Navigating road crash victim compensation: Are medical aid payments deductible?

By Prof Hennie Klopper

Some road crash victim (RCV) compensation disputes are sometimes dealt with without referring to the Road Accident Fund Act 56 of 1996 (RAF Act) and/or older established authority (see for example, MS v Road Accident Fund [2019] 3 All SA 626 (GJ) requirements for Road Accident Fund (RAF) liability erroneously set out, Road Accident Fund v Russell 2001 (2) SA 34 (SCA), Maloney and Others v Road Accident Fund [2022] 3 All SA 137 (WCC); LM and Others v Road Accident Fund (WCC) (unreported case no A30/2023, 11-10-2023) (Lekhuleni J) – causation, Septoo obo Septoo and Another v Road Accident Fund (SCA) (unreported case no 058/2017, 29-11-2017) (Tshiqi, Majiedt and Mocumie JJA, Mbatha and Rogers AJJA) – liability delictual, Engelbrecht v Road Accident Fund and Another 2007 (6) SA 96 (CC); Discovery Health (Pty) Limited v Road Accident Fund and Another (GP) (unreported case no 2022/016179, 26-10-2022) (Mbongwe J) – widest protection not defined). Such an approach creates the danger of dubious precedent. This phenomenon is best addressed by reverting to the RAF Act itself and previous precedent dealing with past in pari materia legislative provisions and precedent. The basis for liability is critical lest a deviation from the provisions of the Act and legislator’s intention may be introduced (see eg, Van der Merwe v Road Accident Fund 2007 (6) SA 283 (SCA); Road Accident Fund v Abdool-Carrim and Others 2008 (3) SA 579 (SCA); Free State Provincial Administration v Road Accident Fund (FB) (unreported case no A47/07, 21-1-2010) (Rampai J and Musi J) – disregard of the origin of s 17(5) and deviation from its exact wording). When clarifying relationships created in the RAF Act, a clear understanding of the object of the RAF Act and attendant legal principles is required. A recent dispute concerning the relationship between the RAF, RCVs and medical aids presents a case study to illustrate how a conjunctive reading and a fundamental understanding of the Act, and its attendant legal principles may assist (see Discovery Health (Pty) Limited; Road Accident Fund and Another v Discovery Health (Pty) Limited (GP) (unreported case no 2022/016179, 23-1-2023) (Mnyovu AJ); Van Heerden v Road Accident Fund (ECGq) (unreported case no 845/2021, 4-10-2022) (Rugunanan J); Mawila v Road Accident Fund (unreported case no 15105/2022, 28-11-2022); Malgas v Road Accident Fund (ECGq) (unreported case no 126/2020, 1-12-2022) (Van Zyl DJP); SJJW v Road Accident Fund (WCC) (unreported case no 19574/2017, 8-2-2023) (Van Zyl AJ)).

Wrongdoer, RAF and RCV relationship

This relationship is described by the object of the RAF Act and its attendant legal principles. It has been repeatedly stated in numerous precedents that the object of the Act is to provide the RCV with the widest protection without considering how this protection is created and what the extent of such protection is. This particular question was aptly answered by Ramsbottom JA in Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 285 when dealing with the Motor Vehicle Insurance Act 29 of 1942, which is in pari materia with and mutatis mutandis applicable to the RAF Act:

‘The obvious evil that it is designed to remedy is that members of the public who are injured, and the dependants of those who are killed, through the negligent driving of motor vehicles may find themselves without redress against the wrongdoer. If the driver of the motor vehicle or his master is without means and is uninsured, the person who has been injured or his dependants, if he has been killed, are in fact remediless and are compelled to bear the loss themselves. To remedy that evil, the Act provides a system of compulsory insurance. The scheme of the Act is that the owner of a motor vehicle must obtain a declaration of insurance from a registered company. Not only is the owner compelled to insure the vehicle – failure to do so is an offence – but all registered companies are compelled, subject to certain qualifications, to issue declarations of insurance in respect of a motor vehicle when the owner thereof has applied for the insurance of the vehicle in a prescribed form. The insurance enures for the benefit of any person who has been injured and of any person who has suffered loss through the death of a person who has been killed; such persons claim compensation direct from the registered company.’

The Act regulates the tripartite relationship of a negligent driver, an RCV and the RAF by the Act substituting the RAF for the wrongdoing driver. The protection afforded is against the possibility that the RCV will be unable to recover his damages due to the original wrongdoing driver being unable to financially meet the RCV’s claim for compensation of his damages. The liability of the wrongdoing driver is suspended for as long as the RAF is able to pay damages (see s 21(2)(a) and (b)). It must be immediately noted that the RCV is the sole beneficiary of the Act, and that the wrongdoer’s indemnity is coincidental – Smith v Road Accident Fund 2006 (4) SA 590 (SCA)). It is sometimes erroneously stated that the Road Accident Fund Amendment Act 19 of 2005 abolished a RCV’s common law claim against the wrongdoing driver (see Law Society of South Africa and Others v Minister for Transport and Another 2011 (1) SA 400 (CC); Road Accident Fund v Abrahams 2018 (5) SA 169 (SCA)). This is not correct (see the wording of s 21(1) which states that no action lies against an owner, driver or the employer and ignores the wording of s 21(2) which retains wrongdoer delictual liability where the RAF is unable to pay and in respect of emotional shock claims which is essentially suspension and not abolition).The wording of the amended s 21 creates conflict with s 19(a), which provides that the RAF is not liable for damage: ‘for which neither the driver nor the owner of the motor vehicle concerned would have been liable but for section 21’ resulting in a circulus vitiosus, which has completely escaped both the legislator and the court in Law Society of South Africa (see H Klopper The Law of Third Party Compensation (Durban: LexisNexis 2020) at 19).

An important fundamental consequence of the object of the Act as described above is that any attempt to curtail a RCV’s compensation is essentially in conflict with the intention of the legislator and, therefore, irrational. This is a crucial factor missed in Law Society of SA and Others v Minister of Transport and Another 2010 (11) BCLR 1140 (GNP) and Law Society of South Africa and which has definite bearing on the rationality of the Road Accident Fund Amendment Bill, 2023 (published in GN3868 GG49283/8-9-2023).

RAF liability is created by s 17(1) of the Act. From the wording of this section read with s 19(a) the RAF’s liability is clearly delictual (see eg, Volker v Road Accident Fund and Others (WCC) (unreported case no 13813/07, 1-8-2011) (Mia AJ) and Dodd v Multilateral Motor Vehicle Accidents Fund 1997 (2) SA 763 (A)). All five elements of delict are reflected in this section. Conduct is constituted by driving of a motor vehicle or other unlawful act, wrongfulness by personal injury and death, fault by negligence, causation by caused by or arising from and damage by damage or loss. A sixth requirement is that the cause of action must arise within the Republic of South Africa (for a comprehensive discussion of the elements of RAF liability in terms of s 17(1), see Klopper (op cit) ch 5).

RAF, RCV and medical aid

Legal classification of a medical aid

A medical aid is essentially a contract where a contribution or premium is paid by a member where there may be no claim, or claims less than the value of the contribution or premiums, or claims which far exceed the value of the contributions or premiums received. It is not insurance, because members’ contributions are not determined by risk and all members contribute equally irrespective of their claims history or risk profile (see Thomson v Thomson 2002 (5) SA 541 (W) at 547; Bane and Others v D’Ambrosi [2010] 1 All SA 101 (SCA), 2010 (2) SA 539 (SCA) at 550)).

Historical background
The basic premises of the Acts preceding COIDA varied from a choice to pursue common law or statutory remedies following an injury during employment (requiring either no fault or fault) to purely statutory prescribed compensation out of a statutorily created fund on a no fault basis with the absolution of liability of the employer but with retention of defined common law rights. A very important recurring common principle of all these Acts was that an employee could not claim where the injury or death was of their own doing, which emphasises the common law basis for liability (see Wilhelm Coetzee Die Toepassingsterrein van Ongevalle-wetgewing in die Suid-Afrikaanse reg (unpublished LLD thesis University of Pretoria 1981) 8ff).

Philosophy
Work-related injuries affect a person’s ability to earn and provide for their dependents leading to the creation of socio-economic problems, which become a societal burden. Based on the governmental obligation to govern and create order, it can be said that government is called on to create measures to counteract the negative impact of occupational injuries, death and diseases. The financial means to ensure such measures fall on the employers as they have the means, have control over the workplace and are, therefore, the best placed to shoulder the financial implications of such measures.

Purpose
This Act is the product of a long development of enactments having their genesis with the Employer’s Liability Act 35 of 1886 (Cape of Good Hope) and culminating in the Workmen’s Compensation Act 30 of 1941. COIDA is the successor to the latter Act and essentially consolidated legislation dealing with occupational injuries and diseases into one Act. The legislation seeks to partially compensate employees for loss of income caused by occupational accidents and diseases (see Coetzee (op cit) 52; Williams v Workmen’s Compensation Commissioner 1952 (3) SA 105 (C) at 109; McDonald v Enslin 1960 (2) SA 314 (O) at 317-8 and Birkett v Ongevallefonds en ’n Ander 1965 (2) SA 630 (A) at 635).

A coincidental consequence of the protection of employees is that s 35(1) absolves the employer from any liability regarding occupational injuries and diseases. It must be noted that the s 35(1) exclusion only relates to claims caused by the negligence of the employer. Section 36(1)(a) authorises the recovery of common law damages caused by a person other than the employer.  Clearly the common law right of an employee to claim damages from other parties other than the employer remains intact. Compensation received in terms of COIDA must be deducted from any common law damages recovered by the employee (s 36(2)).

Viewed from this perspective an ancillary purpose and/or effect can be construed. The protection of the employer is essential to ensure job security. This is illustrated by the unintended practical outcome of Mankayi v AngloGold Ashanti Ltd 2011 (3) SA 237 (CC) where it was held that an employee was entitled to claim non-patrimonial damages from the employer for a respiratory occupational disease contracted during his employment. The added liability for occupational disease has put more pressure on an already financially beleaguered gold mining industry and will ultimately result in further job losses –  a consequence which the legislator could not have intended (see ‘Costs related to layoffs, lawsuit, take toll on AngloGold results’ www.mining.com, accessed 29-1-2018).

RCV, medical aid, RAF and collateral benefit rule

A medical aid has no right of recourse directly against the RAF (it is not a third party as defined by s 1 of the Act nor is it a supplier in terms of s 17(5)) but its interest is rooted in the contract with its members contained in its rules. See for example r 15.6 of the Discovery Medical Aid Scheme: ‘In the event that a member or a dependant becomes entitled to any benefit for any medical services in the treatment of an injury sustained as a result of or arising out of the negligent driving of a motor vehicle within the Republic of South Africa, the member or dependant shall be obliged to take all steps that is necessary to timeously submit to the Road Accident Fund a claim for the compensation for the costs of any health care services performed and which in the future may be necessitated in connection with such injury and … ).  Its right of recourse in respect of provided Road Traffic Crash (RTC) caused medical treatment, lies against its members and not the RAF. The RAF is the substituted wrongdoer and its relationship with a claimant member of a medical aid is governed by common law. The recovery of damages from and payment by the RAF is subject to common law principles, in this instance, res inter alios acta. The essence of this rule is that payment made from an extraneous source in respect of damages suffered by an RCV are not deductible if made without a legal obligation to do so. There are no recognised principles to determine whether such an extraneous payment is deductible. The object of the rule is the prevention of overcompensation and the unwanted indemnification of a wrongdoer. Consideration of the possible application of the rule is based on equity, fairness, and the interests of society (Zysset and Others v Santam Ltd 1996 (1) SA 273 (C) at 279; Standard General Insurance Co Ltd v Dugmore NO [1996] 4 All SA 415 (A), 1997 (1) SA 33 (A) at 41 and H Klopper Damages (Durban: LexisNexis 2017) at 55 fn 195).

Section 29(o) of the Medical Schemes Act 131 of 1998

This section compels a medical aid to pay minimum primary benefits as determined by regulation. Primary medical benefits include trauma treatment for injuries sustained in an RTC. Regulation 8(1) states that a medical aid ‘must pay in full, without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the prescribed minimum benefit conditions.’ This raises the question of whether s 29(o) and reg 8(1) creates a legal duty to pay for RTC trauma treatment, which in turn makes such payment not res inter alios acta, because a medical aid’s discretion to pay for RTC trauma treatment has been excluded.

The first point to note when considering this question, is that medical aid payments are financed from contributions made by a claimant member (Thomson at 547; Bane at 550). Furthermore the obligation to pay for these services are not principally created by the section and regulation of the Medical Schemes Act but pertains to the rules of medical aids which determine payment of benefits and co-payment by a member for medical services rendered (Council for Medical Aid Schemes and Another v Genesis Medical Scheme and Others 2016 (1) SA 429 (SCA); KeyHealth Medical Scheme v Ngoepe N.O and Others (GP) (unreported case no A203/2021, 10-10-2022) (Barit AJ)). It is not an inter partes agreed obligation, but one regulated by a statute which governs medical aids.

Purpose: Widest possible protection
It is settled law that the purpose of third party compensation legislation is the protection of the road accident victim. In this regard it has often been stated that the road accident victim is afforded ‘the greatest possible protection’ against the inability to recover delictual common law damages due to the impecuniosity of the wrongdoing driver (see Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 285 and, also inter alia, Rose’s Car Hire (Pty) Ltd v Grant 1948 (2) SA 466 (A) at 471; Op’t Hof v SA Fire and Accident Insurance Co Ltd 1949 (4) SA 741 (W); Workmen’s Compensation Commissioner v Norwich Union Fire Insurance Society Ltd 1953 (2) SA 546 (A)). The RAF Act has no possible ancillary or concomitant purpose. Full indemnification of a crash victim does not have any beneficial ancillary socio-economic result or consequence other than avoiding and/or negating the societal consequences of road crashes.

Are medical aid payments deductible?

Considering the financial source and mechanism of medical aid RCV trauma treatment payments and applying the object of prevention of overcompensation, unwanted indemnity of wrongdoers and the principles of equity, fairness, and the interests of society, I suggest that it is not the case. Especially if viewed against the fact that non-medical aid RAF claimants constitute approximately 80% of the RAF claimant population and receive free treatment at public hospitals funded by taxes to which medical aid members also contribute. Added to this, the RAF has arrangements with provincial authorities and some individual hospitals in terms of which their treatment of RCVs without medical aid is compensated by the RAF (see eg, Road Accident Fund v Newnet Properties (Pty) Ltd t/a Sunshine Hospital and Others (GP) (unreported case no 2023-070696, 8-8-2023) (Van der Schyff J)). The use of a non-related legislative directive to allow a government organ to escape delictual liability is manifestly inequitable having the effect of the government unfairly profiting at the expense of the RCV who has prudently provided for his medical care needs. In view of these considerations, allowing the RAF as substituted wrongdoer to escape liability for medical aid funded medical costs is contrary to the object of the RAF Act, inequitable, unfair, discriminatory, and not in the interests of society.

RAF’s s 19(d) ‘defence’

The RAF has also resorted to the use of s 19(d) of the Act in an attempt to escape payment of medical aid funded medical costs. The RAF completely misconstrues the purpose of s 19(d). It was never intended to exclude payments of legally binding obligations. Section 23(c) and (d) of the Compulsory Motor Vehicle Insurance Act 56 of 1972 was introduced after the Wessels Report of the Commission of Inquiry into Certain Aspects of Compulsory Motor Vehicle Insurance 1974 proposed the introduction of provisions to protect third party claimants against unscrupulous claims consultants who, unlike attorneys, did not have any tariffs for work done nor indemnity insurance. Section 19(c) and (d) of the Act are the successors of s 23(c) and (d). Section 19(c) for the preceding reason limits the handling of third party claims to practicing attorneys. Section 19(d) prevents a person who is not an attorney from profiting in any way from the handling of a third party claim through the sanction of loss of claim. The use by the RAF of s 19(d) in this manner is furthermore disingenuous because its attempt to employ s 19(d) in respect of s 17(5) suppliers’ claims was rejected by the Supreme Court of Appeal in Road Accident Fund v Abdool-Carrim and Others 2008 (3) SA 579 (SCA). The RAF s 19(d) ‘defence’ was correctly rejected in recent judgments albeit on not altogether accurate grounds (see Van Tonder and Le Roux v Road Accident Fund (WCC) (unreported case no 1736/2020; 9773/2021, 1-12-2023) (Cloete J); Road Accident Fund v Sheriff of the High Court for the District of Centurion East and Another (GP) (unreported case no 122825/2023, 19-2-2024) (De Vos AJ); Gunther v Road Accident Fund (WCC) (unreported case no 24228/16, 6-6-2024) (Pangarker AJ)).

Conclusion

In conclusion, the RAF’s intention of avoiding legally founded liability by the illegal use of non-applicable principles resulting in a recent boast by its chief executive officer to the Portfolio Committee on Transport community of a substantial savings in medical cost payments (ostensibly resulting from its illegal rejection of medical aid liability) must be fully condemned and rejected. Furthermore, the RAF’s desperate clinging to illegal tactics is unconscionable – especially the reliance on s 19(d), which excludes a third party’s claim if he in contravention of s 19(c) illegally shares the proceeds of his claim with another person where in fact a legal repayment of a medical aid debt contractually owed by a third party to his medical aid is made. All these actions are contrary to the Act’s purpose to widely protect a third party against not being able to recover his damages from a wrongdoing driver and to the ultimate detriment of third party claimants.

Professor Hennie Klopper BA LLD (UFS) is an Emeritus Professor at the University of Pretoria and legal practitioner at HB Klopper in Pretoria.

This article was first published in De Rebus in 2024 (July) DR 20.