Author: Gary Moore

Date: 22 November 2016

The Medical Schemes Act, 1998[1] describes itself as an Act to consolidate the laws relating to registered medical schemes, to provide for establishment of a Council for Medical Schemes and appointment of a Registrar of Medical Schemes, to make provision for registration and control of certain activities of medical schemes, to protect the interests of members of schemes, and to provide for measures for the co-ordination of medical schemes.[2]

The Act stipules that no person shall carry on the business of a medical scheme unless that person is registered as a medical scheme under the Act.[3] A person who wishes to carry on the business of a medical scheme must apply to the Registrar for registration.[4] The Registrar must, if satisfied that the person complies or will be able to comply with the Act, register the scheme, with the concurrence of the Council.[5]

No medical scheme shall be registered, unless the Council is satisfied that the registration of the medical scheme is “not contrary to the public interest”[6] (inter alia[7]).

The phrase “the public interest” does not permit of a clear and comprehensive definition[8] and the precise meaning of such an expression can be one of considerable difficulty.[9]

Arguably then, this provision of the Act, that no scheme shall be registered unless the Council is satisfied that its registration is “not contrary to the public interest,”[10] is unduly vague and confers an unduly wide discretion: The provision would thus violate the Rule of Law principles that laws should indicate with reasonable certainty what is required,[11] and that discretions should not be so broad that a regulator cannot determine the scope of his power.[12]

(However, there is case law that a statutory provision that a licensing board must not grant a licence application unless it is in “the public interest,” means unless “the public would be better served” if the applicant were granted the licence.[13]

(Applying that reasoning, the provision here that no medical scheme shall be registered unless the Council is satisfied that registration of the scheme is “not contrary to the public interest”[14] would not be vague: It would mean that no scheme shall be registered unless the Council is satisfied that “the public would not be better served” by not registering it.[15]

(Following this reasoning, any discretion conferred by this “public interest” provision on the Council would also be legitimate,[16] in that the factor to prompt refusal of an application would be clear, and the Council would have the expertise relevant to the decision to be made.[17]

(Thus the contention that the provision that no scheme shall be registered unless the Council is satisfied that its registration is “not contrary to the public interest,”[18] is unduly vague and confers an unduly wide discretion and hence contravenes the Rule of Law, is not unassailable.)

Similar considerations apply in relation to the Act’s provision that, when registering a medical scheme, the Registrar must impose such terms and conditions as he or she “deems necessary:”[19] Arguably this confers an undue discretion, thus violating the Rule of Law principle that discretions should not be so broad a regulator cannot determine the scope of his power.[20]

(In response it can be contended that this provision, that the Registrar must impose such terms and conditions as he deems necessary,[21] means by implication that the Registrar must impose such terms and conditions as he deems “reasonably” necessary “to ensure that the medical scheme complies with the provisions of this Act.”[22]

[1] Medical Schemes Act 131 of 1998.

[2] Medical Schemes Act, Long title.

[3] Medical Schemes Act s 20(1).

[4] Medical Schemes Act s 22(1).

[5] Medical Schemes Act s 24(1).

[6] Medical Schemes Act s 24(2)(f).

[7] The Council must also be satisfied that members of the board of trustees and the principal officer of the proposed scheme are fit and proper persons to hold the offices, and that the scheme will be able to comply with the Act, will be financially sound, has a sufficient number of members likely to contribute to it, and will not “unfairly” discriminate directly or indirectly against any person on one or more “arbitrary” grounds including race, “age,” gender, marital status, ethnic or social origin, sexual orientation, “pregnancy, disability and state of health.” Medical Schemes Act s 24(2)(a)–(e).

[8] Ex parte President of the Conference of the Methodist Church of Southern Africa No: In re William Marsh Will Trust [1993] 4 All SA 416 (C) 420; Transnet Ltd t/a Metrorail and others v Rail Commuters Action Group and others; Rail Commuters Action Group and others v Minister of Safety and Security and another [2003] 4 All SA 228 (SCA) para [15].

[9] Rondebosch Municipal Council v Trustees of the Western Province Agricultural Society 1911 AD 271 282–3 about the expression “public purposes.”

[10] Medical Schemes Act s 24(2)(f). See fn 6.

[11] Affordable Medicines Trust and Others v Minister of Health of RSA and Another 2005 (6) BCLR 529 (CC) para [108].

[12] Affordable Medicines Trust and Others v Minister of Health of RSA and Another op cit paras [33], [34].

[13] Than that the existing state of affairs were to continue (concerning the expression “in the public interest” in Liquor Act 27 of 1989 s 22(2)(d)(i)(ee)). Maharaj v Chairman, Liquor Board 1997 (2) BCLR 248 (N) at 281G–I; Montagu Springs (Pty) Ltd t/a Avalon Springs Hotel v Liquor Board of the Western Cape and others [1999] 2 All SA 549 (C) at 558 per Full Bench.

[14] Medical Schemes Act s 24(2)(f). See fn 6.

[15] By rejecting the application for registration. See text accompanying fn 4.

[16] Affordable Medicines Trust and Others v Minister of Health of RSA and Another op cit paras [33], [34].

[17] Medical Schemes Act s 4(1). This states:

The Council shall consist of up to 15 members appointed by the Minister taking into account the interests of members and of medical schemes, expertise in law, accounting, medicine, actuarial sciences, economics and consumer affairs.

This provision is somewhat truncated, and would better state:

The Council shall consist of up to 15 members who shall be appointed by the Minister taking into account the interests of members and of medical schemes, and who shall collectively have expertise in law, [etc.]

[18] Medical Schemes Act s 24(2)(f). See fn 6.

[19] Medical Schemes Act s 24(1).

[20] Affordable Medicines Trust and Others v Minister of Health of RSA and Another op cit paras [33], [34].

[21] Medical Schemes Act s 24(1) states:

The Registrar shall, if he or she is satisfied that a person who carries on the business of a medical scheme which has lodged an application in terms of section 22, complies or will be able to comply with the provisions of this Act, register the medical scheme, with the concurrence of the Council, and impose such terms and conditions as he or she deems necessary.

[22] The tendency has always been to construe statutory provisions that impose burdens on subjects restrictively. Law of South Africa vol 25(1) 2 ed “Statute Law and Interpretation” (L M du Plessis) para 334(a)(ii).

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Gary Moore

Gary Moore BA LL.B. (Witwatersrand) LL.M. (UC London) is a South African lawyer and Senior Researcher at the Free Market Foundation.

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