In yet another clash with the healthcare industry, and following recent accusations of hostility and harassment, the Council for Medical Schemes (CMS) has applied to place Netcare Medical Scheme under curatorship, writes MedicalBrief.
Netcare Medical Scheme is opposing the application by the CMS, accusing the regulator of lacking justification, and with Craig Taylor, principal officer of the Netcare Medical Scheme, saying the application related to a technical issue from 2022 that had been corrected at the time.
“We believe the curatorship application has no basis and remain confident we will be able to show the court that our governance processes have been, and remain, sound and adhere to regulatory standards,” he told Business Day.
“It is inconceivable that a well-run, financially sound medical scheme, demonstrating ongoing sustainable growth and a robust track record, could be considered for curatorship. A duly elected board of trustees oversees the scheme’s affairs … the scheme has taken all necessary steps and acted with honesty to protect the interests of our members.”
In its application, the council had expressed displeasure with the scheme’s decision to postpone the election of its board of trustees, claiming that the board was unlawfully elected.
Under the Medical Schemes Act, every medical scheme is required to have a board of trustees composed of individuals with the qualifications and integrity to oversee the business. At least half of them must be elected from the scheme’s members.
Among the obligations of the board of trustees is the designation of a principal officer and the maintenance of comprehensive registers, books and records to meticulously record all activities carried out by the medical scheme.
The CMS said it had obtained legal opinion advising it to consider putting the scheme under curatorship, but refused to share details on the grounds that it was privileged, a stance that the Gauteng High Court (Pretoria) rejected.
Two weeks ago the court instructed the council to provide Netcare with the legal opinion on which it claims to have relied in bringing the application, to enable the scheme to defend its position against the proposed curatorship. It has since complied with the order granted in an interlocutory application.
Serious concerns
Netcare said it disagreed with the legal opinion on which the regulator based its case, arguing that a ruling by the council appeal board supported its legal interpretation, contradicting that of the council.
“It is important to note that curatorships are granted only when serious financial or governance concerns exist. Netcare Medical Scheme’s track record shows the circumstances do not warrant such a drastic regulatory intervention,” Taylor said.
This is the second legal dispute between the regulator and Netcare in as many months. In October, Judge Mandlenkosi Motha dismissed the council’s application to bar Discovery Health and a division of Netcare from selling prepaid private healthcare vouchers.
The vouchers are aimed at millions of workers who cannot afford traditional medical schemes cover. The council’s argument was that the vouchers constituted products belonging to the terrain of medical schemes.
The court found that the regulator should have exhausted its own internal appeals process before turning to the courts.
In another episode that points to the unfolding breakdown of relations between the council and the industry, the Board of Healthcare Funders (BHF) earlier this month sent a legal letter to the council and the Health Minister, accusing the watchdog of abusing its power and being hostile towards its members, as reported by MedicalBrief.
One of the accusations levelled by the BHF was that the regulator was threatening several medical schemes with curatorship on “flimsy premises”.
See more from MedicalBrief archives:
CMS loses appeal over low-cost cover challenge
Regulator abusing power and hostile towards medical schemes – BHF
Court slaps CMS with deadline to explain low-cost schemes hold-up
Political meddling at heart of CMS low-cost medical aid delays