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Periodic payments in personal injury cases and the impact on medical experts


A landmark ruling from the Gauteng High Court in December 2019 has developed the common law to allow for payment of future damages by providing services instead of money in certain medical negligence cases involving State hospitals.

Constitutional court background

The stage was set back in 2017 in a medical negligence case before the Constitutional Court where a mother claimed on behalf of her child who had been injured at birth by nursing staff negligence. Her minor son now had cerebral palsy. The State had conceded liability and damages had been agreed upon, but not how and when those damages were going to be paid.

The Court was asked to determine whether future medical expenses could be paid by way of services rather than money, and be paid periodically instead of as a single amount as with the once-and-for-all rule. Related to delictual damages, the judgment stated that compensation in a different form to money is not conflicting, especially if periodic payments or services are subject to a "top-up/claw back" option.

In the end, the appeal was dismissed as the plaintiff had failed to provide evidence that State services were on a par with what one can buy from the private healthcare sector but the way had been paved for common law to be established.

What the common law says

This new common law worked out in the more recent 2019 Gauteng case, only applies in circumstances where the claim is against the State for future medical expenses, and where the claim is on behalf of a child who suffers from cerebral palsy arising from staff negligence. Not only that, the State has to show evidence that the child in question will receive equivalent satisfactory care as claimed they will receive from private healthcare facilities.

The South African healthcare context for periodic payments

Claims for medical negligence against the State have more than tripled over the past four years, rising to a staggering R104.5bn in 2019. Despite only a fraction of these claims actually being awarded, it still means that actual payouts have increased four-fold eating up provincial healthcare budgets. The State, due to the Public Finance Management Act, cannot budget separately for medico-legal claims or insure for that exposure.

The private healthcare sector is not immune and is also facing an increasing amount of medico-legal claims. This mounting financial pressure means that a “pay as you go” option is looking increasingly attractive to the State.

The State Liability Amendment Bill

The State Liability Amendment Bill that has been drafted, is aimed at doing away with lump-sum settlements and instead to replace them with structured payments for claims over R1-million. If State services are not available or up to standard, many of which are not, then claimants will be able to use private healthcare services but they will have to foot the portion of their bills that exceed public-sector rates.

Criticism of periodic payments

The Bill as it stands now has been widely criticised for not being clear enough and for being badly worded. The Actuarial Society of South Africa presented an analysis of the potential financial impact of the Bill, showing that over a 25-year horizon, periodic payments could cost four times more than a lump sum settlement. Others argue that it might force injured parties to seek care at the very institutions that injured them.

The Bill also deviates from the well-established “once and for all” rule which gives claimants certainty in the finalising of their claims. There are concerns about the administration of these future structured payments and whether more responsibility would then be offloaded on injured parties to ensure that they can access the funds or services timeously. The systemic problems currently being experienced do not bode well for easy administration of a much more complex system.

Significantly, the Bill also covers claims relating to alleged State-perpetrated medical malpractice which have “not been instituted or concluded” to date. This means that victims who may be mid-way or concluding lengthy litigation which has taken years, will not be able to see their cases concluded in the way they were planning, and they will then be subject to the new Bill conditions. This in itself may be unconstitutional.

What does this mean for medical experts?

Currently the proposed new legislation will only affect medical experts working within the private healthcare sector when a claimant chooses private treatment over State healthcare. However, as medico-legal litigation is rapidly rising within the private sector as well, it is possible that the model will have further reach in the years to come. A balance may need to be struck between limiting rights and ensuring our healthcare system essentially stays healthy itself.

Medical experts working with injured parties and their treatment and rehabilitation, who become subject to periodic payments or services will need to navigate a new system of which the inner workings are unclear currently.

Make your voice heard

Parties affected by the State Liability Amendment Bill and concerned about the various issues raised such as patients’ rights and ballooning payments should keep a watchful eye on the status of the Bill and make their voice known. The Bill lapsed before the 2019 parliamentary session but is anticipated to be before parliament again soon.

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