Sour grapes: Medical scheme decisions cannot be taken on review

Sour grapes: Medical scheme decisions cannot be taken on review
02 Oct 2017

Thebe Ya Bophele Healthcare Administrators (Pty) Ltd (“TYB”) brought an urgent application against Hosmed Medical Scheme (“Hosmed”); The Board of Trustees for Hosmed; Medscheme (Pty) Ltd as well as The Council for Medical Schemes.

Hosmed had notified its current administrator, TYB of its intention not to renew the administration services contract with it in a notice of termination of the agreement during August 2016.  Hosmed subsequently issued a request for proposals for rendering of administration services, and after undergoing a valid procurement process, it awarded the contract to Medscheme (Pty) Ltd.  The current administrator, TYB sought urgent interim relief to interdict Hosmed from concluding the administration agreement with Medscheme, pending determination of Part B in which it sought an order as follows:

  • Declaring that the termination on notice of its Administration contract with Hosmed was invalid; and
  • Reviewing and setting aside the decision that Hosmed had made to award the tender for the new Administration contract to Medscheme (Pty) Ltd.

The hearing was heard by Honourable Judge Fabricius on 12 September 2017.  During argument, TYB contended that there was urgency in the matter given that Hosmed intended to implement its new contract with Medscheme on 1 October 2017.  The Judge enquired from the counsel for TYB whether TYB’s position was that the matter was a contractual dispute or not, and if it was a contractual dispute why should it be heard under Rule 53 of the Uniform Rules of Court, which pertains to review applications brought to the court.  Hosmed had filed an irregular step notice in relation to the review under Rule 53 on the basis that decisions by medical schemes cannot be subject to review under Rule 53 or PAJA as they were not decisions taken by any inferior court and of any tribunal, board or officer performing judicial, quasi-judicial or administrative functions as contemplated under Rule 53 or the under the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).

In response, TYB admitted that the matter was not subject to review under the provisions of PAJA but that there should be room for development of Common Law to accommodate matters relating to the medical schemes environment. The Judge advised that in his view, this issue of development of Common Law to accommodate TYB’s review application was not developed in their founding papers. As such, the Judge could not be swayed by TYB’s counsel on why a review was permissible under the circumstances.

Judge Fabricius agreed with the submissions made by Hosmed, that the urgency sought by TYB was self-created, and that TYB failed to make out a case for review in its papers.  He handed down his judgment immediately after the arguments were closed. He ruled that the review application was brought in the context of a contract relationship between the parties. He further went on to rule that the issue relating to the termination of the Agreement was communicated to TYB in August 2016 and as such:

  • The matter can never be urgent; and
  • An interim interdict could not be granted. The Judge made it clear that in his view it was abundantly obvious that a review of a decision of a medical scheme is not a competent relief. He also indicated that he was requested to develop Common Law and that this argument was not tempting as there is no case made to sustain the argument in the founding affidavit. Under the circumstances, Judge Fabricius held that the matter was not urgent and was accordingly struck off from the roll with costs of two counsel.

Although the Honourable Judge Fabricius did not make a ruling on the merits of the matter, his views regarding a review of decisions taken by medical schemes not being subject to a review application is in line with earlier decision by the Courts[1] which TYB effectively sought to overturn.  On its own version, TYB made out no prima facie case for review in its founding papers. The high water mark of its case on the founding papers was the hope that a fishing expedition it hoped to conduct may yield some evidence of irregularity in the tender award process.  However, it failed to do so, and  Honourable Judge Fabricius criticised TYB on its unpersuasive submissions made in its application.

[1] Pennington v Friedgood and Others 2002 (1) SA 251 (C) at paras 40-42 and Gerson v Mondi Pension Fund and Others 2013 (6) 162 (GSJ) paras 41-47.

Bonang Masia
Bonang Masia

Bonang Masia is a Director in GMI’s Public Law and Commercial Litigation Department. Her practice area mainly spans around advisory work for public and private sector clients, particularly on the exercise of public power, corporate governance, procurement, PFMA and National Treasury obligations, and corporate and commercial matters in the healthcare sector. Her primary passion lies in Competition Law. Bonang also attends to litigation arising from contractual disputes, procurement, and interpretation of legislation.

Send a legal query to Bonang Masia
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