Widespread opposition to Bill on lump-sum negligence payouts

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The South African government’s latest proposals for containing the growing financial burden posed by medical negligence claims against the state are ill-conceived, unconstitutional, and are unlikely to save money in the long-term, Parliament has heard.

Business Day reports that public interest groups, the legal community and Western Cape government officials were strikingly united in their criticism of the State Liability Amendment Bill, which proposes scrapping lump-sum settlements for successful medical negligence claims of more than R1m and replacing them with periodic payments.

The report says the Bill, which was gazetted for public comment in June, also proposes that claimants be limited to receiving future healthcare services in the public sector at facilities that meet the standards set by the Office of Health Standards Compliance (OHSC), despite the fact that only a handful of facilities do so. If state services are not available, claimants will be able to use private-healthcare services, but they will have to foot the portion of their bills that exceed public-sector rates.

The report says the Bill is an attempt by the government to rein in the state’s soaring pay-outs for medical negligence claims, which grew by on average 45% a year between 2012-2013 and 2016-2017. It paid out R1.2bn in 2016-2017, but faced claims of R56bn – more than a quarter of its health budget.

The Western Cape provincial government warned that introducing periodic payments may create a false sense of security, by making provincial health department budgets look better over the short-term. “In fact, the exponential effect of deferring payments will result in the same problem that is presently being experienced,” it said in its submission.

Western Cape government legal advisor Ronel Berg presented projections that showed the provincial health department’s medico-legal costs would initially plummet from R200m in 2018 to R25m in 2019, but would rapidly rise to reach R826m by 2030. Berg said the Bill would not solve the problems posed by the state’s ballooning medical legal liabilities, as a new payment method would not reduce the number of medical negligence cases. The proposed system of period payments was open to abuse because it lacked safeguards to ensure that money paid out for medical damages was used for its intended purposes, she said.

The report says the Actuarial Society of SA also presented an analysis of the potential financial impact of the Bill, showing that over a 25-year horizon, periodic payments could cost four times more than a lump sum settlement.

Mandy Mudarikwa from the Legal Resources Centre said the bill failed to deal with the underlying reasons for the poor care provided to patients in the public sector. “The solution for poor care is not to cap your financial liabilities,” she is quoted in the report as saying.

The SA Medical Malpractice Lawyers Association’s Karisha Pillay said the Bill in its current form would give the courts power to bind government to future payments up to 20 years ahead, without any insight into the competing demands on the fiscus at the time. “It is at odds with the Public Finance Management Act, which places restrictions on future borrowings and commitments,” she said.

The Law Society of SA’s Luise Ostler said the Bill would not reduce the budget pressures on public hospitals.

“This is not going to be remedied by introducing structured payments or sending people to hospitals where they may have been injured in the first place. There is no evidence that structured payments will cost less, and critically there is no indication at this stage what the administrative costs will be for making these payments indefinitely,” she is quoted in the report as saying.

Business Day report

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