A refusal by the Road Accident Fund (RAF) to pay a private hospital for crash victims it treated led to spiralling debt and the eventual closure of the Gauteng facility, with millions still owed, the CEO has said.
He said the outstanding payments of R300m forced the hospital to close, twice, and to stop treating accident victims, reports News24.
It eventually closed permanently this year.
Ken Ford, former CEO of the Sunshine Hospital in Benoni, Gauteng, which is now being auctioned since its final closure in May, appeared before Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday to testify about his ongoing court battles with the fund.
The inquiry, which will run until November, is investigating allegations of fraud, corruption, maladministration, and financial mismanagement at the fund.
Ford said the 200-bed hospital had issued 6 285 summonses against the fund for an outstanding debt of R300m, with cases dating back to 2020, to recover money. Of the summonses, he said that 647 court judgments had already been obtained in the hospital’s favour, worth a total of R180.4m.
The fund had initially approached the hospital in 2003 to treat the growing number of accident victims, he said. He had bought the hospital the previous year.
Eventually, it signed a co-operation agreement with the RAF in 2007, which included the establishment of RAF employees to assist accident victims and administer direct claims or patient invoices from the hospital. The agreement also included the hospital procuring a vehicle to be used by RAF employees.
Ford told MPs that the car was, however, never used and eventually sold.
“(In 2003) the fund was becoming inundated with victims, with many of them being treated in public hospitals, and because they were having problems… because of high (occupancy) levels, they asked us if we could treat patients on an undertaking basis. We were quite happy to do that, and the RAF said (it) would pay us within 30 days,” he said, adding that even more patients had been referred to the hospital over the years.
He said 130 doctors, specialists, and hospitals had become dependent on the hospital until its closure.
According to Ford, in July 2018, the RAF indicated that it wanted to terminate the agreement with the hospital, sending Sunshine a three-month notice. Nevertheless, the hospital continued to receive road accident victims and patients.
“They continued sending patients to our hospital until 2021 and 2022. Their case managers had free rein in our hospital, and we reported to the RAF on all of our patients. It was part of our process to assist victims… we were talking about victims who were the poorest of the poor.”
By April 2020, Ford said the hospital had stopped receiving payments from the fund. This is after the RAF placed a moratorium on payments to Sunshine due to an investigation, with claims now being listed as Requested Not Yet Paid (RNYP).
To date, Ford said the hospital is unaware of how many outstanding claims are owed to the hospital, and what claims had been placed on the RNYP list.
He also linked the non-payment of the claims to the appointment of former RAF CEO Collins Letsoalo.
“They told me they had sent me a letter to say they were investigating me, and that I did not reply. They said they had sent a follow-up email. They never notified me that an investigation was being held (…) If we had never asked about the investigation (ourselves), we would still be under investigation now.”
According to the affidavit sent to the committee, the investigation into R1bn in payments between 2018 and 2021 and a sample of claims sent by the hospital showed no evidence of collusion between Sunshine Hospital and public hospitals or RAF employees for the payment of claims. The report was compiled in July 2021.
An initial RAF report found: “Analysis of the spreadsheet at this stage also does not indicate any irregularities: further investigation is recommended. Invoices submitted by the doctors at Sunshine Hospital indicate that services were, indeed, rendered to the claimants and patients. No evidence of over-serving or duplication of payments could be established thus far (…).
“The moratorium on Sunshine Hospital should be reconsidered, as all evidence thus far points to the fact that the services were rendered and payment for such services was due.”
Lengthy litigation
Ford said 2020 was the start of the lengthy litigation between the fund and the hospital to force payments. This included a court order in December 2020 for the payment of R353m, which included an order of monthly instalments of R36m.
He said the monthly payments stopped by May 2022, leaving more than R300m in outstanding payments. This led the hospital to apply for writs of execution for the payments and attaching RAF assets to help pay the outstanding debt.
However, the money fetched at auction was not enough to settle the debt. “We had lots of writs, but they were not worth the paper on which they had been written. They (the RAF) would also not let the attorneys on to their premises. Police services were also not helpful.
“We attached furniture, like other people who wanted to have their outstanding debts paid by the RAF. These auctions would only gross R56 000. The furniture was placed in the car park downstairs because it would just end up back in their offices.”
Since no payments had been made to the hospital, Ford said that it eventually closed its doors in March 2023 and transferred all patients to other hospitals.
While a Constitutional Court order was obtained in May that year to enforce the payment of the outstanding debt, Ford said continued payment problems meant that the hospital permanently closed its doors in May this year, and retrenched 150 staff.
The hospital will soon be going on auction with a reserve price of R21m, with a sale having fallen through in July.
“I did not think it would close like it did. I didn’t think they (the RAF) would not pay me. Even if the payment for several years were erratic, I had the expectation they would pay (…) RAF was our biggest client,” Ford told MPs.
Ford said that litigation regarding the payment of outstanding debt was ongoing, with “many cases coming up”.
He said in May this year, the court had granted the hospital an interdict after defamatory comments made by RAF spokesperson McIntosh Polela during an interview with eNCA in March 2024. This included allegations of the hospital’s apparent involvement in a corrupt scheme to transfer patients from all over the country and its overcharging and over-servicing of the fund.
According to Ford, a media narrative had been created that the hospital was corrupt, but investigations by the Special Investigating Unit yielded no results.
Questions around cash cows
MPs questioned the hospital’s reliance on RAF payments, with Scopa chairperson and leader Songezo Zibi saying MPs had the impression that the hospital had become dependent on these payments.
MK Party MP Thalente Kubheka said the payments indicated that a scheme had been created. “It looks as if they just wanted to benefit themselves. It looks like a looting spree, and it becomes a cash cow. If we look at the invoices, it looks as if they cost R47 000 per injury per patient.”
In reply, Ford said that the invoices were accurate and that the fund had also received patients who paid via medical aid and through cash deposits. He also said the hospital had the right to accept victims of road accidents without a formal co-operation agreement with the RAF.
“We did not have a business plan around the RAF. RAF business was not lucrative for us; it was not a major thing. I did not wake up and say I wanted to drive a Lamborghini because I was getting RAF payments.”
News24 article – How R300m owed by the RAF shuttered a hospital (Restricted access)
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