Section 44 of the Medical Schemes Act empowers the Registrar of Medical Schemes to order an inspection of a scheme where he is of the opinion that such an inspection will provide evidence of any irregularity or of non-compliance with the provisions of the Act.  The Registrar can also order an inspection for the purposes of routine monitoring of compliance with the Act.

In a recent decision of the Supreme Court of Appeal, the right of medical schemes to privacy was considered in the face of the Registrar’s powers of inspection.

The matter of Bonitas Medical Fund v The Council for Medical Schemes (814/2015) [2016] ZASCA 154 (3 October 2016) came before the Supreme Court of Appeal after Bonitas launched an appeal against a decision of the High Court that upheld that the Registrar’s direction to appoint an inspector to investigate the affairs of a medical scheme was not a decision that was appealable by the medical scheme.

Bonitas tried to challenge the Registrar’s direction to appoint an inspector by relying on Section 49 of the Medical Schemes Act, which provides any person who is aggrieved by any decision of the Registrar the power to launch an appeal against the decision with the Council for Medical Schemes.

In considering the matter, the Supreme Court of Appeal noted the public importance of medical schemes, stating that they control vast amounts of money in members’ contributions.  Further, the Court considered the object of the Medical Schemes Act, which is stated inter alia to be the control of certain activities of medical schemes and the protection of members’ interests.

The Court considered the powers of inspection that the Medical Schemes Act provides the Registrar, stating that the power is no doubt intended to be an effective regulatory mechanism.  The Court further considered the nature of inspections and the importance of the element of surprise, stating that a medical scheme suspected of irregularities or non-compliance with the Act should, in the public interest, not be given the opportunity to hide or destroy evidence.  In this regard, the Court recognised that where an appeal is noted, the noting of the appeal has the effect of suspending the decision pending the decision of the Council on appeal.  Therefore, the Court noted that if the direction to appoint an investigator was a decision that is considered appealable in terms of the Act, the purpose of the investigation could be hampered by simply noting an appeal.

The Supreme Court of Appeal thus confirmed, after considering the business of a medical scheme, and their role in society, that the right of the medical scheme to privacy should be tapered to give effect to the Registrar’s powers of inspection.  In this regard the Court also placed emphasis on the fact that the investigation is merely an evidence gathering exercise, and therefore does not determine or affect the rights of the medical scheme.

While confirming that the decision to appoint an inspector would not be one that could be appealed by the medical scheme – the Court did confirm that the medical scheme would still be able to review the decision to appoint an inspector on the grounds that the decision was arbitrary or irrational.