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Medical Schemes act, 131 of 1998 (updated 01/03)
[ASSENTED TO 20 NOVEMBER
1998] [DATE OF COMMENCEMENT: 1
FEBRUARY 1999] (English text signed by
the President) amended by Medical Schemes
Amendment Act 55 of 2001 Regulations under this
Act REGULATIONS
UNDER MEDICAL SCHEMES ACT 131 OF 1998
ACT
To consolidate the laws
relating to registered medical schemes; to provide for the establishment of
the Council for Medical Schemes as a juristic person; to provide for the
appointment of the Registrar of Medical Schemes; to make provision for the
registration and control of certain activities of medical schemes; to protect
the interests of members of medical schemes; to provide for measures for the
co-ordination of medical schemes; and to provide for incidental matters. ARRANGEMENT
OF ACT
CHAPTER I DEFINITIONS 1. Definitions CHAPTER
2
APPLICATION OF ACT
2. Application of Act CHAPTER
3
COUNCIL FOR MEDICAL SCHEMES
Part 1 Council 3. Establishment of Council for Medical Schemes 4. Constitution of Council 5. Disqualification as member of Council, and vacation of office 6. Term of office of member of Council 7. Functions of Council 8. Powers of Council 9. Committees of Council 10. Meetings of Council 11. Remuneration of members of Council and committees 12. Funds of Council 13. Accounting officer 14. Annual report 15. Consultation between Minister and Council 16. Cases of improper or disgraceful conduct 17. Liquidation Part 2 Registrar, Deputy Registrar
and Staff of Council 18. Appointment of Registrar and Deputy Registrar of Medical Schemes 19. Staff of Council CHAPTER
4
MEDICAL SCHEMES
20. Business of medical scheme 21. Use of designation ‘medical scheme’ 21A. Marketing 22. Application for registration 23. Name of medical scheme and change of name 24. Registration as medical scheme 25. Notification of registration 26. Effect of registration 27. Cancellation and suspension of registration 28. Prohibition of membership of, and claims against, more than one
medical scheme CHAPTER
5
RULES OF MEDICAL SCHEME
29. Matters for which rules shall provide 29A. Waiting periods 30. General provisions to be contained in rules 31. Amendment of rules 32. Binding force of rules CHAPTER
6
BENEFIT OPTIONS
33. Approval and withdrawal of benefit options 34. Prohibition on cession and attachment of benefits CHAPTER
7
FINANCIAL MATTERS
35. Financial arrangements 36. Auditor and audit committee 37. Annual financial statements 38. Registrar may reject returns CHAPTER
8
DOCUMENTS
39. Requirements in regard to documents to be deposited with Registrar 40. Effect of Registrar’s certificate on documents 41. Right to obtain copies of, or to inspect certain documents CHAPTER
9
POWERS OF REGISTRAR
42. Registrar may require additional particulars 43. Enquiries by Registrar 44. Inspections and reports 45. Persons not registered to furnish information 46. Removal of member of board of trustees CHAPTER
10
COMPLAINTS AND APPEALS
47. Complaints 48. Appeal to Council 49. Appeal against decision of Registrar 50. Appeal Board CHAPTER
11
JUDICIAL MATTERS
51. Application to High Court 52. Judicial management 53. Winding-up 54. Compromise 55. Information as to compromise 56. Appointment of curator CHAPTER
12
GENERAL
57. General provisions on governance 58. Administration by intermediary 59. Charges by suppliers of service 60. Preservation of secrecy 61. Undesirable business practices 62. Limitation of liability 63. Amalgamation and transfer 64. Voluntary or automatic dissolution 65. Broker services and commission 66. Offences and penalties 67. Regulations 68. Repeal of laws and transitional arrangements 69. Short title and commencement Schedule 1 LAWS
REPEALED BY SECTION 68 (1) Schedule 2 TRANSITIONAL
PROVISIONS CHAPTER
1
DEFINITIONS (s 1) 1 Definitions (1) In this Act, unless inconsistent with the context- ‘actuary’ means any
fellow of an institute, faculty, society or chapter of actuaries approved by
the Minister of Finance; ‘administrator’ means
any person who has been accredited by the Council in terms of section 58, and
shall, where any obligation has been placed on a medical scheme in terms of
this Act, also mean a medical scheme; ‘Appeal Board’ means the Appeal Board established by section 50 (1); ‘beneficiary’ means a member or a person admitted as a dependant of a
member; [Definition of
‘beneficiary’ inserted by s. 1 (a) of Act 55 of 2001.] ‘board of trustees’
means the board of trustees charged with the managing of the affairs of a
medical scheme, and which has been elected or appointed under its rules; ‘broker’ means a person
whose business, or part thereof, entails providing a service or advice in
respect of the introduction of prospective members to a medical scheme; [Definition of ‘broker’
inserted by s. 1 (b) of Act 55 of 2001.] ‘business of a medical
scheme’ means the business of undertaking liability in return for a premium
or contribution- (a) to make provision for the obtaining of any relevant health
service; (b) to grant assistance in defraying expenditure incurred in
connection with the rendering of any relevant health service; and (c) where applicable, to render a relevant health service, either by
the medical scheme itself, or by any supplier or group of suppliers of a
relevant health service or by any person, in association with or in terms of
an agreement with a medical scheme; ‘Council’ means the
Council for Medical Schemes established by section 3; ‘complaint’ means a
complaint against any person required to be registered or accredited in terms
of this Act, or any person whose professional activities are regulated by
this Act, and alleging that such person has- (a) acted, or failed to act, in contravention of this Act; or (b) acted improperly in relation to any matter which falls within the
jurisdiction of the Council; [Definition of
‘complaint’ substituted by s. 1 (c) of Act 55 of 2001.] ‘condition-specific
waiting period’ means a period during which a beneficiary is not entitled to
claim benefits in respect of a condition for which medical advice, diagnosis,
care or treatment was recommended or received within the twelve-month period
ending on the date on which an application for membership was made; [Definition of
‘condition-specific waiting period’ inserted by s. 1 (d) of Act 55 of 2001.] ‘curator’ means a curator appointed under section 56; ‘dependant’ means- (a) the spouse or partner, dependent children or other members of the
member’s immediate family in respect of whom the member is liable for family
care and support; or (b) any other person who, under the rules of a medical scheme, is
recognised as a dependant of a member; [Para. (b) substituted
by s. 1 (e) of Act 55 of 2001.] ‘financial year’ means each period of 12 months ending on 31 December; ‘general waiting period’
means a period in which a beneficiary is not entitled to claim any benefits; [Definition of ‘general
waiting period’ inserted by s. 1 (f) of Act 55 of 2001.] ‘Master’ means the Master of the High Court; ‘medical scheme’ means any medical scheme registered under section 24
(1); ‘member’ means a person
who has been enrolled or admitted as a member of a medical scheme, or who, in
terms of the rules of a medical scheme, is a member of such medical scheme; ‘Minister’ means the Minister of Health; ‘officer’ means any
member of a board of trustees, any manager, principal officer, treasurer,
clerk or other employee of the medical scheme, but does not include the
auditor of the medical scheme; ‘prescribed’ means prescribed by regulation; ‘principal officer’
means the principal officer appointed in terms of section 57 (4) (a); ‘Registrar’ means the
Registrar of Medical Schemes appointed in terms of section 18; ‘reinsurance contract’
means any contractual arrangement whereby some element of risk contained in
the rules of the medical scheme is transferred to a reinsurer in return for
some consideration; [Definition of
‘reinsurance contract’ inserted by s. 1 (g) of Act 55 of 2001.] ‘reinsurer’ means an insurer- (a) registered as a long-term insurer in terms of section 9 of the
Long-term Insurance Act, 1998 (Act 52 of 1998), unless that insurer is
prohibited from engaging in the practice of reinsurance in terms of section
10 of that Act; or (b) registered as a short-term insurer in terms of section 9 of the
Short-term Insurance Act, 1998 (Act 53 of 1998), unless that insurer is
prohibited from engaging in the practice of reinsurance in terms of section
10 of that Act; [Definition of
‘reinsurer’ inserted by s. 1 (g) of Act 55 of 2001.] ‘relevant health
service’ means any health care treatment of any person by a person registered
in terms of any law, which treatment has as its object- (a) the physical or mental examination of that person; (b) the diagnosis, treatment or prevention of any physical or mental
defect, illness or deficiency; (c) the giving of advice in relation to any such defect, illness or
deficiency; (d) the giving of advice in relation to, or treatment of, any
condition arising out of a pregnancy, including the termination thereof; (e) the prescribing or supplying of any medicine, appliance or
apparatus in relation to any such defect, illness or deficiency or a
pregnancy, including the termination thereof; or (f) nursing or midwifery, and includes an
ambulance service, and the supply of accommodation in an institution
established or registered in terms of any law as a hospital, maternity home,
nursing home or similar institution where nursing is practised, or any other
institution where surgical or other medical activities are performed, and
such accommodation is necessitated by any physical or mental defect, illness
or deficiency or by a pregnancy; ‘restricted membership
scheme’ means a medical scheme, the rules of which restrict the eligibility
for membership by reference to- (a) employment or former employment or both employment or former
employment in a profession, trade, industry or calling; (b) employment or former employment or both employment or former
employment by a particular employer, or by an employer included in a
particular class of employers; (c) membership or former membership or both membership or former
membership of a particular profession, professional association or union; or (d) any other prescribed matter; ‘rules’ means the rules of a medical scheme and include- (a) the provisions of the law, charter, deed of settlement, memorandum
of association or other document by which the medical scheme is constituted; (b) the articles of association or other rules for the conduct of the
business of the medical scheme; and (c) the provisions relating to the benefits which may be granted by
and the contributions which may become payable to the medical scheme; ‘this Act’ includes the regulations. (2) For the purposes of this Act, any reference in this Act to a
medical scheme shall be construed as a reference to that medical scheme or to
the board of trustees of that medical scheme, as the case may be. CHAPTER
2
APPLICATION OF ACT (s 2) 2 Application of Act (1) If any conflict, relating to the matters dealt with in this Act,
arises between this Act and the provisions of any other law save the
Constitution or any Act expressly amending this Act, the provisions of this Act
shall prevail. (2) This Act shall also apply to a medical scheme established by any
organ of the State including those medical schemes established under section
28 (g) of the Labour Relations Act, 1995 (Act 66 of 1995). CHAPTER
3
COUNCIL FOR MEDICAL SCHEMES
(ss 3-19) Part 1 Council (ss 3-17) 3 Establishment of Council for Medical Schemes (1) There is hereby established a juristic person called the Council
for Medical Schemes. (2) The Council shall be entitled to sue and be sued, to acquire,
possess and alienate moveable and immovable property and to acquire rights
and incur liabilities. (3) The registered office of the Council shall be situated in Pretoria
or such other address as the Council may from time to time determine. (4) The Council shall, at all times, function in a transparent,
responsive and efficient manner. 4 Constitution of Council (1) The Council shall consist of up to 15 members appointed by the
Minister taking into account the interests of members and of medical schemes,
expertise in law, accounting, medicine, actuarial sciences, economics and
consumer affairs. (2) The Minister may appoint any member of the Council on a full-time
or a part-time basis for such a period as the Minister may deem necessary. (3) The Minister shall appoint a member of the Council as chairperson.
(4) Members of the Council shall elect from amongst themselves a
vice-chairperson. (5) When the chairperson is unable to perform his or her functions in
terms of this Act, the vice-chairperson shall act as chairperson of the
Council. (6) The chairperson or the vice-chairperson or, in their absence, a
member of the Council designated by the members present, shall preside at a
meeting of the Council. (7) If a member dies or by virtue of section 5 (2) ceases to be a member,
the Minister may, subject to the provisions of this section, appoint a person
in that member’s place for the unexpired period of his or her term of office. (8) The Minister may at any time discharge a member of the Council
from office if such a member is absent, except with the leave of the
chairperson, from more than three consecutive meetings of the Council, or is
guilty of misconduct. (9) The Minister shall cause the name of every person appointed as a
member of the Council and the period for which he or she has been appointed
to be published in the Gazette. 5 Disqualification as member of Council, and vacation of office (1) No person shall be appointed as a member of the Council if he or
she- (a) is an unrehabilitated insolvent; (b) is disqualified under any law from carrying on his or her
profession; (c) is not permanently resident in the Republic of South Africa; or (d) has at any time been convicted (whether in the Republic of South
Africa or elsewhere) of theft, fraud, forgery or uttering a forged document,
perjury, an offence under the Corruption Act, 1992 (Act 94 of 1992), or any
offence involving dishonesty, and has been sentenced therefor to imprisonment
without the option of a fine. (2) A member of the Council shall vacate his or her office if he or
she- (a) becomes subject to any disqualification referred to in subsection
(1); (b) becomes mentally incompetent; (c) by written notice resigns as a member; (d) is discharged of his or her office by the Minister under section 4
(8); (e) is in terms of the provisions of the Electoral Act, 1993 (Act 202
of 1993), nominated as a candidate for election as a member of Parliament; or (f) is in terms of the provisions of the Constitution of the
Republic of South Africa, 1996 (Act 108 of 1996), elected as a member of
Parliament or holds a political office at a provincial or local government
level. 6 Term of office of member of Council A member of the
Council shall be appointed for no more than three years but he or she may be
reappointed for one further term. 7 Functions of Council The functions of
the Council shall be to- (a) protect the interests of the beneficiaries at all times; [Para. (a) substituted
by s. 2 of Act 55 of 2001.] (b) control and co-ordinate the functioning of medical schemes in a
manner that is complementary with the national health policy; (c) make recommendations to the Minister on criteria for the
measurement of quality and outcomes of the relevant health services provided
for by medical schemes, and such other services as the Council may from time
to time determine; (d) investigate complaints and settle disputes in relation to the
affairs of medical schemes as provided for in this Act; (e) collect and disseminate information about private health care; (f) make rules, not inconsistent with the provisions of this Act for
the purpose of the performance of its functions and the exercise of its
powers; (g) advise the Minister on any matter concerning medical schemes; and (h) perform any other functions conferred on the Council by the
Minister or by this Act. 8 Powers of Council The Council shall,
in the exercise of its powers, be entitled to- (a) appoint such staff as the Council may deem necessary to employ to
assist the Council in the performance of its functions and the execution of
its duties; (b) hire, purchase or otherwise acquire such moveable or immovable
property for the performance of its functions, and may let, sell or otherwise
dispose of such property; (c) enter into an agreement with any person including the State or any
other institution for the performance of any specific act or function or the
rendering of any service; (d) insure itself against any loss, damage, risk or liability which it
may suffer or incur; (e) approve business plans and the budget for the Council and the
functions performed by the Registrar; (f) approve the registration, suspension, and cancellation of
registration, of medical schemes or a benefit option; (g) invest, loan, advance on interest and place on deposit, moneys not
needed immediately for the current expenditure of the Council or the
functions performed by the Registrar or to deal therewith in any other way
against such securities and in such manner as the Council may determine from
time to time, and to convert investments into money, adjust such securities,
re-invest the proceeds thereof or to deal therewith in any other manner as
determined by the Council; (h) exempt, in exceptional cases and subject to such terms and
conditions and for such period as the Council may determine, a medical scheme
or other person upon written application from complying with any provision of
this Act; [Para. (h)
substituted by s. 3 of Act 55 of 2001.] (i) authorise the Registrar from time to time to sign any contract,
cheque or other document which binds the Council or which authorises any
action on behalf of the Council; (j) determine the terms and conditions of service of any person
appointed by the Council or who is under contract; and (k) in general, take any appropriate steps which it deems necessary
or expedient to perform its functions in accordance with the provisions of
this Act. 9 Committees of Council (1) The Council may- (a) appoint from amongst its members an executive committee consisting
of the chairperson, the vice-chairperson and three other members to attend to
the day to day tasks of the Council, and may delegate to such executive
committee such functions and powers as it may from time to time determine;
and (b) appoint from amongst its members or any other persons, any other
committee in regard to any matter falling within the scope of the Council’s
functions and powers under this Act, and may delegate to any such committee
such of its functions and powers as it may determine from time to time. (2) The chairperson of the Council shall be the chairperson of the
executive committee and in his or her absence the vice-chairperson shall act
as chairperson. (3) Any other committee appointed by the Council shall elect its own
chairperson. (4) All resolutions taken by the executive committee or any other
committee shall be by a majority vote. (5) The quorum for a meeting of the Council or any committee shall be
half of the members of the Council or of such committee plus one member. 10 Meetings of Council (1) The Council shall hold at least four ordinary meetings each year. (2) Special meetings of the Council may be convened by the chairperson
or at the written request of the majority of the members setting forth
clearly the purpose for which the meeting is to be held. (3) The Minister may at any time request that a meeting of the Council
be convened in order to advise him or her on a specific matter. (4) The executive committee shall meet at least once a month or at
such intervals as the chairperson may deem it necessary for the efficient
performance of the Council’s functions. (5) The Council may determine its own rules regarding the procedures
at its meetings or those of its committees. (6) All resolutions taken by the Council shall be by a majority vote. 11 Remuneration of members of Council and committees The chairperson,
vice-chairperson, other members of the Council and members of committees of
the Council who are not members of the Council, excluding any such member- (a) who is in the full-time service of the State; or (b) who is in the full-time service of an employer by whom such member
is remunerated in respect of such service and with whose consent such member
was appointed as such, shall
be paid such remuneration and allowances out of the funds of the Council as
the Minister, with the concurrence of the Minister of Finance, may determine
from time to time. 12 Funds of Council (1) The funds of the Council shall consist of- (a) moneys appropriated by Parliament on such terms and conditions as
the Minister, with the concurrence of the Minister of Finance, may determine;
(b) fees raised on services rendered by the Registrar in the
performance of his or her functions under the provisions of this Act; (c) penalties contemplated in section 66 (3); and (d) interest on overdue fees and penalties in respect of services
rendered by the Registrar. (2) The Council- (a) may accept moneys or other goods donated or bequeathed to the
Council; and (b) shall specify details of any such donation or bequest in the
annual report to the Minister. (3) The Council shall utilise its funds for the defrayal of expenses
incurred by the Council and the office of the Registrar in the performance of
their functions under this Act. (4) The Council shall cause an account to be opened with an
institution registered as a bank and shall deposit in that account all moneys
received in terms of this section. (5) The Council may invest money, which is deposited in terms of
subsection (4) and which is not required for immediate use, in any manner as
it may deem fit. (6) Any money which at the close of the Council’s financial year
stands to the credit of the Council shall be carried forward to the next
financial year as a credit in the account of the Council. 13 Accounting officer (1) The Registrar shall be the accounting officer of the Council
charged with accounting for all moneys received and payments authorised by
and made on behalf of the Council and the Registrar. (2) The financial year of the Council shall end on 31 December in each
year. (3) The Registrar shall- (a) keep full and proper records of all moneys received and expenses
incurred by, and of all assets, liabilities and financial transactions of,
the Council and the Registrar; and (b) as soon as is practicable, but not later than four months after
the end of each financial year referred to in subsection (2), prepare annual
financial statements in respect of the financial year in question. (4) The records and annual financial statements referred to in
subsection (3) shall be audited by the Auditor-General. (5) Any moneys payable to the Council in terms of this Act, shall be a
debt due to the Council and recoverable by the Registrar in any competent
court. 14 Annual report (1) The Council shall submit to the Minister before the end of June of
each year a report on the Council’s activities during the previous financial
year. (2) The report referred to in subsection (1) shall be accompanied by
audited financial statements and notes thereon in respect of the financial
year concerned. (3) The financial statements referred to in subsection (2) shall- (a) be in conformity with general accepted accounting practice; (b) fairly present the state of affairs and functions of the Council
and the results thereof and of the Registrar; and (c) refer to any material matters not specifically required in terms
of this Act which have affected or are likely to affect the affairs of the
Council and the Registrar. (4) The Council shall publish or make available the annual report and
audited financial statements after submission thereof to the Minister. 15 Consultation between Minister and Council (1) The Council may consult with the Minister in the exercise of the
powers and the performance of the functions under this Act or on any other
law, and in connection with any other matter which the Council deems
necessary. (2) The Minister may consult with the Council on any matter falling
under this Act. 16 Cases of improper or disgraceful conduct Whenever it appears
to the Council- (a) that the conduct of any person registered under any Act of
Parliament which regulates the professional conduct of any health care
supplier constitutes improper or disgraceful conduct relating to a medical
scheme, the Council shall report this matter to any body or organisation
which has jurisdiction over the person concerned; or (b) that an offence has been committed, the
Council shall refer the matter to the National Prosecuting Authority. 17 Liquidation (1) The Council shall only be placed under liquidation by an Act of
Parliament. (2) In the event of the liquidation of the Council, the assets and
liabilities of the Council, if any, shall accrue to the State. Part 2
Registrar, Deputy
Registrar and staff of Council (ss 18-19) 18 Appointment of Registrar and Deputy Registrar of Medical Schemes (1) The Minister shall, after consultation with the Council, appoint a
Registrar and one or more Deputy Registrars of Medical Schemes. (2) The Registrar shall be the executive officer of the Council and
shall manage the affairs of the Council. (3) The Registrar shall act in accordance with the provisions of this
Act and the policy and directions of the Council. (4) The Registrar may assign to any staff member such of his or her
functions or duties as he or she may from time to time determine. (5) The Registrar shall supervise the staff appointed under section 8
(a) or (c) or placed at his or her disposal in terms of section 19 (1). (6) A Deputy Registrar shall assist the Registrar in the performance
of his or her functions and the carrying out of his or her duties and may,
subject to the approval of the Registrar, exercise any power conferred upon
the Registrar by the Council or by this Act. 19 Staff of Council (1) The Council may, in addition to the staff appointed or a person
under contract under section 8 (a) or (c) respectively, request the
Director-General of Health to place at the disposal of the Registrar,
officers and employees in the public service in terms of section 15 (3) of
the Public Service Act, 1994 (Proclamation 103 of 1994) to assist the
Registrar in the performance of his or her functions and duties. (2) The staff of the Council, excluding the officers and employees
referred to in subsection (1), shall be paid such remuneration and allowances
as the Council may, after consultation with the Minister and with the
concurrence of the Minister of Finance, determine from time to time. (3) ...... [Sub-s. (3) deleted by
s. 4 of Act 55 of 2001.] CHAPTER
4
MEDICAL SCHEMES (ss
20-28) 20 Business of Medical Scheme (1) No person shall carry on the business of a medical scheme unless
that person is registered as a medical scheme under section 24. (2) No medical scheme shall purchase any insurance policy in respect
of any relevant health service other than to reinsure a liability in terms of
section 26 (1) (b). (3) Where a medical scheme intends entering into any reinsurance
contract, or effecting any amendment of such reinsurance contract, the board
of trustees shall furnish to the Registrar- (a) a copy of any such reinsurance contract or amendment of such
reinsurance contract; and (b) an evaluation of the need for the proposed reinsurance contract
undertaken by a person with the necessary expertise to conduct such an
evaluation, and who has no direct or indirect financial interest in the
relevant reinsurance contract. [Sub-s. (3) added by s.
5 of Act 55 of 2001.] (4) The Registrar may in writing raise, within 30 days of having
received any such reinsurance contract or amendment and evaluation, any
matter in respect of the terms of such contract or amendment, taking into
account whether- (a) due consideration has been given by the medical scheme concerned
to the need for reinsurance, based upon an assessment of the financial risks
to which that medical scheme is exposed; (b) the reinsurance contract is in the best interests of the members
of the medical scheme concerned; and (c) there is conflict of interests between the parties to the
reinsurance contract. [Sub-s. (4) added by s.
5 of Act 55 of 2001.] (5) The board of trustees is obliged to address, to the satisfaction
of the Registrar, any matter raised prior to the implementation of the
reinsurance contract or amendment to any such contract; [Sub-s. (5) added
by s. 5 of Act 55 of 2001.] (6) The board of trustees shall certify that a reinsurance contract or
amendment submitted in terms of section 20 (3) constitutes the entire
agreement between the medical scheme and reinsurer with respect to the
business being reinsured thereunder, and that there are no arrangements
between the medical scheme and the reinsurer other than those expressed in
the contract or amendment. [Sub-s. (6) added
by s. 5 of Act 55 of 2001.] (7) Failure to comply with sections 20 (3), 20 (5) and 20 (6) shall
result in such reinsurance contract or amendment being null and void. [Sub-s. (7) added
by s. 5 of Act 55 of 2001.] 21 Use of designation ‘medical scheme’ No person shall,
without the consent of the Registrar, apply to his or her business a name
which includes the words ‘medical scheme’ or any other name which is
calculated to indicate, or is likely to lead persons to believe that he or
she carries on the business of a medical scheme, unless such business is
registered under this Act. 21A Marketing (1) It is an offence to market, advertise or in any other way promote
the business of any person in a manner likely to create the impression that
such person conducts, will conduct, or is entitled to conduct, the business
of a medical scheme unless that person is registered as a medical scheme in
terms of section 24 (1) of this Act. (2) The admission of a person as a member or dependant of a medical
scheme may not be made directly or indirectly conditional upon that person
purchasing or participating in any product, benefit or service provided by a
person other than the medical scheme in terms of its rules. (3) It is an offence to market, advertise or in any other way promote
a medical scheme in a manner likely to create the impression that membership
of such medical scheme is conditional upon an applicant purchasing or
participating in any product, benefit or service provided by a person other
than the medical scheme in terms of its rules. [S. 21A inserted by s. 6
of Act 55 of 2001.] 22 Application for registration (1) Any person who wishes to carry on the business of a medical scheme
shall apply to the Registrar for registration under this Act. (2) An application under subsection (1) shall be accompanied by such
documents and particulars as may be prescribed from time to time. 23 Name of medical scheme and change of name (1) The Registrar shall not register a medical scheme under a name,
nor change the name of a medical scheme to a name- (a) which has already been registered; (b) which so closely resembles the name of a medical scheme already
registered that the one is likely to be mistaken for the other; or (c) which is likely to mislead the public. (2) A medical scheme shall not use or refer to itself by a name other
than the name under which it is registered or a literal translation or an
abbreviation thereof which has been approved by the Registrar. (3) A medical scheme may, with the consent of the Registrar, in
conjunction with its registered name, use, or refer to itself by, the name of
a medical scheme with which it has amalgamated or which it has absorbed or,
in the case of a change of name, the name by which it was previously known. (4) A medical scheme shall not change its name without the prior
written consent of the Registrar. 24 Registration as medical scheme (1) The Registrar shall, if he or she is satisfied that a person who
carries on the business of a medical scheme which has lodged an application
in terms of section 22, complies or will be able to comply with the
provisions of this Act, register the medical scheme, with the concurrence of
the Council, and impose such terms and conditions as he or she deems
necessary. (2) No medical scheme shall be registered under this section unless
the Council is satisfied that- (a) members of the board of trustees and the principal officer of the
proposed medical scheme are fit and proper persons to hold the offices
concerned; [Para. (a)
substituted by s. 7 (a) of Act 55 of 2001.] (b)
the medical scheme complies with or will be able to comply with any other
provision of this Act; (c) the medical scheme is or will be
financially sound; (d) the
medical scheme has a sufficient number of members who contribute or are
likely to contribute to the medical scheme; (e) the
medical scheme does not or will not unfairly discriminate directly or
indirectly against any person on one or more arbitrary grounds including
race, age, gender, marital status, ethnic or social origin, sexual
orientation, pregnancy, disability and state of health; and [Para. (e)
substituted by s. 7 (b) of Act 55 of 2001.] (f) the registration of the medical scheme is
not contrary to the public interest. (3) The Registrar shall transmit to the applicant a certificate of
registration and a copy of the rules of the medical scheme reflecting the
date of registration of such rules. (4) If an application for registration is rejected, the Registrar
shall in writing indicate to the applicant in what respect the medical scheme
in question does not comply with the provisions of this Act. (5) The Registrar may demand from the person who manages the business
of a medical scheme which is in the process of being established, such
financial guarantees as will in the opinion of the Council ensure the
financial stability of the medical scheme. 25 Notification of registration The Registrar shall
publish in the Gazette a notification of the registration of a medical scheme
setting out- (a) the name and address of the medical scheme; (b) the date of registration; and (c) any terms and conditions imposed. 26 Effect of registration (1) Any medical scheme registered under this Act shall- (a) become a body corporate capable of suing and being sued and of
doing or causing to be done all such things as may be necessary for or
incidental to the exercise of its powers or the performance of its functions
in terms of its rules; (b) assume liability for and guarantee the benefits offered to its
members and their dependants in terms of its rules; and (c) establish a bank account under its direct control into which
shall be paid every amount- (i) received as subscription or contribution paid by or in respect
of a member; and (ii) received as income, discount, interest, accrual or payment of
whatsoever kind. (2) No person shall have any claim on the assets or rights or be
responsible for any liabilities or obligations of a medical scheme, except in
so far as the claim has arisen or the responsibility has been incurred in
connection with transactions relating to the business of the medical scheme. (3) The assets, rights, liabilities and obligations of a medical
scheme, including any assets held in trust for the medical scheme by any
person, as existing immediately prior to its registration, shall vest in and
devolve upon the medical scheme without any formal transfer or cession. (4) No amount shall be debited to the account contemplated in
subsection 1 (c) other than- (a) payments by a medical scheme of any benefit, payable under the
rules of a medical scheme; (b) costs incurred by the medical scheme in the carrying on of the
business as a medical scheme; or (c) amounts invested by the board of trustees in accordance with
section 35 (7). (5) No payment in whatever form shall be made by a medical scheme
directly or indirectly to any person as a dividend, rebate or bonus of any
kind whatsoever. (6) No person other than an employer shall receive, hold or in any
manner deal with the subscription or contribution which is payable to a
medical scheme by or on behalf of a member of such medical scheme. (7) All subscriptions or contributions shall be paid directly to a
medical scheme not later than three days after payment thereof becoming due. (8) The officer in charge of a deeds registry in which is registered
any deed or other document relating to any asset or right which in terms of
subsection (3) vests in or devolves upon a medical scheme, shall, upon
production to him or her by the medical scheme of its certificate of
registration and of the deed or other document aforesaid, without payment of
transfer duty, stamp duty, registration fees or charges, make the
endorsements upon such deed or document and the alterations in his or her
registers that are necessary by reason of such vesting or devolution. (9) All moneys and assets belonging to a medical scheme shall be kept
by that medical scheme and every medical scheme or the administrator, as the
case may be, shall maintain such books of accounts and other records as may
be necessary for the purposes of such medical scheme. (10) Every medical scheme
shall have a registered office in the Republic. (11) No medical scheme
shall carry on any business other than the business of a medical scheme and
no medical scheme shall enrol or admit any person as a member in respect of
any business other than the business of a medical scheme. 27 Cancellation and suspension of registration (1) The Registrar may, with the concurrence of the Council, after
investigation and after having afforded the medical scheme, or its legal
representative an opportunity of being heard, cancel the registration of a
medical scheme- (a) on proof that the medical scheme has ceased to operate; (b) if the medical scheme was registered by virtue of misleading
information; (c) if the medical scheme is unable to maintain a financially sound
condition as contemplated by this Act; (d) if the medical scheme is unable to enrol within the period
determined by the Council, or to maintain the minimum number of members
required for the registration of a medical scheme; and (e) if the medical scheme, after written notice from the Registrar,
persists in violating any provision of this Act. (2) The Council may, in lieu of cancellation, suspend the
cancellation, in terms of subsection (1), if the Registrar is satisfied that
the medical scheme will be able to rectify the situation contemplated in
paragraph (c), (d) or (e) of subsection (1) in a manner consistent with the
provisions of this Act. (3) The Registrar shall inform the medical scheme concerned of any
decision taken in terms of subsection (1) by means of a written notice served
upon the medical scheme and shall come into operation on a date specified in
such notice. 28 Prohibition of membership of, and claims against, more than one
medical scheme No person shall- (a) be a member of more than one medical scheme; (b) be admitted as a dependant of- (i) more than one member of a particular medical scheme; or (ii) members of different medical schemes; or (c) claim or accept benefits in respect of himself or herself or any
dependant from any medical scheme other than the medical scheme of which he
or she is a member. [Para. (c) substituted
by s. 8 of Act 55 of 2001.] CHAPTER
5
RULES OF MEDICAL SCHEME
(ss 29-32) 29 Matters for which rules shall provide (1) The Registrar shall not register a medical scheme under section
24, and no medical scheme shall carry on any business, unless provision is
made in its rules for the following matters: (a) The appointment or election of a board of trustees consisting of
persons who are fit and proper to manage the business contemplated by the
medical scheme. (b) The appointment of a principal officer by the board of trustees
who is a fit and proper person to hold such office. (c) The appointment, removal from office, powers and remuneration of
officers of a medical scheme. (d) The manner in which contracts and other documents binding the
medical scheme shall be executed. (e) The custody of the securities, books, documents and other effects
of the medical scheme. (f) The appointment of the auditor of a medical scheme and the
duration of such appointment. (g) The power to invest funds. (h) Subject to the provisions of this Act, the manner in which and
the circumstances under which a medical scheme shall be terminated or
dissolved. (i) The appointment of a liquidator in the case of a voluntary
dissolution. (j) The settlement of any complaint or dispute. (k) The amendment of the rules in accordance with the provisions of
section 31. (l) The giving of advance written notice to members of any change in
contributions, membership fees or subscriptions and benefits or any other
condition affecting their membership. (m) The manner of calling the annual general meeting and special
general meetings of members, the quorum necessary for the transaction of
business at such meetings and the manner of voting thereat. (n) The terms and conditions applicable to the admission of a person
as a member and his or her dependants, which terms and conditions shall
provide for the determination of contributions on the basis of income or the
number of dependants or both the income and the number of dependants, and
shall not provide for any other grounds, including age, sex, past or present
state of health, of the applicant or one or more of the applicant’s
dependants, the frequency of rendering of relevant health services to an
applicant or one or more of the applicant’s dependants other than for the
provisions as prescribed. (o) The scope and level of minimum benefits that are to be available
to beneficiaries as may be prescribed. [Para. (o)
substituted by s. 9 (a) of Act 55 of 2001.] (p) No limitation shall apply to the reimbursement of any relevant
health service obtained by a member from a public hospital where this service
complies with the general scope and level as contemplated in paragraph (o)
and may not be different from the entitlement in terms of a service available
to a public hospital patient. (q) The payment of any benefits according to- (i) a scale, tariff or recommended guide; or (ii) specific directives prescribed in the rules of the medical
scheme. (r) The dependants of a member are entitled to participate in the
same benefit option as the member. (s) The continuation, subject to such conditions as may be
prescribed, of the membership of a member, who retires from the service of
his or her employer or whose employment is terminated by his or her employer
on account of age, ill-health or other disability and his or her dependants. [Para. (s)
substituted by s. 9 (b) of Act 55 of 2001.] (t) For continued membership of a member’s dependants, subject to
such conditions as may be prescribed, after the death of that member, until
such dependant becomes a member of, or is admitted as a dependant of a member
of another medical scheme. [Para. (t)
substituted by s. 29 (c) of Act 55 of 2001.] (u) If the members of a medical scheme who are members of that
medical scheme by virtue of their employment by a particular employer
terminate their membership of the said medical scheme with the object of
obtaining membership of another medical scheme or of establishing a new
medical scheme, such other or new medical scheme shall admit to membership,
without a waiting period or the imposition of new restrictions on account of
the state of his or her health or the health of any of his or her dependants,
any member or a dependant of such first mentioned medical scheme who- (i) is a person or persons contemplated in paragraph (s); or (ii) is a person or persons contemplated in paragraph (t). (2) A medical scheme shall not cancel or suspend a member’s membership
or that of any of his or her dependants, except on the grounds of- (a) failure to pay, within the time allowed in the medical scheme’s
rules, the membership fees required in such rules; (b) failure to repay any debt due to the medical scheme; (c) submission of fraudulent claims; (d) committing any fraudulent act; or (e) the non-disclosure of material information. (3) A medical scheme shall not provide in its rules- (a) for the exclusion of any applicant or a dependant of an applicant,
subject to the conditions as may be prescribed, from membership except for a
restricted membership scheme as provided for in this Act; (b) for the exclusion of any applicant or a dependant of an applicant
who would otherwise be eligible for membership to a restricted membership
scheme; and (c) for the imposition of waiting periods other than as provided for
in section 29 (A). [Para. (c) substituted
by s. 9 (d) of Act 55 of 2001.] 29A Waiting periods (1) A medical scheme may impose upon a person in respect of whom an
application is made for membership or admission as a dependant, and who was
not a beneficiary of a medical scheme for a period of at least 90 days
preceding the date of application- (a) a general waiting period of up to three months; and (b) a condition-specific waiting period of up to 12 months. (2) A medical scheme may impose upon any person in respect of whom an
application is made for membership or admission as a dependant, and who was
previously a beneficiary of a medical scheme for a continuous period of up to
24 months, terminating less than 90 days immediately prior to the date of
application- (a) a condition-specific waiting period of up to 12 months, except in
respect of any treatment or diagnostic procedures covered within the
prescribed minimum benefits; (b) in respect of any person contemplated in this subsection, where
the previous medical scheme had imposed a general or condition-specific
waiting period, and such waiting period had not expired at the time of
termination, a general or condition-specific waiting period for the unexpired
duration of such waiting period imposed by the former medical scheme. (3) A medical scheme may impose upon any person in respect of whom an
application is made for membership or admission as a dependant, and who was
previously a beneficiary of a medical scheme for a continuous period of more
than 24 months, terminating less than 90 days immediately prior to the date
of application, a general waiting period of up to three months, except in
respect of any treatment or diagnostic procedures covered within the
prescribed minimum benefits. (4) A medical scheme may not impose a general or a condition-specific
waiting period on a beneficiary who changes from one benefit option to
another within the same medical scheme unless that beneficiary is subject to
a waiting period on the current benefit option, in which case any remaining
period may be applied. (5) A medical scheme may not impose a general or a condition-specific
waiting period on a child-dependant born during the period of membership. (6) A medical scheme may not impose a general or condition-specific
waiting period on a person in respect of whom application is made for
membership or admission as a dependant, and who was previously a beneficiary
of a medical scheme, terminating less than 90 days immediately prior to the
date of application, where the transfer of membership is required as a result
of- (a) change of employment; or (b) an employer changing or terminating the medical scheme of its
employees, in which case such transfer shall occur at the beginning of the
financial year, or reasonable notice must have been furnished to the medical
scheme to which an application is made for such transfer to occur at the
beginning of the financial year. (7) A medical scheme may require an applicant to provide the medical
scheme with a medical report in respect of any proposed beneficiary only in
respect of a condition for which medical advice, diagnosis, care or treatment
was recommended or received within the 12 month period ending on the date on
which an application for membership was made. (8) In respect of members who change medical schemes in terms of
subsection (6), where the former medical scheme had imposed a general or
condition-specific waiting period and such waiting period had not expired at
the time of termination, the medical scheme to which the person has applied
may impose a general or condition-specific waiting period for the unexpired
duration of such waiting period imposed by the former medical scheme. [S. 29A inserted by s.
10 of Act 55 of 2001.] 30 General provisions to be contained in rules (1) A medical scheme may in its rules make provision for- (a) donations to any hospital, clinic, nursing home, maternity home,
infirmary or home for aged persons in the interest of all or some of its
beneficiaries; [Para. (a)
substituted by s. 11 of Act 55 of 2001.] (b) the granting of loans to any of its members or to make ex gratia
payments on behalf of or to members in order to assist such members to meet
commitments in regard to any matter specified in the definition of ‘business
of a medical scheme’ in section 1; (c) the contribution to any association instituted for the benefit of
medical schemes; (d) the contribution to any fund of any kind whatsoever which is
conducted for the benefit of the officers of the said medical scheme or to
pay for insurance policies on the lives of officers of the said medical
scheme for the benefit of such officers or their dependants; (e) the allocation to a member of a personal medical savings account,
within the limit and in the manner prescribed from time to time, to be used
for the payment of any relevant health service; or (f) the membership of a minor who is assisted by his or her parent
or guardian. (2) Notwithstanding the provisions of section 41
(1) and (2), a medical scheme shall provide free of charge to every member of
that medical scheme on admission with a detailed summary of the rules
specifying such member’s rights and obligations. 31 Amendment of rules (1) A medical scheme may, in the manner provided for in its rules,
amend or rescind any of such rules or make any additional rule. (2) No amendment, rescission or addition of any rule referred to in
subsection (1) shall be valid unless it has been approved by the Registrar in
accordance with any directive given by the Council and registered as
contemplated in subsection (3). (3) On receipt of a written notice from a medical scheme setting out
the particulars of any amendment or rescission of its rules, certified by the
principal officer, the chairperson and one other member of the board of
trustees as having been adopted in accordance with the provisions of the
rules of the medical scheme, the Registrar shall- (a) if he or she is satisfied that the amendment or rescission of the
rules will not be unfair to members or will not render the rules of the
medical scheme inconsistent with this Act, register the amendment or the
rescission of the rules and return it to the medical scheme with the date of
registration endorsed thereon; or (b) if he or she is not so satisfied, in writing advise the medical
scheme accordingly and indicate the reasons for his or her rejection of the
amendment or rescission. (4) The Registrar may order a medical scheme to- (a) within a period of 30 days as from the date on which he or she
addressed the request to the medical scheme concerned, amend the rules in the
manner indicated by him or her; or (b) apply in the manner indicated by him or her, any
rule of such medical scheme which is, in his or her opinion, being applied in
a manner which is inconsistent with the provisions of this Act. 32 Binding force of rules The rules of a
medical scheme and any amendment thereof shall be binding on the medical
scheme concerned, its members, officers and on any person who claims any
benefit under the rules or whose claim is derived from a person so claiming. CHAPTER
6
BENEFIT OPTIONS (ss
33-34) 33 Approval and withdrawal of benefit options (1) A medical scheme shall apply to the Registrar for the approval of
any benefit option if such a medical scheme provides members with more than
one benefit option. (2) The Registrar shall not approve any benefit option under this
section unless the Council is satisfied that such benefit option- (a) includes the prescribed benefits; (b) shall be self-supporting in terms of membership and financial
performance; (c) is financially sound; and (d) will not jeopardise the financial soundness of any existing
benefit option within the medical scheme. (3) The Registrar may demand from the principal officer such financial
guarantees as will in the opinion of the Council ensure the financial soundness
of benefit options. (4) The Registrar may, on account of an inspection or investigation in
terms of this Act or on account of any report, document, statement or
information furnished to him or her, if he or she is of the opinion that a
benefit option is or may not be financially sound, withdraw the approval of
such benefit option and the medical scheme shall amend its rules accordingly
with effect from the date directed by notice by the Registrar. (5) The Registrar may amend the rules of a medical scheme if such
medical scheme fails to amend its rules as directed by the Registrar under
the provisions of subsection (4) within the period specified in the notice,
and such amendment shall be deemed to be an amendment within the meaning of
the provisions of section 31. 34 Prohibition on cession and attachment of benefits (1) No benefit or right in respect of a benefit payable under this Act
shall be capable of being assigned or transferred or otherwise ceded or of
being pledged or hypothecated or be liable to be attached or subjected to any
form of execution under a judgement or order of a court of law. (2) A medical scheme may withhold, suspend or discontinue the payment
of a benefit to which a member is entitled under this Act or any right in
respect of such benefit or payment of such benefit to such a member, if a
member attempts to assign or transfer or otherwise cede or to pledge or
hypothecate such benefit. CHAPTER
7
FINANCIAL MATTERS (ss
35-38) 35 Financial arrangements (1) A medical scheme shall at all times maintain its business in a
financially sound condition by- (a) having assets as contemplated in subsection (3); (b) providing for its liabilities; and (c) generally conducting its business so as to be in a position to
meet its liabilities at all times. (2) A medical scheme shall be deemed to have failed to comply with the
provisions of subsection (1) if it does not comply with subsection (3), (4),
(5), (6) or (7). (3) A medical scheme shall have assets, the aggregate value of which,
on any day, is not less than the aggregate of- (a) the aggregate value on that day of its liabilities; and (b) the nett assets as may be prescribed. (4) A medical scheme shall not be deemed to hold an asset for the
purposes of this Act to the extent to which such asset is encumbered. (5) A medical scheme shall have such assets in the Republic in the
particular kinds or categories as may be prescribed. (6) A medical scheme shall not- (a) encumber its assets; (b) allow its assets to be held by another person on its behalf; (c) directly or indirectly borrow money; or (d) by means of suretyship or any other form of personal security,
whether under a primary or accessory obligation, give security in relation to
obligations between other persons, without
the prior approval of the Council or subject to such directives as the
Council may issue. [Sub-s. (6) amended by
s. 12 (a) of Act 55 of 2001.] (7) Subject to the provisions of this section a medical scheme may
invest its funds in any manner provided for by its rules. (8) A medical scheme shall not invest any of its assets in the
business of or grant loans to- (a) an employer who participates in the medical scheme or any
administrator or any arrangement associated with the medical scheme; (b) any other medical scheme; (c) any administrator; and (d) any person associated with any of the abovementioned. (9) For the purposes of this Act, the liabilities of a medical scheme
shall include- (a) the amount which the medical scheme estimates will be payable in
respect of claims which have been submitted and assessed but not yet paid; (b) the amount which the medical scheme estimates will become payable
in respect of claims which have been incurred but not yet submitted; and (c) the amount standing to the credit of a member’s personal savings
account. (10) A medical scheme which
fails to comply with subsection (1) shall, within 30 days after becoming
aware of it, notify the Registrar of such failure and state the reasons for
it. (11) The Registrar may, if
a medical scheme gives notice to the Registrar in terms of subsection (10),
or if the Registrar is satisfied that a medical scheme is failing, or is
likely to fail within a reasonable period, to comply with subsection (1),
(2), (3), (4), (5), (6) or (7) direct that the medical scheme by notice,
submit to him or her, within a specified period- (a) specified information relating to the nature and causes of the
failure; and (b) its proposals as to the course of action that it should adopt to
ensure compliance therewith. (12) The Registrar may,
when he or she has received the information referred to in subsection (11),
and in concurrence with the Council- (a) authorise the medical scheme concerned, by notice, to adopt a
course of action, approved by him or her after having considered those
proposals and which he or she is satisfied will reasonably ensure that the
medical scheme complies with subsection (1), (2), (3), (4), (5), (6) or (7)
within a specified time and he or she may at the same time, or at any time
thereafter, by notice authorise the modification of that course of action to
the extent he or she deems appropriate in the circumstances; or (b) if he or she is satisfied that it is necessary to do so in the
interest of the beneficiaries of the medical scheme, at the same time, or at
any time thereafter, and notwithstanding any steps already taken by him or
her under paragraph (a), act in terms of any other provision of this Act. [Para. (b) substituted
by s. 12 (b) of Act 55 of 2001.] (13) If a medical scheme
fails to comply with any provision of this section, every officer of the
medical scheme who is a party to the failure, shall be guilty of an offence. 36 Auditor and audit committee (1) A medical scheme shall appoint at least one auditor. (2) The appointment of an auditor shall not take effect unless it has
been approved by the Registrar, subject to such conditions as he or she may
deem fit. [Sub-s. (2)
substituted by s. 13 (a) of Act 55 of 2001.] (3) A medical scheme shall not appoint as its auditor- (a) a person who is a member of its board of trustees; (b) a person who is otherwise engaged as an employee, officer or
contractor of the medical scheme; [Para. (b) inserted
by s. 13 (b) of Act 55 of 2001.] (c) a person who is an employee, director, officer or contractor of
the medical scheme’s administrator, or of the holding company, subsidiary,
joint venture or associate of its administrator; [Para. (c) inserted
by s. 13 (b) of Act 55 of 2001.] (d) a person who is not engaged in public practice as an auditor; or [Para. (d), previously
para. (b), renumbered by s. 13 (b) of Act 55 of 2001.] (e) a person who is disqualified from acting as an auditor in terms of
section 275 of the Companies Act, 1973 (Act 61 of 1973). [Para. (e),
previously para. (c), renumbered by s. 13 (b) of Act 55 of 2001.] (4) The approval of an auditor of a medical scheme by the Registrar
shall not lapse if an auditor of a medical scheme is a firm as contemplated
in the Public Accountants’ and Auditors’ Act, 1991, (Act 80 of 1991), whose
membership of the firm has changed, if not fewer than half of the members
after the change, were members when the appointment of the firm was last
approved by the Registrar. (5) Notwithstanding anything to the contrary contained in any other
law, the auditor of a medical scheme shall- (a) whenever he or she furnishes a report or other document of
particulars as contemplated in section 20 (5) (b) of the Public Accountants’
and Auditors’ Act, 1991, also furnish a copy thereof to the Registrar; (b) inform the Registrar in writing of any matter relating to the
affairs of the medical scheme of which he or she became aware in the
performance of his or her functions as auditor and which, in the opinion of
the auditor, may prejudice the medical scheme’s ability to comply with this
Chapter; (c) if his or her appointment is terminated for any reason- (i) submit to the Registrar a statement of what he or she believes
to be the reasons for that termination; and (ii) if he or she would, but for that termination, have had reason to
submit to the medical scheme a report as contemplated in section 20 (5) (a)
of the Public Accountants’ and Auditors’ Act, 1991, submit such a report to
the Registrar; and (d) if requested by the Registrar to do so, furnish him or her with
written information relating to any matter referred to in this Chapter. (6) An auditor who in terms of this section furnishes a report in good
faith shall not contravene a provision of a law or breach a provision of a
code of professional conduct, to which he or she is subject. [Sub-s. (6)
substituted by s. 13 (c) of Act 55 of 2001.] (7) An auditor’s failure, in good faith, to furnish a report or
information in terms of this section shall not confer upon any person a right
of action against the auditor which, but for that failure, that person would
not have had. (8) The auditor shall, in addition to the duties imposed upon the
auditor of a medical scheme by any other Act- (a) in respect of a return or statement which he or she is required to
examine in terms of this Chapter, certify whether that return or statement
complies with the requirements of this Act and whether the return or
statement, including any annexure thereto, presents fairly the matters dealt
with therein as if such return or statement were a financial statement
contemplated in section 20 of the Public Accountants’ and Auditors’ Act,
1991; and (b) carry out the other duties provided for in this Act. (9) The Registrar may, notwithstanding the provisions of any other
Act, appoint an auditor for a medical scheme if that medical scheme for any
reason fails to appoint an auditor, and such an auditor shall be deemed to
have been appointed by the medical scheme. (10) The board of trustees
of a medical scheme shall, subject to the provisions of subsection (13), appoint
an audit committee of at least five members of which at least two shall be
members of that board of trustees. (11) The majority of the
members, including the chairperson of the audit committee, shall be persons
who are not officers of the medical scheme or the administrator of the
medical scheme, the controlling company of the administrator or any
subsidiary of its controlling company. (12) The objects of the
audit committee shall, inter alia, be to- (a) assist the board of trustees in its evaluation of the adequacy and
efficiency of the internal control systems, accounting practices, information
systems and auditing processes applied by that medical scheme or its
administrator in the day-to-day management of its business; (b) facilitate and promote communication and liaison regarding the
matters referred to in paragraph (a) or a related matter, between the board
of trustees, principal officer, administrator and, where applicable, the
internal audit staff of the medical scheme; (c) recommend the introduction of measures which the committee
believes may enhance the credibility and objectivity of financial statements
and reports concerning the affairs of the medical scheme; and (d) advise on any matter referred to the committee by the board of
trustees. (13) The Council may, if it
is satisfied that the appointment of an audit committee, in a particular
case, is inappropriate or impractical or would serve no useful purpose,
subject to the conditions it deems fit to impose, exempt the medical scheme
concerned from the requirements of subsection (10). 37 Annual financial statements (1) The board of trustees shall in respect of every financial year
cause to be prepared annual financial statements and shall within four months
after the end of a financial year furnish copies of the statements concerned
together with the report of the board of trustees to the Registrar. (2) The annual financial statements referred to in subsection (1)
shall be furnished to the Registrar in the medium and form determined by the
Registrar and shall inter alia consist of- (a) a balance sheet dealing with the state of affairs of the medical
scheme; (b) an income statement; (c) a cash-flow statement; (d) a report by the auditor of the medical scheme; and (e) such other returns as the Registrar may require. (3) The annual financial statements of a medical scheme shall, subject
to the provisions of the Public Accountants’ and Auditors’ Act, 1991, be
audited by an accountant and auditor registered in terms of that Act except
where such accounts are to be audited by the Auditor-General in terms of any
law. (4) The annual financial statements shall- (a) be prepared in accordance with general accepted accounting
practice; (b) fairly present the state of affairs and the business of the medical
scheme and the results thereof at the end of the financial year concerned and
the surplus or deficiency of the medical scheme for that financial year; (c) by means of figures and a descriptive report, set out and explain
any matter or information material to the affairs of the medical scheme; and (d) be accompanied by the management accounts in respect of every
benefit option offered by the medical scheme indicating the financial
performance thereof and the number of members enrolled per option. (5) The board of trustees’ report referred to in subsection (1) shall- (a) deal with every matter which is material for the appreciation by
members of the medical scheme of the state of affairs and the business of the
medical scheme and the results thereof; and (b) contain relevant information indicating whether or not the
resources of the medical scheme have been applied economically, efficiently
and effectively. (6) Notwithstanding anything to the contrary in this section, and
without derogating from other powers conferred on the Registrar in terms of
this Act, the Registrar may, on a quarterly basis, require the board of
trustees to prepare and furnish to him or her financial statements, in any
specified medium or form. [Sub-s. (6) added by s.
14 of Act 55 of 2001.] 38 Registrar may reject returns The Registrar, if he
or she is of the opinion that any document furnished in terms of section 37
does not comply with any of the provisions of this Act or does not correctly
reflect the revenue and expenditure or financial position, as the case may
be, of that medical scheme, may reject the document in question, and in that
event- (a) he or she shall notify the medical scheme concerned of the reasons
for such rejection; and (b) the medical scheme shall be deemed not to have furnished the said
document to the Registrar. CHAPTER
8
DOCUMENTS (ss 39-41) 39 Requirements in regard to documents to be deposited with
Registrar (1) A medical scheme shall be deemed not to have complied with any
provision of this Act which imposes upon such a medical scheme the obligation
to furnish to the Registrar a document prepared by the medical scheme, unless
such document is signed by the principal officer and one other person
authorised in accordance with the rules of the medical scheme to sign
documents. (2) The following persons, other than an auditor or valuator, shall
sign any document which in terms of any provision of this Act must be
furnished by a medical scheme to the Registrar: (a) In the case of a board of trustees, the chairperson of the board
of trustees, and by one other member of such board; and (b) in any other case, persons designated by the Registrar who
exercise control over the business of the medical scheme concerned. (3) A medical scheme shall be deemed not to have complied with the
provisions of section 38 unless any income statement, cashflow statement,
balance sheet or return required to be submitted, is certified by the auditor
of the medical scheme. (4) Any person who is required in terms of this Act to furnish to the
Registrar- (a) any original document; or (b) a copy of any document, shall
furnish one copy thereof certified as correct- (i) in the case of a medical scheme, by its principal officer; and (ii) in any other case, by the person by whom such copy is required to
be furnished, together
with so many additional copies as the Registrar may require. 40 Effect of Registrar’s certificate on documents Every document which
purports to have been duly certified by the Registrar to be a document
deposited at his or her office under this Act, or to be a copy of such a
document, shall prima facie be deemed to be such a document, or a copy
thereof, and every such copy shall be admissible as evidence in a court of
law as if it were the original document. 41 Right to obtain copies of, or to inspect certain documents (1) A medical scheme shall deliver to a beneficiary on demand by such
beneficiary, and on payment of such fee as may be determined by the rules of
the medical scheme, a copy of any of the following documents: (a) The rules of the medical scheme. (b) The latest annual financial statements prepared under section 37
(1). (c) Any other document referred to in section 37 (2) and (4) (d). [Sub-s. (1) amended by
s. 15 (a) of Act 55 of 2001.] (2) A beneficiary shall be entitled to inspect, without charge, at the
registered office of a medical scheme of which he or she is a member, the
documents referred to in subsection (1) and to make extracts therefrom. [Sub-s. (2)
substituted by s. 15 (b) of Act 55 of 2001.] (3) Any person may, upon payment of the prescribed fee, inspect at the
office of the Registrar any document referred to in subsection (1) and may
make an extract thereof or obtain from the Registrar a copy thereof or
extract therefrom. (4) The Registrar may exempt any person from the obligation to pay
fees under this section if the Registrar is satisfied that the inspection,
copy or extract in question is desired for the purpose of furthering the
public interest. CHAPTER
9
POWERS OF REGISTRAR (ss
42-46) 42 Registrar may require additional particulars (1) The Registrar may, if he or she is of the opinion that- (a) an application for registration of a medical scheme; (b) any amendment to the rules of a medical scheme; or (c) any statement, account, return or document relating to the
financial condition of a medical scheme, does
not disclose sufficient information to enable a decision to be made, request
the principal officer of that medical scheme to furnish such additional
particulars as the Registrar may deem necessary. (2) If the Registrar is of the opinion that a certificate or special
report by an actuary or by the auditor of a medical scheme is necessary in
regard to any matter set out in subsection (1), the principal officer of that
medical scheme shall on request furnish such certificate or report as the
Registrar may require. (3) The Registrar may require such information as to enable the
Council to make recommendations to the Minister on the matters referred to in
section 7 (c). 43 Enquiries by Registrar The Registrar may
address enquiries to a medical scheme in relation to any matter connected
with the business or transactions of the medical scheme, and the medical
scheme shall reply in writing thereto within a period of 30 days as from the
date on which the Registrar addressed the enquiry to it, or within such other
period as the Registrar may specify. [S. 43 substituted
by s. 16 of Act 55 of 2001.] 44 Inspections and reports (1) A medical scheme shall, at the written request of the Registrar,
or during an inspection of the affairs of a medical scheme, by the Registrar
or such other person authorised by him or her, produce at any place where it
carries on business, its books, documents and annual financial statements in
order to enable the Registrar or such other person authorised by him or her
to obtain any information relating to the medical scheme required in
connection with the administration of this Act. (2) The Registrar, or such other person authorised by him or her,
shall in addition to the powers and duties conferred or imposed upon him or
her by this Act, have all the powers and duties conferred or imposed upon an
inspector appointed under section 2 of the Inspection of Financial
Institutions Act, 1984 (Act 38 of 1984), as if he or she has been appointed
an inspector under that Act. (3) Any reference in this Act to an inspection made under this section
shall also be construed as a reference to an inspection made under the
Inspection of Financial Institutions Act, 1984. (4) The Registrar may order an inspection in terms of this section- (a) if he or she is of the opinion that such an inspection will
provide evidence of any irregularity or of non-compliance with this Act by
any person; or (b) for purposes of routine monitoring of compliance with this Act by
a medical scheme or any other person. [Sub-s. (4) inserted by
s. 17 of Act 55 of 2001.] (5) The Registrar may, at any time by notice in writing, direct a
medical scheme to furnish to him or her within a period specified in that
notice, or within such further period as the Registrar may allow- (a) a statement of its assets and liabilities, including contingent
liabilities; and (b) any other document or information specified in the notice,
relating to the financial or other affairs of the medical scheme over a
period likewise specified. [Sub-s. (5), previously
sub-s. (4), renumbered by s. 17 of Act 55 of 2001.] (6) The Registrar may direct that any statement furnished to him or
her under subsection (4), or any document so furnished and which relates to
the financial affairs of that medical scheme, shall be accompanied by a
report thereon by the auditor of the medical scheme, and in which the auditor
shall state- (a) in what manner and to what extent he or she has satisfied himself
or herself as to the amount of the liabilities and contingent liabilities
shown in the statement; (b) in what manner and to what extent he or she has satisfied himself
or herself as to the existence of the assets shown in the statement; (c) to what extent he or she has satisfied himself or herself that
the particulars of such assets which are shown in the statement are correct; (d) whether or not, in his or her opinion, the basis of valuation of
each of the various kinds of assets adopted by the medical scheme is
financially sound; (e) whether or not, in his or her opinion, the medical scheme is in a
sound financial condition; (f) if he or she is of the opinion that the medical scheme is not in
a sound financial condition- (i) in what respects the condition of the medical scheme is in his
or her opinion unsound; and (ii) what the causes or probable causes are of such unsound condition; (g) such other particulars as he or she deems relevant for the
purposes of this Act; and (h) such other particulars as the Registrar may deem necessary. [Sub-s. (6), previously
sub-s. (5), renumbered by s. 17 of Act 55 of 2001.] (7) The Registrar may, if he or she, on account of any statement,
document or information furnished to him or her by virtue of subsection (4),
deems it necessary in the interest of the members of the medical scheme
concerned, and, after consultation with the Financial Services Board
established by section 2 of the Financial Services Board Act, 1990 (Act 97 of
1990), by notice in writing direct the medical scheme to furnish to him or
her a report compiled by an actuary, in the form and relating to the matters
specified by the Registrar in the notice. [Sub-s. (7),
previously sub-s. (6), renumbered by s. 17 of Act 55 of 2001.] (8) The Registrar may, on the authority and in accordance with the
instructions and directions of the Council, from time to time place any
restriction on the administration costs of a medical scheme in respect of any
financial year, and may for this purpose prescribe the basis on which such
costs shall be calculated. [Sub-s. (8),
previously sub-s. (7), renumbered by s. 17 of Act 55 of 2001.] (9) The Registrar may, if he or she is, on account of an inspection or
investigation in terms of this Act or on account of any report, document,
statement or information furnished to him or her under this section, of the
opinion that a medical scheme is or may be rendered not financially sound- (a) by notice in writing direct the medical scheme to take such steps
as may be specified in the notice which are, in the opinion of the Registrar,
necessary- (i) to ensure the financial soundness of the medical scheme; or (ii) in the interests of the members of the medical scheme; (b) at any time demand from the medical scheme such financial
guarantees and guarantee deposits as will in the opinion of the Registrar
ensure the financial stability of the medical scheme; and (c) subject to the provisions of this Act, take such other steps as
may in his or her opinion be necessary to ensure the financial soundness of
the medical scheme. [Sub-s. (9), previously
sub-s. (8), renumbered by s. 17 of Act 55 of 2001.] (10) The
Registrar may, for the purposes of paragraph (a) of subsection (8), by notice
in writing direct the medical scheme concerned- (a) to amend, within a period specified in the notice, the rules of
the medical scheme in the manner indicated in the notice; or (b) to conduct, within a period or for a period specified in the
notice, the business of the medical scheme in a manner determined by the
Registrar and specified in the notice. [Sub-s. (10), previously
sub-s. (9), renumbered by s. 17 of Act 55 of 2001.] (11) The Registrar may, if
a medical scheme fails to amend its rules as directed by the Registrar under
subsection (9) (a) within the period specified in the notice concerned, amend
such rules, and such amendment shall be deemed to be an amendment within the
meaning of section 31. [Sub-s. (11),
previously sub-s. (10), renumbered by s. 17 of Act 55 of 2001.] 45 Persons not registered to furnish information (1) The Registrar may, by notice in writing, require any person who he
or she has reason to suspect is carrying on the business of a medical scheme
which is not registered, to transmit to him or her, within a period stated in
such notice, a copy of the rules, if any, under which such person is
operating and such other information as he or she may require. (2) The Registrar may, if the person referred to in subsection (1)
fails to comply with his or her requirements to his or her satisfaction,
require such person to produce at any place where that person carries on the
business in question, the records, documents, statements or accounts relating
to that business in order to enable the Registrar to ascertain whether that
business constitutes the business of a medical scheme. 46 Removal of member of board of trustees (1) The Council may, by notice in writing, remove from office a member
of the board of trustees of a medical scheme if it has sufficient reason to
believe that the person concerned is not a fit and proper person to hold the
office concerned. (2) The Council shall, before issuing the notice referred to in
subsection (1), furnish such person with full details of all the information
the Council has in its possession in regard to any allegations of the member
of the board of trustees not being a fit and proper person and to request
that person to furnish the Council with his or her comments thereon within 30
days or such further period as the Council may allow. (3) The Council may not issue the notice referred to in subsection (1)
until it has considered the comments, if any, referred to in subsection (2). CHAPTER
10
COMPLAINTS AND APPEALS
(ss 47-50) 47 Complaints (1) The Registrar shall, where a written complaint in relation to any
matter provided for in this Act has been lodged with the Council, furnish the
party complained against with full particulars of the complaint and request
such party to furnish the Registrar with his or her written comments thereon
within 30 days or such further period as the Registrar may allow. (2) The Registrar shall, as soon as possible after receipt of any
comments furnished to him or her as contemplated in subsection (1), either
resolve the matter or submit the complaint together with such comments, if
any, to the Council, and the Council shall thereupon take all such steps as
it may deem necessary to resolve the complaint. 48 Appeal to Council (1) Any person who is aggrieved by any decision relating to the
settlement of a complaint or dispute may appeal against such decision to the
Council. [Sub-s. (1)
substituted by s. 18 of Act 55 of 2001.] (2) The operation of any decision which is the subject of an appeal
under subsection (1) shall be suspended pending the decision of the Council
on such appeal. (3) An appeal contemplated in subsection (1) shall be in the form of
an affidavit directed to the Council and shall be furnished to the Registrar
not later than three months, or such further period as the Council may, for
good cause shown, allow, after the date on which the decision concerned was
made. (4) The date, time and place for the hearing of an appeal shall be
determined by the Council and shall, not less than 14 days before such
hearing, be made known in writing by the Registrar to the parties concerned. (5) The persons contemplated in subsection (1) may appear before the
Council and tender evidence or submit a written argument or explanation to
the Council in person or through a representative. (6) The Council may for the purposes of an appeal- (a) in writing request any person who, in its opinion, may be able to
give material information concerning the subject of the appeal or who in its
opinion has in his or her possession or custody or under his or her control
any document which has any bearing upon the subject of the appeal, to appear
before it at a time and place specified in the written request, to be
examined or to produce that document, and may retain for examination any
document so produced; (b) administer an oath to or accept an affirmation from any person
called as a witness at the appeal; and (c) call any person present at the hearing of the appeal as a witness
and examine him or her and require him or her to produce any document in his
or her possession or custody or under his or her control. (7) The procedure at the hearing of an appeal shall be determined by
the Council. (8) The Council may after hearing the appeal confirm or vary the
decision concerned, or rescind it and give such other decision as it may deem
just. (9) The decision of the Council shall be in writing and a copy thereof
shall be furnished to the persons contemplated in subsection (1). 49 Appeal against decision of Registrar (1) Any person who is aggrieved by any decision of the Registrar under
a power conferred or a duty imposed upon him or her by or under this Act,
excluding a decision that has been made with the concurrence of the Council,
may within 30 days after the date on which such decision was given, appeal
against such decision to the Council and the Council may make such order on
the appeal as it may deem just. (2) The operation of any decision which is the subject of an appeal
under subsection (1) shall be suspended pending the decision of the Council
on such appeal. (3) The Registrar or any other person who lodges an appeal in terms of
subsection (1) may in person or through a representative appear before the
Council and tender evidence or submit any argument or explanation to the
Council in support of the decision which is the subject of the appeal. 50 Appeal Board (1) There is hereby established an Appeal Board, consisting of three
persons appointed by the Minister, of whom- (a) one shall be a person appointed on account of his or her knowledge
of the law, who shall be the chairperson; and (b) two shall be persons appointed on account of their knowledge of
medical schemes. (2) The Registrar shall designate a staff member to act as secretary
of the Appeal Board. (3) Any person aggrieved by a decision of the Registrar acting with
the concurrence of the Council or by a decision of the Council under a power
conferred or a duty imposed upon it by or under this Act, may within a period
of 60 days after the date on which such decision was given and upon payment
to the Registrar of the prescribed fee, appeal against such decision to the
Appeal Board. (4) Any person who lodges an appeal under subsection (3) shall submit
with his or her appeal written arguments or explanations of the grounds of
his or her appeal. (5) A member of the Appeal Board shall, if before or during the hearing
of any appeal it transpires that he or she has any direct or indirect
personal interest in the outcome of that appeal, recuse himself or herself
and shall be replaced for the duration of the hearing by- (a) in the case of the member referred to in subsection (1) (a), a
person appointed by the Minister with due consideration of the provisions of
that subsection; and (b) in the case of a member referred to in subsection 1 (b), a member
appointed by the Minister under the provisions of that subsection. (6) A member of the Appeal Board shall hold office for a period of
three years and shall on the expiration of his or her term of office be
eligible for reappointment. (7) Subject to the provisions of subsection (1), any casual vacancy
that occurs on the Appeal Board shall be filled by the appointment by the
Minister of another person, and any person so appointed shall hold office for
the unexpired period of office of his or her predecessor. (8) An appeal shall be heard on the date and at the place and time
fixed by the Appeal Board and the secretary shall notify the appellant as
well as the Council thereof in writing. (9) For the purpose of ascertaining any matter relating to the subject
of its investigation, the Appeal Board shall have the powers which a High
Court has to summon witnesses, to cause an oath or affirmation to be
administered by them, to examine them, and to call for the production of
books, documents and objects. (10) A summons for the
attendance of a witness or for the production of any book, document or object
before the Appeal Board shall be signed and issued by the secretary in a form
prescribed by the chairperson and shall be served in the same manner as a
summons for the attendance of a witness at a criminal trial in a High Court
at the place where the attendance or production is to take place. (11) A witness shall, if
required to do so by the chairperson of the Appeal Board, before giving
evidence, take an oath or make an affirmation, which oath or affirmation
shall be administered by the chairperson. (12) Any person who has
been summoned to attend any sitting of the Appeal Board as a witness or who
has given evidence before the Appeal Board shall be entitled to the same
witness fees from public funds, as if he or she had been summoned to attend
or had given evidence at a criminal trial in a High Court held at the place
of such sitting, and in connection with the giving of any evidence or the
production of any book or document before the Appeal Board, the law relating
to privilege as applicable to a witness giving evidence or summoned to
produce a book or document in such a court, shall apply. (13) All the evidence and
addresses heard by the Appeal Board shall be heard in public: Provided that
the chairperson may, in his or her discretion, exclude from the place where
such evidence is to be given or such address is to be delivered any class of
persons or all persons whose presence at the hearing of such evidence or
address is, in his opinion, not necessary or desirable. (14) The procedure at the
hearing of an appeal shall be determined by the chairperson of the Appeal
Board. (15) The appellant as well
as the Registrar or the Council shall be entitled to be represented at an
appeal by a legal practitioner. (16) The Appeal Board may,
after hearing the appeal- (a) confirm, set aside or vary the relevant decision; or (b) order that the decision be given effect to. (17) The decision of a
majority of the members of the Appeal Board shall be the decision of the
Appeal Board. (18) The decision of the
Appeal Board shall be put in writing, and a copy thereof shall be furnished
to the appellant as well as to the Council. (19) If the Appeal Board
sets aside any decision by the Council, the prescribed fees paid by the
appellant in respect of the appeal in question shall be refunded to him or
her, and if the Appeal Board varies any such decision, it may in its
discretion direct that the whole or any part of such fee be refunded to the
appellant. (20) A member of the Appeal
Board who is not in the full-time employment of the State, shall in respect
of his or her services as such a member be paid such remuneration, including
reimbursement for transport, travelling and subsistence expenses incurred by
him or her in the performance of his or her functions as a member of the
Appeal Board, as may from time to time be determined by the Minister with the
concurrence of the Minister of Finance. (21) Any person who
wilfully interrupts the proceedings of the Appeal Board or who wilfully
hinders or obstructs the Appeal Board in the performance of its functions
shall be guilty of an offence. (22) Any person summoned to
attend and give evidence or to produce any book, document or object before
the Appeal Board who, without sufficient cause, the onus of proof whereof
shall rest upon him or her, fails to attend at the time and place specified
in the summons, or to remain in attendance until the conclusion of the appeal
or until he or she is excused by the chairperson of the Appeal Board from
further attendance, or having attended, refuses to be sworn or to make
affirmation as a witness after he or she has been required by the chairperson
of the Appeal Board to do so or, having been sworn or having made
affirmation, fails to answer fully and satisfactorily any question lawfully put
to him or her, or fails to produce any book, document or object in his or her
possession or custody or under his or her control, which he or she has been
summoned to produce, shall be guilty of an offence. (23) Any person who after
having been sworn or having made affirmation, gives false evidence before the
Appeal Board on any matter, knowing such evidence to be false or not knowing
or believing it to be true, shall be guilty of an offence. CHAPTER
11
JUDICIAL MATTERS (ss
51-56) 51 Application to High Court (1) The Registrar may, with the concurrence of the Council, in regard
to any medical scheme apply to the High Court for an order contemplated in
paragraph (b), (c), (d) or (e) of subsection (5) if the Registrar is of the
opinion that it is in the interest of beneficiaries or because material
irregularities have come to his or her notice. [Sub-s. (1)
substituted by s. 19 (a) of Act 55 of 2001.] (2) A medical scheme may, in regard to itself, apply to the High Court
for an order contemplated in paragraph (b), (d) or (e) of subsection (5), if
the medical scheme is of the opinion that it is desirable, because the
medical scheme is not in a sound financial condition or for any other reason
that such an order be made in regard to the medical scheme: Provided that a
medical scheme shall not make such an application except by leave of the High
Court and the court of appeal shall not grant such leave unless the medical
scheme has given security to an amount specified in the Rules of the High
Court for the payment of such costs. (3) Any member or one or more creditors of a medical scheme may make
an application to the High Court for an order in terms of paragraph (b), (d)
or (e) of subsection (5), and the proviso to subsection (2) shall apply in
regard to such an application. (4) If an application to the High Court in terms of subsection (3) is
made by a person other than the Registrar- (a) it shall not be heard unless a copy of the notice of motion and of
all accompanying affidavits and other documents filed in support of the
application are also lodged with the Registrar at least 15 days, or such
shorter period as the High Court may allow on good cause shown, before the
application is set down for hearing; and (b) the Registrar may, if he or she is of the opinion that the
application is contrary to the interest of the beneficiaries of the medical
scheme concerned, make application to join the application as a party and
file affidavits and other documents in opposition to the application. [Para. (b) substituted by
s. 19 (b) of Act 55 of 2001.] (5) Upon any application in terms of the preceding subsections, the
High Court may- (a) refuse the application; (b) order that an investigation be made and may issue such directions
regarding such investigation as the High Court may deem desirable; (c) order that the rules of the medical scheme relating to the
appointment, powers, remuneration and removal from office of any officer, or
relating to such other matter as the High Court may regard appropriate, be
altered in a manner to be specified in such order; (d) order that the medical scheme be placed under judicial management
in terms of section 52; or (e) order that the whole or any part of the business of the medical
scheme be wound-up in terms of section 53. (6) The High Court shall, in exercising its discretion under
subsection (5), consider the equitable interests of the members and of any
other person who has rendered or who intends to render financial assistance
to the medical scheme, and, subject to such considerations as aforesaid,
shall make such order as it deems most advantageous to the members. (7) When a High Court has made an order under paragraph (b) of
subsection (5) in regard to a medical scheme, it may at any time thereafter
make an order under paragraph (c), (d) or (e) of that subsection in regard to
that medical scheme, and when a High Court has made an order under paragraph
(d) of subsection (5) in regard to the medical scheme, it may at any time
thereafter make an order under paragraph (e) of that subsection in regard to
that medical scheme. (8) Notwithstanding anything to the contrary contained in the rules of
a medical scheme, an order of the High Court made under paragraph (c) of
subsection (5) shall take effect as from the date specified for that purpose
in the order, or if no date has been so specified, as from the date of the
order, and thereupon the said rules shall be deemed to have been amended in
the manner specified by the High Court. (9) Unless the High Court otherwise orders, the costs of the Registrar
in or in connection with an application in terms of this section, shall be
paid by the medical scheme and shall be a first charge upon the assets of
such medical scheme. 52 Judicial management (1) Chapter XV of the Companies Act, 1973 (Act 61 of 1973), shall,
subject to the provisions of this section and with the necessary changes,
apply in relation to the judicial management of a medical scheme, and in such
application the Registrar shall be deemed to be a person authorised by
section 346 of the Companies Act, 1973, to make an application to the High
Court for the winding-up of the medical scheme. (2) The Registrar may, with the concurrence of the Council, make an
application under section 427 (2) of the Companies Act, 1973, for a judicial management
order in respect of a medical scheme if he or she is satisfied that it is in
the interests of the members of that medical scheme to do so. (3) In the application of Chapter XV of the Companies Act, 1973, as
provided for by subsection (1)- (a) a reference which relates to the inability of a medical scheme to
pay its debts or to meet its obligations shall be construed as relating also
to its inability to comply with the requirements prescribed by section 35 (1)
of this Act; (b) in addition to any question which relates to the nature of a
medical scheme as a successful concern, there shall be considered also the
question whether any course of action is in the interest of its members; (c) a reference to the members of a company in sections 432 (2) and
433 (d) shall be construed as a reference also to the members of a medical
scheme; (d) a reference in sections 432 (2) (e) and 433 (d) to the Registrar
of Companies shall be construed as a reference also to the Registrar; (e) a reference in sections 428 (3), 432 (4) and 433 (j) to the Master
shall be construed as a reference also to the Registrar; and (f) a reference in section 433 (j) to a contravention of any
provision of that Act shall be construed as a reference also to a
contravention of any provision of this Act; and (g) a reference to a director shall be construed as referring also to
a member of the board of trustees. (4) If an application to the High Court for the judicial management of
a medical scheme is made by a person other than the Registrar- (a) it shall not be heard unless copies of the notice of motion and of
all accompanying affidavits and other documents filed in support of the
application are lodged with the Registrar at least 15 days, or such shorter
period as the High Court may allow on good cause shown, before the
application is set down for hearing; and (b) the Registrar may, if he or she is satisfied that the application
is contrary to the interests of the beneficiaries of the medical scheme
concerned make application to the High Court to join the application as a
party and file affidavits and other documents in opposition to the
application. [Para. (b) substituted
by s. 20 of Act 55 of 2001.] (5) As from the date on which a provisional or final judicial
management order is granted in respect of a medical scheme- (a) any reference in this Act to a medical scheme shall, unless
clearly inappropriate, be construed as a reference to the provisional or
final judicial manager, as the case may be; and (b) the provisional or final judicial manager of a medical scheme
shall not admit members unless he or she has been granted permission to do so
by the High Court in the provisional or final judicial management order or
any variation thereof. 53 Winding-up (1) Chapter XIV of the Companies Act, 1973 (Act 61 of 1973), shall,
subject to the provisions of this section and with the necessary changes,
apply in relation to the winding-up of a medical scheme and in such
application the Registrar shall be deemed to be a person authorised by section
346 of the Companies Act, 1973, to make an application to the High Court for
the winding-up of the medical scheme. (2) The Registar may, with the concurrence of the Council and with the
approval of the High Court, make an application under section 346 of the
Companies Act, 1973, for the winding-up of a medical scheme if he or she is
satisfied that it is in the interest of the beneficiaries of that medical
scheme to do so. [Sub-s. (2)
substituted by s. 21 (a) of Act 55 of 2001.] (3) In the application of Chapter XIV of the Companies Act, 1973, as
provided for by subsection (1)- (a) a reference which relates to the inability of a medical scheme to
pay its debts shall be construed as relating also to its inability to comply
with the requirements prescribed by section 35 (1) of this Act; (b) in addition to any question whether it is just and equitable that
a medical scheme should be wound up, there shall be considered also the
question whether it is in the interests of the beneficiaries of that medical
scheme that it should be wound up; [Para. (b)
substituted by s. 21 (b) of Act 55 of 2001.] (c) notwithstanding any other provision of
that Chapter, there shall be considered whether a person is acting in
contravention of section 20 of this Act; (d) a reference in sections 392, 394 (5)
and 400 to the Master shall be construed as a reference also to the
Registrar; (e) a reference to the Registrar of
Companies in sections 375 (5) (a) and 419 (1) shall be construed as a
reference also to the Registrar; (f) a reference in section 400 to a
contravention of any provision of that Act shall be construed as a reference
also to a contravention of any provision of this Act; (g) section 346 (3) of the Companies Act,
1973, shall not apply where the Registrar makes the application to the High
Court; and (h) a reference to a company shall be
construed as referring also to a medical scheme, and a reference to a
director shall be construed as referring also to a member of a board of
trustees. (4) If an application to the High Court for or in respect of the
winding-up of a medical scheme is made by any person other than the
Registrar- (a) it shall not be heard unless copies of the notice of motion and of
all accompanying affidavits and other documents filed in support of the
application are lodged with the Registrar at least 15 days, or such shorter
period as the High Court may allow on good cause shown, before the
application is set down for hearing; and (b) the Registrar may, if satisfied that the application is contrary
to the interests of the members of the medical scheme concerned, make
application to the High Court to join the application as a party and file
affidavits and other documents in opposition to the application. 54 Compromise (1) Where any compromise or arrangement is proposed between a medical
scheme and its creditors or any class of them, or between a medical scheme
and its members or any group of them, the High Court may, on the application
of the medical scheme or any creditor or member thereof or, in the case of a
medical scheme being wound up, of the liquidator, or if the medical scheme is
subject to a judicial management order, of the judicial manager, or if the
medical scheme is subject to a curatorship order, of the curator, order a
meeting of the creditors or class of creditors, or of the members of the
medical scheme or a group of members, as the case may be, to be summoned in
such manner as the High Court may direct. (2) If the compromise or arrangement is agreed to by- (a) a majority in number representing 75 per cent in value of the
creditors or class of creditors; or (b) a majority representing 75 per cent of the votes exercisable by
the members or group of members, as the case may be, present and voting
either in person or by proxy at the meeting, such
compromise or arrangement shall, if sanctioned by the High Court, be binding
on all the creditors or the class of creditors, or on the members or group of
members, as the case may be, and also on the medical scheme, liquidator,
judicial manager or curator, as the case may be. (3) No such compromise or arrangement shall affect the liability of
any person who is a surety for the medical scheme. (4) If the compromise or arrangement provides for the discharge of a
winding-up order, a judicial management order or curatorship order or for the
dissolution of the medical scheme without winding-up, the liquidator or
judicial manager or curator of the medical scheme, as the case may be, shall
lodge with the Master and the Registrar a report as to whether or not any individual,
organisation, person or persons or officer of the medical scheme is or
appears to be personally liable for damages or compensation to the medical
scheme or for any debts or liabilities of the medical scheme under any
provision of this Act, and the Master and the Registrar shall report thereon
to the High Court. (5) The High Court, in determining whether the compromise or
arrangement should be sanctioned or not, shall have regard to the number of
members present or represented at the meeting referred to in subsection (2)
and voting in favour of the compromise or arrangement, and to the report of
the Master and the Registrar referred to in subsection (4). 55 Information as to compromise (1) Where a meeting of creditors or members is summoned under section
54 for the purpose of agreeing to a compromise or arrangement, there shall- (a) with every notice summoning the meeting which is sent to a
creditor or member, be sent also a statement explaining the effect of the
compromise or arrangement and stating all relevant information material to
the proposed transaction; and (b) in every notice summoning the meeting which is given by
advertisement, be included either such a statement as referred to in
paragraph (a) or a notification of the place at which and the manner in which
creditors or members entitled to attend the meeting may obtain copies of such
a statement. (2) Where a notice given by advertisement includes a notification that
copies of the statement referred to in subsection (1) (a) may be obtained by
creditors or members entitled to attend the meeting, every such creditor or
member shall, on making application in the manner indicated by the notice, be
furnished by the medical scheme free of charge with a copy of such statement. (3) Where a medical scheme is in default of complying with any
requirement of this section, such medical scheme and every officer who is a
party to the default, shall be guilty of an offence, and for the purpose of
this subsection any liquidator, judicial manager or curator of the medical
scheme shall be deemed to be an officer. (4) A person shall not be liable under subsection (3) if he or she
shows that the default was due to the refusal of any other person to supply
the necessary particulars as to his or her interests and that fact has been
stated in the statement referred to in subsection (1) (a). 56 Appointment of curator (1) The Registrar may, notwithstanding the provisions of section 52
and 53, if he or she is of the opinion that it is in the interest of
beneficiaries or that it is desirable to do so, because material
irregularities have come to his or her notice, or because a medical scheme is
not in sound financial condition or as a result of an inspection of the
affairs of a medical scheme, apply, with the concurrence of the Council, to
the High Court, for the appointment of a curator to take control of and to
manage the business of that medical scheme. [Sub-s. (1)
substituted by s. 22 of Act 55 of 2001.] (2) The provisions of the Financial Institutions (Investment of Funds)
Act, 1984 (Act 39 of 1984), insofar as those provisions relate to the
appointment of a curator in terms of the said Act, and insofar as they are
not inconsistent with the provisions of this Act, shall apply with the
necessary changes to the appointment of a curator of a medical scheme in
terms of this section. (3) In the application of the Financial Institutions (Investment of
Funds) Act, 1984 as provided for by subsection (1)- (a) a reference to a company and the registrar in section 1 of the
Financial Institutions (Investment of Funds) Act, 1984, shall be construed as
a reference also to a board of trustees and the Registrar, respectively; (b) a reference in that Act to a director, official, employee or agent
shall be construed as a reference also to a member of the board of trustees
or the principal officer, as the case may be; and (c) a reference in that Act to a financial institution shall be
construed as a reference also to a medical scheme. CHAPTER
12
GENERAL (ss 57-69) 57 General provisions on governance (1) Every medical scheme shall have a board of trustees consisting of
persons who are fit and proper to manage the business contemplated by the
medical scheme in accordance with the applicable laws and the rules of such
medical scheme. (2) At least 50 per cent of the members of the board of trustees shall
be elected from amongst members. (3) A person shall not be a member of the board of trustees of a
medical scheme, if that person is- (a) an employee, director, officer, consultant or contractor of the
administrator of the medical scheme concerned, or of the holding company,
subsidiary, joint venture or associate of that administrator; or (b) a broker. [Sub-s. (3) substituted
by s. 23 (a) of Act 55 of 2001.] (4) The duties of the board of trustees shall be to- (a) appoint a principal officer who is a fit and proper person to hold
such office and shall within 30 days of such appointment give notice thereof
in writing to the Registrar; (b) ensure that proper registers, books and records of all operations
of the medical scheme are kept, and that proper minutes are kept of all
resolutions passed by the board of trustees; (c) ensure that proper control systems are employed by or on behalf
of the medical scheme; (d) ensure that adequate and appropriate information is communicated
to the members regarding their rights, benefits, contributions and duties in
terms of the rules of the medical scheme; (e) take all reasonable steps to ensure that contributions are paid
timeously to the medical scheme in accordance with this Act and its rules; (f) take out and maintain an appropriate level of professional
indemnity insurance and fidelity guarantee insurance; [Para. (f) substituted by s. 23 (b) of Act 55 of 2001.] (g)obtain
expert advice on legal, accounting and business matters as required, or on
any other matter of which the members of the board of trustees may lack
sufficient expertise; (h) ensure that the rules, operation and
administration of the medical scheme comply with the provisions of this Act
and all other applicable laws; and (i) take all reasonable steps to protect the
confidentiality of medical records concerning any member’s state of health. (5) Any notice required or permitted to be given to a medical scheme
in terms of this Act shall, if given to the principal officer, be deemed to
have been duly given to the medical scheme. (6) The board of trustees shall- (a) take all reasonable steps to ensure that the interests of
beneficiaries in terms of the rules of the medical scheme and the provisions
of this Act are protected at all times; [Para. (a)
substituted by s. 23 (c) of Act 55 of 2001.] (b) act with due care, diligence, skill and
good faith; (c) take all reasonable steps to avoid
conflicts of interest; and (d) act with impartiality in respect of all
beneficiaries; [Para. (d) substituted
by s. 23 (d) of Act 55 of 2001.] (7) A person shall not be a principal officer of a medical scheme if
that person is- (a) an employee, director, officer, consultant or contractor of the
administrator of the medical scheme concerned, or of the holding company,
subsidiary, joint venture or associate of that administrator; or (b) a broker. [Sub-s. (7) added by s.
23 (e) of Act 55 of 2001.] (8) The members of the Board of trustees shall disclose annually in
writing to the Registrar any payment or considerations made to them in that
particular year by the medical scheme. [Sub-s. (8) added by s.
23 (e) of Act 55 of 2001.] 58 Administration by intermediary (1) No person shall administer a medical scheme as an intermediary
unless the Council has, in a particular case or in general, granted
accreditation to such a person. (2) An application to administer a medical scheme shall be made to the
Council in the manner and be accompanied by such information, as may be
prescribed, and any other information as the Council may require. (3) The Council may- (a) approve the application; (b) limit such approval to the performance of specified functions; and (c) review the approval from time to time. (4) Application for approval in terms of subsection (2) shall be
accompanied by the fees prescribed. 59 Charges by suppliers of service (1) A supplier of a service who has rendered any service to a
beneficiary in terms of which an account has been rendered, shall, notwithstanding
the provisions of any other law, furnish to the member concerned an account
or statement reflecting such particulars as may be prescribed. [Sub-s. (1)
substituted by s. 24 of Act 55 of 2001.] (2) A medical scheme shall, in the case where an account has been
rendered, subject to the provisions of this Act and the rules of the medical
scheme concerned, pay to a member or a supplier of service, any benefit owing
to that member or supplier of service within 30 days after the day on which
the claim in respect of such benefit was received by the medical scheme. (3) Notwithstanding anything to the contrary contained in any other
law a medical scheme may, in the case of- (a) any amount which has been paid bone fide in accordance with the
provisions of this Act to which a member or a supplier of health service is
not entitled to; or (b) any loss which has been sustained by the medical scheme through
theft, fraud, negligence or any misconduct which comes to the notice of the
medical scheme, deduct
such amount from any benefit payable to such a member or supplier of health
service. 60 Preservation of secrecy (1) A member of the Council or of its staff shall not disclose any
information relating to the affairs of the Council where the Council meets in
committee or in those instances where the chairperson so determines, except
for the purposes of the performance of his of her duties or the exercise of
his or her powers in terms of this Act or any other law or when required to
do so under any law before a court of law. (2) No person shall, except in the performance of his or her functions
or duties under this Act or when called upon to do so as a witness before a
court of law, disclose any information relating to the affairs of any medical
scheme and furnished to or obtained by him or her in connection with any
enquiry or investigation under this Act. 61 Undesirable business practices (1) Notwithstanding the provisions of any other law, the Registrar
may, with the concurrence of the Council and the Minister, by notice in the
Gazette, declare a particular business practice as undesirable for- (a) all or a particular category of medical schemes; or (b) all or a particular category of persons who render contractual,
administrative or intermediary services. (2) The Registrar shall not publish the declaration referred to in
subsection (1) unless he or she has, at least 60 days before that declaration
is given, by notice in the Gazette published his or her intention to make the
declaration and invited interested persons thereby to make written
representations regarding the proposed declaration so as to reach him or her
within 21 days after the date of publication of that notice. (3) The Registrar may, if he or she is satisfied that a medical scheme
or any other person is carrying on a business practice which, in his or her
opinion, may become the subject of a declaration under subsection (1), in
writing, direct that medical scheme or person to suspend that particular
business practice for such a period, not exceeding three months, as he or she
deems necessary to enable the matter to be dealt with in terms of subsection
(1). (4) No medical scheme or other person shall, on or after the date of a
notice referred to in subsection (1), or of a directive referred to in
subsection (3), carry on the business practice referred to in the directive
referred to in subsection (3). (5) The Registrar may, in writing, direct a medical scheme or other
person who has, on or after the date of a notice referred to in subsection
(1), or a directive referred to in subsection (3), carried on the business
practice concerned, to rectify, to his or her satisfaction, anything which he
or she is satisfied was caused by or arose out of that carrying on of the
business practice concerned. (6) A medical scheme or other person who is under subsection (5)
directed to rectify anything, shall do so within 60 days after it has so been
directed. 62 Limitation of liability The Minister, the
Council, a member of the Council or of the Appeal Board, the Registrar,
Deputy Registrar or other staff member of the Council shall not be liable in
respect of any bona fide exercise of a discretion in the performance of any
function under this Act. 63 Amalgamation and transfer (1) No transaction involving the amalgamation of the business of a
medical scheme with any business of any other person (irrespective of whether
that other person is or is not a medical scheme) or the transfer of any
business from a medical scheme to any other medical scheme or the transfer of
any business from any other person to a medical scheme, shall be of any
force, unless such amalgamation or transfer is carried out in accordance with
the provisions of this section. [Sub-s. (1)
substituted by s. 25 (a) of Act 55 of 2001.] (2) The medical scheme contemplated in subsection (1) shall deposit
with the Registrar a copy of the exposition of the proposed transaction,
including a copy of every actuarial or other statement taken into account for
the purpose of the proposed transaction, and shall furnish the Registrar with
particulars of the voting at any meeting of its members at which the proposed
transaction was considered and with such additional information as the
Registrar may require. (3) The Registrar may require a medical scheme to comply with any of
the following provisions regarding the proposed transaction: (a) A report on the proposed transaction to be drawn up by an
independent valuator or other competent person nominated by the Registrar at
the expense of the medical schemes concerned. (b) A copy of the exposition of the proposed transaction and of the
report, if any, referred to in paragraph (a) to be forwarded by the parties
concerned to every member and creditor of those medical schemes. (c) The publication of the proposed transaction of the parties
concerned in a form approved by the Registrar in the Gazette and in such
newspaper or newspapers as the Registrar may direct. (4) Copies of the exposition of the proposed transaction and of the
report, referred to in subsection (3) (a) shall, for such period but not less
than 21 days or within such further period as the Registrar may, on request,
allow, be made available for the inspection of any member or creditor of any
party to the proposed transaction or by any other person or body having an
interest therein- (a) at the registered office of any medical scheme concerned; (b) at the registered office or other principal place of business in
the Republic of any other party; and (c) at the office of the Registrar. (5) A person who has an interest in the proposed transaction may, in
writing, submit to the Registrar within 21 days after the period specified in
terms of subsection (4), such representations concerning the transaction as
are relevant to his, her or its interests. (6) The Registrar shall, if he or she is satisfied that the
requirements of subsection (4) have been complied with, consider the
exposition of the proposed transaction and thereafter he or she may- (a) confirm the exposition; or (b) suggest that the parties to the proposed transaction modify the
exposition in certain respects, and if they so modify the exposition he or
she may confirm the exposition as modified; or (c) decline to confirm the exposition. (7) The Registrar shall not confirm the proposed exposition unless he or
she is satisfied that the transaction concerned- (a) would not be detrimental to the interests of the majority of the
beneficiaries of the medical scheme or medical schemes concerned; and [Para. (a)
substituted by s. 25 (b) of Act 55 of 2001.] (b) would not render any of the medical schemes concerned which will
continue to exist if the proposed exposition is completed, unable to meet the
requirements of this Act or to remain in a sound financial condition, or, in
the case of a medical scheme which is not in a sound financial condition, to
attain such a condition within a period of time deemed by the Registrar to be
satisfactory. (8) If the Registrar has declined to confirm the exposition, the
parties to the proposed transaction may, after notice of not less than 14
days to the Registrar, apply to the Council for confirmation of the
exposition. (9) The Registrar shall be entitled to be heard personally or through
a representative at any consideration by the Council of such application. (10) The Council may
confirm the exposition as submitted to it or with such modifications as the
Council may deem fit, or decline to confirm the exposition. (11) Any exposition
confirmed by the Registrar or the Council in accordance with this section
shall be binding on all parties concerned, and shall have effect
notwithstanding any conflicting provision contained in the rules of any
medical scheme concerned, in the memorandum or other document under which any
other party to the transaction is constituted or in the articles of
association or other rules of such party. (12) Any person who is
aggrieved by a decision of the Registrar in terms of subsection (6) or a
decision of the Council in terms of subsection (10), may within 30 days after
the date on which such decision was given, appeal against such decision to
the Appeal Board or the High Court as the case may be, and the Appeal Board
or the High Court may make such order as it may deem necessary. (13) As soon as the
exposition of the proposed transaction has been confirmed by the Registrar or
the Council, as the case may be, the person controlling the amalgamated
business or the person to whom any business has been transferred in terms of
the transaction, as the case may be, shall within 14 days after such
confirmation deposit with the Registrar a declaration, duly signed in
accordance with the provisions of section 39, on behalf of each of the
parties to the transaction, and also stating that, to the best of their
belief, every payment made or to be made or other valuable consideration
given or to be given to any person whatsoever on account of the amalgamation
or transfer is fully set forth in the exposition of the proposed transaction
and that all the conditions of the transaction have been complied with. (14) Upon the confirmation
of the exposition of a proposed transaction in accordance with the provisions
of this section, the relevant assets and liabilities of the parties to the
amalgamation shall vest in and become binding upon the amalgamated body or,
as the case may be, the relevant assets and liabilities of the party
effecting the transfer shall vest in and become binding upon the party to
which transfer is effected. (15) The officer in charge
of a deeds registry in which is registered any deed or other document relating
to any asset which is transferred in accordance with the provisions of
subsection (14), shall, upon the production to him or her by the person
concerned of such deed or other document and of a certificate by the
Registrar of the confirmation of the transaction of amalgamation or of
transfer, as the case may be, make the endorsements upon such deed or
document and the alterations in his or her registers necessitated by the
amalgamation or transfer. (16) A transaction in terms
of this section shall not deprive any creditor of a party thereto, other than
in his or her capacity as a member or a shareholder of such party of any
right or remedy which he or she had immediately prior to the date of the
transaction against any party to the transaction or against any member or
shareholder or officer of such party. (17) No transfer duties,
registration fees or charges shall be payable in respect of a transaction
contemplated in this section in the execution of a transaction entered into
at the insistence of the Registrar, upon written confirmation by the
Registrar that the Minister of Finance, on the recommendation of such
Registrar and after consultation with the Commissioner of the South African
Revenue Service, has consented to waive such duties, fees or charges. 64 Voluntary or automatic dissolution (1) In the event of the rules of a medical scheme providing for the
dissolution or termination of such medical scheme upon the expiry of a period
or upon the occurrence of an event, or upon a resolution by the members that
such medical scheme shall be terminated, then upon the expiry of such period,
or the occurrence of such event, or the passing of such resolution, such
medical scheme shall, subject to the provisions of this section, be
liquidated in the manner provided for by the rules of such medical scheme,
and the assets of that medical scheme shall, subject to the provisions of
this Act, be distributed in the manner provided for by the rules of the
medical scheme. (2) The board of trustees of the medical scheme shall appoint a person
or persons as liquidator who shall be approved by the Registrar and the
liquidation shall be deemed to commence as from the date of such approval. (3) During such liquidation the provisions of this Act shall continue
to apply to such medical scheme as if the liquidator was the person managing
the business of the medical scheme. (4) The liquidator shall, as soon as possible, deposit with the
Registrar a preliminary account and a preliminary balance sheet signed and
certified by him or her as correct, showing the assets and liabilities of the
medical scheme at the commencement of the liquidation and the manner in which
it is proposed to realise the assets and to discharge the liabilities,
including any liabilities and contingent liabilities to or in respect of
members. (5) The Registrar may direct the liquidator to furnish a report drawn
up by an independent valuator or other competent person nominated by the
Registrar. (6) The preliminary account, preliminary balance sheet and report, if
any, referred to in subsections (4) and (5), shall lie open at the office of
the Registrar, and at the registered office of such medical scheme, and where
the registered office of the medical scheme is in any district other than the
district wherein the office of the Registrar is situated, at the office of
the magistrate of the district in which the registered office of the medical
scheme is situated, for inspection by interested persons for a period of 30
days. (7) The liquidator shall, at the cost of such medical scheme, cause to
be published in the Gazette or in a newspaper circulating in the district in
which the registered office of such medical scheme is situated, or in both
the Gazette and such newspaper, a notice stating the period during which and
the places at which the preliminary account, preliminary balance sheet and
report, if any, shall lie open for inspection as aforesaid, and such notice
shall call upon all interested persons who have any objection to the said
preliminary account, preliminary balance sheet and report, if any, to lodge
their objections in writing with the Registrar within a period stated in the
notice, not being less than 14 days as from the last day on which the
aforesaid documents lie open for inspection. (8) If no objections are lodged with the Registrar in terms of
subsection (7), he or she shall direct the liquidator to complete the
liquidation. (9) The Registrar may, if objections are lodged with him or her in
terms of subsection (7), after considering the said objections, direct the
liquidator to amend the preliminary account and preliminary balance sheet, or
give such other directions relating to the liquidation as he or she thinks
fit: Provided such directions are not inconsistent with the rules of the
medical scheme, and any such directions shall be binding upon the liquidator. (10) The liquidator shall,
within 14 days of the receipt by him or her of any direction of the Registrar
in terms of subsection (9), post a copy thereof to every member and creditor
of the medical scheme, and the liquidator or any person aggrieved by any such
direction of the Registrar, may apply to the Council or by motion to the High
Court within 28 days after such direction has been communicated to the
liquidator, for an order setting aside the Registrar’s decision, and the
Council or the High Court may confirm the said decision or make such order as
it deems necessary. (11) If the Registrar is
satisfied that his or her directions, in so far as they have not been varied
or set aside by the Council or the High Court, have been given effect to, he
or she shall direct the liquidator to complete the liquidation. (12) The liquidator shall,
within 30 days after the completion of the liquidation, lodge with the
Registrar a final account and a final balance sheet, signed and certified by
him or her as correct, showing the assets and liabilities of the medical
scheme at the commencement of the liquidation and the manner in which the
assets have been realised and the liabilities, including any liabilities and
contingent liabilities to or in respect of the members, have been discharged. (13) The provisions of
section 53, in so far as they are applicable to the voluntary winding up of a
medical scheme and are not inconsistent with the provisions of this section,
shall apply to the dissolution of a medical scheme in terms of this section. (14) All claims against the
medical scheme shall be proved to the satisfaction of the liquidator, subject
to a right of appeal to the High Court, and the liquidator may require any
claim to be made on affidavit. (15) If the Registrar is
satisfied that the said account and balance sheet are correct and that the
liquidation has been completed, he or she shall cancel the registration of
the medical scheme, and thereupon such medical scheme shall be deemed to be
dissolved. (16) Any member of the
board of trustees, principal officer or liquidator who fails to take all
reasonable steps to ensure compliance with the provisions of this section,
shall be guilty of an offence. 65 Broker services and commission (1) A medical scheme may compensate a broker, in accordance with its
rules, for the introduction or admission of a member to that medical scheme. [Sub-s. (1)
substituted by s. 26 (a) of Act 55 of 2001.] (2) The Minister may prescribe the amount of the compensation which,
the category of brokers to whom, the conditions upon which, and any other
circumstances under which, a medical scheme may compensate any broker in
terms of subsection (1). [Sub-s. (2)
substituted by s. 26 (b) of Act 55 of 2001.] (3) No person shall be compensated for providing services relating to
the introduction or admission of a member to a medical scheme in terms of
subsection (1) unless the Council has, granted accreditation to such a person
on payment of such fees and on submission of such information as may be
prescribed. [Sub-s. (3)
substituted by s. 26 (c) of Act 55 of 2001.] (4) An application for accreditation shall be made to the Council in
the manner and be accompanied by such information as may be prescribed, and
any other information as the Council may require. (5) A medical scheme may not directly or indirectly compensate a
broker other than in terms of this section. [Sub-s. (5) added
by s. 26 (d) of Act 55 of 2001.] (6) No person, other than a medical scheme, may directly or indirectly
compensate a broker for the introduction or admission of members to a medical
scheme. [Sub-s. (6) added
by s. 26 (d) of Act 55 of 2001.] 66 Offences and penalties (1) Any person who- (a) contravenes any provision of this Act or fails to comply
therewith; (b) makes or causes to be made any claim for the payment of any
benefit allegedly due in terms of the rules of a medical scheme, knowing such
claim to be false; (c) knowingly makes or causes to be made a false representation of
any material fact to a medical scheme, for use in determining any right to
any benefit allegedly due in terms of the rules of the medical scheme; (d) having knowledge of any fact or the occurrence of any event
affecting his or her right to receive any benefit in terms of the rules of a
medical scheme, and who fails to disclose such fact or event to the medical
scheme with the intent to obtain from the medical scheme a benefit to which
he or she is not entitled or a larger benefit than that to which he or she is
entitled; (e) renders a statement, account or invoice to a member or any other
person, knowing that such statement, account or invoice is false and which
may be used by such member or other person to claim from a medical scheme any
benefit or a benefit greater than the benefit to which he or she is entitled
in terms of the rules of the medical scheme; or (f) ...... [Para. (f) deleted by s.
27 (a) of Act 55 of 2001.] shall,
subject to the provisions of subsection (2), be guilty of an offence, and
liable on conviction to a fine or to imprisonment for a period not exceeding
five years or to both a fine and imprisonment. [Sub-s. (1) amended by
s. 27 (b) of Act 55 of 2001.] (2) No contravention or failure to comply with any provision of this Act
shall be punishable under subsection (1) if the act or omission constituting
that contravention or failure to comply with any request or requirement is
punishable as an offence under the provisions of any other Act of Parliament
which controls the professional conduct of any health care provider. (3) Any person who fails to furnish the Council or the Registrar with
a return, information, financial statement , document or a reply to an
enquiry addressed to him or her, as provided for by this Act or any directive
under this Act, within the prescribed or specified period or any extension
thereof, shall irrespective of any criminal proceedings instituted under this
Act, be liable to a penalty as prescribed for every day which the failure
continues, unless the Registrar, for good cause shown, waives the penalty or
any part thereof. (4) Any penalty imposed under subsection (3) shall be a debt due to
the Council. 67 Regulations (1) The Minister may, after consultation with the Council, make
regulations relating to- (a) the provision by medical schemes to their members of written proof
of membership, and the particulars such proof shall or may contain; (b) the conditions subject to which any person who has terminated his
or her membership of a medical scheme shall be enrolled as a beneficiary of
any other medical scheme; [Para. (b)
substituted by s. 28 (a) of Act 55 of 2001.] (c) the assets to be held by a medical scheme in the Republic
including the limiting of the amount which or the extent to which such a medical
scheme may invest in particular assets or in particular kinds or categories
of assets; (d) the manner in which any payment due by a medical scheme shall be
made; (e) the administration of the affairs of medical schemes, including
the regulating, controlling, restricting or prohibiting of any act relating
to such administration; (f) the fees to be paid to the Council in respect of- (i) an application for the registration of a medical scheme; (ii) the registration of a medical scheme; (iii) the change of the name of a medical scheme in
terms of section 23; (iv) the registration of an amendment or rescission of a rule, or an
addition to the rules of a medical scheme, in terms of section 31; (v) the fees payable by an appellant in terms of section 50 (3); and (vi) the fees payable by an intermediary in terms of section 58 (4); (g) the prescribed scope and level of minimum benefits to which
members and their registered dependants shall be entitled to under the rules
of a medical scheme; (h) the minimum membership required for registration of a medical
scheme; (i) the conditions under which a medical scheme may provide benefits
in terms of a personal savings account; (j) the conditions under which a person may act as an administrator
of a medical scheme; (k) the nett assets to be held by a medical scheme; (l) open enrolment periods, premium penalties within defined bands
for persons joining only late in life and such other measures against adverse
selection as may be appropriate; [Para. (l)
substituted by s. 28 (b) of Act 55 of 2001.] (m) provisions associated with the manner of providing
managed health care to beneficiaries and requirements for managed health care
contracts; [Para. (m)
substituted by s. 28 (c) of Act 55 of 2001.] (n) the code of conduct of a broker, and the conditions under which
such person may provide advice and other services to, or on behalf of, a
medical scheme, beneficiary or any other person; [Para. (n) inserted
by s. 28 (d) of Act 55 of 2001.] (o) penalties to be applied to a medical scheme or administrator in
respect of the late payment of benefits owing to a member or a supplier of
service, in contravention of section 59 (2); [Para. (o) inserted
by s. 28 (d) of Act 55 of 2001.] (p) reporting of acts or omissions of any person in contravention of
the provisions of this Act; and [Para. (p) inserted
by s. 28 (d) of Act 55 of 2001.] (q) all other matters which he or she considers necessary or expedient
to prescribe in order that the purposes of this Act may be achieved. [Para. (q),
previously para. (n), renumbered by s. 28 (d) of Act 55 of 2001.] (2) The Minister shall, not less than three months before any
regulation is made under subsection (1), cause a copy of the proposed
regulation to be published in the Gazette together with a notice declaring
his or her intention to make that regulation and inviting interested persons
to furnish him or her with their comments thereon or any representations they
may wish to make in regard thereto. (3) The provisions of subsection (2) shall not apply in respect of- (a) any regulation made by the Minister which, after the provisions of
that subsection have been complied with, has been amended by the Minister in
consequence of comments or representations received by him or her in
pursuance of a notice issued thereunder; or (b) any regulation in respect of which the Minister, after
consultation with the Council, is of the opinion that the public interest
requires it to be made without delay. 68 Repeal of laws, and transitional arrangements (1) Each of the laws referred to in the fist two columns of Schedule 1
is hereby repealed to the extent specified opposite that law in the third
column of that Schedule. (2) The repeal of those laws does not effect any transitional
arrangements made in Schedule 2. (3) The transitional arrangements in Schedule 2 must be read and
applied as substantive provisions of this Act. 69 Short title and commencement This Act shall be called
the Medical Schemes Act, 1998, and shall come into operation on a date fixed
by the President by proclamation in the Gazette. Schedule 1 LAWS REPEALED BY SECTION 68
(1) Number and year of law Short title Extent of repeal Act 72 of 1967 Medical Schemes Act, 1967 The
whole Act 95 of 1969 Medical Schemes Amendment Act, 1969 The whole Act 49 of 1972 Medical Schemes Amendment Act, 1972 The whole Act 43 of 1975 Medical Schemes Amendment Act, 1975 The whole Act 51 of 1978 Medical Schemes Amendment Act, 1978 The whole Act 42 of 1980 Medical Schemes Amendment Act, 1980 The whole Act 72 of 1981 Medical Schemes Amendment Act, 1981 The whole Act 59 of 1984 Medical Schemes Amendment Act, 1984 The whole Act 23 of 1993 Medical Schemes Amendment Act, 1993 The whole Schedule 2 TRANSITIONAL ARRANGEMENTS [Schedule 2 amended by
ss. 29 and 30 of Act 55 of 2001.] 1 Council for Medical Schemes The Council for
Medical Schemes established by section 3 and any committee appointed under
section 10 of the Medical Schemes Act, 1967 (Act 72 of 1967), shall be deemed
to have been appointed in terms of sections 3 (1) and 9 (1), respectively, of
this Act for a period of six months as from the date of commencement of this
Act. 2 Assets and liabilities (1) Immovable property of the State used by the Council and its
employees immediately before the date of commencement of this Act remains at
the disposal of the Council on terms and conditions as may be agreed on
between the Council and the Minister. (2) All movable assets of the State which were used by or which were
at the disposal of the Council and its employees immediately before the date
of the commencement of this Act, except those assets excluded by the
Minister, become the property of the Council. (3) As from the date on which this Act shall come into operation, all
contractual rights, obligations and liabilities of the Department of Health
which relate to the activities of the Council, are vested in the Council. (4) All financial, administrative and other records of the Department
of Health which relate to the activities of the Council, including all
documents in the possession of that Department immediately before the date on
which this Act shall come into operation, shall be transferred to the
Council. 3 Transfer of officers and employees (1) Any person appointed in terms of section 13 of the Medical Schemes
Act, 1967 shall be deemed to have been appointed in terms of section 18 of
this Act for a period of nine months from the date of the commencement of
this Act on the same terms and conditions under which he or she previously
served. (2) Any officer or employee in the employment of the State may, with
his or her written consent and the consent of the head of the Department in
which he or she is employed, be transferred to a post at the Council to
assist the Registrar in the performance of his or her functions or duties,
after which he or she shall from the date of his or her transfer be deemed to
have been appointed under section 8 (a) of this Act: Provided that- (a) his or her salary or salary scale in respect of the post shall not
be less favourable than the salary or salary scale which was applicable to
him or her as a person employed by the State; (b) any sick or vacation leave which stood to his or her credit
immediately prior to his or her transfer, shall be deemed to be leave
credited to him or her in the employment of the Council; (c) pensionable service accrued or bought back by him or her before
his or her transfer shall be deemed to be pensionable service performed by
him or her in the employment of the Council; (d) any other conditions of service shall not be less favourable than
those under which he or she previously served; and (e) no person shall, as a consequence of such transfer and
appointment, acquire a retirement age which is higher than that which applied
to him or her in the employment of the State. (3) The salary or salary scale referred to in subsection (2) (a) may
not be reduced without the written consent of the person concerned. 4 Medical Schemes (1) Any medical scheme which immediately prior to the commencement of
this Act was registered as a medical scheme under section 15 of the Medical
Schemes Act, 1967, shall be deemed to be registered as a medical scheme in
terms section 24 (1) read with sections 26 and 32 of this Act. (2) Any medical scheme which immediately prior to the commencement of
this Act was established as a medical scheme under the South African Police
Services Act, 1995 (Act 68 of 1995), and the Correctional Services Act, 1959
(Act 8 of 1959), shall be exempt from the provisions of this Act until the Registrar
registers that medical scheme in terms of section 24 of this Act; [Subitem (2)
substituted by s. 29 (a) of Act 55 of 2001.] (3) Any medical scheme which immediately prior to the commencement of
this Act was established as a medical scheme under the Legal Succession to
the South African Transport Services Act, 1989 (Act 9 of 1989), and the
Labour Relations Act, 1995 (Act 66 of 1995), shall be deemed to be a medical
scheme registered in terms of section 24 (1) read with sections 26 and 32 of
this Act. [Subitem (3)
inserted by s. 29 (b) of Act 55 of 2001.] (4) A medical scheme shall within six months from the date of the
commencement of this Act amend its rules in order to comply with the
provisions of this Act; and shall submit such rules to the Registrar in terms
of section 31 of this Act. [Subitem (4),
previously subitem (3), renumbered by s. 29 (b) of Act 55 of 2001.] (5) The Registrar may, on good cause shown, grant extension to a
medical scheme to comply with the provisions of subsection (3) for a further
period of up to 3 months. [Subitem (5),
previously subitem (4), renumbered by s. 29 (b) of Act 55 of 2001.] (6) A person who fails to comply with the provisions of subsection (3)
shall be guilty of an offence. [Subitem (6),
previously subitem (5), renumbered by s. 29 (b) of Act 55 of 2001.] 5 Reinsurance contracts A reinsurance
contract or any amendment thereof, which- (a) was lawfully entered into prior to the commencement of the Medical
Schemes Amendment Act, 2001; (b) was legally valid and enforceable at the date of commencement of
the Medical Schemes Amendment Act, 2001, is deemed to be valid
until its date of expiry as provided for in the contract, or for a period of
one year from date of commencement of the Medical Schemes Amendment Act,
2001, whichever is the sooner. [Item 5 added by s. 30
of Act 55 of 2001.] 6 Principal officers A person who,
immediately prior to commencement of the Medical Schemes Amendment Act, 2001,
was a principal officer of a medical scheme in contravention of section 57
(7) of this Act, will be deemed to comply with that section for the period
terminating on 1 January 2004. [Item 6 added by s. 30
of Act 55 of 2001.] MEDICAL SCHEMES
AMENDMENT ACT 55 OF 2001 [ASSENTED TO 11 DECEMBER
2001] [DATE OF COMMENCEMENT: 1
MARCH 2002] (English text signed by
the Acting President) ACT
To amend the Medical
Schemes Act, 1998, so as to extend certain rights of members to their
dependants; to broaden the definition of complaint; to explicitly prohibit
discrimination on the basis of age; to further regulate the practice of
reinsurance; to regulate the circumstances under which waiting periods may be
applied; to improve the powers of the Council and the Registrar to act in the
interests of beneficiaries; to regulate the marketing of entities doing the
business of a medical scheme; to provide for more frequent submission of
returns to the Registrar; to determine the circumstances under which
inspections may be made; to further define the persons who may be appointed
as auditors of medical schemes; to further define the persons who may serve
as trustees of a medical scheme and to further clarify their duties; to
define the persons who may serve as principal officers of a medical scheme;
to limit the purposes for which medical schemes may compensate brokers and
provide for the regulation of their professional conduct; to regulate the
transfer of business of medical schemes to any person; to remove the
requirement for staff of the Council to be members of the Government
Employees Pension Fund; to amend the transitional provisions with regard to
certain schemes; and to provide for incidental matters. 1 Amends section 1 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) inserts the definition of ‘beneficiary’; paragraph (b)
inserts the definition of ‘broker’; paragraph (c) substitutes the definition
of ‘complaint’; paragraph (d) inserts the definition of ‘condition-specific
waiting period’; paragraph (e) substitutes paragraph (b) of the definition of
‘dependant’; paragraph (f) inserts the definition of ‘general waiting
period’; and paragraph (g) inserts the definition of ‘reinsurance contract’. 2 Amends section 7 of the Medical Schemes Act 131 of 1998 by
substituting paragraph (a). 3 Amends section 8 of the Medical Schemes Act 131 of 1998 by
substituting paragraph (h). 4 Amends section 19 of the Medical Schemes Act 131 of 1998 by
deleting subsection (3). 5 Amends section 20 of the Medical Schemes Act 131 of 1998 by
adding subsections (3) to (7). 6 Inserts section 21A in the Medical Schemes Act 131 of 1998. 7 Amends section 24 (2) of the Medical Schemes Act 131 of 1998,
as follows: paragraph (a) substitutes paragraph (a); and paragraph (b)
substitutes paragraph (e). 8 Amends section 28 of the Medical Schemes Act 131 of 1998 by substituting
paragraph (c). 9 Amends section 29 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (1) (o); paragraph (b)
substitutes subsection (1) (s); paragraph (c) substitutes subsection (1) (t);
and paragraph (d) substitutes subsection (3) (c). 10 Inserts section 29A in the Medical Schemes Act 131 of 1998. 11 Amends section 30 (1) of the Medical Schemes Act 131 of 1998 by
substituting paragraph (a). 12 Amends section 35 of the Medical Schemes Act 131 of 1998, as follows:
paragraph (a) substitutes in subsection (6) the words following paragraph
(d); and paragraph (b) substitutes subsection (12) (b). 13 Amends section 36 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (2); and paragraph (b) inserts
subsection (3) (b) and (c), the existing paragraphs (b) and (c) becoming
paragraphs (d) and (e) respectively. 14 Amends section 37 of the Medical Schemes Act 131 of 1998 by
adding subsection (6). 15 Amends section 41 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes in subsection (1) the words preceding
paragraph (a); and paragraph (b) substitutes subsection (2). 16 Substitutes section 43 of the Medical Schemes Act 131 of 1998. 17 Amends section 44 of the Medical Schemes Act 131 of 1998 by
inserting subsection (4), the existing subsections (4) to (10) becoming
subsections (5) to (11). 18 Amends section 48 of the Medical Schemes Act 131 of 1998 by
substituting subsection (1). 19 Amends section 51 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (1); and paragraph (b)
substitutes subsection (4) (b). 20 Amends section 52 (4) of the Medical Schemes Act 131 of 1998 by
substituting paragraph (b). 21 Amends section 53 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (2); and paragraph (b)
substitutes subsection (3) (b). 22 Amends section 56 of the Medical Schemes Act 131 of 1998 by
substituting subsection (1). 23 Amends section 57 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (3); paragraph (b) substitutes
subsection (4) (f); paragraph (c) substitutes subsection (6) (a); paragraph
(d) substitutes subsection (6) (d); and paragraph (e) adds subsections (7)
and (8). 24 Amends section 59 of the Medical Schemes Act 131 of 1998 by
substituting subsection (1). 25 Amends section 63 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (1); and paragraph (b)
substitutes subsection (7) (a). 26 Amends section 65 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) substitutes subsection (1); paragraph (b) substitutes
subsection (2); paragraph (c) substitutes subsection (3); and paragraph (d)
adds subsections (5) and (6). 27 Amends section 66 of the Medical Schemes Act 131 of 1998, as
follows: paragraph (a) deletes subsection (1) (f); and paragraph (b)
substitutes the words following subsection (1) (f). 28 Amends section 67 of the Medical Schemes Act 131 of 1998, as follows:
paragraph (a) substitutes subsection (1) (b); paragraph (b) substitutes
subsection (1) (l); paragraph (c) substitutes subsection (1) (m); and
paragraph (d) inserts paragraphs (n) to (p) in subsection (1), the existing
paragraph (n) becoming paragraph (q). 29 Amends item 4 of Schedule 2 to the Medical Schemes Act 131 of
1998, as follows: paragraph (a) substitutes subitem (2); and paragraph (b)
inserts subitem (3), the existing subitems (3) to (5) becoming subitems (4)
to (6). 30 Amends Schedule 2 to the Medical Schemes Act 131 of 1998 by
adding items 5 and 6. 31 Short title and commencement This Act is called the
Medical Schemes Amendment Act, 2001, and comes into operation on a date to be
fixed by the President by proclamation in the Gazette.
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