Road Accident Fund Amendment Bill: deliberations

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
25 May 2005
ROAD ACCIDENT FUND AMENDMENT BILL: DELIBERATIONS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Road Accident Fund Amendment Bill: Department Amended Bill, combined State Legal Advisors and Department versions, May 2005
Submission from the State Law Advisor: Proposed repeal of Section 17(2)
Draft Road Accident Fund Amendment Bill [B – 2004]

SUMMARY
The Chief State Law Advisor briefed the Committee on the constitutionality of the issue of party and party costs in the Road Accident Fund Amendment Bill, and outlined the most recent amendments to the Committee. The Committee then went through the Bill in detail and discussed issues with the Department. Amendments still under discussion included the sections dealing with setting caps and the issue of a threshold for general damages. Recommendations on these issues were given to the Department for further consideration. The Committee would await further legal opinion on the constitutionality issue before continuing with the Bill.

MINUTES
The Chairperson said that they had asked Mr Herman Smuts, a State Law Advisor, to advise them on the constitutionality of the party and party costs issue. The amendments to be discussed included setting caps and the threshold for general damages. The Committee would soon receive a response on the constitutionality of these issues and the Department was working on their statistical impact.

Mr Smuts said that he had been asked to look into the constitutionality of the repeal of Clause 17(2), involving party and party costs. There had been concern that it might impact on a person’s right to legal representation, but his view was that this was not the case because a claimant would be put in the same position as any other claimant in civil procedures. The repeal only meant that the third party was no longer entitled as a matter of right to party and party costs when an offer was accepted.

Mr R Ainslie (ANC) confirmed that the Constitution guaranteed the right of a person to go to court or to legal representation, but did not guarantee that someone else would pay for that. Mr Smuts said that was correct. He then gave his input on all of the amendments (see attached).

Mr S Farrow (DA) asked whether Mr Smuts had studied the issue of releasing patient information. Mr Smuts said that he needed more time to look into that.

Mr Farrow asked if they had looked into the constitutionality of the inclusion of emotional shock in terms of the Mental Health Act. Ms M du Toit, Director: Policy, Advocacy and Co-ordination from the Department of Transport said that they were looking into the issue with the Hospitals Association of South Africa (HASA), but they had not yet been able to meet to discuss it.

Clause 10: Appointment of the Board
The Chairperson said that Dr Cooper, Chair of the RAF Board, had suggested that Boardmembers needed a longer term than three years, renewable once. This limit had been put in place to guard against the entrenchment of the Board.

Mr Farrow said that it would be useful to know if there was a mechanism for the removal or replacement of boardmembers in order to decide whether the term should be increased.

Mr L Mashile (ANC) felt that if the boardmembers would have their term extended, it should be for a shorter term than three years, such as six months, so that it was not a re-appointment.

The Chairperson said that the extension applied to individual Boardmembers, not the whole Board, for the purposes of continuity.

Mr V Mabuyakhulu (ANC) agreed that the extension should be less than three years.

The Chairperson said the problem might be the word ‘extend.’ When a new Board was selected, Boardmembers could re-apply for a second term.

Ms du Toit said that the extension did not preclude the appointment process. Members of the Board were allowed to serve a second term, but in the legislation, they would have to clarify the total of six years.

The Chairperson said there were other small issues to clear up as well, such as whether non-successive terms were an issue.

Mr Farrow said that they could state it as ‘not excluding the right to reapply for a second term.’

Clause 12: Appointment of the CEO
Mr Ainslie asked the difference between ‘concurrent’ and ‘agreement’. Ms du Toit said that it meant that if there was no agreement, it did not stop the Minister from proceeding with the appointment.

Mr W Ndou, Department Legal Services, present felt it meant that if there was concurrence, neither of the two who had been given the power to appoint, could do so.

The Chairperson said that the Minister would propose a Chairperson, but that the Board would be consulted and given the opportunity to express its views.

Mr Farrow was happy with the idea of consultation, but said that the legislation said that the Board would set the terms and conditions of employment. The legislation also excluded the competency level of the executive. Dr Cooper had expressed concern about the experience level of that person and his or her ability to do the job. Mr Farrow was not sure that there was any reason for excluding that section.

Ms du Toit said that the terms and conditions for the appointment of the CEO were left to the Board because the salary, amount of leave and benefits were something they felt that the institution itself should be in control of. The Minister should provide the policy framework in which the person was appointed, so that the knowledge the person should have remained in the Act and guided the Minister, but the Board would make the appointment.

Mr Ndou said that the removal of the section on competency related to when the Act had come into being, not the current version.

Mr Farrow said that the paragraph did not outline the manner in which the Minister should appoint the CEO or the selection process.

Ms du Toit said that under Clause 12(b), the nature of the person to be appointed was stipulated.

Mr Farrow said that the Board then had no role other than consultation.

Mr Mashile said that the description of the CEO’s background might limit them in filling the role.

The Chairperson said that the guideline was fairly broad and that they wanted someone who would be able to understand the ‘complicated issues’. They were looking for someone with an insurance or compensation background.

Mr Dhlamini (IFP) said that he was concerned about the phrase that the CEO would hold office ‘at the Minister’s pleasure.’

The Chairperson said that that phrase had been removed.

Clause 17: Liability of Fund and Agents
The Chairperson said that Clause 17(1)(a), involving third party compensation, was subject to the advice of the State Law Advisors on constitutionality.

Mr Farrow said that they needed to flag this issue because if they did not put caps in place, they would need to consider how they would deal with foreigners.

The Chairperson said that there were issues of constitutionality, foreigners and the amount of the cap. The Department had said that 99% of general damages cases were settled at R100 000 or below, so there would not be a huge saving with a cap. They could consider raising the cap. He asked whether there was a possibility to explore a different figure than R100 000.

Ms du Toit said that the monetary savings of this cap on general damages was very small, but the purpose of the cap would be to prevent future unlimited liability. Current caps were based on current behaviour, but behaviour could change with changing rules. Since they were looking at serious injuries, however, they could negotiate on whether to remove the cap or to increase it.

Mr Ainslie said that he had assumed there would be greater savings with the application of the label ‘serious injury.’ One of the public submissions had said that 80% of the people now qualifying for claims under R100 000 would no longer qualify under the category of ‘serious injury.’

Ms du Toit said that there were two aspects; one was a threshold that indicated that general damages would only be paid for serious injury, and this impacted a wide range of claimants, and had a 24% savings for the Fund. The second issue was whether, once that threshold was put in place, those who qualified would be able to claim for an unlimited amount or would be limited in order to prevent future liability. The Department’s view was that they were trying to look more closely at serious injuries and did not necessarily feel that the fund would be at risk. They felt that it would be advantageous to the seriously injured to be able to seek compensation in line with their general damages.

Mr Farrow said that it would be useful to have the statistics that the Department was using to determine savings.

The Chairperson said that the Department was prepared to look at a higher figure or dispense with the cap altogether. Serious injuries would still have amounts awarded in court procedures based on precedents, so what they were trying to change was the claims for minor injuries, such as whiplash. He asked if Members wanted to make a firm suggestion to the Department in regards to an upper limit, and since it appeared that no one was saying that they were in favour of the R100 000 cap, they should raise it or remove it. The Committee decided it would provisionally look at removing it. The Chairperson then outlined how serious injuries would be determined, including the idea of setting up panels to assess claimants.

Mr Mashile asked if provincial panels would be made up of individuals accredited by the Fund.

The Chairperson said that they would be specially accredited and appointed by the Fund. The question brought up in the hearings was why they would set up provincial panels to do screening. The Fund had suggested accepting the medical opinion of panels of specially accredited professionals instead, which would be less costly and bureaucratic.

Mr Farrow said that these checks ad balances would need to be in place. To avoid the issue of ensuring that the panel accommodated every type of professional needed, the checks could become a function of the claims handler. The proposed system of provincial panels would be clumsy and take time, and they needed to address the issue of how to protect private medical information.

Mr Ainslie said that they needed to clean up the simpler, less serious claims, but suggested that this process be costed. His main concern was access to the panels, in terms of whether they would be mobile or if people would have to travel, in which case the poor would lose out.

The Chairperson said that his understanding was that the panels would not be an interview process, but that they would come together to look at claims documentation in order to approve or decline them. It would be difficult to draw the line determining what was a serious injury, so it was difficult to ask claims handlers to do that. It would be preferable to ask a panel of professionals to do that.

Mr Ainslie said that if they used a monetary threshold to determine serious injury, they would not need all of these panels. He wondered at what bottom threshold the RAF would start to make significant savings and cut out the minor injuries.

Ms du Toit said that, at the moment, the relationship between the injury and the general damage compensation was weak and inverse, meaning that those who were less seriously injured got more general damages. The concern was that a financial threshold was a crude policy instrument and could negatively impact the seriously injured. If they were to link compensation to injuries and not finances, they needed to assess injuries.

The Chairperson asked how they could offer legal guidance on how seriousness would be determined.

Ms du Toit said that they were still in the process of proposing a method. There were different opinions from the different groups, but there could not be a specific and rigid measure. They needed to look at the injury in relation to the person and the context of the injury. The inclusion of the person’s personal doctor in the determination process allowed for that.

Mr Farrow said that the Department had prepared a book of quantum that looked at precedents in which the courts had taken into account the concerns and costs of each medical profession involved.

Ms du Toit said that accreditation went a long way in terms of consistency when it was based on training in assessment methods. The issue of quantum was not relevant because assessment only looked at whether a person could claim for general damages and not the amount of the claim. Court precedents would speak to how much a person could claim in terms of the specific injury. The Bill did not change this process, but just proposed limiting the amounts in some way.

Mr Ainslie asked if there was an appeal mechanism if the injury was deemed not serious.

Mr Mashile commented that with people with no medical aid submitting a claim for an amount below the bottom threshold, and the claim was thrown out, would the RAF not be suited only for the first economy?

The Chairperson said that general damages applied without a bottom threshold. They did not want general damages to apply in cases where the injury was not serious and needing assistance. This was why they did not want to have a monetary lower threshold.

Mr Mashile supported accreditation.

The Chairperson said that the ideas of accreditation and panels were not so far apart and they needed to work out the details.

Mr Farrow said that they should find out the cost implications of these options for the RAF.

The Chairperson asked the Department for some kind of estimate of that and more detail on how these would operate.

Ms du Toit said that in Clause 26(e) there was a provision for the Minister to draw up regulations around the resolution of disputes when people were found to have non-serious injuries. If they moved toward an accreditation process, the dual process of both panels and review panels might not be necessary. The panels could be subsumed into the accreditation process, and they could set up a review panel to get the views of a broad range of health professionals.

Mr Mabuyakhulu asked if the panel of accredited doctors would still follow the current procedure, which was that someone involved in an accident must see a doctor within a certain time limit. At the moment, people were going to their general practitioners, who do not necessarily have the equipment to make a full diagnosis.

Ms du Toit said that they would need some clarity on the process. Some medical practitioners were qualified to write medical-legal reports dealing with the injury and the damages. They would need to look into the practicalities of the whole process.

Mr Farrow said that under Clause 26, many of these issues were regulatory, and did not need to be addressed with legislation.

The Chairperson said that what they were trying to do here was change the law in regards to general damages and to set a bottom threshold for serious injury. The mechanisms were a different matter, so they should look at the costing and practicalities of the different options.

Clause 4?: Future Loss of Earnings
The Chairperson said that they should clarify what was meant by R160 000 per year, and should specify that this figure was in real terms. The Minister would need to be able to adjust for inflation.

Ms du Toit said that the figure was given per year because the amount of compensation the claimant would need until 65 would depend on the claimant’s current age.

The Chairperson said that this area was potentially subject to constitutional challenge. He also said that Mr Smuts had revived an old clause on foreigners and future loss of earnings. This would be taken care of if they put caps in place, but they could exclude foreigners from claiming from the Fund altogether.

Mr Mabuyakhulu said that he wondered if they were stretching themselves too far because South Africans were not covered in other countries. They must look into the practices of other SADC countries when foreign citizens were involved in accidents.

Mr Farrow said that they should embrace SADC countries, but that most people were required to take out personal insurance coverage at the border posts into South Africa. The Committee could look into situations where that did not apply, but rich foreigners would generally have their own insurance.

Mr Mashile said that the countries they should be looking at were just the SADC countries. They should look at the obligations of foreigners and whether they were forced to take out insurance.

Mr M Swathe (DA) said that some of the foreigners that came to South Africa were investors who needed to be taken care of so that they saw that South Africa appreciated them.

The Chairperson said that much research needed to be done. They should keep this in mind in case capping was unconstitutional, but if capping were accepted, they would not have to refer to foreigners.

Clause ??: Tariffs
The Chairperson said that Mr Smuts had proposed that the tariff for private health care be based on the reference price lists in the National Health Act, and should be prescribed by the Minister in consultation with the Minister of Health.

Ms du Toit said that the Department was happy with that, but raised the position of the RAF Board, which suggested that the RAF itself publish the tariff. The Department was concerned about the oversight of that, in that the Department of Transport would have to update it yearly, which might be impractical. Instead, the tariff should be set by Department of Health officials with the expertise to do so.

Mr Mashile asked if the RAF was not expected to play any role in setting tariffs.

Ms du Toit said that there were reasons why that should be the case. The process of determining tariffs was based on the cost of treatment and the ability of the Fund to pay, so the Minister would consult with the RAF to determine the second aspect.

The Chairperson said that there was a no-fault aspect to the Fund in terms of emergency treatment.

Clause 18: Funeral Costs
The Chairperson said that concerns had been raised about the claim for funerals being set at R5000.

Mr Mashile said that most people in South Africa were poor and that the legislation should cater for people in the second economy who were more vulnerable. They could differentiate between a minor and an adult in terms of how much was paid.

Mr Farrow said that the cost of funerals would increase in future and locking in a specific figure would make it difficult to change.

The Chairperson said that there were two issues and these were cost escalation and whether they even wanted to include this in the legislation. Some indication of how much funeral claims were costing the fund would help them decide what to do about this.

Mr Farrow said that some funerals might cost less than R5 000, and the clause in the previous Act had satisfied him.

Ms du Toit said that the motivation for specifying funeral compensation was to expedite the process of settlement. The RAF had been paying out less and less on the claims for funerals, which meant that there would be more contestation. Most people were claiming around R3 000, but the Department felt that they would satisfy most people with R5 000 and limit the contestation.

Mr Farrow asked for an idea of who was litigating because the brochures from the RAF clearly outlined what the RAF would pay for.

Ms du Toit said that they did not have the figures, but it would be useful to find out the environment in which the litigation was taking place.

Mr Mashile asked what informed the figure of R5 000 because he thought that a funeral would cost more.

The Chairperson said that it came down to deciding what they were trying to do with this figure and what they wanted the Fund to cover.

Mr Farrow said that in the past, the RAF had had a public awareness campaign. This may have something to do with the increase in claims for funeral costs.

The Chairperson said that they wanted the Department to persuade them, with statistics, that there was a good case for setting a fixed amount. If they decided that there was, they would want to further consider the amount.

Clause 19: Emotional Shock
Mr Farrow said that there was an issue of constitutionality in terms of the Mental Health Act for emotional shock claims.

The Chairperson said that the legislation would remain that compensation would not be paid to witnesses at accidents.

Clause 26: Regulations
The Chairperson asked why ongoing assessment of the recovery of injured persons had been included.

Ms du Toit said that this spoke to issues of undertaking. The Fund did not have measures to check if the treatment was leading to an improvement. They proposed that people should be reassessed, but this would not affect the monetary settlement.

The Chairperson said that it was a Compensation Fund and not a health care provider, so this clause would be overreaching the Fund’s purpose.

Ms du Toit said that it removed the arbitrary nature by which undertakings were currently handled and would let people know that something was expected of them in terms of continuing treatment. It may not be in the Fund’s scope at this time.

The Chairperson said that undertaking was a problem not being touched on. This clause enabled the Minister to move in that direction so they would flag it and return to it.

Mr Farrow wanted to flag Clause 26(e), as he assumed that it had to do with arbitration.

Ms du Toit said that it had to do with general damages and spoke to where there might be disputes in the original thinking between the oversight or peer review and the provincial panel, or between the victim and the panel. This was to provide a way for those disputes to be resolved through mediation and arbitration, but without stopping people from going to court.

Mr Farrow said that there was strong motivation from the Fund to include it in the amendment bill. The issue was that once it was enacted, the Minister would be able to set up that mechanism, so the right thing might be to put it in with the jurisdiction proposal.

Mr Mashile said that he felt that the legislation would not be complete until these regulations had been made. He suggested that they separate regulations into two groups; those that were optional and those that were needed to ensure that the legislation was complete. They should also consider bringing in regulations on accreditation if they decided to include that.

The Chairperson said that some issues would require more detail than they had included in the Bill, but that they should retain ‘may’ and not ‘must.’ The Minister wanted to do these things and this provided him with the power to do so and to make regulations.

Clause 24: Jurisdiction and Arbitration
The Chairperson said that Mr Smuts had raised the issue of jurisdiction and attempting to prescribe where a claim could be lodged. His suggestion seemed complicated, and this might be a fraud issue that needed to be looked into separately from the legislation.

Mr Farrow said that it was an administration issue. It should be possible to move case files depending on where people were, and he saw no problem with legislating for this.

The Chairperson said that the facts in dispute would pertain to the accident site, so they would need to assemble facts there and it would make sense that the claim would be lodged there.

Ms du Toit said that legislation on jurisdiction was proposed by the Fund. This legislation would not prevent fraud and corruption and the Department was afraid that it was a reaction to a bad claims system. To address fears of fraud or a system that was not capacitated to deal well with claims, something else would need to be done.

Mr Mashile said that if a claimant were directed to where they should lodge the claim, the Fund would not take responsibility for inefficiency in dealing with claims.

The Chairperson said that he was reinforcing the idea that they should not legislate this and should improve the system instead. He said that the Committee would agree to drop that section. In terms of arbitration, the Committee and the Department had no problem with using arbitration and mediation as a first course of action, but would need to assess the costs.

Mr Farrow said that it had been shown that this was working and did save money. If they were to go by the objectives of this amendment, which was to save the Fund money, they needed to include it. They also needed to ensure that there was no corruption and could go through some type of accreditation for lawyers.

Mr Mashile said that under subsection 7, it said that the mediator had to be agreed upon by the Fund and the third party. He asked what that would mean for the poor, because it did not indicate whether there would be payment to the arbitrator or whether this forced the poor claimant to pay for legal representation as well as the arbitrator.

The Chairperson said that he did not think that was the intention. The third party would be paying a lawyer in any case, but would not have to pay for the arbitration mechanism. It would be a semi-permanent entity. They could include this as one of the areas where the Minister ‘may’ make regulations, but they could come back to this point when making a final consideration.

Mr Mabuyakhulu said that they could modify the current wording to say that if a person decided to go the route of mediation, the Fund could decide who would become the arbitrator.

The Chairperson said that they could go into the details of regulating it if they decided to include it.

General Discussion
Ms N Mbombo (ANC) asked if these changes to the Bill would occur in the future, but that at present did not apply. The Chairperson said that it would apply once it was law.

Ms du Toit said that the Minister did not support retrospective legislation, so only once the Bill was passed would it become effective.

Mr Mashile said that they had heard that the RAF was not finalising claims quickly, so he suggested that they include some time limits for dealing with claims.

The Chairperson said they were generally satisfied with the new version of the Bill, with a few minor additions and alterations. The Committee wanted to see the Department’s statistics.

Ms du Toit said that there was a package of information and statistics that had been compiled by the Department. The statistics of the RAF related to income and expenses, but did not look into the detail of injuries and the people who were receiving money, so the Department had looked into files to collect that information. It was a descriptive account to get a sense of impact and cost.

The Chairperson said that they were waiting for the responses on constitutionality before they met again.

The meeting was adjourned.