Johannesburg - Sanitas, the medical scheme based in KwaZulu Natal with about 12 000 members, was placed under curatorship by the Durban High Court yesterday.
Sanitas has a major presence in the Indian teaching fraternity.
Danie Kolver, the Registrar of Medical Schemes, said the objective had been to avoid insolvency and under different management the scheme would try to trade out of the difficulties. "Curatorship is preferable to formal winding up."
Market commentators have raised questions about the trustees of the scheme and certain of their investments, including an investment in a casino operation which caused a cash shortfall within the medical scheme. An investigation is under way in this regard.
Duff & Phelps Credit Rating agency (DCR) released a cautionary announcement last week stating that Sanitas was experiencing financial difficulties.
"During the course of 1999, Sanitas advised DCR that they would discontinue with their rating and DCR therefore withdrew its rating on Sanitas."
A number of Sanitas members are currently being turned away from service providers.
Sanitas recently gave notice that it would part ways with Medscheme, its administrator for 24 years. A new administrator has not yet been announced.
Last week, Aslam Dasoo, the chief executive of the Board of Healthcare Funders, the representative body for medical aids, said the fault in law rested with management and the trustees of the scheme, despite non-performance of other parties.
Members of Sanitas have for some time been moved by brokers to other schemes. This led to a funding crisis a few months ago as the pool of resources was reduced and this was compounded by the cash shortfall.
Sources said problems were exacerbated when some members began to demonstrate high claiming patterns before their departure from Sanitas in collusion with certain providers of healthcare services.