After a long sequence of court cases, the Supreme Court of Appeal last week finally ordered the Road Accident Fund (RAF), the state-run third-party insurance scheme, to stop refusing compensation for medical expenses on the grounds that an accident victim’s medical scheme has already paid the bills. The judgment is a significant victory for Discovery Health and potentially an expensive defeat for the RAF. But the most astonishing aspect of the case is the extraordinary set of events that brought it before the court.
The dispute began in August 2022, when the then RAF CEO, Collins Letsoalo, issued a directive instructing claims officers to reject medical expense claims where a medical scheme had already paid for treatment. Discovery challenged the decision, and in October 2022 the Pretoria high court declared the directive unlawful.
The RAF applied for leave to appeal. The high court refused, and on March 31 2023 the SCA also turned it down. The RAF was notified on April 11. Two days later, on April 13, the RAF issued a new directive, with essentially the same effect as the first. It didn’t tell Discovery, or the public, about this new instruction.
On April 24, the RAF approached the Constitutional Court for leave to appeal, without disclosing that it had already issued a replacement directive. The Constitutional Court dismissed the application in October 2023 because it did not engage its jurisdiction. Two weeks later, the RAF issued yet another directive, again finding a new legal justification for substantially the same refusal to pay.
This is a remarkable chronology. Each time the legal system told the RAF it could not do something, the fund tried to find another way to do it. It was less an appeals process than a game of legal whack-a-mole.
Discovery then went back to court. A majority of a specially constituted high court bench sided with the RAF in December 2024, though one judge dissented. Last Friday, the SCA unanimously overturned that decision.
Judge Tati Makgoka was particularly unimpressed by the RAF’s conduct, describing its actions as “clearly contrived” to circumvent the original judgment. The second directive, he said, had been issued “surreptitiously”. The court found that the RAF had not acted in good faith and had breached its constitutional duty to obey court orders.
That is a serious finding against a public institution and Letsoalo himself. The RAF has now been ordered to comply within 14 days and provide a written report to the court.
The legal principle is quite straightforward. Suppose you are injured in a motor accident and your medical scheme pays R100,000 for your treatment. Under the established rules, you can still claim that amount from the RAF, assuming the statutory requirements are met, and the RAF must reimburse your scheme according to its rules.
The principle is known as res inter alios acta, which broadly means that an arrangement between other parties should not diminish the liability of the party responsible for the loss. The injured person doesn’t get compensated twice. And since medical scheme members pay the RAF levy whenever they buy fuel, it is difficult to argue that they should be excluded from the benefits that levy finances.
The financial implications for the RAF could be substantial. In 2022, Discovery estimated that its disputed policy would cost medical schemes about R500m annually. That estimate was based on earlier RAF expenditure and the proportion of South Africans with medical scheme cover, rather than a detailed assessment of individual claims. The amount directly affected by this judgment is unknown, but several hundred million rand a year seems a reasonable order-of-magnitude estimate.
There is also a retrospective issue. The 2025 report of Discovery’s medical scheme referred to outstanding RAF-related cases exceeding R250m. Some previously rejected claims may still be recoverable, though the SCA ruling does not automatically reopen cases already concluded through binding settlements or final judgments. Prescription may also prevent some older claims from proceeding.
For the RAF, which owed claimants R22.18bn on settled but unpaid claims at the end of June, another few hundred million rand is hardly welcome news. On the other hand, relative to its annual fuel-levy income of about R50bn, it is not the principal cause of the fund’s financial problems. Those are deeply embedded in its design, administration and accumulated obligations.
The ruling comes at an interesting moment. Waseem Carrim has recently been appointed to replace the RAF’s succession of temporary leaders following Letsoalo’s departure. His first obligation is to comply with the ruling. His second should be to establish how many claims were refused under the disputed directives, how many remain legally recoverable and what the financial implications are. There is little point in arguing about the affordability of liabilities if the institution cannot reliably establish their size.
But the case also raises an intriguing policy question, and here the RAF’s underlying argument deserves more sympathy than its methods.
Why should a financially distressed public compensation fund reimburse private medical schemes that have already collected contributions precisely to cover medical treatment? After all, medical schemes are required to provide certain minimum benefits regardless of the cause of an injury. Why should the RAF effectively replenish their reserves?
The majority in the December 2024 high court decision was sympathetic to this reasoning. It questioned whether scarce RAF resources should be used to benefit the relatively privileged minority of South Africans with private medical cover when so many accident victims depend entirely on the public system.
It is a serious argument. But the real question is which pool of contributors should finance road-accident injuries: motorists generally, through the RAF levy, or medical scheme members, through their monthly contributions? Either way, somebody pays. Moving the obligation from one institution to another does not make the hospital bill disappear.
There are possible reforms. Parliament could simply explicitly establish which institution is the primary payer, when reimbursement is appropriate and whether medical schemes should recover the full cost or an agreed tariff. Standardised reimbursement arrangements could reduce litigation and administrative costs. A redesigned system could also impose clearer limits on compensation while protecting severely injured victims.
Such changes would need to be accompanied by a proper assessment of the consequences for medical scheme contributions, accident victims and the RAF’s finances. The current system’s combination of public compensation, private health care and expensive litigation is hardly a model of administrative elegance.
Crucially, however, changes of this nature require legislation and proper consultation. They cannot be introduced by an internal memorandum from an increasingly desperate public institution.
