Future medical expenses can be payable in kind

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Natasha Naidoo, Associate Norton Rose Fulbright South Africa Inc

In a landmark judgment handed down in December 2019, the Johannesburg High Court held that it is in the wider interest of justice to develop the common law to allow courts to make orders for compensation in kind as opposed to monetary compensation for future medical expenses in appropriate cases. The judgment is related to a cerebral palsy claim where the MEC for Health was liable for the negligent conduct of public healthcare staff resulting in injury during or at birth.

The ruling follows an action brought against the MEC for Health, Gauteng, by the mother of a child who allegedly suffered neurological injury during birth in 2012. The MEC admitted liability in 2017 for 60% of the child’s damages and the mother was held liable for the remaining 40% of the damages. The claim for future medical expenses considered was in excess of R15 million.

The judge ordered that the MEC is required to ensure that medical services of the same or a higher standard will be made available to the child in the future by the public healthcare system at no or a lesser cost than the cost of private healthcare, and that the level of service provided by the public healthcare system is at the same or better level than that provided in the private healthcare sector.

Approach of the parties

The MEC pleaded that the common law should be developed to allow for compensation for damages in kind and for payment of any award handed down by means of periodic instalments instead of a single lump sum payment. The MEC stated that in terms of section 173 of the Constitution such an extension is in the wider interests of justice. In support of its plea, the MEC stated that certain of the identified medical services the child requires could be provided by the Charlotte Maxeke Johannesburg Academic Hospital.

The mother opposed the development of the common law and sought an order in accordance with the existing common law which allows for payment for damages in a single lump sum. The mother, however, agreed to a claw-back provision which allows for any funds remaining to be returned to the state in the event of the child’s untimely death.

Once-and-for-all-rule

In terms of the once-and-for-all rule under South African law, a party is required to claim compensation for damages in a single action on a once-off basis. What this means is that a party is required to claim compensation for past and future medical expenses, loss of earnings and earning capacity, and for general damages under one action. Damages for future medical expenses are calculated, at the date of the judgment, based on the estimated life expectancy of the injured party. The injured party is not entitled to claim additional funds if the injured party lives beyond the predicted life expectancy. In the event of the injured party’s early death, any lump sum payment already made in accordance with an award made by a court is not refundable to the defendant.

Development of the common law

The judge stated that these aspects required that the common law be developed and the question that remained was whether, on the basis of the evidence before it, this was a suitable case in which the common law should be developed.

The court considered whether the MEC had placed sufficient cogent evidence before it to establish that the identified services will be available to the child at the same or at a higher level, and at no cost or less cost than that which is available in the private healthcare sector. The court also considered whether the MEC had made out a case that the common law should be developed to permit an order that the identified services will be rendered to the child at the hospital.

Specialists in various disciplines in the employ of the hospital gave evidence to the effect that the Charlotte Maxeke Johannesburg Academic Hospital is one of four central hospitals in Gauteng and that it offers specialised treatment. The hospital furthermore acts as a referral hospital and provides training and teaching. It was stated that the hospital is a centre of excellence and that the child would be treated as a special patient at no cost. It was also stated that the hospital had the financial budget to meet the child’s requirements.

The court furthermore visited the hospital to determine whether the facilities on offer and the staff members in the employ of the hospital were in the position to render the required services. The court held that the medical procedures and therapies that the child will require are available at the hospital and that the required treatment could be provided by the hospital’s specialists. It was held furthermore that the level of medical and therapeutic care which the minor would receive at the hospital was similar to that which a private healthcare facility could provide.

In arriving at a decision, the court stated that the development of the common law requires that there be a balancing of rights and interests. In this case, a balance had to be established between the damages and harm suffered by the child and her right to compensation, and the collective interests of the broader public to access healthcare services which the state is obliged to provide. The court furthermore took into consideration that public healthcare institutions are, in terms of the Constitution, required to render services to all.

In considering whether it is was appropriate to order that the common law be developed to allow for periodic payment of damages, it was held that insufficient evidence was presented with regards to what amounts and at what intervals such payments would be made. It was stated that this was not the appropriate case upon which such a determination could be made.

The MEC was ordered to make payment directly to the mother for the amounts claimed in respect of vehicle and transportation costs, alterations to the child’s home, caregivers and case managers, with costs reduced by one third of the actual amounts claimed.

The mother’s claims for loss of earnings and earning capacity of the child as a result of the alleged injuries suffered, general damages for pain and suffering, and for the establishment of a trust to protect the minor’s funds was paid over to her by the MEC for Health in 2017.

Effect of judgment

The judgment has the effect of ring-fencing the amount awarded for the child’s future medical expenses and any residue, in the unfortunate event of the child’s early death, will be returned to the MEC for Finance/Health, Gauteng.

The courts have previously held that awards for damages must be compensated in money and that a party may not be compensated by means of actual rendering of medical services. The courts declined to deviate from the rule as it is the function of the legislature to develop and amend the law in line with the Constitution.

Damages, especially future medical expenses, claimed in medical negligence cases are often very high due to rising medical inflation rates. The judgment is therefore a milestone in medical negligence cases which are instituted against the MEC as a result of cerebral palsy arising from alleged injuries suffered during or at birth. The effect of the judgment is not confined to those claims only. Nor does the court close the door on the periodic payment of damages where the evidence supports that approach.

According to the South African Law Reform Commission’s paper on medico-legal claims, issued in 2017, R527 billion was allocated in terms of the national budget towards health. The funds are used for actual healthcare services provided by the state and to settle medico-legal claims. The allocation of the funds in this manner has created a vicious circle in that funds which ought to be utilised for provision of healthcare services are also used to settle medico-legal claims which then affects the standard of healthcare services rendered in hospitals.

The judge, in handing down judgment, stated that damages are paid from the public healthcare’s purse and that such funds are meant to be utilised for resources to be made available to those who do not have the benefit of private healthcare. As such, it is not only the child and her family who are affected but also the public healthcare system.

The case is MSM obo KBM v Member of the Executive Council for Health.

Norton Rose Fulbright South Africa Inc