THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 216/2014
In the matter between:
SECHABA MEDICAL SOLUTIONS (PTY) LTD       First Appellant
JAN JOHANNES LOUIS SPIES

Second Appellant
GEN-HEALTH MEDICAL SCHEME
(IN LIQUIDATION)

Third Appellant
and
WILLIAM SEKETE

First Respondent
MASTER OF THE HIGH COURT

Second Respondent
LIFE HEALTHCARE GROUP (PTY) LTD
Third Respondent
EMH OPERATING COMPANY (PTY) LTD
Fourth Respondent
ANTHONY PIETER BROWN NO

Fifth Respondent
EUGENE PELSER NO

Sixth Respondent
JOHAN CHRISTOFFEL JOUBERT NO
Seventh Respondent
PETRUS JOHANNES OOSTHUIZEN NO
Eighth Respondent
KLAAS CHRISTIAAN VAN DER WALT NO      Ninth Respondent
EDWARD LAWRENCE GURNELL NO
Tenth Respondent
HENDA LOOTS NO

Eleventh Respondent
(in their capacities as trustees of the LCM TRUST)
PEGLERAE HOSPITAL (PTY) LTD

Twelfth Respondent
GLYNNWOOD HOSPITAL OPERATING

COMPANY (PTY) LTD

Thirteenth Respondent
WESTCOST PRIVATE HOSPITAL (PTY) LTD
Fourteenth Respondent
PRETORIA NORTH SAME DAY SURGICAL
CENTRE PARTNERSHIP

Fifteenth Respondent
MIDDELBURG HOSPITAL LTD
Sixteenth Respondent
LIFE COSMOS HOSPITAL (PTY) LTD     Seventeenth Respondent
ISIVIVANA HEALTH (PTY) LTD
Eighteenth Respondent
LIFE BIRCHMED SAME DAY SURGICAL
CENTRE PARTNERSHIP

Nineteenth Respondent
WILGEHEUWEL HOSPITAL (PTY) LTD     Twentieth Respondent
WILGERS HOSPITAL LTD

Twenty-first Respondent
METROPOL HOSPITALS (PTY) LTD   Twenty-second Respondent
FLOHOC INVESTMENTS (PTY) LTD   Twenty-third Respondent
BORDER HOSPITALS (PTY) LTD
Twenty-fourth Respondent
LIFE BAYVIEW HOSPITAL (PTY) LTD   Twenty-fifth Respondent
ROBINSON PRIVATE HOSPITAL
HOLDINGS (PTY) LTD

Twenty-sixth Respondent
ST MARY’S PRIVATE HOSPITAL
(PTY) LTD

Twenty-seventh Respondent
Neutral citation: Sechaba Medical Solutions & others v Sekete & others
(216/2014) [2015] ZASCA 8 (11 March 2015)
Coram:
NAVSA ADP, SHONGWE and WALLIS JJA and
DAMBUZA and MAYAT AJJA.
Heard:
27 February 2015
Delivered: 11 March 2015
Summary: Medical scheme – liquidation – proof of claims – claim by
healthcare provider – whether claim lies against medical scheme –
authorisation of treatment by medical scheme – whether creates a contract

between healthcare provider and medical scheme – ss 26(1)(b) and 59 of
Medical Schemes Act 131 of 1998 – effect.

ORDER

On appeal from: North Gauteng High Court (Murphy J sitting as court
of first instance):
1  The appeal is dismissed with costs, such costs to be paid by the first
appellant and the liquidators jointly and severally, the one paying the
other to be absolved.
2 No costs in relation to the appeal shall be recovered or paid out of the
assets of Gen-Health Medical Scheme.

JUDGMENT

Wallis JA (Navsa DP, Shongwe JA and Dambuza and Mayat AJJA
concurring)
[1] Gen-Health Medical Scheme (Gen-Health), the third appellant, was
a medical scheme with some 13 000 members duly registered in terms of
the Medical Schemes Act 131 of 1998 (the Act). On 12 October 2010 it
was placed in final liquidation. Prior to that it had been under curatorship
since at least 2008. The first appellant, Sechaba Medical Solutions (Pty)
Ltd (Sechaba), was the administrator in respect of Gen-Health. After
Gen-Health’s liquidation, and pursuant to a court order obtained by the
liquidator, Sechaba was appointed to compromise or admit claims by
Gen-Health’s members against the scheme in liquidation. Claims totalling
some R28 million had been proved in the liquidation pursuant to its
efforts in this regard. Although Mr Spies is reflected in the heading to this
judgment as the second appellant he played no role in the litigation and
had settled his dispute with the third respondent.

[2] The third respondent, Life Healthcare Group (Pty) Ltd (Life
Healthcare) represents 18 medical facilities and hospitals that rendered
services to Gen-Health’s members prior to its liquidation. On its own and
their behalves it submitted 19 claims totalling in the aggregate a little
over R5 million for proof at a special meeting of creditors on 20 February
2012. In due course the first respondent, Mr Sekete, an assistant master of
the high court, admitted those claims as proved claims in the liquidation.
That prompted Sechaba and Gen-Health to bring review proceedings to
challenge his decision. The application failed before Murphy J in the high
court and this appeal is with his leave. Neither the Master nor Mr Sekete
have played any part in the appeal.

[3] Originally the application was pursued on a variety of grounds.
Sechaba and Gen-Health said that Mr Sekete committed a number of
irregularities in relation to the conduct of meetings of creditors and the
admission of Life Healthcare’s claim. His actions were said to be contrary
to the provisions of the Insolvency Act 24 of 19361 (the Insolvency Act)
in regard to the conduct of meetings of creditors and to constitute
unlawful administrative action in terms of PAJA.2 None of these grounds
were pursued in the high court. Instead the proceedings were treated as a
review in terms of s 151 of the Insolvency Act. Sechaba and Gen-Health
contended that Mr Sekete should not have accepted Life Healthcare’s
claim as a proved claim on the ground that the affidavit in proof of the
claim failed to disclose any lawful basis for a claim by Life Healthcare
against Gen-Health.

1 These provisions are applicable to the liquidation of Gen-Health by virtue of the provisions of s 53 of
the Act read with s 339 of the Companies Act 61 of 1973.
2 The Promotion of Administrative Justice Act 3 of 2000.

[4] Before turning to the merits, I must examine the entitlement of
Sechaba to institute these proceedings, whether as the primary applicant
or at all. Its involvement in the liquidation arose from a court order
authorising it to prepare and submit on behalf of members of the scheme
claims in liquidation in respect of their unresolved claims against Gen-
Health. It had discharged that duty and the claims submitted on behalf of
members had been admitted to proof. Its interest thereafter is unclear. Yet
it was the first applicant in the review and the first appellant in this
appeal. It claimed to represent the members on whose behalf it had
submitted claims, but it disclosed no basis for doing so and, on the face of
it, its opposition to the admission of Life Healthcare’s claims was not in
the interests of those members. Their interest was for Gen-Health to
provide the benefits to which they had been entitled by virtue of their
membership of the scheme and the contributions they had made. To the
extent that Life Healthcare’s claims were satisfied their obligations to
Life Healthcare would be pro tanto discharged. Resisting Life
Healthcare’s claims meant leaving members to pay their own medical
bills to Life Healthcare in full, and to do so before receiving whatever
dividend would be paid by Gen-Health. A far more sensible solution for
members of Gen-Health would have been to arrive at a situation in the
liquidation where the maximum amount was paid to Life Healthcare
leaving them with as little as possible to pay over and above that amount.

[5] Sechaba had no interest of its own for instituting the review
proceedings. Counsel could furnish no explanation for Sechaba’s
involvement in this litigation, much less for the clear impression that it
was the driving force behind it. Over and above that, Mr van der
Westhuizen, one of the liquidators, deposed to the founding affidavit,

without any affidavit from a representative of Sechaba.  This is quite
extraordinary. As pointed out in the only text on the law governing
medical schemes in South Africa:3
‘The relationship between a scheme and its administrator is usually so close that
without its administrator, the scheme cannot fulfil its obligations to its members or in
any other manner conduct business as a scheme. In practice, it is the administrator that
conducts the daily affairs of a scheme and the acts or omissions of the administrator
are the acts and omissions of the scheme. A medical scheme does not have its own
employees to pay claims and process membership applications and changes in
beneficiaries. It does not have its own information technology systems, financial
reporting and management systems and human resources … Most medical schemes
are little more than paper entities with a principal officer, a board of trustees and a
bank account, and therefore they are literally dependent on their administrators for
their daily operations.’

[6] Mr van der Westhuizen’s affidavit was extremely cryptic as to the
manner in which Gen-Health had dealt with claims by healthcare
providers prior to its liquidation. He did not say whether it received
claims directly from those healthcare providers or whether, as many
medical schemes do, it had facilities for the healthcare providers to
submit claims directly to it by electronic means, which claims would be
processed through its computer systems. He made no mention of its
previous dealings with Life Healthcare. This was in the face of evidence
that the latter would contact its staff telephonically on admission of a
patient to obtain pre-authorisation for the rendering of services to that
patient. The statement that these allegations were too general to attract a
response was simply evasive.

3 D Pearmain The Law of Medical Schemes in South Africa (Loose-leaf, Original Service, 2008) para
8.3.1, pp8-5 to 8-6.

[7] The liquidator had standing to challenge the decision by the
assistant master to admit Life Healthcare’s claims to proof. However, his
reasons for doing so are obscure and do not appear from the affidavits,
which were principally directed at attacking the manner in which the
assistant master dealt with the claims. In argument it was suggested that
the liquidators were concerned about payments being duplicated by being
made to both Life Healthcare and members in respect of the same claims.
It was also said that the liquidators were concerned whether the services
had in fact been rendered and whether the correct tariffs had been
charged. But Sechaba did not say that there would be any difficulty in
examining the claims by Life Healthcare and correlating them with those
of individual members. Nor did it say that there would be any difficulty in
verifying those claims, whether as to validity in terms of the scheme’s
rules, or as to quantum. Counsel could not refute the suggestion from the
bench that it would have been a relatively straightforward practical matter
to compare Life Healthcare’s claims with Gen-Health’s records and to
match the claims of members with those submitted by Life Healthcare.
Where claims overlapped they could be treated as one for the purpose of
determining the dividend payable on the global claim and paying it to the
party entitled thereto. In any event this type of logistical issue was not
raised as the reason for instituting review proceedings.

[8] Against that background it is necessary to express disquiet at the
fact that time, better spent on winding up the affairs of the scheme, has
been wasted on this litigation, which does not appear to benefit the people
most disadvantaged by Gen-Health’s liquidation, namely its members. No
other creditor has come forward in opposition to the admission to proof of
Life Healthcare’s claims. What is more, the admission of the claims was
merely for the purposes of proof. After investigation the liquidator could

have approached the Master to reject them if a basis for rejecting them
had emerged. Having said that I turn to deal with the merits of the
litigation.

[9] A review of a decision by the Master in terms of s 151 of the
Insolvency Act is the broadest kind of review, where the court enters
upon the question decided by the functionary and determines it afresh.4
The question before Mr Sekete was whether Life Healthcare had provided
proof of a valid claim. It must be remembered that, in deciding that it had,
Mr Sekete was not determining the validity of the claim. The claim still
needed to be scrutinised by the liquidators, who could, if not satisfied
with it, ask the Master to reconsider it.5 Thereafter both Gen-Health and
any other interested person would still be entitled on proper grounds to
object to the liquidation and distribution account, including Life
Healthcare’s claim,6 and, if not satisfied with the Master’s response to
their objection, could challenge that decision before the high court.7

[10] It is no doubt for that reason that the cases say that all that a
creditor need do, in submitting a claim to proof, is to provide proof on a
prima facie basis that it has a valid claim. The matter was dealt with by
Roper J8 when he said:
‘The admission of a claim by the presiding officer is in a sense only provisional,
because under sec. 45(3) the trustee may dispute the claim notwithstanding its
admission by the presiding officer. Furthermore, the presiding officer does not
adjudicate upon the claim as if he were a Court of Law; he is not required to examine

4 Nel and Another NNO v The Master (Absa Bank Ltd and Others Intervening) 2005 (1) SA 276 (SCA)
paras 22 and 23.
5 Section 45 of the Insolvency Act.
6 Section 111(1) of the Insolvency Act.
7 Section 111(2) of the Insolvency Act.
8 Cachalia v De Klerk NO and Benjamin NO 1952 (4) SA 672 (T) at 675E-F. See also Marendez v
Smuts 1966 (4) SA 66 (T) at 72 D; Rabinowitz v De Beer NO 1983 (4) SA 410 (T) at 412E.

the claim too critically (Hassim Moti & Co v Insolvent Estate Joosub & Co., 1927
T.P.D. 778 at p. 781), or to require more than prima facie proof (Aspeling v Hoffman's
Trustee, 1917 T.P.D. 305 at p. 307). It is by no means inconceivable that he might be
satisfied, on the evidence advanced by the creditor, that the latter had a prima facie
case, or even more than such a case, notwithstanding the declared opposition of the
trustee to the claim.’
The proper approach is to decide whether the claimant has disclosed
sufficiently the essential particulars of the claim being advanced.
Technical objections are not lightly upheld.9 Even if the claim is admitted
as a proved claim at the meeting of creditors it must then be scrutinised
by the liquidator in terms of s 45(2) of the Insolvency Act and if the
liquidator disputes the claim a report must be made to the Master, who
will either confirm or alter the previous decision admitting the claim as a
proved claim. If the Master confirms that decision then the liquidator
must include the claim in the liquidation and distribution account, but the
account is subject to objection by the insolvent – in this case – Gen-
Health, and any other interested person.10

[11] Under s 44(4) of the Insolvency Act Life Healthcare’s claim had to
be proved by way of an affidavit in a form corresponding substantially
with Form C and setting out the nature and particulars of its claim. The
affidavit stated that Life Healthcare operated a number of divisions and
subsidiaries and through these it operated medical facilities and hospitals
to which patients were admitted for treatment. The affidavit went on as
follows:
‘5
In respect of each division … the patients admitted for health care signed
admission forms in terms of which they:
5.1
recorded that their medical aid to which they belonged was Gen-Health;

9 Hassim Moti & Co v Insolvent Estate Joosub & Co 1927 TPD 778 at 781.
10 Section 111 of the Insolvency Act.

5.2
indicated which form of cover they had with Gen-Health;
5.3
warranted that they were a “currently, paid-up member of Gen-Health” and
furthermore authorised the creditor to submit its statement of account to Gen-Health
for payment on his/her behalf.
It is submitted that the very purpose of a party holding medical aid cover is so
that when they are admitted to any medical facility of the creditor for care and
medical treatment, the costs associated with such medical treatment and particularly
the medical facility’s costs in providing such treatment are insured by the medical aid
concerned.
If regard be had to section 59 of the Act, a medical scheme such as Gen-
Health could, subject to the provisions of the Act and the rules of the medical scheme
concerned, pay to a member or a supplier of a service any benefit owing to that
member or supplier of the service within 30 days after the day on which the claim in
respect of the benefit was received by the medical scheme.
Accordingly, and by virtue of the provisions of the Act and the fact that each
of the patients who received medical treatment from the medical facilities of the
creditor … were paid-up members of Gen-Health, it is submitted that the creditor has
the right to claim payment of the monies due, owing and payable to it consequent
upon the medical services rendered from Gen-Health.’

[12]  Sechaba and Gen-Health argue that the claim advanced by Life
Healthcare was based on the provisions of s 59 of the Act and that the
section does not entitle a healthcare provider to claim directly from its
patient’s medical scheme, even if the patient authorises the healthcare
provider to submit its account directly to the medical scheme. Life
Healthcare disputes this contention. In addition it had another string to its
bow. In its answering affidavit filed in the review it said:
‘The claims submitted by and on behalf of the Life Group are premised on medical
and hospital services that were rendered by the Life Group to members of Gen-Health
prior to its liquidation. Those services are rendered, firstly, upon a declaration by the
member concerned that he is a fully paid up member of a medical scheme (in this case
Gen-Health) and, secondly an authorisation by Gen-Health itself (via its

administrators) that the services may be provided and will be paid for by Gen-Health.
These authorisations take the form of telephonic confirmation of various codes that
identify the service or procedure to be undertaken by the member concerned.’
Neither Sechaba, which was the claims administrator for Gen-Health, nor
Gen-Health itself, disputed these allegations. Life Healthcare argued that
on these facts their claims were underpinned by contracts concluded, in
relation to each patient and member of Gen-Health, between Life
Healthcare and Gen-Health, in terms of which the latter accepted liability
for and agreed to pay for the services rendered to its members.

[13] Murphy J upheld that submission and he was correct to do so.  The
whole purpose of a healthcare provider seeking pre-authorisation from a
medical scheme before rendering services to a patient is to obtain the
assurance that the medical scheme of which that person is a member will
pay its account once the treatment has been rendered. Gen-Health’s own
schedule of benefits, as set out in various of the documents in the papers,
showed that pre-authorisation was a requirement for many forms of
procedure and particularly a requirement in respect of services rendered
in hospitals and clinics. It is the hospital or clinic that seeks this
authorisation and it does so in its own interests, not those of the patient.
That is what was said in the answering affidavit and that alone sufficed to
establish a contractual foundation for these claims.

[14] In my view, Hugo J correctly described the consequences of a
healthcare provider seeking and obtaining authorisation from a medical
scheme to render services to a member of that scheme, when he said in
Margate Clinic:11

11 Margate Clinic (Pty) Ltd v Genesis Medical Scheme 2007 (4) SA 639 (D) at 642E.

‘When the scheme gives the hospital an authorisation to treat, that authorisation must
clearly be limited by the scheme's own rules. What the scheme undertakes to do as
against the hospital is to comply with its contractual obligation as against its member.
… The upshot of this is that what the scheme undertakes to do, is to pay the hospital
in accordance with the applicable tariff, provided it is bound to do so as against its
member.’

[15] The review had to fail on that simple ground alone, but there was a
more fundamental reason why it had to fail, flowing from s 26(1)(b) of
the Act dealing with the relationship between a medical scheme and its
members and the obligations assumed by the scheme towards its
members. This spells out the obligations that a medical scheme bears
towards its members. It provides that it shall ‘assume liability for and
guarantee the benefits offered to its members and their dependants in
terms of its rules’. This makes it clear that the liability of the medical
scheme does not exist in substitution for the liability of the member, but
as an adjunct to it.12 But a meaning must be attached to the statement that
the scheme ‘assumes liability for’ the benefits to which the member is
entitled.

[16]  The benefits to which members of a medical scheme are entitled
are the benefits set out in its published schedule of benefits. The scheme
assumes liability for those benefits. The effect of the appellants’
argument is that it merely assumes a liability to reimburse the member for
the amount of such benefit, once quantified. In other words, adopting an
expression applicable to some insurance policies, it is a ‘pay to be paid’
form of insurance. On the other hand, Life Healthcare’s argument is that

12 According to D Pearmain, op cit, para 7.1, p 7-2  there can be contractual relationships between
healthcare providers and medical schemes that release the member from any liability to the healthcare
provider, but these are not the norm.

the obligation goes further and is an obligation to pay the healthcare
provider to the full extent of the benefit. The undertaking given, and
statutory obligation owed, to its member is that it will pay the healthcare
provider itself, not that it will reimburse the member for what the member
has paid. On that argument the ‘benefit’ referred to in s 26(1)(b) is the act
of discharging the obligation incurred by the member to the healthcare
provider when receiving medical treatment. When a medical scheme
authorises the provision of services, on enquiry by a service provider, and
undertakes to pay the service provider it is discharging its obligation to its
member to provide the benefits set out in its schedule of benefits .

[17] A reading of Gen-Health’s schedule of benefits makes it clear that
the benefits it provided were not restricted to refunding the member with
the amount of the benefit, leaving the member to pay the healthcare
provider. The benefits were that the scheme would itself pay the
healthcare provider to the extent reflected in the schedule of benefits.
That is apparent from those items dealing with situations where the cost
of the service exceeded the amount of the benefit. The schedule said that
in that event the member would ‘co-pay’ the difference between the cost
of the service and the stipulated benefit. If the scheme were not itself
going to pay the service provider the reference to ‘co-pay’ would not
make sense.

[18] To understand the nature of a benefit conferred on a member under
a medical scheme as being primarily to pay the member’s health service
providers for their services, is reinforced by the fact that in addition to
assuming liability for the benefit the scheme must ‘guarantee’ the benefit.
The expression ‘guarantee’ does not make sense in a situation where the
scheme’s only obligation is to reimburse its member for the amount of

any benefit. What then would it be guaranteeing? A guarantee is an
obligation given by one party on behalf of another to discharge that
other’s liability to a third party. And that seems to me precisely what a
medical scheme is obliged to do. It is obliged to guarantee to its members
that it will discharge, to the extent of the benefits set out in the schedule
of benefits, their liability to the healthcare providers who render services
to the members.

[19] This approach accords with the ordinary way in which medical
schemes function in this country. The member consults a healthcare
provider and the latter submits an account to the member’s medical
scheme, which pays the healthcare provider.13 Sometimes it will pay the
account in full and debit its member with any shortfall and sometimes it
will pay the benefit only, leaving the healthcare provider to recover the
balance from the member.14 In either event it assumes liability for and
guarantees the benefit by paying the healthcare provider.

[20] Construing the obligations of medical schemes in that way
constrains them to function in a manner that is consonant with the social
realities of this country. By far the majority of people are not in a
position, after paying their medical aid subscriptions, to fund medical
treatment from their other resources and seek reimbursement from their
medical scheme. They are dependent for their ability to obtain such
treatment on the fact that the cost will be borne by the medical scheme.
And that is reinforced by the fact that the schemes enter into agreements

13 Pearmain, op cit, para 7.1, p 7-2.
14 Pearmain op cit, para 7.11, p 7-44 says that some medical schemes will not pay any claim in excess
of the tariff in the schedule of benefits but will pay the member the amount of the tariff benefit.
Whether that is permissible is not a question that arises in this case.

with doctors, pharmacies, clinics and other healthcare providers to
establish preferred provider networks and other systems for the provision
of medical services.15 Gen-Health did this as appears from its schedule of
benefits, which refers to its ‘Preferred Provider Network’ and its
‘Managed Care Provider’. The founding affidavit described these
arrangements as ‘Designated Service Provider Agreements’ and accepted
that services rendered by service providers under such agreements would
be paid for directly by Gen-Health.

[21] But a construction of s 26(1)(b) is not the only basis for reaching
the conclusion that medical schemes are obliged to pay their members’
medical bills in accordance with the scheme benefits. Sections 59(1) and
(2) of the Act are explicitly to this effect and, in addition, make it clear
that this obligation is one owed to the service providers themselves. They
read:
‘CHARGES BY SUPPLIERS OF SERVICE
(1)
A supplier of a service who has rendered any service to a beneficiary in terms
of which an account has been rendered, shall notwithstanding the provisions of any
other law, furnish to the member concerned an account or statement reflecting such
particulars as may be prescribed.
(2)
A medical scheme shall, in the case where an account has been rendered,
subject to the provisions of this Act and the rules of the medical scheme concerned,
pay to a member or a supplier of service, any benefit owing to that member or
supplier of service within 30 days after the day on which the claim in respect of such
benefit was received by the medical scheme.’

[22] Section 59(1) recognises that a healthcare service provider will
ordinarily render its account directly to the medical scheme. That is why

15 D Pearmain, op cit, para 7.3, pp 7-6 to 7-7 describes a variety of such relationships.

it obliges the service provider, in addition, to furnish an account or
statement directly to the member. This it does ‘notwithstanding the
provisions of any other law’. One law that springs to mind immediately is
the provisions of s 20(1)(i) of the Value-Added Tax Act 89 of 1991,
which prohibit a supplier from issuing more than one tax invoice for each
taxable supply. The medical scheme will want such an invoice, as the
VAT payable to the service provider will then be included as input tax in
its VAT returns. So the second invoice issued to the patient is issued
notwithstanding the provisions of that other law. But that in turn indicates
that the medical scheme is liable to pay the service provider.

[23]   Section 59(2) of the Act expressly recognises that the medical
scheme may pay the service provider directly. It was submitted that it was
only obliged to do so when the service provider was party to a designated
service provider agreement. However, there is nothing in the language or
the context of the section that warrants us reading such a limitation into it.
The section says that what is payable is ‘any benefit owing to that
member or supplier of service’. It is plain therefore that a benefit may be
owing to the service provider. That can only be because the claim of the
service provider arose in circumstances where the service provider was
entitled to advance that claim against the medical scheme and the scheme
was obliged to pay it. A claim cannot be owed if the party that owes it is
not obliged to pay it.

[24] The shift in language between s 59(1) and s 59(2) is a helpful
pointer to this being the correct interpretation of this section. Section
59(1) refers to the account or statement of the service provider. But
s 59(2) says that where an account has been rendered it is the benefit that
is payable, not the account. That in turn refers back to the benefit

mentioned in s 26(1)(b) of the Act, for which the scheme assumes
liability and payment of which it guarantees.

[25] The high court thought that the effect of s 59(2) was to give the
medical scheme a choice between, paying the amount of the benefit to the
member, or paying it to the service provider. But if the benefit is owing to
the service provider, which is what the section says, I fail to see on what
basis it can be said that the medical scheme is not obliged to pay the
service provider. To my mind that is in accordance with the relationship
between the member and the medical scheme. Scheme members are not
primarily expecting to receive a sum of money from the scheme, as a
result of their having sought medical treatment. They become members in
the expectation that the scheme will pay their medical bills to the extent
of the benefits for which they contract. It seems to me that when a
member obtains medical services and arranges for the service provider to
submit their account to the medical scheme, they are authorising the
medical scheme to pay the service provider and not the member. The
position is different where the member pays the service provider directly
and seeks reimbursement. That is the alternative contemplated by s 59(2),
namely payment to the member. Again this reflects common practice in
the industry. Where a member seeks reimbursement of the account of a
service provider the medical scheme will not ordinarily sanction such
payment without receiving proof that the service provider has been paid.

[26] We were referred in argument to the provisions of regulations 5
and 6 of the regulations made under the Act.16 These are the regulations
dealing with the rendering of accounts and the manner of payment of

16 Medical Schemes Act Regulations, GN R1262, GG 20566, 20 October 1999.

benefits. I do not intend to set them out or canvass them in any detail. It
suffices to say that they entirely support the exposition of the legal
obligations of a medical scheme set out above.

[27] For those reasons I am satisfied that the appeal must fail. I make
the following order:
The appeal is dismissed with costs, such costs to be paid by the
first appellant and the liquidators jointly and severally, the one paying the
other to be absolved.
No costs in relation to the appeal shall be recovered or paid out of
the assets of Gen-Health Medical Scheme.

M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellants:
B H Swart SC
Instructed by:
Jaco Roos Attorneys, Pretoria
E G Cooper Majiedt Inc, Bloemfontein

For third to twenty-seventh respondents:

M A Chohan SC
Instructed by:
Werksmans Attorneys, Johannesburg
Symington & de Kok, Bloemfontein.

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
11 March 2015
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Sechaba Medical Solutions & others v Sekete and others

The SCA today handed down judgment in a case dealing with the
liability of medical schemes to the suppliers of medical services to their
members. The case arose because a medical scheme, Gen-Health, went
into liquidation and claims were lodged against it both on behalf of
members, in respect of medical treatment they had received at various
medical facilities operated within the Life Healthcare Group, and by Life
Healthcare in respect of the services rendered to those members. The
previous administrators of the scheme, together with the liquidators,
opposed the admission of the claims on the basis that the scheme was not
under any obligation to pay the claims of Life Healthcare

The SCA rejected the contentions by the administrators and the
liquidators. It held that as a result of Life Healthcare, in each instance,
obtaining authorisation from Gen-Health, before rendering services, a
contract came into existence between Life Healthcare and Gen-Health in
terms of which Gen-Health undertook to pay Life Healthcare for the
services it rendered to the members of Gen-Health.

The court furthermore held that terms of Sections 26(1)(b) and 59
of the Medical Schemes Act 131 of 1998, Gen-Health was entitled to
claim directly from Gen-Health, as that was the benefit that Gen-Health
had undertaken to afford to its members in terms of the scheme’s
schedule of benefits. Section 59 expressly contemplated that the provider
of medical services would be entitled to claim directly from a medical
scheme in respect of services rendered to its members subject to the
limitations of the scheme’s schedule of benefits. In the circumstances the
court held that the objections to the claims by Life Healthcare should be
rejected and dismissed the appeal with costs.