COMMENT ON THE ROAD ACCIDENT FUND AMENDMENT BILL 2005 SUBMITTED BY THE LAW SOCIETY OF SOUTH AFRICA ("LSSA")
The object of the legislation that is, today, the ROAD ACCIDENT FUND ACT 1996 ("THE ACT") is described by JUDGE SATCHWELL in the SATCHWELL COMMISSION REPORT as follows: -
"The lives of more than 120 000 road accident victims are disrupted each year by death or injuries of greater or lesser degree of severity. The families, friends and employers also share in and bear the burden of death and injuries on the roads.
The legal response to the suffering caused by road accidents is that the aggrieved and prejudiced road accident victim or family searches for a wrongdoer and uses the civil law to extract a financial remedy for the damage caused. The root of civil liability of the wrongdoer lies in the tradition, common to most societies, of "pay a forfeit for harm done". The object of the delictual action is therefore the need to compensate persons injured in accidents.
The increase in the vehicular traffic and the number of persons so transported was accompanied by concomitant increase in the
threat posed by such traffic to road users. As early as 1934 pressure was placed on the South African Parliament to institute legislation to protect motor vehicle accident victims against the possibility of non-recovery of damage due to the fact that the wrongdoer was unable to pay the road accident victimís loss or damage.
"Its object is to ensure the payment of compensation for injuries or death caused by negligence in the use of motor transport. When damages are brought about through the negligence of an uninsured motorist, and he is unable to meet the claim for compensation, the innocent victim is left without any redress".
"Those people who were injured are suffering day in and day out in their work; they are unable to look after their families and because those families have to endure great
hardships while the children are young, they cannot enjoy their legitimate share in life. Those are the people we should primarily think of. We at once realise the tremendous amount of money involved in nursing services and medical services in restoring those people to health after they have been injured in some accident. We know of
a great number of people who have lost a leg and who will suffer all their lives in consequence of the injury they have sustained".
2 The proposals in the current Bill, in essence, turn back the clock 70 years. Effectively 80% of road accident victims will receive no compensation in respect of pain, suffering and disfigurement. The difference in 2005 is that the culture of lawlessness prevalent on our roads has resulted in an exponential increase both in the "tremendous amount of money involved in nursing services and medical services in restoring those people to health after they have been injured in some accident" and the number of number of incidents resulting in fatalities and injuries. Government seems unable to stem the carnage on our roads, but at the same time seeks to save money by effectively remaining the rights of these accident victims to obtain redress from the only practical and economically viable scheme for compensating innocent victims and protecting all motorists from financial ruin.
3 OBJECTS OF THE BILL
The Memorandum, which accompanies the Bill, states that the proposals are aimed at "improving the governance of the Fund" and will "improve the financial sustainability of the Fund".
To address governance the Bill seeks to empower the Minister of Transport to appoint the Chairperson and Vice Chairperson of the Board of the Fund and, with the concurrence of the Board, to appoint the Chief Executive Officer of the Fund. The executive committee of the Board is to be abolished.
5 Financial Sustainability
To achieve savings "a monetary limit" on general damages and future loss of income or support is proposed along with "a method for determining tariffs for payment of medical expenses". The Fundís current statutory liability to pay successful claimants their party and party costs is to be repealed.
6 As against this the Bill proposes that the current cap on passengerís claims be abolished and that the Fund be liable, on a no fault basis, to "compensate a provider of emergency medical treatment directly". It is our view that the benefits to claimants of these proposals are more apparent than real. This will be dealt with in the body of this comment.
7 It is noteworthy to note that, to improve the financial sustainability of the Fund, the proposal is to limit compensation paid by the Fund and not to increase the sources of income of the Fund or to look at factors which are risk factors increasing the financial obligations of the Fund.
8 COMMENT ON THE BILL
Administration and Governance of the Fund
The door has been opened for the outsourcing of the administration of the Fund to either the private or public sector. LSSA has previously suggested that consideration be given to privatising the administration of the Fund. No explanation is given in the memorandum and accordingly one is uncertain what the current policy is in this regard.
9 If consideration is given to the powers afforded to the Minister of Transport by way of the amendments proposed to sections 10,12 and 26 it is apparent that the direct responsibility for the performance of the Fund or any agency appointed to administer any functions of the Fund will rest firmly with the Minister, rather than the Board. If this is the case, the necessity for the continued existence of the Board may be called into question.
10 Although the Board is charged with the financial responsibility of the fund it has no power over income and no power over the day-to-day administration of the Road Accident Fund.
11 If the Board still does have a useful function then the extension of the period of tenure of Board members to a second term is to be welcomed, as this will promote continuity of policy.
General Damages and the Nature of the Injury
The amendment seeks to exclude payment of general damages (pain and suffering, loss of amenities of life, impairment, disfigurement, disability and shock ) to victims who have not suffered a "a serious injury". A cap of R100 000,00 is imposed in respect of a victim who suffers a serious injury.
13 If one applies the proposed definition of "a serious injury" to the Road Accident Fundís own current guidelines for the calculation of general damages, all but approximately 6 of the listed injuries will be disqualified for compensation. This means that more than 80% of road accident victims will be disqualified from receiving compensation for pain and suffering, loss of amenities of life, disability, disfigurement and shock.
14 The definition of "a serious injury" leaves much to be desired. The Minister is empowered to "prescribe" other serious injuries. No regulations have, as yet been produced. It is clear that the intention is to limit payment to those claimants with an objectively discernable catastrophic injury. Many injuries, which would not fall into the definition of "total disablement", can result in a claimantís lifestyle and ability to earn being severely impaired. LSSA has already made submissions regarding the need for adequate compensation in the form of general damages and these will not be repeated here. Suffice it to say that if the proposed amendment is adopted, thousands of seriously injured claimants will suffer.
15 The Bill proposes that "assessment of serious injuries" be based on a "prescribed method" adopted after consultation with "medical service providers". It is not clear whether these are the same "providers" as referred to in section 26.
16 What is of concern is the establishment of "provincial medical panels consisting of a representative of the Fund". To make assurance doubly sure, it is proposed that "the Fund set up a peer review panel to oversee assessments by panelsÖ".
17 What is contemplated is the establishment of medical tribunals, controlled by a review panel "set up" by the Fund, the very body against whom the claim is made. In addition, amendments proposed to section 26 empower the Minister to further "make regulations regarding-
(e) the resolution of disputes about the assessment of the nature of an injury"
18 No indication is given as to the nature of the regulations, but it is assumed that these will attempt to prescribe in-house mediation and other procedures, which will exclude a claimantís constitutional right to have access to the courts in order to enforce a right.
19 Such a system of assessing the "nature of an injury" of an injury cannot be perceived to be independent, impartial or fair.
20 The abolition of the Fundís current statutory obligation to pay a successful claimantís party and party costs in addition to the capital merely emphasises that the new system of dispute resolution intended by the Bill excludes claimantsí lawyers, claimantsí independent medical and other expert advisors and the courts. The constitutionality of this is questioned.
21 Without sight of the proposed regulations it is not possible to comment further.
22 The proposed payment of general damages limited to R100 000.00 in a lump sum will not begin to address the immediate needs of those few accident victims who do qualify for the payment, particularly as the clear intention is to pay future loss of income by way of instalments over the rest of a claimantís life (to age 65 or death). Both the lump sum payment and the instalments will be further subject to apportionment in the case of contributory negligence.
23 Loss of Income and Support
The Bill proposes that the Funds liability " to compensate the third party for future loss of income or support as contemplated in section 17(4)(b) shall not exceed R160 000.00 per year".
24 The Fundís liability to compensate a claimant ceases upon the death of the claimant or when the claimant turns 65, whichever occurs first. In the case of loss of support it ceases when the deceased would have turned 65 and/or if the surviving spouse should remarry or, in the case of a child, when that child attains the age of 21.
25 The spouse of a road accident victim, fatally injured in terms of the common law, is entitled to receive support up to her death. Woman is identified in the Constitution as vulnerable. The question arises whether it is not unconstitutional to take away a spouseís right to claim loss of support when the deceased would have reached the age of 65, particularly in the event where the wrongdoer is not in a position to pay any compensation.
26 The wording of the proposed section (4B)(a) indicates that the intention of the amendment is to pay future loss of income and support in instalments not exceeding R160 000.00 per annum. What is not clear is whether these annual payments will be spread over 12 months or paid quarterly or in one payment.
Department of Transport also supports this reading of the section. It was also apparent from remarks made during the interview that that the intention is to review the claim annually.
28 If, however, it is governmentís intention to continue to pay future loss of income and support in a lump sum, then all that is required is that the words "The amount for which the Fund is liable as calculated in terms of subsection (4B) shall be paid by way of a lump sum." be inserted in section 17(4)(b). Consequential amendments will need to be made in subsection (4B). Currently, in terms of the common law, actuarial assessments of future losses and the application of appropriate contingency deductions take into account life expectancy as well as the prospects of re-marriage. It is submitted that these provisions in (4B) should be omitted.
29 The Bill proposes that loss of support will be divided equally between all dependants. The motivation for this is very difficult to understand. It is obvious that inequities will arise as a result of this, particularly where a deceased breadwinner has remarried and has dependants from a former marriage. The deceasedís responsibilities for support to a former spouse, parents, children from a previous marriage and to a current spouse will clearly differ and may in certain cases be governed by an order of court.
30 The stipulation, that loss of support cease on re-marriage (although a codification of the current common law) is inequitable, as is the provision that loss of support shall terminate at age 21.
and, if denied fair support, be obliged to institute proceedings, time and time again, in terms of whatever system is prescribed to attempt to enforce their rights, most likely without legal assistance. Re-marriage will not be a financially sensible alternative.
32 There are many circumstances where children, in terms of the common law, legitimately require support beyond the age of 21. For example, those children who are brain damaged, ill or for any physical reason will never be independent. It is discriminatory to prejudice those dependants. If a dependant loses both parents, such dependant will require assistance, year after year, to process annual claims for loss of support.
33 Similarly, the provision that loss of support terminate, when the breadwinner would have turned 65 is artificial. Many breadwinners do not have the luxury of retiring at some arbitrary, albeit, widely accepted "retirement" age.
34 No Lump sums
As very few claimants will qualify for general damages, lump sum payments, in essence, will be done away with in terms of the Bill as presently drafted. The Portfolio Committee has already heard considerable evidence from a large cross-section of the public and stakeholders on this. Virtually every submission was against the payment of compensation in instalments.
35 The objections were broadly based on two grounds, namely, the Fundís inability to administer claims and undertakings in terms of the current legislation and the devastating effect that the denial of lump sums will have on the lives of accident victims, particularly those who sustain serious, disabling injuries.
36 For the sake of convenience we, once again, summarise briefly certain of the submissions relevant to lump sums.
37 Mr M Nkhwashu the National Development Facilitator of National Council for Persons with Physical Disabilities (NCPPD)commented that there had been a lack of consultation particularly within the disabled sector. He also said that the RAF attempted to play too many roles in the claims process thereby not doing justice to the claimant. He called for a regulator to monitor the RAF and urged the committee to interview claimants and to pay random visits to the RAF to observe operations. Lack of professionalism by RAF staff has caused havoc in the administration of claims.
38 Ms Howitson, Vice President of NCPPD said that the NCPPD viewed the bill as an affront to all persons with disabilities whether injured in a motor vehicle accident or disabled in a different way. The manner in which the disability sector had been ignored resulted in unmitigated discrimination and called into question the seriousness of the RAF in easing the life of its petitioners. She also said that the bill made it apparent that there were no persons with disabilities within the RAF. The NCPPD was strongly opposed to installments.
39 Mr M Toni for Disabled People of SA (DPSA) argued that the RAF focused more on minimizing payment than it did on providing adequate compensation to victims. He was in favour of no fault and integrating the RAF into a holistic social security framework.
40 Ms G Humpheries, speaking for FEDUSA opposed installments. She also expressed concerns regarding the consultative process, administrative spending at the RAF, taxation and the cost of additional insurance.
41 Dr S Kariem, speaking for GSH, seemed to support a mixed system of lump sums and instalments. GSH, as part of a pilot project in the western Cape had appointed DELOITTE & TOUCHE to identify potential claimants, assess, submit and collect outstanding payments due to GSH by the RAF.
42 What is of note is that in the period since February 2003, when the project began, to September 2003, the RAF had become indebted to GHS for almost R1 million but nothing had been paid.
43 Ms S Carter on behalf of HEADWAY pointed out that the poor did not have money to pay for treatment up front. Current staff at the RAF could not cope with the process of reimbursing suppliers or therapists. The instalment process would make purchases of special equipment impossible. The bill might improve the cash flow of the RAF but it would be catastrophic for families of brain-injured victims.
44 Ms Anderson said that there were many problems with undertakings. They were often not accepted by pharmacies and other providers. Those that did accept undertakings had to wait for long periods for payments. In general the RAF did not administer undertakings well and made life very difficult and confusing for victims.
45 Advocate Abri Meiring, representing SACOB said that the bill should be referred to NEDLAC before proceeding any further.
46 Mr S Kgara representing COSATU recorded that THE DEPARTMENT OF TRANSPORT and the RAF had failed to table the bill at NEDLAC. This was against a background of a series of such omissions, including the failure to table for discussion in PARLIAMENT and at NEDLAC the SATCHWELL REPORT and the recommendations of the INTERGOVERNMENTAL COMMITTEE made to CABINET.
47 He also expressed serious concerns relative to the RAFís operational deficiencies. He went on the say that: -
48 The proposed amendments, once again, impose huge additional, administrative burdens on the Fund. If the Fund has to review every claimant entitled to future loss of income annually (in addition to administering unsettled claims) and dealing with claims under the existing system (where a substantial backlog continues to grow) the additional cost to the Fund will be astronomical. Whatever savings the Fund hopes to achieve by eliminating attorneys from the system will be spent on medical panels, medical review panels and additional systems and staff.
49 In the case of passengers injured on duty, where under the current legislation their claims are limited to R25 000.00, claims from the Compensation Commissioner against the Fund will increase substantially, in respect of loss of income, past and future. Furthermore, it is apparent that the Compensation Commissioner will also be obliged to claim year by year in respect of future loss of income and support, thus materially increasing the administration functions of that office as well as the Road Accident Fund.
50 The stipulation that only providers can claim for costs incurred by a claimant will increase the volume of claims to be made on the Road Accident Fund dramatically. Instead of aiming at reducing administration the proposed amendments has the opposite effect.
51 No-fault golden hour treatment (without proving any fault)
52 No-fault "emergency medical treatment" is limited to "reasonable and appropriate emergency treatment by a prescribed provider of such service in order to stabilize the emergency medical condition".
53 The definition of "emergency medical condition" emphasises the limited nature of the treatment envisaged and liability is limited to the "prescribed tariff". In addition the Fund is afforded a backdoor as the tariff may be amended to take into account "the ability of the Fund to provide the compensation".
54 Future Medical Expenses
55 It is unknown to LSSA whether there has been consultation with the private health care sector on the tariffs contemplated in section (4A) or for that matter with the Minister of Health.
56 More importantly, the same concerns relate to future medical treatment, which is similarly limited to the "prescribed tariff".
57 There has been much publicity recently regarding the claims of medical providers who remain unpaid under the current system. LSSA is aware of the fact that many of these suppliers have been driven to sue the Fund for payment of outstanding accounts and have resorted to issuing writs of execution and removing Fund assets when, despite judgements, their claims remain unpaid.
58 To compound matters, the Bill takes away from the Claimant the right to claim for reimbursement of either emergency medical treatment or future medical treatment. Only claims from the providers, themselves, will be entertained. In essence, this restricts an accident victim to suppliers and providers who are prepared to contract in to the Fund and who are prepared to administer their claims against the Fund in terms of an undertaking.
59 The proposed section abolishes the victimís right for compensation for future medical expenses. An entitlement is created for a provider. How on earth can the "provider" be identified at the time of the court order or settlement? Not the Fund nor the Court will know who the provider will be. The entitlement of the victim in future medicals is unclear. The entitlement of a "provider" is also clouded in uncertainty. Is the providerís entitlement based on contract? It certainly cannot be in delict. How the contract will come into place is clouded in uncertainty.
60 On a practical level, this provision will increase the volume of claims against the Fund. Instead of a claimant including past expenses in his or her claim, each and every individual provider will have to submit claims to the Fund. The same applies to claims made in terms of an undertaking.
61 Once again the administration implications will be enormous and extremely costly.
62 No cap on passengersí claims
63 The Bill contemplates that the current cap on passenger claims of R25 000.00 be abolished.
64 At present, the majority of taxi passengers do not qualify for any meaningful payment as they are denied general damages (as a result of the absence of a taxi permit) and many are unemployed and/or unable to prove loss of income.
65 In other words, currently, passengers in taxis in a single vehicle accident or one caused by the sole negligence of the taxi driver are unable to access even the limited compensation of R25 000.00. The stringent limitation on general damages will exclude most passengers travelling in taxis, which do have valid permits. Those passengers in "illegal" taxis will remain excluded from claiming general damages, in any event.
66 If the intention is to eliminate the unfair discrimination against passengers then the requirement of a taxi permit should also be abolished.
67 Whilst, in theory, the removal of the cap on passengersí claims and the concept on no-fault emergency medical treatment is to be welcomed, LSSA has doubts as to whether the current proposals will achieve their ostensible purpose.
68 The proposed amendment does not limit a court of law to award costs. Is it then necessary to compel each and every road accident victim who is entitled to compensation to immediately issue summons to enable him/her to recover his legal costs. The proposed amendment is ineffective.
69 The legislature must understand that the abolishment of party and party costs not only affects the attorney client relationship, but also effects victims. A victim will therefore not be entitled to consult a medical expert for the purpose of assessment of his actual loss and recover the costs thereof since these costs are dealt with under the heading party and party costs.
70 If costs can only be recovered through the issuing of summons the aim of the legislation to promote negotiation will not be attained.
71 The cost of Common Law liability and reduced Road Accident Fund compensation
72 The current cost to the motorist for indemnity cover via the Road Accident Fund (with limited protection for passengers) is estimated to average R600.00 per annum. The premium is collected by way of the fuel levy. Those motorists who can afford comprehensive private cover, for a relatively modest premium, are able to buy "top-up" cover for passenger liability; being the only personal liability currently faced by motorists is i.r.o. the balance of passenger liability where the passengers claim exceeds the R25 000.00 cap, and only in circumstances where the motorist is to blame for his passengers injury. Alternatively, motorists can buy "balance of third party" cover, only, which basically provides cover for passenger liability not covered by the Act. Again, the cost of this cover is relatively cheap, because of the underlying existing cover provided by the Act.
73 In terms of the proposed amendments, the cover currently provided by the Act will be drastically curtailed, thus exposing the motorist to substantial common law claims. Although the cap on passenger claims is to be lifted, the vast majority of passengers will not qualify for compensation for general damages from the Road Accident Fund in terms of the proposed amendments. The curtailed benefits available for accident victims from the Road Accident Fund will result in every accident victim having a substantial common law claim against the guilty motorist(s) and, if applicable, the motoristís employer.
74 The most exposed class of motorist will be the taxi driver/owner. In the case of a single taxi accident, each and every passenger will have a common law claim against the taxi driver and/or owner for the balance damages suffered not covered by the proposed legislation. Currently, there is very limited cover available for the taxi industry in respect of passenger liability. Under the proposed legislation, the cost of this limited cover is likely to become unaffordable. The cost of full cover will be prohibitive. Even in collisions involving more than one vehicle the negligent driver (albeit 1% negligence) will be exposed to substantial common law claims, both from passengers in the vehicle driven by him or her and from the occupants of the other vehicle.
75 Government has confirmed its intention to proceed with the taxi re-capitalization scheme. Without sufficient protection from the Road Accident Fund and/or private insurers, owners of "new" taxis will be vulnerable to having their vehicles (probably their major asset) being attached for sale in execution to meet judgments obtained for personal injuries suffered by road accident victims.
77 The road transport industry will be obliged to take out additional insurance in order to protect their businesses from insolvency arising from a secondís inattention on the part of an employee. The tourism industry will be even more exposed.
78 The additional costs for cover will have to be passed on to the end user in order for those industries to continue to trade. The ripple effect will be considerable.
79 All commercially active road users will have to protect themselves, financially, from the risk of injury in circumstances where it will not be possible to recover in terms of the common law. Currently, because of the cover in terms of the Act, such protection is relatively affordable. If the current legislation is passed the cost of replacing the protection lost from private insurers is likely to be beyond the reach of all but the extremely wealthy.
80 In 1998 an estimate was obtained as to the "cost" to a family of four, to buy both liability and disability cover to replace the cover currently enjoyed in terms of the Act, at an average cost of R600.00 per year. Then the estimate was R4000.00 per month. It is unlikely that the costs would have reduced over the last 7 years.
81 It is unknown whether Government has recently consulted with the private insurance industry regarding the availability and cost of "top-up" cover for common law personal injury claims. Preliminary enquiries made by LSSA, indicate that the local South African insurance industry will be unable to absorb the risk and consequently no cover will be available.
82 Statistics quoted are that the cost to the economy of motor vehicle collisions resulting in injury or death currently exceeds R9Billion per annum. This is apart from the "cost" to the Road Accident Fund of paying out accident victims. Companies with group life schemes with disability cover will be obliged to pay considerably higher premiums to maintain the cover currently dovetailing with the Road Accident Fund. Alternatively, the cover will have to reduce, which, in turn will increase the cost to the economy resulting from employees being disabled in road accidents.
83 Medical Aid Societies will have to reconsider the pricing of their premiums where currently schemes afford cover to members injured in motor vehicle accidents as against repayment of any costs recovered from the Road Accident Fund.
84 Although the Compensation Commissioner will have increased claims against the Road Accident Fund in respect of loss of income for passengers, claims for medical and hospital costs will be limited to the tariff proposed in the Bill. It is not known whether the tariff will cover the Compensation Commissionerís actual costs. If not it may become necessary to increase the contributions to this fund by employers and employees.
85 Similarly, claims on the UIF fund will increase where employees lose their jobs as a result of injuries sustained in a motor vehicle accident.
86 COMMON LAW CLAIMS
In order to be able to proceed with a common law claim, a claimant will first need to determine what amount the Road Accident Fund is obliged to pay in terms of the amended legislation. This could take years. A common law claim has to be instituted within three years from the date of accident in order to interrupt prescription.
87 Currently, a similar situation exists in relation to claims made on the Road Accident Fund by or on behalf of a workman injured in a motor vehicle accident, whilst on duty. Although it is possible to commence an action against the Road Accident Fund before the Compensation Commissioner has made a final award it is not possible to finalise the quantum of the claim, until such time as a final award is made and published by the Commissioner.
88 In terms of the Bill, as presently drafted, there is no cut-off point when the amount due to a claimant from the Road Accident Fund can be calculated. This means that a claimant will be prevented from finalising any common law claim in perpetuity.
89 On a practical level, the current experience in delays caused by the Commissionerís failure to administer claims in terms of COIDA does not auger well for expeditious completion of common law claims, which will be dependant on the efficient functioning of the Road Accident Fund.
90 The Power to Regulate
Very wide powers to prescribe by regulation matters of both substance and procedure are proposed in the Bill. Despite this, no draft regulations have been published.
91 It is of concern that a Minister in charge of a system designed (with sound historical reason) to compensate a particular class of victims and funded by a dedicated tax should be legislatively empowered to produce regulations that must inevitably have the effect of reducing the flow of compensation to those very victims.
92 In principle, the delegation by parliament of the power to legislate by regulation to a Minister or an official in a government department (the executive part of government) cannot be supported by LSSA.
93 Similar provisions in the IMMIGRATION ACT 13 0F 2002 have received the attention of the Cape of Good Hope Division of the High Court, and the Constitutional Court. (see MINISTER OF HOME AFFAIRS VS EISENBERG: IN RE EISENBERG AND ASSOCIATES VS THE MINISTER OF HOME AFFAIRS AND OTHERS 2003(5) SA 281 (CC) and PRESIDENT OF RSA VS EISENBERG AND ASSOCIATES 2005 (1)SA 247 (CPD).
94 Procedural Amendments
Substantial amendments to procedures are contemplated. It appears as if special tribunals will be established to ventilate disputes relative to quantum. Prior thereto Claimants will be assessed by an appointed panel of Provincial doctors and reviewed by a medical panel appointed by the Road Accident Fund. And all these procedures will have to be faced by the victim without legal assistance.
95 No draft regulations have been published and therefore further comment is not possible.
See attached memorandum
1 In the Mid Term Budget Debate reference was made to the four government "social funds", namely:
2 It was reported to parliament that the projected budget "surplus" in respect of these four funds of R3.7 billion had not been achieved, as the Road Accident Fund had required additional funding of R500 million. The "surplus" was reported as R3.2 billion. It was further reported that the projected budget surplus for the next fiscal period was R4.2 billion and that legislation was in the pipeline to address the financial situation at the Road Accident Fund, presumably with a view to ensuring that the budgeted surplus is achieved. The current Bill is to be seen against this background.
3 It would surely not be overly cynical to speculate that the reason for the "surpluss" in the other three funds is the failure of those funds to carry out the very purpose for which they were established, namely, to compensate claimants.
4 Claimants on these funds very rarely, if ever, have legal or medical expert assistance in processing their claims. Recently the Legal Resources Centre launched proceedings aimed at obtaining a court order compelling the Compensation Commissioner to perform the very functions for which the office was created. The Legal resources Centre has stated that investigations conducted by them reveal a reserve of R11BILLION in the coffers of the Compensation Commissioner.
5 Effects of the Savings
The clear intention of the proposed legislation is to remove claimantsí attorneys and their medical and other expert advisors from the system and to develop a tribunal for the assessment of damages controlled by the Fund, itself. The similarities between the proposed legislation and COIDA are obvious. This is against the backdrop of a fault-based system where compensation is apportioned according to fault.
6 The delays and inefficiencies in the office of the Compensation Commissioner have received considerable publicity of late, as well as the failure on the part of the Commissioner to pay suppliers and/or providers. A recent newspaper article reported that at any one time there are 100 000 pieces of unopened mail in the office of the Compensation Commissioner and only two members of staff to process the backlog. This comes as no surprise to any attorney who has had to correspond with the office of the Compensation Commissioner.
7 The failure in the Compensation Commissioners office to process claims has resulted in lengthy delays in finalising claims against the Road Accident Fund and, often, a claimantís only remedy is to proceed to court and subpoena the Commissioner to attend the trial, duces tecum. Often it is only this drastic step that forces a response from the Commissionerís office.
8 There is little doubt that but for the intervention of the workmanís attorney many of these claims would be still "pending". It is, usually, only in relation to a concurrent claim against the Road Accident Fund that an injured workman has the assistance of an attorney in finalising a claim in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA)
9 The Legal Resources Centre has estimated that there are 100s of thousands of workmen waiting for their cases to be "processed", some since 1991. In the meanwhile, those disabled workmen, fortunate enough to have their cases "processed" and who still require ongoing treatment and supplies have been refused further assistance until such time as the Commissioner settles outstanding accounts and in some cases service providers have stated that they are no longer prepared to treat patients in terms of COIDA, at all. It is a common phenomena for a paraplegic workman to be told by the Commissionerís Office that the case has been "closed".
10 It should be borne in mind that in terms of COIDA an injured workman is covered for stated benefits, regardless of fault. In other words, all the workman needs to prove is that the injury was suffered "on duty" and the nature of the injury. Initially, at least, the workmanís employer is, in terms of COIDA, obliged to assist the workman in the reporting and initial processing of the claim. A schedule to COIDA defines the injuries and diseases covered and the nature of the compensation. The Commissionerís function is, to a large extent, administrative. Despite this many workmen are unable to access the benefits due in terms of COIDA.
11 Road accident victims, in terms of the proposed legislation, will be in a far worse position. Before they even qualify for compensation they will be obliged to traverse a minefield of technicalities, prove fault on the part of a motorist and quantify their damages. The vast majority of claimants will not be represented.
12 A claimant will still have to prove fault and thread his or her way through extremely complicated and technical procedural requirements in order to qualify for compensation.
13 The proposed amendment to section 19 will entitle the Fund to interrogate each and every claimant on any aspect of the claim and, if, in the opinion of the Fund, a claimant "fails to respond truthfully and to the best of his or her knowledge to questions put" compensation will be denied. Words fail to express adequately the injustice and inequity of such a proposal, which flies in the face of every basic tenet of fairness, access to justice and equality.
14 The Fundís current culture, even with attorneys representing claimants, is to take technical points, delay settlement of claims and payments and consistently make initial offers and tenders that bear no relation to the fair and reasonable value of the claim in terms of the current legislation. Where claimants have attempted to claim direct the Fund has raised prescription when the claim is not settled within the prescribed periods. To compound matters, the inefficiency of the Fund remains a serious issue. There is little in the current practice that gives any comfort to future claimants, who will be obliged to claim, unassisted.
15 The inability of the Road accident Fund to administer undertakings has been well ventilated before this committee, as has the general failure of the Fund to perform many of its functions with any degree of acceptable efficiency. This is in terms of a dispensation, which permits a claimant to have legal representation.
16 At the start of the holiday season in December 2004, considerable publicity was given to statements made by private hospital groups and medical emergency services to the effect that, as they were owed substantial amounts of money by the Road Accident Fund, only accident victims with acceptable medical aid cover would be treated.
17 On the other side of the coin, and at the same time, the Fund claims to have been inundated with writs of execution issued by medical and other service providers who had obtained judgements against the Fund, which remained unpaid. Assets were being attached and removed in order to obtain payment. Substantial amounts of costs were incurred every month in respect of sheriffís fees and the costs of issuing the writs. The Funds own estimate was that in approximately 5 months, R6 million worth of sheriffís costs, alone, had been incurred.
18 Clearly this is most undesirable and a complete waste of money. Add to this other legal costs incurred in instituting action, obtaining judgement and issuing the writ as well as the man-hours lost in tracking down the file, sorting out payment and recovery of the removed assets, and it is clear that this is an extremely expensive exercise.
19 A notice published in the Sunday Times of 23 January 2005 by the interdepartmental portfolio committee, invites stakeholders to participate in consultations regarding possible and changes to the current Road Accident Fund Act with a view to devising a new system of compensation for road accident victims.
20 This process clearly relates to the SATCHWELL COMMISSIONíS report. It is understood that cabinet has, in principle, approved the philosophy of the SATCHWELL COMMISSION recommendations and, to this end, appointed an inter-departmental committee, to work in conjunction with a panel of suitably qualified experts, to advise on the implementation of the recommendations.
21 It is also understood that cabinet has, in principle, approved the current Bill. The objective of cabinet in doing so can, surely, only be aimed at addressing the concerns raised in the Mid Term Budget debate, as there would otherwise be little sense in running the two processes in parallel. It is, naturally, governmentís prerogative to determine policy. This in essence appears to be a short-term budget exercise, aimed at saving cash flow in the immediate short term from a "social" fund.
22 This approach assumes that the fundamental debate as to whether the Fund is funded by premiums collected from the motoring public by way of the fuel levy for a dedicated purpose, namely the indemnification of the motorist and the compensation of the accident victim or by general government revenue has been resolved in favour of the latter.
23 If one postulates the logical conclusion to this, there would be, eventually, three separate Road Accident Funds, administering claims, or, at best, three differing forms of compensation for road accident victims, being administered, concurrently, by the Road Accident Fund. Undertakings, in terms of the current legislation will take many years to "run off". In addition, claims for minors, which have been incurred but not yet made will be "alive" for a further 21 years. If the new legislation proposed in the Bill is passed, all claims falling within that period will require that files be kept open for 40 years and more, to administer future loss of income and support claims as well as future medical claims. Add to this the exponential increase in administration costs, the cost of funding medical panels and review panels, plus the dramatic long-term increase in liabilities, the exercise may prove very expensive in the long run.
24 Having regard to the ongoing carnage on our roads, there can be little doubt that the provision of even limited no-fault emergency medical treatment will have an immediate adverse impact on the Fundís immediate cash flow requirements. The deferment of payment of future losses will result in an accumulation of substantial long-term liability. No doubt the Fund envisages that the virtual abolition of general damages will result in considerable savings. LSSA has on may occasions queried the correctness of the statistics quoted by the Fund as to the actual amount expended, purely, on general damages (as opposed to lost earning capacity). To what extent the lifting of the cap on passengerís claims will offset savings achieved in respect of general damages, remains to be seen.
25 No statistics or financial projections accompany the Bill. Indeed, we doubt whether it would be possible for the Fund to produce either. LSSA has consistently requested financial information and statistics from the Fund without success. The SATCHWELL COMMISSION was unable to secure the co-operation of the Fund in this regard and dealt in detail in its report with the failure of the Fund to keep reliable statistics on accidents and claims and/or to analyse its operations.
26 This Committee has also requested an assessment of the cost and savings of the various proposals made over the past 18 months. None has been forthcoming. The only way to ensure the financial sustainability of any fund is to ensure that the income exceeds expenditure. The current premium is far too cheap for the benefits and the proposed changes will result in an extremely costly fund, which will provide no real comfort for either the motorist or the injured victim.
27 The reality is that, under the proposed amendments without legal assistance, the vast majority of claimants will be denied meaningful compensation. The "financial sustainability of the Fund", will indeed be improved (if only in the sort term) but at what real cost?
28 THE BILL
29 Amendment of Section 4 of Act 56 of 1996
The Bill seeks to expand the powers of the Fund to include the power to sub-contract its functions, currently the responsibility of the Fund, either to the private sector or another organ of state.
Changes the Financial year of the "new" Fund.
Provides for the disbanding of the executive committee and limits the term of office of Board members. The proposed amendment limiting the term of office of Board members to three years militates against long term planning and continuity on the part of the Board.
The amendment further empowers the Minister to appoint the Chairperson and Vice-Chairperson of the Board (as opposed to the Board, itself).
Abolishes the power of the Board to appoint the Chief Executive Officer.
Empowers the Minister to appoint the Chief Executive Officer of the Fund with the "concurrence" of the Board.
This section is the core of the Act and determines the liability of the Fund to compensate claimants. Radical amendments are proposed.
35 General Damages
A cap of R100 000.00 is imposed on general damages which is further limited to "a serious injury", defined as "a permanent injury which leads to total disablement or paralysis or dysfunction of a vital organÖÖÖÖ.or such other serious injuries as the Minister may prescribe".
36 The Minister is further empowered to prescribe methods of assessing serious injuries entailing assessment by provincial medical panels (and including a representative from the Fund) and "external" experts and a "peer review panel" set up by the Fund.
37 Future Loss of Income or Support
Future loss of income and support is capped at R160 000.00 per year. Liability for future loss of income ceases when the claimant dies or turns 65 (whichever occurs first) or in the case of loss of support when
a minor child turns 21 or a surviving spouse dies or remarries or when the deceased would have turned 65 (whichever occurs first).
38 Party and Party Costs
The Fundís statutory obligation to pay "party and party" costs in addition to compensation is removed.
39 Future Medical Expenses
The right to claim future medical and related costs from the Fund is taken away from the claimant. Only the supplier or provider may claim. The Fundís liability is further restricted to a "prescribed" tariff.
40 No fault "golden hour" Medical Treatment
A restricted element of no-fault compensation has been introduced with a provision to pay "emergency medical treatment" irrespective of negligence or wrongfulness on the part of any person. The definition of "emergency medical treatment" limits liability to "reasonable and appropriate emergency treatment by a prescribed provider of such service in order to stabilize the emergency medical condition".
The cap on passengersí claims is removed and fixed compensation of R5000.00 is proposed for funeral expenses.
This amendment seeks to extend the right of the Road Accident Fund
to interrogate all claimants regarding all aspects of the claim, and imposes the sanction that the Fund is not obliged to compensate any claimant who "fails to respond truthfully and to the best of his or her knowledge to questions put".
This saves the common law rights of a claimant to sue the wrongdoer in respect of any shortfall in the damages sustained for which the Fund is not liable.
This proposes radical increases in the power of the Minister to regulate on both substantive and procedural issues.
The amendments apply only to causes of action, which arise after the date upon which the Act comes into effect.