Maladministration was allegedly one of the main causes of the “financial ruin” of South African medical scheme Health Squared, relatively than simply the Covid-19 pandemic, in keeping with a provisional report by the scheme’s curator.
This was disclosed by Council for Medical Aid Schemes (CMS) Registrar Dr Sipho Kabane, in an affidavit in help of a excessive court docket utility heard final week for the postponement of the winding-up listening to of the scheme.
Judge J Wright ordered that Health Squared’s liquidation utility be postponed till a quantity of different excessive court docket purposes have been lastly decided, or the info and circumstances change sufficiently to warrant the setting down of the liquidation utility.
Read:
Health Squared’s administration lodged an utility within the High Court in Johannesburg on 18 August 2022 to liquidate the scheme and suggested its members that the voluntary winding up can be efficient from 1 September 2022.
However, Health Squared was subsequently positioned below provisional curatorship efficient from 8 September 2022, following a excessive court docket utility introduced by the CMS.
Curator’s report
Johannes Seoloane, a former CEO of Sanlam Health, was appointed provisional curator of Health Squared.
Kabane mentioned it seems from Seoloane’s provisional report that Health Squared spent on common R80 million a yr on administration, administration and advertising and marketing charges at a time when the scheme was “bleeding members”.
He added that the time period of workplace of the trustees of Health Squared resulted in December 2021 and so they have been meant to name an annual normal assembly (AGM) at the moment.
Kabane mentioned the trustees utilized and have been granted an exemption to remain in workplace till the top of June 2022, at which era they have been meant to carry an AGM. The trustees then modified the principles of the scheme to permit them to remain on as trustees till 30 September 2022.
“This coincides with the timing of this pressing utility for the winding-up of the scheme.
“It would seem the trustees are intent on seeing the scheme wound up before their term of office expires,” mentioned Kabane.
“This additionally must be considered in gentle of the truth that I had suggested the scheme that I meant to nominate a statutory supervisor to supervise the operations of the scheme and that [a] judicial supervisor would start work on 1 July 2022.
“My efforts were frustrated by the scheme, and in an effort to prevent my regulatory intervention, the scheme rushed this [winding-up] application to court.”
Another concern …
Kabane mentioned a additional level of concern raised by the provisional curator is that it seems that in the course of the month of August 2022, the trustees solely made half funds to themselves and didn’t draw their full charges.
“This means once the scheme is wound up, they will be the scheme’s creditors and have an influence in the choice of liquidator,” he mentioned.
“The curator informed the court that he needs more time to look into this issue.”
Kabane added that to this finish, he had introduced the applying for the postponement of the pressing winding-up utility pending the finalisation of many excessive court docket purposes and to afford the provisional curator extra time to finalise his work and supply him with a report, which was due on the finish of September 2022.
He mentioned Health Squared has acknowledged that it may survive for an additional six months and there may be due to this fact no prejudice to the scheme ought to this utility be postponed for a month.
Applications
The utility for the winding up of Health Squared was set right down to be heard on an pressing foundation within the High Court in Johannesburg on 27 September 2022.
The CMS utilized for this utility to be postponed till the ultimate willpower of a quantity of different excessive court docket purposes, together with:
- The prolonged 30 September 2022 return date for the affirmation or discharge of the provisional appointment of a curator to take over the enterprise of Health Squared.
- Health Squared’s utility for the suspension of the order granted by Judge J Crutchfield on 8 September 2022, in phrases of which a provisional curator was appointed for Health Squared.
- Health Squared’s utility for depart to attraction the entire judgment and order of Judge Crutchfield that was handed down on 8 September and 20 September 2022.
- The CMS’s utility for depart to attraction in opposition to the order of Judge AJ Swanepoel on 23 September 2022.
Judge Swanepoel prolonged the return date of Judge Crutchfield’s order to 30 September 2022, but in addition held that her order was suspended as a result of Health Squared had filed an utility for depart to attraction.
However, Kabane mentioned Judge Swanepoel’s order is now additionally topic to an utility for depart to attraction and has successfully been suspended.
He mentioned this makes it essential to postpone Health Squared’s pressing winding-up utility till the query of the scheme’s authorized representatives has been resolved.
This is a reference to the provisional curator terminating the mandate of Malatji & Co attorneys of report of Health Squared, who have been the scheme’s legal professional of report when the winding-up utility was introduced.
Kabane mentioned Malatji & Co nonetheless claims to symbolize the pursuits of the scheme and persists in submitting papers to the excessive court docket.
He mentioned Malatji & Co has up to now nonetheless not supplied the CMS, as requested, with proof of its authority to behave on behalf of Health Squared, whereas Lawtons Inc attorneys has filed a discover of appointment and substitution as attorneys of report for Health Squared.
In a case heard within the Gauteng South High Court on Friday, Judge Swanepoel granted the registrar of medical schemes depart to attraction in opposition to two paragraphs of his order issued on 23 September 2022 and prolonged the return date for Judge Crutchfield’s interim order to 1 November 2022.
One of these paragraphs pertains to his order that Health Squared’s depart for attraction in opposition to the order appointing a curator routinely suspended the interim order of 8 September 2022 issued by Judge Crutchfield and that the appointed curator –Seoloane – could consequently not act for the CMS till the interim order has been lastly decided.
The different paragraph pertains to Judge Swanepoel’s order that the CMS take no matter steps are essential to ship your complete utility for the appointment of a curator, the interim order, and his order on all events by e-mail by no later than midday on 26 September 2022.
