Nicolette Dirk, finance writer, Justmoney.co.za
The North Gauteng High Court in Pretoria placed Hosmed Medical Scheme under provisional curatorship on Tuesday, 29 April 2014, following a successful application by the Council for Medical Schemes (CMS) to address governance concerns of the scheme.
Hosmed is an open scheme with approximately 76 000 beneficiaries. The scheme’s annual contribution income is in excess of R1 billion and it has reserves of approximately R270 million.
Siyabonga Jikwana was appointed as provisional curator. The former director of health financial planning and economics for the National Department of Health, would replace the current Board of Trustees. The CMS said in a statement that Jikwana was tasked to ensure that a new board takes over the reins at Hosmed in due course.
According to a court affidavit by Daniel Lehutjo, acting chief executive officer of the CMS, the scheme has had a tumultuous history since 2008. There have also been previous applications to place Hosmed under curatorship.
Reasons for previous curatorship applications
On 9 June 2010, Dr Monwabisi Gantsho, the Registrar of the CMS, launched an urgent application to place the scheme under curatorship.
Some of the reasons listed in the court report was that Hosmed had not submitted audited finacial statments for 2008 and that it was being managed by three and not eight trustess.
Another reason listed was that the scheme had an acting principal officer, Dawie Van Zyl, who was deemed unfit to occupy the position.
According to reports, Van Zyl, along with other trustees of the board, tried to plead exception to a summons in which the CMS ordered the scheme to pay penalties of R350 000 for failing to comply with certain provisions of the Medical Schemes Act. These dealt with the submission of financial statement.
A settlement was reached on 8 July 2010 where Mr C Lehoka was appointed as the scheme’s compliance officer and a forensic investigation was to be conducted. The curatorship application was withdrawn and the scheme paid the costs.
In 2011 Hosmed again faced curatorship and some of the reasons listed were because there was selective changing of members to higher income bands, procurement and appointment of an electoral body and an appointment of a supplier that did not meet the proper requirements.
In his affidavit Lehutjo said that the current appointment of the curator was in the interest of the beneficiaries of the scheme and that it was the best decision after material irregulaties had come to his attention.
These irregualties were discovered after the registrar appointed an inspector last year, to look into the scheme’s activities. Some of the scheme’s trustees were found to not be qualified for their roles while another trustee was sequestrated.
“The board of trustess failed in instuting control measures and procedures, they did not record their meeting and decisions validly. They left the service providers unchecked and allowed rampant misspending,” said Lehutjo.
What will the curatorship mean for members?
In a statement the CMS assured beneficiaries that the claims-paying ability of Hosmed would not be affected by the appointment of the provisional curator.
Heidi Kruger, head of corporate communications for the Board of Healthcare Funders of Southern Africa, agreed that memebers would not be affected negatively by the curatorship and they were in fact disadvantaged in the past by the actions of the trustees who have been removed.
If you want to apply or compare prices of Justmoney’s medical scheme offerings, click here