Proposed “draconian” provisions in the draft Road Accident Fund (RAF) Amendment Bill discriminate unfairly against medical aid members and may necessitate steep premium increases as the industry is forced to mitigate the risk of members not being covered by the fund, experts warn.
The draft Bill, meant to limit the liability of the fund to improve its solvency and sustainability, was published for public comment on 8 September, giving commentators just one month to provide feedback.
Broadly, it aims to make a lot of changes to how the RAF actually works, but one of the more contentious points is moving from a compensation model to a “benefits” model for those who are claiming.
Historically, medical schemes have submitted claims to the RAF after carrying the costs for members injured in road accidents, reports Business Day, but if the amendments get the nod, the reimbursement of expenses covered by medical aid/insurance will fall away.
The Bill would be opposed by the Personal Injury Plaintiff Lawyers Association (Pipla), which said medical schemes would then need to “drastically” increase premiums with dire consequences for all members, and warned that it would curtail the rights of drivers, passengers and pedestrians to claim compensation.
Advocate Justin Erasmus, chairperson of Pipla, which represents 300 personal injury lawyers, told BusinessTech legal practitioners are moving heavily against the Bill.
More than 5 000 objections have already been raised, arguing that the proposed laws will negatively affect the rights of all drivers, passengers and pedestrians to claim compensation for injuries suffered in accidents.
One of the concerns is loss of earnings, said Erasmus.
“Currently, a claim for loss of income is paid out in a lump sum; under the new system claimants will receive annuity (partial) payments that will eventually equal the lump sum.
“There is also the qualification that the amount payable is subject to periodic review of the Fund’s liabilities and if a claimant dies before the full annuities are received, the payments will stop and their heirs will inherit nothing,” he said.
Ryan Noach, CEO of Discovery Health, told Business Day the Bill discriminated unfairly against medical scheme members and would not pass constitutional review.
“This …would certainly impose higher costs on medical schemes…and just exaggerates the medical inflation premium to CPI,” he said.
“It confers a greater cost of healthcare to road users who are medical scheme members and who would continue to pay fuel levies plus marginally higher medical scheme premiums.”
Discovery has already taken RAF to court after the fund last year told medical schemes it would no longer pay for past hospital and medical claims issued by medical scheme members. Most schemes provide for the handling of motor vehicle claims, with members being able to claim compensation from the RAF for these.
The company expects challenges from multiple stakeholders to the amendments in the interests of road accident victims in general, and medical scheme members in particular.
“Prohibiting the reimbursement of expenses paid for by medical schemes is only one of the amendments among many, which would deprive road accident victims of their rights to full compensation.
“If the amendments become law … road accident victims could be deprived of the majority of the compensation to which they are entitled.”
Biggest pain points
Dr Herman Edeling, chairperson of the South African Medico-Legal Association (SAMLA), shared similar concerns.
“It will be a tremendous shame if poor people are deprived of general damages compensation, which is separate from loss of earnings and medical expenses. In principle, victims can get compensation for medical expenses under section 17, however, the RAF does not pay upfront.
“So to put this in perspective, if you are unemployed and have no money, or your life is devastated from the injury, you now cannot pay for treatment. You will be expected to pay for all your medical needs upfront and then claim back from RAF, so in essence, the annuity payments are worthless,” he said.
Further exclusions worth noting around drivers and claimants include that claimants will not be covered if hit by an unidentified vehicle. Under the present system, so-called “hit and run” incidents are compensated.
The proposed changes also specifically exclude from compensation any driver, pedestrian or cyclist over the legally prescribed alcohol limit, regardless of who was at fault, as well as their dependents, if they are killed.
Erasmus said it was also probable this section would be interpreted to mean that passengers of people who have drunk alcohol would also be excluded from any compensation.
“Importantly, the RAF will be able to recover expenditure from anyone found to have drunk alcohol, even if they did not cause the accident,” he said.
Other proposed amendments are the banning of compensation for non-SA citizens or non-permanent residents; and that all future medical claims must be pre-authorised by the RAF or they will not be paid.
Rights infringed
Under the mooted changes, an accident must have taken place on a public road for the claimant to be paid out. Injuries from accidents in parking areas, sports fields, farm roads, driveways, private estates, game reserves or any other private road will not be covered.
Another exclusion refers to pain and suffering. Claimants will no longer receive compensation for pain, suffering, disfigurement and shock, as this category of damage will be totally abolished.
Problems for medical aids
The implication for medical aid schemes and medical aid members is also huge.
Erasmus said there would be no reimbursement of expenses covered by medical aid/insurance.
“We predict this will drastically increase premiums with dire consequences for all medical aid members.”
And then, unlike the current dispensation, all future medical claims will have to be pre-authorised by the RAF or they will not be paid.
“This will create serious time lags for victims who urgently require care,” he said.
The clause relating to claims against the person who caused the accident needs to be reviewed as well, he added.
Since 2008, innocent victims have not been entitled to sue the wrongdoer for damages not recovered from the RAF.
“If we are moving away from compensation, this clause definitely needs to be restored so victims have the right to sue the wrongdoer,” he said.
“This amendment affects every South African and cannot be allowed to go forward in its current format.”
The other side of the coin
While the legal fraternity protests the changes to the laws, the department has been compelled to go the route of amending the RAF Act largely because of the financial pressure being placed on it by lawyers and legal cases.
The RAF has come under immense pressure and criticism over the years for failing to execute its mandate, being beset by delays, backlogs and heavy litigation – all while alleging that unscrupulous legal agents have been milking it dry.
“The RAF continues to be a victim of crime syndicates involving legal practitioners, medical experts, actuaries, law enforcement and internal staff. In most instances, these involve collusion to defraud the RAF of millions of rands,” it said.
Not only is the fund severely financially constrained because of the significant number of claims made against it, but its litigation bill has run into the billions of rands – before even hitting the courts.
The group’s latest available annual report (2020/21) shows that almost 90% of all civil litigation in the courts is RAF-related. Almost all are settled “on the steps of the court” but still carry a hefty legal bill of R10.6bn.
The group paid out R35.5bn in claims in 2021, with the average claim totalling R235 141. Personal claims averaged almost R400 000.
Business Day article – RAF amendment bill rattles medical schemes (Restricted access)
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