Cape Town - After falling off his motorcycle on a dirt road and without any other parties being involved, a Fin24 user, who wants to remain anonymous, but whose details are known to Fin24, claims he received an email from Discovery informing him of his “duty” to claim from the Road Accident Fund (RAF) and then reimburse Discovery for medical expenses.
"I replied that this was not an option as there were no other parties involved and it was an 'offroad adventure riding' event," writes the Fin24 user.
"In one of the Fin24 articles Discovery claims it 'no longer requires' members to sign the undertaking that required them to claim from the RAF. This means that they did in fact require their members, at their own cost and risk, to claim from the RAF to reimburse Discovery. So Broboff et al are actually correct on this," writes the Fin24 user.
To him Discovery's rule regarding claiming from the RAF in order not to be compensated twice for an event is "ludicrous".
"Forcing a member to claim at the member's cost and risk implies a double penalty for the same event in the event of an unsuccessful claim," says the Fin24 user.
"If a claim is lodged with the RAF - for example for pain and suffering and loss of income and not for medical expenses – will Discovery claim a right to this money? Who is Discovery to tell me what I can, cannot or must claim after my accident in order to reimburse them for the expenses they are obliged to pay in respect of my monthly medical aid premium?"
The Fin24 user feels Discovery is making their members “de-facto risk managers".
"A premium is paid to a medical aid as an insurance premium. The insurer then undoubtedly re-insures a component of this premium. If the member then refunds Discovery for payment of medical expenses, then it will be Discovery who in fact benefits twice from the same client," writes the Fin24 user.
He refers to the 2012 annual report of Discovery Health Medical Scheme which states that it paid R3.4bn to its administrator, Discovery Health. In addition Discovery Health received R256m more from 13 smaller schemes it manages.
"During the period under review, Discovery Health made an operating profit of R1.5bn, or 44% of the group’s overall operating profit of R3.44bn. And now they want to be refunded more? By me? And at my cost and risk? Seriously?" writes the Fin24 user.
"I am expecting that Discovery will say that its RAF claim policy is to keep the medical scheme affordable and reduce premiums. If they do take this line, then read it in context with the R3.4bn it pays its administrator."
Dr Jonathan Broomberg, CEO of Discovery Health, responds:
The RAF clause has been in the rules since 2000, based on the model rules of the Council for Medical Schemes (CMS). Notwithstanding the rules, Discovery Health Medical Scheme (DHMS) has never enforced this rule and will never force a member to submit a claim to the RAF.
The board of trustees will consider a change to the rule to clarify that submission of claims to the RAF at the discretion of the member.
Attorneys Bobroff et al have claimed that DHMS forces members to submit claims to the RAF and has deliberately failed to disclose this to members. This is completely false.
It is a well accepted principle of South Africa’s common law that no person should benefit twice from an insured event.
All medical schemes and other insurers have policies that comply with this law. Members who claim from the RAF do so at their own election, typically to secure payouts for general damages, loss of income etc.
Only if and when they receive compensation for medical expenses already paid out by the medical scheme are they required to refund that amount to the scheme. The Council for Medical Schemes, the regulatory authority for medical schemes, supports this important principle.
Discovery Health Medical Scheme would only ever require a member to refund what the RAF has paid out for medical expenses. The medical scheme would not be entitled to request a member to refund any payouts for other components.
There is no re-insurance in the Discovery Health Medical Scheme. At best, the medical scheme would recover all or some of the medical expenses it has already paid out on behalf of the member.
In aggregate, DHMS has paid out approximately R2bn in the past six years on around 25 000 accidents and has recovered approximately R330m of this in refunds from members who received RAF payouts.
It is important to note that DHMS is, by law, a not for profit trust owned by its members. Any monies recovered from the RAF are, therefore, retained in the scheme and assist in keeping premiums affordable into the future.
Regarding the 2012 figures quoted by the Fin24 user: Do not confuse Discovery Health, the administrator, with the Discovery Health Medical Scheme (DHMS).
The DHMS is a non-profit entity managed by a board of trustees. Its sole purpose is to pay for medical expenses for its members. It is DHMS, and therefore all its members, which benefits when a RAF claim is paid back to the scheme.
Discovery Health is paid a fixed fee per policy per month and does not benefit in any way from refunds to DHMS from RAF payouts.
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Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.