A High Court judge made a ruling in a case this week that appears to entrench members of medical schemes' rights to the money they have saved in their medical savings accounts.
As a result of the ruling in the Transvaal Provincial High Court, about 9 000 former members of Omnihealth Medical Scheme could be paid back about R33 million that they had in their medical savings accounts with this scheme when it was placed under liquidation in November 2005.
However, the liquidators of Omnihealth from Tshwane Trust say they are considering an appeal against the ruling. This would further delay any payment to the long-suffering former members of the scheme.
Patrick Masobe, the Registrar of Medical Schemes, applied to the High Court for the order to force the liquidators of Omnihealth to pay the money to the schemes' former members rather than retain it as part of Omnihealth's insolvent estate.
If the liquidators retain the money in the scheme's estate, members would be treated as creditors of the scheme, and the money the liquidators recover, less their commission, would be divided between everyone to whom the scheme owed money, in line with the amount owed.
The liquidators, Lazarus Mpanana Ledwaba and Alta van Wyk, argued before the court that, because Omnihealth failed to keep the money in the savings accounts separate from the scheme's other funds, the money should be retained as part of the scheme's insolvent estate.
Masobe opposed this move, saying that money in the members' medical savings accounts constitutes money held in trust for members and is thus property that does not form part of Omnihealth's insolvent estate.
He said the rules of Omnihealth clearly state that the money in personal medical savings accounts belongs to members, and when a member leaves the scheme it should be either paid to the member's new scheme - if that scheme has a medical savings account - or to the member in cash (after tax).
members' property
Judge Ben du Plessis found in favour of the registrar and maintained that Omnihealth's rules, which serve as an agreement between the member and the scheme, state that the balances in a member's medical savings account will at all times remain the member's property.
The judge said that the money in Omnihealth members' personal medical savings accounts constitutes trust money in line with the provisions of the Financial Institutions (Protection of Funds) Act, read together with one of the regulations under the Medical Schemes Act.
When it became apparent that Omnihealth could not continue as a going concern late in 2005, Masobe negotiated with the curator of KwaZulu-Natal Medical Scheme to take Omnihealth's 9 000 remaining members. KwaZulu-Natal Medical Scheme had been put under curatorship because of governance problems with its trustees, but was financially strong. It was brought out of curatorship late last year.
Some former Omnihealth members have subsequently joined other schemes, but a number of them have remained with KwaZulu-Natal Medical Scheme.
The judge ordered the liquidators of Omnihealth to pay the medical savings account money, plus interest, that is owing to the former members who remain on KwaZulu-Natal Medical Scheme to that scheme.
This scheme apparently no longer has medical savings accounts, which means that members could be paid out.
Du Plessis ordered that the liquidators should pay the money, plus interest, that is owing to former Omnihealth members no longer with KwaZulu-Natal Medical Scheme directly to them.
These payments have to be made within 60 days of this week's order, unless the matter is taken on appeal.