcare market and
impinge on the business of medical schemes, which schemes are highly
regulated. The broad ambit of the definition is deliberate as the public interest
in oversight of health services by the Registrar of Medical Schemes is
triggered.
[42] The applicant asserts that it is profit driven and does not pool risk. It does not
wish to be a medical scheme.
[43] In argument counsel for the applicant accepted that the applicant ’s DPC
service does fall within par ( c) of the definition. As explained, the DPC
services are acquired by means of a monthly payment made by a member to
a preselected and incorporated group of medical practitioners that practice at
a Health Village, i.e. a medical practice. The practice charges the applicant an
administration fee. There is a tripartite contractual relationship between the
member, the medical practice and the applicant. The services involved in the
basket of offerings are “relevant health services”, also a defined term. The
assumption of liability for only one of the activities in (a)-(c) is sufficient, in
terms of the introductory part of the definition.
[44] The activities as described also fall within par (a) of the definition. By means
of the contract concluded between the applicant and the medical practice , a
member of the applicant obtains relevant health services from the practice.
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[45] The applicant contends that a “premium or contribution ” in the context of a
medical scheme has overt ones and features of an insurance payment in
respect of pooled risk. And as the applicant’s DPC services are for- profit
services without accepting pooled risk, its payment has a context different to
medical schemes.
[46] The applicant ’s reliance on the Constitutional Court judgment in Genesis
Medical Aid Scheme v Registrar, Coun cil for Medical Schemes 2017 (6)
SA1 (CC) which considered the definition in the context of whether PMSAs
were assets of the medical scheme or of its members , does not assist the
applicant.
[47] In Genesis Medical Aid Scheme v Registrar , Council for Medical
Schemes 2017(6) SA 1 (CC) the definition of the business of a medical
scheme was considered in the context of which assets had to be reflected in
the annual financial statements of a medical scheme. The payment or
contribution was specifically dealt with from par [25] in the majority judgment
of Cameron J:
“[25] Second, the definition posits two contracting parties, and a
mutual exchange of value ( quid pro quo ). The parties,
obviously, are the scheme and its member. The quid pro quo is
that the scheme undertakes liability — the kinds spelled out in
the definition — in exchange for money. The statute calls this 'a
premium or contribution'. The word 'premium' comes from the
commercial world of insurance, where it means the amount the
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insured pays to the insurer for undertaking liability for the loss
the specified eventuality, should it supervene, would inflict. To
'premium' the statute's definition adds 'or contribution' since this
is the synonym it uses for the money the member pays f or the
value the scheme offers in exchange.
[26] The third, obvious, point, flows from these. It is that, within the
confines the statute stipulates, the definition is steeped in the
language of a business-based, contractual relationship. It frames
two parties dealing with each other in a commercial setting for a
statutorily regulated bargain: that of undertaking liability in return
for payment of a premium or contribution.”
[48] The words “premium or contribution” merely refer to money paid in a quid pro
quo. The distinguishing features of the applicant’s DPC services do not cloud
this assessment. This interpretation is consistent with Genesis, the
grammatical meaning of the words, their context within the definition and the
purpose of the definition.
[49] The applicant’s acceptance that paragraph (c) is triggered, is correctly made.
As paragraph (a) is also triggered, it is clear that the business of the applicant
falls within the ambit of the definition of the “business of a medical scheme”.
The granting of the declarator in prayer 3 of the notice of motion must therefore
be declined.
[50] This also means that the prohibition in section 20 of the MSA applies to the
applicant: “No person shall carry on the business of a medical scheme unless
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it is registered as a medical scheme. ” The only option, other than registering
as a medical scheme, would be an exemption.
[51] The exemption application is based on a circle argument. The applicant’s
starting point is that it does not require an exemption as it is not a medical
scheme as its services fall outside the definition of the “business of a medical
scheme”. It is in the event that this position is wrong that it seeks an exemption
in terms of section 8(h).
[52] However, the exceptional circumstances that need to be established for such
an application are based on exactly the same reasons why the applicant
contends that it is not a medical scheme.
[53] The First respondent is a specialist body to whose merits assessment of such
an application the court would normally defer. In Bato Star Fishing (Pty)
(Ltd) v The Minister of Environmental Affairs and Tourism and Another
2004 (4) SA 490 (CC) at par [48] Justice O’Regan stated:
“[48] In treating the decisions of administrative agencies with the
appropriate respect, a court is recognising the proper role of the
executive within the Constitution. In doing so a court should be
careful not to attribute to itself superior wisdom in relation to
matters entrusted to other branches of government. A court
should thus give due weight to findings of fact and policy
decisions made by those with special expertise and experience
in the field. The extent to which a court should give weight to
these considerations will depend upon the character of the
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decision itself, as well as on the identity of the decision -maker.
A decision that requires an equilibrium to be struck between a
range of competing interests or considerations and which is to
be taken by a person or institution with specific expertise in that
area must be shown respect by the courts. Often a power will
identify a goal to be achieved, but will not dictate which route
should be followed to achieve that goal. In such circumstances
a court should pay due respect to the route selected by the
decision-maker. This does not mean however that where the
decision is one which will not reasonably result in the
achievement of the goal, or which is not reasonably supported
on the facts or not reasonable in the light of the reasons given
for it, a court may not review that decision. A court should not
rubber-stamp an unreasonable decision simply because of the
complexity of the decision or the identity of the decision-maker.”
[54] The applicant has taken the CMS to task for merely rubber stamping an
internal memorandum prepared for the CMS for a meeting with an agenda
which included the exemption application. If correct, this would be irrational,
and therefore the evidence needs to be considered.
[55] The memorandum posits that there is no dispute that the applicant’s services
fall within the definition of the “business of a medical scheme”. The position of
the applicant was overstated as it merely conceded that it was arguable.
However, as my conclusion is that the applicant’s services do fall within the
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definition, the overstatement is not material and does not rise to an error of
fact or law.
[56] The memorandum further disavows reliance on the Demarcation Regulations
that have a cut-off date of 1 April 2017. The CMS did not take these regulations
into account as it recognised the applicant’s product as a new one – i.e. that
arose after the cut-off date of the Demarcation Regulations . There is no
irrationality in this regard, and the decision was expressly not tainted
consideration of irrelevant regulations.
[57] The fact that the CMS agreed with the recommendation that the exemption
application does not establish exceptional circumstances, and does not
amount to rubber stamping. The CMS took a decision within its powers. The
review of the refusal to grant the exemption application therefore cannot
succeed.
[58] I have considered all the grounds of review. Many of them are reformulations
of the same fundamental issue, namely disagreement with the conclusion to
which the respondents came. None of the grounds as formulated have
substance.
[59] In the premises, n o grounds of review , within the manifestations thereof in
section 6 of PAJA, have been established as against the CMS and the Appeal
Board.
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CONCLUSION
[60] The applicant has not established a case for setting aside the decisions of the
respondents. Its product offering, absent an exemption in terms of sec 8(h) of
the MSA cannot be lawfully offered to the public.
[61] In the premises:
1. The application is dismissed with costs, including costs of two counsel,
on a party and party scale, Scale C.
LABUSCHAGNE J
JUDGE OF THE HIGH COURT
APPEARANCES :
COUNSEL FOR APPLICANT
INSTRUCTED BY
: ADV MEIRING
ADV PANDA
: WEBBER WENTZEL
COUNSEL FOR RESPONDENT: ADV MOKOTEDI SC
ADV HLALETHO
INSTRUCTED BY : DIALE MOGASHOAATTORNEYS