THE STATE LIABILITY AMENDMENT BILL | A MISSED OPPORTUNITY FOR CHANGE

The State Liability Amendment Bill, as published in Government Gazette No. 41658 of 25 May 2018, in its preamble, aims to amend the State Liability Act, Act 20 of 1957, seeking to “provide for structured settlements for the satisfaction of claims against the State as a result of wrongful medical treatment of persons by servants of the State”.

The introduction is sought to reduce the impact of lump sum payments and aimed to ease the financial strain on the budget of provincial departments of health, in an ever-increasing climate of medical malpractice litigation in South Africa, to allow for an increase in financial resources available for provincial hospitals to provide health care services. The Bill aims to inter alia, recoup unused portions of a lump sum paid to an injured for future medical expenses and future loss of earnings that were not previously retrievable if they had died prematurely, in contrast to what had been postulated at time of settlement or adjudication, and to combat, although unlikely it would appear, what Minister of Health Aaron Motsoaledi deems to be “rampant fraud” in some provinces. [1]

The Bill specifically seeks to inter alia, introduce Section 2A to the State Liability Act, in terms of which compensation in respect of claims against the State, exceeding R1 million, are to be paid to the injured in terms of a structured settlement and periodic payments, in relation to claims for future care, future medical treatment and future loss of earnings, which further will cease once the injured has passed away. Payments are to be made, at the very least, at yearly intervals. More importantly, and possibly restrictively so, a court may in lieu of payment of the anticipated amount, order the State to provide such treatment to the injured party at a public health establishment which complies with the standards set by the Office of Health Standards Compliance, or conversely order, that a reduced amount may be awarded to be tendered for private care, akin to the compensation that would have been paid for the future medical treatment of the injured party, at a public health establishment. Minister Motsoaledi indicates that the Bill directs claimants for treatment to public healthcare facilities, in preparation of the National Health Insurance legislation to be implemented[2].

The proposed legislation to be introduced, raises certain points of contention:

  1. It derogates from the well established “once and for all” rule, that ensures finality and certainty in the resolution of delictual claims.
  2. Structured payments, as evidenced by the proposed Bill, call for proper administration facilities to be in place, to regulate and process claims and payments so awarded. The administrative burden to enforce payments continues to reside with the injured, who is forced to go through lengthy processes to ensure and enforce due payments not honoured by the state, as is currently already being experienced, which further serves to deprive the injured from immediate compensation which ought to maintain and care for his or her day to day care and well-being.
  3. The legislation is devoid of provisions catering for the furnishing of security to the courts or undertaking to be liable to pay the full capital amount, or remedies available to the injured in the alternative, in the absence of periodic payments being honoured in the long term. [3]
  4. In considering the Law Reform Commission Report, issue paper 33, [4] published for commentary, prior to the publishing of the proposed Bill, it is noted that: A) The countries used as a comparative study, such as Canada, the UK, Ireland and Australia, who employed a system of periodic or structured payments, are first world countries, whose financial resources and socio-economic circumstances differ greatly from that of a developing country like South Africa.[5] and B) Structured settlements or periodic payments, for some of these countries, are further discretionary by the courts and not legislatively made compulsory. As such the basis of their introduction in our jurisdiction carries a different weight of consideration if not equally applied.[6]
  5. Litigation and payments of compensation for medical malpractice should not be paid from operational budgets of state health establishments, further straining resources for adequate and proper medical care but rather should be separately budgeted for.
  6. A reconsideration and proper implementation of introducing compulsory professional indemnity insurance of medical practitioners should be considered, to ease the financial burden of the state, to be viewed in context of the National Health Act to be similarly implemented.
  7. The amendment of the Act serves to circumvent litigation in ensuring greater risks to recoup legal costs, brought on by periodic payments, once the litigation has finalised, in instances where lump sum payments would normally have covered within reason, the attorney and client costs not capable of being recouped on a party and party scale. An indigent injured is accordingly prejudiced, by his or her financial means, to pursue litigation as a result.
  8. In advocating for treatment at a state facility, the injured is forced to seek care from the very person or provider that caused the harm, without a guarantee that health standards are enforced and maintained.
  9. The injured is still liable at private healthcare services, for the portion of accounts that exceed public sector rates,[7] placing the financial burden on the injured and thereby limiting and negating the compensation which is received, which is to be sourced for payments of additional obligations imposed, rather than for the injured’s day to day care.

The Bill is anticipated to be passed on a date still to be determined by the President by proclamation in the Government Gazette. It is doubtful at this stage if the Bill will be able to withstand constitutional scrutiny, which will no doubt require a careful consideration of not only state interest, but also the patient’s rights. It is inherent for the patient, to have a right of recourse, to be placed in a position he or she would have been had it not been for the negligent act, which caused or contributed to his or her damage, without being burdened, restrictively, and to be forced to absorb undue hardships that would not have ensued were it not for the negligent act to start with. Ever increasing social awareness, and the constitutional dispensation, warrant an equitable approach that serves to address and find systemic solutions that aim to improve the health care system as a whole without detracting from the health care providers ability to perform its functions and duties effectively and efficiently whilst most importantly still safeguarding the patient’s interests, rights and well-being.

 by Richard Wiers | Senior Associate

[1] Article, “Staggered medical negligence bill “unfair, Business Day, dated 5 June 2018

[2] Article, “Staggered medical negligence bill “unfair, Business Day, dated 5 June 2018

[3] South African Law Reform Commission, Issue Paper 33, as published 17 July 2017 at page 44;

[4] South African Law Reform Commission, Issue Paper 33, as published 17 July 2017;

[5]  South African Law Reform Commission, Issue Paper 33, as published 17 July 2017 at page 40 – 45;

[6] South African Law Reform Commission, Issue Paper 33, as published 17 July 2017 at page 45;

[7] Article, “Staggered medical negligence bill “unfair, Business Day, dated 5 June 2018

RICHARD WIERS

Senior Associate
Attorney

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