1. Road Accident Fund Draft Amendment Bill
IMPORTANT NOTICE:
Comments on draft Bill, by the Department of Transport, are included on Notes Page
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Presentation to the Parliamentary Portfolio Committee on Transport
18 May 2005
Comments on published Bill
by the Department of Transport:

2. Road Accident Fund Commission
Implementation for the restructuring of the RAF will be presented to Cabinet in mid The Restructuring of the RAF calls for a policy change in compensation for Road Accident Victims and is not addressed in this Bill.
However, some recommendations could be incorporated into draft Bill as they speak to key processes to be incorporated irrespective of any policy change, these are:
Compensation for all road users
Injury threshold to access general damages and related assessment
Medical tariffs
Exclusion of secondary victims
Prioritisation of golden hour treatment
Critical to ensure that the risk associated with restructuring is contained
Comments on published Bill by the Department of Transport:
The Bill is not a visionary piece of legislation, but an attempt to stabilize the Fund whilst ensure all road users can be compensated. The IDC has taken a decision that the passing of this Bill is necessary for the future restructuring of the Fund to ensure that risk is controlled and manageable, as oppose to the current compensation framework of the Fund characterized by exponential growth, hindering any restructuring process. The Amendment Bill incorporate numerous aspect as proposed by the RAFC, however, policy changes in respect of fault are not incorporated. Considering where we are with the restructuring, the process may take between 3 and 4 years to implement, the draft Bill ensures that the RAF remains a going concerns during this transition. The committee will be briefed on the IDC work once the Bill has been finalised.

3. Memorandum
Bill 64 of 2003 as revised based on key principles of equity, fairness and transparency
Improve the governance of the Fund and address issues which would affect the liquidity of the Fund.
Amendment Bill will only apply to claims that arose after the commencement of the Act.
The Department took the oral and written comments and inputs given during the consultation process in the Portfolio Committee Hearings in 2003, regarding B64-03, into account; the Department presented the Draft Bill to the Road Accident Fund Board and their comments were incorporated; National Treasury was consulted on both the Bill and the financial implications of the Bill.
Comments on published Bill by the Department of Transport:
The revision of a Bill according to Rule Nr. 241C of the Rules of the National Assembly, means that substance of the original memorandum does not change. The object of the Bill is therefore still to limit the liability of the Fund whilst providing for a system of compensation which is more equitable, fair and transparency and an institution characterised by good governance.

4. 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.
Comments on published Bill by the Department of Transport:
Bill provides for the CEO to conclude any agreement with any person for the performance of any act, work of service contemplated in this Act, not for the privatisation of the administration of road accident compensation.

5. 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
Comments on published Bill by the Department of Transport:
Current Act: May to April

6. Governance: Board of Fund
S(10) substitution s(2)(c)
S(10) substitution of s(6) & (7)
S(10) deletion of s(8)
hold office for a period of three years as from the date of appointment of such member, which period may be extended for a further period not exceeding three years.
The Minister shall appoint two of the members of the Board as Chairperson and Vice-Chairperson, respectively.
Abolish Executive Committee
Comments on published Bill by the Department of Transport:
Extension of term will promote continuity.
The separation between the operation duties and strategic duties is imperative for good governance at the RAF.

7. Governance: Appointment of Board
S(10) deletion of s(9)
Removal of process of appointment as well as the provisions for the selection committee.
Comments on published Bill by the Department of Transport:
Intention is to expedite the appointment process and in doing so remove governance obstacles during the appointment of the Board.
Proposal: Replacement of the Provision of subsection (9) with:
“(9) For the purposes of the appointment of the members of the Board referred to in subsection 1(b), the Minister must, though the media and by notice in the Gazette, invite nominations of persons as candidates for such appointments from a person or body having an interest in the operations of the Fund.”

8. Governance: Appointment and Functions of CEO
S(12) substitution of s(1)
S(12) substitution of s(2)
The Minister shall with the concurrence of the Board, appoint the Chief Executive Officer of the Fund on such terms and conditions of employment as the Board may determine
exercise the powers and shall perform the functions of the Fund mentioned in section 4.
Comments on published Bill by the Department of Transport:
The separation between the operation duties and strategic duties is imperative for good governance at the RAF.
Deletion of [S(4)(1)(b), (c) and (d), (2) and (3)] CEO takes operational responsibility for the claims policy, proposal that Board establish an claims policy committee to ensure strategic direction in this regard.

9. Transparency: Limitation on Compensation for General Damages
S(17) substitution of S(17) with S(17)(1)
Provided that the obligation of the Fund to compensate a third party for general damages, for pain and suffering, loss of amenities of life and disability, shall be limited to the amount of R in respect of each claimant and shall be paid by way of a lump sum
Comments on published Bill by the Department of Transport:
Lump sum provision sufficient for 99% of all current claimants, can be adjusted once effect of threshold impact on liability of the Fund.
Amounts claims have on average decrease, however, the number of claims have increased from in 2000 to in 2004.
Total saving amount to only 0.6% of total expenditure, purpose is to curtail exposure to potentially unlimited liability
In the Constitutional Court judgments of Jooste v Score Supermarket Trading (Pty) Ltd (Minister of Labour intervening) 1999 (2) SA 1(CC) and Soobramoney v Minister of Health (Kwazulu-Natal) 1998 (1) SA 765 (CC) the Court considered the dilemma of political and administrative decisions within the context of limited public resources. The Court clearly indicated that it will neither make law, nor will it interfere with difficult administrative and political decisions regarding allocation of scarce resources to competing needs, as long as the choices and decisions were not arbitrary and irrational and they were taken in good faith.

10. Fairness: Threshold to access general damages
S(17) substitution of S(17) with S(17)(1)
Provided further that the Fund's obligation to pay such compensation shall only extend to a third party who suffers 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 ;
Road Accident FundCommission Report (2002) p. 1114, par “In short, claimants with minor injuries who have required little medical treatment and have not been obliged to take time off work seek compensation simply for the incalculable pain and suffering and loss of enjoyment of life. Persons who have sustained serious injuries requiring considerable medical treatment, rehabilitation and life care and who will possibly never work again receive a very small proportion of their compensation to allow for the pain and suffering which they have to endure on a long-term basis as also the loss of amenities and enjoyment of life which will never be theirs”.
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…”

11. Overview: General Damages Trends in compensation payment
Claimants
Road Accidents
Average annual growth: 3.2 %
Average annual growth: 2.6 %
Average annual growth: 0.8%
Trends in compensation payment
Transaction cost
Comments on published Bill by the Department of Transport:
The current system that allows even those slightly injured to claim for pain and suffering is unfair. The number of accidents in which major injuries were sustained in 2003 amounted to , during this year the RAF finalised claims for general damages.
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.

12. Fairness: Definition of Serious Injury
S(17) substitution of S(17) with S(17)(1A) (a)
Definition: “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.
Comments on published Bill by the Department of Transport:
The process for assessment will be defined to ensure consistency and reliability in assessment method, without limiting the definition in legislation.

13. Fairness: Assessment of Serious Injury
S(17) substitution of S(17) with S(17)(1A) (a), (b), (c) & (d)
Assessment of serious injuries shall be based on a prescribed method adopted after consultation with medical service providers and shall be reasonable in ensuring injuries are considered in relation to the circumstances of the third party.
The method of assessment shall entail assessment by provincial medical panels consisting of a representative from the Fund and external experts representing key medical fields relevant to road accident injuries.
The Fund shall set up a peer review panel to oversee the assessments made by panels .
Comments on published Bill by the Department of Transport:
To address concerns that the assessment system is cumbersome, costly and will lead to lengthy delays the DOT has reconsidered the centralised nature of the assessment process.
These practical problems, including an assessment method or methods, accreditation and training, can be overcome. Government will accept a de-centralised system in which medico-legal reports can be sent to the assessment panels and reviewed by a peer review panel set up by the Minister. This will improve access and lesson the administrative burden.

14. Fairness: Remove statutory obligation to pay party-to-party costs
S(17) substitution of S(17) and deletion of s(2)
[(2) Upon acceptance of the amount offered as compensation in terms of subsection (1) 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.
The Contingency Fees Act, which, despite statements to the contrary made to the Portfolio Committee, is not being utilized by attorneys as indicated to my Department by representatives of the Law Society. Courts have started to make cost orders against losing applicants in what can be described as ‘public interest’ litigation.
Current Section has allowed legal representative to work on risk, work without fees; make payment to advocates and doctors and therapists.This situation has also led to fruitless expenditure, leaving the claimant with little or no compensation once all service providers have been paid. Furthermore, this has allowed legal representatives to take cases with no or little merit. The justification for proceeding with a claims should be merit and not the knowledge that cost will be covered.
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.

15. Transparency: Undertakings
S(17) substitution with S(17)(4)(a)
(4) Where a claim for compensation includes a claim for the costs of the future accommodation of any person in a hospital or nursing home or treatment of or rendering of a service or supplying of goods to him or her, the Fund or an agent shall be entitled, after furnishing the third party concerned with an undertaking to that effect or a competent court has directed the Fund or the agent to furnish such undertaking, to compensate the provider of such service or treatment directly, in accordance with the prescribed tariff contemplated in subsection (4A);
Comments on published Bill by the Department of Transport:
DOT propose a revision of this clause to provide for either the service provider or the victims is entitled to claim for service rendered through an undertaking.
Operational changes will be requested to address the practical issue of apportioned undertaking required the victim on each occasion to contribute own resources to fund any shortfall.

16. Transparency: Medical Tariffs
S(17) addition of s(4A) (a)
The liability of the Fund or an agent regarding the tariff shall, in the case of compensation for–
(i) public health care, be based on tariffs determined for providers of such services, and shall be prescribed by the Minister after consultation with the Minister of Health; and
(ii) private health care, be based on the National Health Reference Price List published by the Council for Medical Schemes, and shall be prescribed by the Minister after consultation with that Council.
The tariff contemplated in paragraphs (i) and (ii) shall be prescribed after consultation with medical service providers and shall be reasonable compensation, taking into account factors such as the cost of such treatment and the ability of the Fund to provide the compensation.
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.

17. Transparency: Cap loss income and support
S(17) substitution with S(17)(4)(b)
includes a claim for future loss of income or support, the liability of the Fund or an agent shall be limited to the amount specified in subsection (4B).
Comments on published Bill by the Department of Transport:
The amendment seeks to introduce greater transparency and remove disparities.
The current system of compensation is skewed, as between 2000 and 2004 the 4.8% of those who claimed for loss of income over and above R , received 39.1% of the total expenditure on loss of income.
Support: impact on 0.04% (40)total savings of 0.4% over 5 years.
Income: impact on 0.18% (160) total savings of 2.6%
All indication are that the cap is realistic and in line with living standards in South Africa.
The decision in Jooste v Score Supermarket Trading provides strong support for the rationality of a scheme such as the one adopted in the RAF Act. In our view, a Constitutional challenge based on the equality will fail for the reasons set out in the Jooste case. Limits are necessary to ensure greater certainty with regard to what can be expected of the Fund.
Call for committee to be reasonable: currently support excludes those who receive a old age grant of R which proves she is not indigent.

18. Transparency: Regulatory powers: Cap loss income and support
S(17) addition of S(17)(4B)(a,b,c&d)
The liability of the Fund to compensate the third party for future loss of income or support as contemplated in section 17(4)(b) shall not exceed R160 000 per year.
The liability of the Fund shall, in the case of future loss of income, cease upon the death of the third party or the attainment of the age of 65 years, whichever occurs first.
Any compensation paid in respect of loss of support shall be divided equally amongst dependents.
The liability of the Fund in respect of a claim for loss of support shall cease upon the date the deceased would have reached the age of 65 years or, if earlier−
(i) in the case of such a claim by a spouse, upon remarriage; and
in the case of such a claim by a dependent child, upon attainment of the age of 21 years.
Comments on published Bill by the Department of Transport:
Fund cannot act as a retirement scheme.
The RAF is not a tertiary education savings plan. The age was
increased beyond 18 to ensure that those children who are still school
going can rely on support to finish their secondary schooling.

19. Fairness: Emergency Medical Treatment
S(17) addition of s(7)(a,b&c)
When a person has provided a third party with emergency medical treatment as defined in paragraph (b), the Fund shall compensate such person directly, according to the prescribed tariff contemplated in subsection (4A), irrespective of any negligence or wrongfulness on the part of any person.
For the purposes of paragraph (a) “emergency medical treatment” means the provision of reasonable and appropriate emergency treatment by a prescribed provider of such service in order to stabilize the emergency medical condition, and includes triaging, resuscitation, stabilization or monitoring of the patient.
For the purposes of paragraph (b) “emergency medical condition” means an acute injury or illness which requires immediate preventative or remedial medical intervention, where failure so to intervene would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or death of the person concerned.”.
Comments on published Bill by the Department of Transport:
This amendment is consistent with the provisions of the Constitution, the National Health Act and the Ethical Rules as published by HPCSA. Amendment if welcomed and changes are progressive and positive.
Amendment speaks to those who are not covered by personal health insurance, to ensure that they are treated at the closest more appropriate hospital. Will have to link with 17(6), in which provision for interim payments to suppliers is made.
Department has removed the definition of emergency medical treatment and emergency medical condition to remove conflicting definitions. Will be stipulated in tariffs after consultation.
Inclusion of right of the third party to claims against the Fund for in respect of said costs after the cost have been incurred and on proof thereof.
Increased expenditure for past medical care due to the amendment is projected to be R77mil and total expenditure by 1.9% over five years.

20. Equity: Removal on limitation on passengers
S(18) deletion of s(1)(a)(b)
The liability of the Fund or an agent to compensate a third party who, at the time of the occurrence which caused that injury or death, 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;
Comments on published Bill by the Department of Transport:
From a Constitutional point of view, the abolition of the R 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.

21. Transparency: Specification of funeral costs
S(18) substitution of s(4)
The liability of the Fund or an agent to compensate a third party for any loss or damage contemplated in section 17 which is the result of the death of any person shall in respect of funeral expenses be fixed at R5 000.”.
Comments on published Bill by the Department of Transport:
The provision allow for transparent system of compensation which will expedite the claims process, if allowance made for claims above R5000, delays due to litigation on quantum will once against impact on dependant who are in desperate need of support.

22. Governance: Excluded liability
S(19)(f) addition of (f)(iii)
to attend a meeting arranged at the request of the Fund in order to elucidate matters relating to the claim, or at such meeting fails to respond truthfully and to the best of his or her knowledge to questions put.
Comments on published Bill by the Department of Transport:
Provision to be removed.

23. Governance: 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.

24. Transparency: Claim for compensation against other
S(21) substitution
When a third party is entitled under section 17 to claim from the Fund or an agent any compensation that third party may not claim compensation in respect of that loss or damage from the owner or from the person who so drove the vehicle, or if that person drove the vehicle as an employee in the performance of his or her duties, from his or her employer -
(a) to the extent that the Fund or such agent has already paid or has agreed to pay or is obliged to pay the compensation; or
(b) unless the Fund or such agent is unable to pay the compensation.
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.

25. Amendment requested Financing
Financing: provision for the Fund to be procured through SARS for fuel produced or imported.
Comments on published Bill by the Department of Transport:
Based on proposed Amendments to the Customs and Excise Act.