South African Medical Association

1. South African Medical Association Section 59 Investigation: ORAL SUBMISSIONS

2. MAIN ISSUES: • Divergent interpretations of Sechaba Medical Solutions & others v Sekete & others (216/2014) [2015] ZASCA 8 • Procedural fairness • Collection of evidence • Quantification of claims • Coercion

3. INTERPRETATION OF S59(2) • S 59(2): • “A medical scheme shall, in the case where an account has been rendered, subject to the provisions of this Act and the rules of the medical scheme concerned, pay to a member ora supplier of service, any benefit owing to that member or supplier of service within 30 days after the day on which the claim in respect of such benefit was received by the medical scheme.” • Does s59(2) grant an absolute discretion? • Sechaba Medical Solutions & others v Sekete & others (216/2014) [2015] ZASCA 8 • CMSA Appeals Board - POLMED ruling

4. SECHABA MEDICAL SOLUTIONS & OTHERS V SEKETE & OTHERS • Scheme arguments: • S59 of the Act does not entitle the provider to claim directly from a patient’s medical scheme, even if the patient authorised the provider to submit an account directly to the scheme. • Merely assumes a liability to reimburse the member for the amount of such benefit, once quantified. • Absolute discretion. • Provider arguments: • Claims underpinned by contracts concluded, in relation to each patient and member, between provider and scheme, in terms of which the latter accepted liability for and agree to pay for the services rendered to its members.

5. SCA JUDGMENT • Provider seeks authorizationin its own interests, not those of the patient. That alone suffices to establish a contractual foundation for these claims. • S 26(1)(b) of the Medical Schemes Act – meaning of “guarantee” instructive. • Ordinary way in which medical schemes function in this country. Social realities. • The position is different where the member pays the service provider directly and seeks reimbursement. That is the alternative contemplated by s 59(2), namely payment to the member, thus not a blanket discretion.

6. SCA JUDGMENT • Services are rendered, firstly, upon a declaration by the member concerned that he is a fully paid up member of a medical scheme and, secondly an authorisation by provider itself (via its administrators) that the services may be provided and will be paid for by scheme. Claims were underpinned by contracts concluded, in relation to each patient and member of scheme, between provider and scheme, in terms of which the latter accepted liability for and agreed to pay for the services rendered to its members. • It is the provider that seeks this authorisation and it does so in its own interests, not those of the patient. That alone sufficed to establish a contractual foundation for these claims. • s 26(1)(b) : scheme must ‘guarantee’ the benefit. The expression ‘guarantee’ does not make sense in a situation where the scheme’s only obligation is to reimburse its member for the amount of any benefit. What then would it be guaranteeing? A guarantee is an obligation given by one party on behalf of another to discharge that other’s liability to a third party.

7. SCA JUDGMENT • It is obliged to guarantee to its members that it will discharge, to the extent of the benefits set out in the schedule of benefits, their liability to the healthcare providers who render services to the members. This approach accords with the ordinary way in which medical schemes function in this country. Construing the obligations of medical schemes in that way constrains them to function in a manner that is consonant with the social realities of this country. Purposive interpretation of Act. • But a construction of s 26(1)(b) is not the only basis for reaching the conclusion that medical schemes are obliged to pay their members’ medical bills in accordance with the scheme benefits. Sections 59(1) and (2) of the Act are explicitly to this effect and, in addition, make it clear that this obligation is one owed to the service providers themselves.

8. SCA JUDGMENT • Section 59(2) of the Act expressly recognises that the medical scheme may pay the service provider directly. It was submitted by scheme that it was only obliged to do so when the service provider was party to a designated service provider agreement. However, there is nothing in the language or the context of the section that warrants us reading such a limitation into it. The shift in language between s 59(1) and s 59(2) is a helpful pointer to this being the correct interpretation of this section. • The position is different where the member pays the service provider directly and seeks reimbursement. That is the alternative contemplated by s 59(2), namely payment to the member. Again this reflects common practice in the industry. Thus not a blanket discretion.

9. POLMED APPEALS BOARD RULING • Appellant arguments: • Sechaba “no longer good law” as it infringes on right to exercise due diligence with regard to ensuring proper administration procedures. • Balance with trustee duty to ensure proper control mechanisms. • Ruling cannot be applied to claims that have already been paid, as it this case. Relief requested was direct payment of claims already paid out to members. Would amount to double payment. • Obligation discharged upon payment to either provider or member. • “

10. POLMED APPEALS BOARD RULING Appeals Board: • Does not directly address Sechaba or s59(2), but “service provider has a right to claim from member”. Comments: • SCA binding, cannot be overruled or sidestepped by Appeals Board or medical schemes. • SCA Judgment clear on correct interpretation of s59(2). • Double payment issue speaks to relief claimed, not interpretation of s59(2) per se.

11. SCHEME ATTITUDES • Sechaba distinguishable on facts. • Scheme rules can “contract out” of Act. • Comments: • No indication of limited application. • S59(2) is “subject to the provisions of this Act and the rules of the medical scheme”, however: • (a) cannot contract out if public interest involved (see Genesis-case); • (b) authorisation subject to/limited by scheme rules, not application of S59(2) (see Margate Clinic case referred to with approval by SCA in Sechaba).

12. Margate Clinic (Pty) Ltd v Genesis Medical Scheme 2007 (4) SA 639 (D) at 642E. • ‘When the scheme gives the hospital an authorisation to treat, that authorisation must clearly be limited by the scheme's own rules. What the scheme undertakes to do as against the hospital is to comply with its contractual obligation as against its member. … The upshot of this is that what the scheme undertakes to do, isto pay the hospital in accordance with the applicable tariff, provided it is bound to do so as against its member.’

13. UPSHOT • Arbitrary and unfair withdrawal of direct payments. • Punitive measure. • Inducement to sign provider contracts. • Facilitates procedurally unfair forensic investigations. • Vehicle to disproportionally disadvantage certain practitioners – could be discriminatory.

14. 2. PROCEDURAL FAIRNESS • Onus of proof ignored – HPCSA / SAPS etc. • Appeals Committee CMS 65173: • A scheme “is burdened with the onus that payments were irregular” before amounts may be deducted. • “It would be considered fair practice to allow for the discussions and feedback from the Regulators” before a scheme applies section 59. • Whoever makes allegations bears onus– trite principle! • Registrar ruling CMS59899: • A scheme is liable to fund any claims “in the event that it does not have any proof of allegations and in the event that said conduct was not reported to the relevant authority for further investigations and recommendations.”

15. 2. PROCEDURAL FAIRNESS • Immediate suspension of direct payments • Sharing of information prior to meetings • Unreasonable requests re patient records • Audi alteram partem? • Registrar ruling CMS54518: proper procedures should be appliedand recordings shared • Prescription unlimited

16. 3. COLLECTION OF EVIDENCE • Probes / entrapment • Surreptitious recordings • Coercive measures

17. 4. QUANTIFICATION • Benchmark amounts • Percentage of the value of allegedly undue claims, unilaterally decided • No detailed line by line calculations • CMS54518 : • “Whilst the scheme is within its rights to recover money due to it, what is due to the scheme is not an average or ‘benchmark’ amount” and “the scheme needs to provide the actual claims which it believes were claimed and paid for in error.” • To furnish the provider with raw data is not acceptable.

18. 5. COERCION Acknowledgement of debt agreements • Hard bargaining or duress? • Proof of duress? • Unequal position • Not preceded by fair process

19. 6. CONCLUSION Solutions? • Urgent need for binding guidelines on investigation procedures. • Medical schemes (inclusive of its rules) may not sidestep SCA interpretation of S59(2). • Consider legislative amendments – will take time, so more immediate intervention required.