The Special Investigating Unit (SIU) is investigating a long-running medical malpractice scam involving collusion between law firms and state attorneys that has cost government at least R60bn, reports the Sunday Times. Since the probe started, unscrupulous lawyers countrywide have reportedly hastily withdrawn several malpractice actions.
It reports that inquiries by Health Minister Aaron Motsoaledi led to the government discovering one of the biggest scams in South African history. The government is investigating collusion between people suing government hospitals for malpractice and state attorneys who either settle cases that have no merit whatsoever or defend the cases so badly that they invariably lose.
Estimates put the cost at perhaps as high as R80bn in a large-scale scam that began at least six years ago and is concentrated on hospitals in the Eastern Cape – although the practice occurs nationwide. The Special Investigating Unit (SIU) is now probing how several state attorneys allegedly receive kickbacks from claimants’ lawyers in return for intentionally bungling cases.
The Citizen reports that Justice Minister Michael Masutha and Motsoaledi confirmed to the Sunday Times that the scams are so entrenched that the state has lost at least R60bn since 2013 in fraudulent malpractice claims that could easily have been defended. The true figure could be more than R100bn.
The health minister said he’d recently discovered one claim for R70m for a supposedly botched circumcision, when it turned out the patient had never even been circumcised at all and the hospital had in fact saved him from illness. Another R25m claim from a 19-year-old man supposedly suffering from cerebral palsy – allegedly caused by bad treatment when he was born in Limpopo – was also without merit since the “victim” was well enough to apply for a driver’s licence.
The report says since news of the SIU probe has emerged, unscrupulous malpractice lawyers countrywide have reportedly been hastily withdrawing several malpractice lawsuits. The unit raided the offices of five of them this week after they were identified as having lodged 80% of the claims in the Eastern Cape. “One notorious law firm in the Eastern Cape being investigated by the SIU has a total of 28 cases against the state, with each claim being R15.8m – a total of R442.4m,” the Sunday Times said.
Motsoaledi said they had discovered that even in Gauteng it was easy to discover malpractice cases that were using a basic template where the names of “victims” had simply been changed.
“Kingpins” in the scam are understood to have been identified by government. An official is quoted in the report as saying that they’d already started asking how some state workers were able to afford luxury vehicles on salaries of no more than R20,000.
Government reportedly intends to recover as much money from implicated officials as possible. The Sunday Times report also suggests that government previously lacked the “political will” to deal with the problem.
Motsoaledi cited an example of how the scam works. According to the Sunday Times report, he said that he had intercepted a legal payment in Limpopo where the Health Department was being sued for the “botched circumcision”. When the case came to his attention, Motsoaledi became suspicious about the extent of medical malpractice that could warrant such a huge figure. “When my legal unit was asking for information, there was no co-operation. I then called the MEC and she knew nothing about it. I was shocked that there was a case of R70m and the MEC knew nothing about it.”
When he and an expert at Steve Biko Academic Hospital in Pretoria examined the file, Motsoaledi “found that no circumcision took place”.
Motsoaledi said in the report that he suspected that if he had not taken an interest in the case, it would have been settled for millions. “I suspect that this would have been settled out of court and a minimum of R10m would be paid and the State Attorney would regard it as a win,” he said. The case has been referred to the Hawks and the lawyer representing the case is also facing a probe.
An official with knowledge of the SIU investigation is quoted in the report as saying that this investigation “is going to be far bigger than planned.” He said some law firms approached by officials to “play the game” had initially refused, but have now started coming forward with information. A 2016 report by the Public Service Commission showed that the State Attorney's Office was losing 70% of its cases. At the time this was attributed to inefficiency, but it may in fact be down to collusion.
Motsoaledi says he wants to see those who colluded with the state attorney’s office to defraud the state, in jail. "I want people arrested. There are lawyers‚ private lawyers in the Eastern Cape that need to be arrested. Why is it taking so long? We need to break these cartels and networks‚" Motsoaledi is quoted in Business Day as saying.
As a result police minister Bheki Cele said he instructed the head of the Hawks‚ advocate Godfrey Lebeya to pursue criminal charges against some of those implicated in collusion with the state attorney’s office. "There are matters where the police has to act … and the SIU will continue its work‚" he said.
The report says the SIU has now set up a team to begin investigating the office of the state attorney‚ which is expected to last more than 12 months. SIU head advocate Andy Mothibi said the investigation would be multipronged and include a number of people with different skills. He said it would include forensic investigators‚ lawyers and even accountants. "It’s important that we get skills within the team … the actual number of the team will be finalised in a week or two‚" Mothibi said.
Justice minister Michael Masutha said that apart from the SIU investigation and the criminal probe‚ disciplinary action would be taken. "We therefore encourage anyone who can assist by providing useful information to avail themselves to the SIU to assist in the investigation‚" he said.
Masutha said they hoped the SIU probe would bring an end to the collusion, in which fictitious claims were made against the state.
According to the report, Cele said the police were both victims and perpetrators of the fraudulent activity‚ saying they colluded with the state attorney in claims against the department. "Some of our members collude and collaborate with these kinds of people‚" he said.
[link url="https://citizen.co.za/news/south-africa/1994313/how-state-lawyers-have-robbed-sa-blind-to-the-tune-of-r80bn-report/"]The Citizen report[/link]
[link url="https://www.timeslive.co.za/sunday-times/news/2018-08-11-state-attorneys—-r80bn-scam/"]Sunday Times report (subscription only)[/link]
[link url="https://www.businesslive.co.za/bd/national/2018-08-14-i-want-people-arrested-aaron-motsoaledi-demands-as-cartels-continue-defrauding-the-state/"]Business Day report[/link]
[link url="https://www.gov.za/speeches/justice-minister-further-elaborates-reason-president’s-proclamation-authorising-special-14"]Masutha statement[/link]