Road Accident Fund Amendment Bill, B64B_2003 Tabled for Debate in the Second House, National Council of Provinces 12 October 2005 Comments on published Bill by the Department of Transport:

Long Title To amend the Road Accident Fund Act, 1996, so as to extend the powers of the Fund regarding the conclusion of agreements; to alter the financial year of the Fund; to make new provisions regarding the Board of the Fund; to further regulate the Fund’s obligation to compensate a third party for non-pecuniary loss, for certain hospital or medical expenses, and for loss of income or support; to repeal certain provisions limiting the liability of the Fund to R25 000 in respect of claims; to abolish certain common law claims; to make further provision for the prescription of certain claims; to substitute the provision authorising the Minister to make regulations; and to provide for matters connected therewith.

Governance: Powers and Function of Fund S(4) addition of s(2)(i) S(4) addition of s(4)(a) Conclude any agreement with any person for the performance of any particular act or particular work or the rendering of particular services contemplated in this Act. The Fund may conclude an agreement with any other organ of State regarding any matter provided for in this Act in order to improve or ensure– (i) the effective management of the Fund; (ii) the efficiency of the Fund; (iii) co-ordination of functions; (iv) co-operative governance contemplated in Chapter 3 of the Constitution.

Governance: Financial year and budgeting S(6) substitution s(1) The financial year of the Fund shall run from 1 April of any year to 31 March of the following year

Governance: Board of Fund S(10) substitution s(1)(a) s(2)(c) s(4) s(6) & (7) deletion of s(8) the Director-General: Transport or any other senior officer in the Department of Transport, designated by him or her; members hold office for a period of three years and may, subject to nomination, be reappointed for further terms of office not exceeding three years at a time, provided that such a member may not serve for more than three consecutive terms of office. Only a member of the Board referred to in section (1)(b) shall, have a vote on any matter before the Board. The Minister shall appoint two of the members of the Board as Chairperson and Vice-Chairperson, respectively. Abolish Executive Committee

Governance: Appointment of Board S(10) substitution of s(9) Revision of process of appointment. the Minister shall by notice in the Gazette and the national news media, invite persons or bodies who have an interest in the operations of the Fund to nominate persons who comply with the criteria; publish a list of nominees received in response to such invitation, which list shall include the names of the relevant nominators The Minister shall cause the name of a member appointed, or reappointed, to be published in the Gazette.

Governance: Appointment of CEO S(12) substitution of s(1)(a)(b) The Minister shall upon the recommendation of the Board, appoint the Chief Executive Officer of the Fund on such terms and conditions of employment as the Board may determine. The Chief Executive Office shall be a person who is suitably qualified and experienced to manage the day to day affairs of the Fund.

Fairness: Threshold to access general damages S(17) substitution of S(17) with S(17)(1) Provided further that the Fund's obligation to compensate a third party for non-pecuniary loss shall be limited to compensation for a serious injury Comments on published Bill by the Department of Transport: The introduction of a threshold holds the largest saving potential (24% total compensation, or just under R1billion) for the Fund and is the reason why passenger claims can be accommodated. Request the Chairpersons permission to deviate from the amendment before us and present data on accident, injuries and compensation for General Damages. The distribution of fuel levy income according to financial minimum and maximum values, as proposed by the Coalition, firstly, represents a blunt policy instrument; Secondly, it does not take into consideration the inverse relationship between the level of injury and compensation for general damages ; Thirdly, it may discriminates against the indigent and those seriously injured unable to prove substantial damages for pain and suffering; and Lastly, does not address unfair situation in relation to compensation for general damages. Amendment to be reviewed to read “non-pecuniary loss…”

Fairness: Assessment of Serious Injury S(17) substitution of S(17) with S(17)(1A) (1A) (a) Assessment of a serious injury shall be based on a prescribed method adopted after consultation with medical service providers and shall be reasonable in ensuring that injuries are assessed in relation to the circumstances of the third party. (b) The assessment shall be carried out by a medical practitioner registered as such under the Health Professions Act, 1974 (Act No. 56 of 1974). Serious injury” means a permanent injury which leads to total disablement or paralysis or dysfunction of a vital organ, and includes brain injuries, loss of sight, or loss of a limb or the use thereof or such other serious injuries as the Minister may prescribe

Fairness: Remove statutory obligation to pay party-to-party costs S(17) deletion of s(17)(2) Upon acceptance of the amount offered the third party shall be entitled to the agreed party and party costs or taxed party and party costs in respect of the claim concerned. Comments on published Bill by the Department of Transport: The constitutional rights of such claimants are not infringed by the failure of the government to provide to them, at state expense, legal representation, or by the deletion of a provision such as section 17(2), which secures a right to party-party cost for the third party. The amendment does not abolish the RAF’s power to negotiate or pay legal costs. Intention of the amendment is that in deserving situations, nothing prevents the Fund from agreeing to pay the legal feeds incurred by the claimant as overall settlement. Mechanisms exist for those claims with merit to be taken on through the Contingency Fees Act if appropriate; to approach the legal aid board, revert to the small claims court, make use of legal coverage schemes or to claim directly from the Fund. Mediation and arbitration can be provided for as an optional alternative without legislative changes, although the rising cost of these services may not allow for sufficient saving on legal costs to the Fund.

Transparency: Undertakings S(17) substitution with S(17)(4)(a) (4) Where a claim for compensation — (a) includes a claim for the costs of the future healthcare the Fund shall be entitled, after furnishing the third party concerned with an undertaking to that effect, to compensate— (i) the third party in respect of the said costs after the costs have been incurred and on proof thereof; or (ii) the provider of such service or treatment directly, notwithstanding section 19(c) or (d), in accordance with the tariff contemplated in subsection (4B); Constitutional opinion outstanding Operational changes cannot be implemented as the Court cannot determine there cost as a lump sum.

Transparency: Cap loss income and support S(17) substitution with S(17) (4)(b)(c) & (4A) (b) includes a claim for future loss of income or support, the amount payable by the Fund shall be paid by way of a lump sum or in instalments as agreed upon; (c) the annual loss, irrespective of the actual loss, shall be proportionately calculated to an amount not exceeding— (i) R160 000 per year in the case of a claim for loss of income; and (ii) R160 000 per year, in respect of each deceased breadwinner, in the case of a claim for loss of support. (4A) (a) The Fund shall, by notice in the Gazette, adjust the amounts quarterly, in order to counter the effect of inflation. (b) In respect of any claim for loss of income or support the amounts adjusted in terms of paragraph (a) shall be the amounts set out in the last notice issued prior to the date on which the cause of action arose. The loss calculated based on annual gross income not exceeding R160k

Transparency: Medical Tariffs S(17) addition of s(4B) (4B) (a) The liability of the Fund shall be based on the tariffs for health services provided by public health establishments contemplated in the National Health Act, 2003, and shall be prescribed after consultation with the Minister of Health. (b) The tariff for emergency medical treatment provided by a health care provider contemplated in the National Health Act, 2003— (i) shall be negotiated between the Fund and such health care providers; and (ii) shall be reasonable taking into account factors such as the cost of such treatment and the ability of the Fund to pay. (c) In the absence of a tariff for emergency medical treatment the tariffs contemplated in paragraph (a) shall apply. Comments on published Bill by the Department of Transport: Tariff will be published through the Department of Health as a price reference, based on the structure of NHRPL, and published as tariff guidelines according to the National Health Act 2005 for the RAF. Quantum will be negotiated for tariff to be applicable. The ability of the Fund to compensate is relevant to the tariff setting and not to individual claimants. Guidelines should be put in place to guide payment terms. Differentiation between past and future treatment is due to drafting mistake, will be corrected to allow for medical tariffs to be applicable to all medical services provided.

Equity: Removal on limitation on passengers S(18) deletion of s(1)(a) Substitution of 18(2)(a) The liability to compensate a third party who was being conveyed in or on the motor vehicle concerned, for reward; or in the course of the lawful business of the owner of that motor vehicle; or in the case of an employee of the driver or owner of that motor vehicle, in respect of whom subsection (2) does not apply, in the course of his or her employment; or for the purposes of a lift club where that motor vehicle is a motor car, or in the case of a person who was being conveyed under circumstances other than those referred to in paragraph (a), shall be limited to the sum of R25000 Removal of limitation on passengers protected by COIDA Comments on published Bill by the Department of Transport: From a Constitutional point of view, the abolition of the R25 000 limit in section 18(1) is welcomed. To the extent that there are no real justifications for treating different road users differently, the amendments strengthen arguments in favour of the validity of the RAF Amendment Bill. The exclusion of liability in Section 19(b) will be removed. Section 18(2a) refers to Section 18(1)(b) which is intended to be repealed. This will be addressed. Increase in total expenditure over 5 years is 10.5%. This may increase further due to behavioural changes.

Equity: Removal of Exclusions on Passengers S(18) deletion of 19(b) Fund shall not be obliged to compensated any person for loss or damage suffered as a result of bodily injury whilst - being conveyed for reward on a motor cycle - is a person referred to in Section 18 and a member of the household Comments on published Bill by the Department of Transport: From a Constitutional point of view, the abolition of the R25 000 limit in section 18(1) is welcomed. To the extent that there are no real justifications for treating different road users differently, the amendments strengthen arguments in favour of the validity of the RAF Amendment Bill. The exclusion of liability in Section 19(b) will be removed. Section 18(2a) refers to Section 18(1)(b) which is intended to be repealed. This will be addressed. Increase in total expenditure over 5 years is 10.5%. This may increase further due to behavioural changes.

Fairness: Excluded liability S(19) addition of (g) suffered as a result of an emotional shock sustained by that person when that person witnessed or observed or was informed of the bodily injury or the death of another person as a result of the driving of a motor vehicle Comments on published Bill by the Department of Transport: The Act was set up with the mandate to compensate those injured in road accidents and their dependants, if we veer from this mandate we will fail those in need of support. This amendment was agreed to by the PPC in 2003 and, hence, reintroduced. Those damages suffered by secondary victims can be claimed through civil cases.

Common Law Rights: Claim for compensation against other S(21) substitution 21. (1) No claim for compensation in respect of loss or damage resulting from bodily injury to or the death of any person caused by or arising from the driving of a motor vehicle shall lie— (a) against the owner or driver of a motor vehicle; or (b) against the employer of the driver. (2) Subsection (1) does not apply— (a) if the Fund or an agent is unable to pay any compensation; or (b) to an action for compensation in respect of loss or damage resulting from emotional shock sustained by a person, other than a third party, when that person witnessed or observed or was informed of the bodily injury or the death of another person as a result of the driving of a motor vehicle.’’. Comments on published Bill by the Department of Transport: The amendment will be removed. Section 21 will remain as is. Limitation on rights is seen as justifiable and reasonable: No liability insurance will be necessary and no additional risks of civil claims in excess of available liability policies. The restrictions hold no consequences for those not affected by the limitation, such as the working class, whose accumulated wealth may be threatened by civil litigation. The caps will impact on less than 1% of those currently compensated for income and support claims. I believe the income levels are a fair attempt to provide for those unable to provide for themselves. Levels of income in line with the first economy are only affordable due to the Act excluding the liability of the RAF for those who are unable to prove fault. Drivers who want to protect a lifestyle that is above that provided by the RAF will need to take out personal injury insurance as protection provided by the RAF against the wrongful action of other driver will be limited. The Bill provides sufficient time to allow the insurance industry to prepare policies and update premiums. Although 71% of those claiming for general damages will be affected, only 42.6% those in need of medical attention will be affected. For the seriously injured, which our policies on disability urge us to focus on, I am willing to consider any suggestions from your committee to increase the cap on general damages and suggestions to increase access and efficiency in injury assessment.

Finalisation of Bill Thank you. Marissa du Toit Director: Policy Advocacy and Coordination Adam Masombuka Director: :Legislation Comments on published Bill by the Department of Transport: The amendment will be removed. Section 21 will remain as is. Limitation on rights is seen as justifiable and reasonable: No liability insurance will be necessary and no additional risks of civil claims in excess of available liability policies. The restrictions hold no consequences for those not affected by the limitation, such as the working class, whose accumulated wealth may be threatened by civil litigation. The caps will impact on less than 1% of those currently compensated for income and support claims. I believe the income levels are a fair attempt to provide for those unable to provide for themselves. Levels of income in line with the first economy are only affordable due to the Act excluding the liability of the RAF for those who are unable to prove fault. Drivers who want to protect a lifestyle that is above that provided by the RAF will need to take out personal injury insurance as protection provided by the RAF against the wrongful action of other driver will be limited. The Bill provides sufficient time to allow the insurance industry to prepare policies and update premiums. Although 71% of those claiming for general damages will be affected, only 42.6% those in need of medical attention will be affected. For the seriously injured, which our policies on disability urge us to focus on, I am willing to consider any suggestions from your committee to increase the cap on general damages and suggestions to increase access and efficiency in injury assessment.