LSSA comments on RAF Amendment Bill; raises questions on consultation regarding acceptable tariff for private sector health care

February 1st, 2015

By Barbara Whittle

The reason for the need for the Road Accident Fund Amendment Bill, 2014 is, inter alia, to address the issue of a medical tariff in response to the judgment of the Constitutional Court on 25 November 2010 in the case of Law Society of South Africa and Others v Minister for Transport and Another 2011 (2) BCLR 150 (CC), which struck down the public healthcare tariff then prescribed as the limit of the liability of the RAF to compensate a claimant for ‘non-emergency’ medical and hospital costs in the Road Accident Fund Amendment Act 19 of 2005. The memorandum to the Bill also notes that the administration of a two-tariff system adds ‘administrative complexity’.

In terms of the Constitutional Court ruling, currently all medical and hospital treatment which cannot be classified as ‘emergency’ is compensated as if the claim came into existence prior to the commencement of the 2005 Amendment Act on 1 August 2008.

In commenting on the Bill, the Law Society of South Africa (LSSA) stressed that it is in agreement that administering a two-tariff system of compensation is unnecessarily complicated and costly and the move back to a single method of calculating the compensation payable for all medical, hospital and related expenses arising from a motor vehicle injury is welcomed.

However, the LSSA pointed out that any tariff that may now be prescribed by the Minister of Transport in order to meet the criteria laid down in the Constitutional Court judgment four years ago still needed to be published for comment. ‘No doubt, the objective of the introduction of a “tariff” is still to limit the exposure of the RAF with regard to expenses incurred, which are covered by that tariff. The Act requires that any such tariff be prescribed after consultation with the Minister of Health. It is not known whether those consultations have taken place and whether there has been any engagement with the private health care sector and/or medical aids on what would be an acceptable tariff for the private sector to be able to continue to provide much needed treatment and health care to road accident victims to supplement the often inadequate, overstretched, poorly administered and, in some cases, unavailable, services at public hospitals,’ said the LSSA.

It added: ‘Of course, if the tariff eventually prescribed is such, so as to exclude access to private health care, it will meet with the very same challenges as were raised by the LSSA in its successful application to strike down the previous tariff, particularly as the common law right to recover the balance of costs not covered by the Act remains abolished.’

In this regard the LSSA noted that the Bill proposed that the costs of the first 30 days of treatment be paid on a no-fault basis. The LSSA noted: ‘It is in those 30 days that the vast majority of high cost expenditure is incurred, both in relation to hospitalisation and medical treatment. The object of the Bill is stated to be to create a scheme that facilitates responsible financial management and that enables the efficient and cost effective delivery of compensation. Without knowing what tariff is proposed, it is obviously not possible to estimate the costs that might be incurred as a result of this proposal. Common sense dictates that, if those costs are to be met on a no fault basis, the exposure of the Fund for past medical and hospital costs will increase materially.’

The Bill also proposes no-fault liability for funeral claims, but caps liability at R 10 000 per claim. ‘Hopefully the medical tariff will not also be aimed at containing those costs also at a significantly lower level than the actual costs reasonably incurred by a claimant,’ stated the LSSA.

The LSSA welcomed the major amendment that proposes the removal of the two-year prescriptive period for hit and run claims and the Bill proposes a unitary prescription period for all claims.

The LSSA provided a detailed commentary to the various proposals in the Bill. The full submissions can be accessed on the LSSA under ‘Legal practitioners’ then ‘LSSA comments on legislation’.

Compiled by Barbara Whittle, communication manager, Law Society of South Africa,

This article was first published in De Rebus in 2015 (Jan/Feb) DR 24.