Circulars published by the Council for Medical Schemes should not be regarded as directives to schemes, and schemes cannot contravene a circular, Paul Midlane, the general manager for legal governance risk compliance at Medscheme Holdings, told the Board of Healthcare Funders conference this week.
Midlane says the Medical Schemes Act does not provide for circulars; it states only that schemes must abide by the Act and their own rules.
A circular is an administrative action that must, in terms of the constitution, be lawful, reasonable and procedurally fair, he says.
The Promotion of Administrative Justice Act states that, for an administrative action to be fair, an organ of state must provide those affected by it with a reasonable opportunity to make representation, provide adequate notice of any right of review or appeal, and provide adequate notice of the right to request reasons for the action.
If a circular affects you, as a scheme member, the Council for Medical Schemes should hold a public inquiry before issuing it, or provide notice of the intended action and invite comment, or both, Midlane says.
If an administrative action is procedurally unfair, it does not create any legal rights or obligations, he says.
Therefore, “a circular is nothing more than an FYI. You need to take it for what it is,” Midlane says.
In a circular issued in 2014, the Council for Medical Schemes said that some schemes were wrongly refusing to admit as members individuals whose membership of another scheme had been terminated because they failed to disclose material information to the scheme.
A medical condition that affects a scheme’s assessment of its risks, or for which a waiting period may be imposed, is an example of material information.
Midlane says the circular effectively told schemes to admit people whom schemes have a right to prosecute criminally for a failure to disclose.
Responding to Midlane’s comments, Elsabe Conradie, the Council for Medical Schemes’s general manager for stakeholder relations, says the council’s circulars do not create any legal obligations other than those contained in the Medical Schemes Act.
She says circulars are a way of communicating to schemes what is expected of them in terms of the Medical Schemes Act. They provide clarity on the interpretation and application of the Act, she says.
Schemes have in the past lodged appeals against circulars, and they are entitled to do so if they feel aggrieved by the regulator’s decision with regards to the interpretation of the relevant legislation, she says.