GMI recently represented the Government Employees Medical Scheme

12 Oct 2020

GMI recently represented the Government Employees Medical Scheme (“GEMS”) in a matter against the Public Protector (“PP”) primarily in respect of whether the PP had the power and jurisdiction to investigate a GEMS as a medical scheme.

The office of the PP has often been described as ‘an indispensable constitutional guarantee’ that possesses broad investigative powers. However, in the case of Government Employees Medical Scheme and Others v The PP of the Republic of South Africa and Others (1000/2019 and 31514/2018 and 33401/2018) [2020] ZASCA 111, the Supreme Court of Appeal (SCA) confirmed that such powers are not unrestrained and is subject to jurisdictional limitations.

The Second Respondent (Mr Ngwato) lodged a complaint with the Third Respondent, the Registrar of Medical Schemes (the Registrar), purporting to be aggrieved by GEMS’ initial refusal to grant him recognition as a beneficiary following the death of his life-partner, a long-time member of GEMS.

GEMS’ refusal was based on Mr Ngwato’s failure to produce a marriage certificate, as proof of his marriage to the erstwhile GEMS member, was required by the Scheme’s Rules. However, due to a policy change by GEMS, which resulted in the requirement of a marriage certificate to fall away, GEMS later issued a certificate to Mr Ngwato confirming his membership. Mr Ngwato, notwithstanding the issuance of the certificate, was unsatisfied and continued to pursue his complaint.

On 19 January 2016, the Registrar ruled that although Mr Ngwato was entitled to be a member of GEMS, he did not qualify for the subsidy from the Government Pensions Administration Agency (GPAA) and would, therefore, be liable for the full payment of contributions due to GEMS. Mr Ngwato then appealed to the Fourth Respondent, the Council for Medical Scheme (CMS), which upheld the ruling of the Registrar.

Instead of exercising his right of further appeal to the Appeals Board of the Council, Mr Ngwato then lodged a complaint with the PP.

Although the office of the PP found the complaint to be unsubstantiated and closed the file, the matter was subsequently reopened and the PP sought to investigate the complaint, albeit by broadening the scope thereof.

In correspondence exchanged between GEMS and the PP’s office, GEMS pointed out to the PP that she did not have the jurisdiction to investigate GEMS, and furthermore, having closed her file, there was no new evidence, nor any compelling grounds as contemplated in the Public Protector Act 23 of 1994 (“PPA”).  Notwithstanding this, the PP persisted with her investigation, and issued subpoenas against certain of GEMS’ employees to produce documents in furtherance of this investigation.

These steps were taken arbitrarily, notwithstanding the fact that GEMS had challenged the PP’s jurisdiction to investigate Mr Ngwato’s complaint, as GEMS is a private medical scheme regulated by the Medical Schemes Act 131 of 1998 (MSA) and the statutory body (CMS) with jurisdiction over the Scheme had already made a final and binding ruling in its favour.

Pursuant to the subpoenas, GEMS approached the High Court for an order declaring that the PP did not have jurisdiction in terms of the PPA or otherwise, to investigate the complaint lodged by Mr Ngwato against it.

On 14 May 2018, Dr Goolab and Mr Kruger approached the High Court on an urgent basis requesting the suspension of the subpoenas and to be joined as the Second and Third Appellants respectively. Due to the PP’s failure to file an answering affidavit, the order was granted by Davis J.

It is against these set of facts that the Court had to determine four pertinent issues namely: (i) whether GEMS performs a public function as envisaged in Section 6(4)(a)(ii) and (v) of the PPA thus empowering the PP to investigate Mr Ngwato’s complaint; (ii) whether GEMS conducted itself in a manner as contemplated in terms of Section 6(5)(b); (iii) whether GEMS is an ‘institution in which the State is the majority or controlling shareholder’ in terms of Section 6(5)(a) and whether the PP was authorised to make use of coercive measures.

The Court a quo held that GEMS falls within the category of entities that may be subject to investigations by the PP as it performs a public function in terms of national legislation for the benefit of public employees and due to the fact that the Minister was entitled to appoint 50% the trustees, it fell within the ambit of her jurisdiction.

The Court a quo, subsequently, dismissed the main application, set aside the suspension of the subpoenas, ordered costs against the Appellants and granted the Appellants leave to appeal to the SCA.

On appeal the SCA held that GEMS is a non-profit entity which does not perform a public function or exercise public power. It further held that the relationship between the scheme and its members is essentially one of a contractual nature, therefore, any complaints arising from the Scheme’s Rules do not concern the general public or result in general application as it only applies to a restricted class of persons.

The SCA went on to emphasise that the dispute between Mr Ngwato and GEMS was based on the interpretation and application of the Scheme’s Rules, as opposed to any conduct contemplated in terms of Section 6(5)(b), and an isolated incident with no continuing public interest that would warrant the PP’s investigation.

The SCA further ruled that although 50% of GEMS’ board is appointed by a Minister, the Minister exercises no control over it and the Board of Trustees can change its rules without any Ministerial approval.

Pursuant to the abovementioned reasons, the SCA held that the jurisdictional preconditions for an investigation in terms of Section 6(4) and (5) of the PPA have not been met and the PP, accordingly, does not have the statutory power to investigate the complaint.

In determining whether the PP had unrestrained subpoena powers, the SCA held that these are extraordinary coercive powers generally reserved for our Courts. Therefore, when such powers are granted to a body other than a Court, it should be interpreted restrictively and only used when evidence cannot be obtained using a less invasive route.

It further acknowledged that the PP does possess subpoena powers, however, the use of such powers is confined, in terms of Section 7(1)(a) of the PPA, to investigations that fall within the ambit of Section 6(4) or (5) of the PPA. The PP’s subpoena powers are, therefore, dependent on the existence of a complaint, allegation and the like, which encompasses conduct referred to in Section 6(4) or (5) of the PPA.

The appeal was, accordingly, upheld with costs.

This judgment emphasises that the office of the PP as well as its actions and powers are not exempt from the scope of the law and subject to limitations imposed by the PPA notwithstanding the fact that it is an independent and impartial institution.

See also:

• Sour grapes: Medical scheme decisions cannot be taken on review
• How taxpayers will cough up for the new National Health Insurance Fund
• Constitutionality of NHI Bill under the microscope
• Will government’s approach to the adoption of the NHI do more harm than good?
• #Covid-19: Am I covered for medical expenses?
• Genesis Medical Aid Scheme versus the Registrar of Medical Schemes

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)