In a blow for the profession after a five-year battle, the South African Society of Physiotherapy (SASP) has lost its bid to scrap legal provisions permitting medical schemes to recover claims paid by mistake or as a result of fraud, reports Business Day.
The Gauteng High Court (Pretoria) last week dismissed the society’s application to have section 59(3) of the Medical Schemes Act declared unconstitutional and invalid, ending a lengthy legal struggle in which the SASP challenges the Health Minister, the Council for Medical Schemes and all South African medical schemes (79 when the SASP launched its case in 2021, but since dropped to 71).
The case brought by SASP challenged the legal basis for the “clawbacks” instituted by schemes. Section 59(3) allows them to recover funds by withholding payments to healthcare providers or withholding members’ benefits.
The SASP had argued that the clawback provisions in the Act infringed on physiotherapists’ constitutional rights to administrative action. It maintained that when disputes arose, medical schemes were de facto players and referees, as they both investigated and adjudicated suspicious claims. It had asked the court to give that power to an independent party and order a review of six years of contested audits.
But Judge Corrie van der Westhuizen ruled that section 59(3) does not infringe on the constitutional rights to administrative action or access to courts. Existing statutory provisions enabled healthcare providers to appeal scheme decisions at the CMS, and in court, he said.
The Health Funders Association (HFA) welcomed the ruling, saying it meant medical schemes could continue to use the disputed section to recover payments lost to error, fraud, negligence or misconduct.
Medical schemes currently recover about R1bn a year through fraud, waste and abuse management initiatives, said HFA CEO Thoneshan Naidoo.
He added that it was vital for schemes to retain their ability to safeguard member contributions, which would be markedly higher if schemes could not recover money that had been paid out erroneously.
“It’s not all fraud – only a small percentage of it is maliciously intended. Notwithstanding that, schemes need a mechanism to recover funds, which is what section 59(3) allows,” he said.
The Board of Healthcare Funders (BHF) said the judgment affirms the lawfulness of section 59(3) in the broader regulatory framework governing medical schemes.
“The BHF has consistently maintained that the clawback provision serves an important financial stewardship function by enabling medical schemes to recover payments made in error, or losses arising from fraud, theft, negligence or misconduct, thereby helping to protect member funds,” said BHF MD Katlego Mothudi.
The SASP had not responded to Business Day’s request for comment at the time of publication.
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