Road Accident Benefit Scheme (RABS)
Under the Road Accident Benefit Scheme (herein after referred to as RABS) structured benefits will be made available to eligible claimants on a no-fault basis with no deductions or penalties applied for the injured person’s own negligence. Benefits would be available to any road accident victim injured or death caused by or arising out of a road accident which involves a motorized vehicle at any place anywhere in South Africa will be covered. Eligibility for life enhancement benefits of road accident victims will be determined in accordance with the guidelines in the Act.
The administrative authority of the RABS will have the power to assess the injured person in accordance with the guidelines as outlined in the relevant Rules of the Act.
An injured person who does not consent or fails to participate in such an assessment shall not be entitled to life enhancement benefits.
RABS is aimed at providing a scheme of structured and defined benefits to those seriously affected by road accidents in accordance with social insurance purposes and not liability insurance purposes.
RABS will aim to provide a benefit which will not cover the full extent of the loss as the aim would be to encourage an injured person to return to work thus reducing the culture of dependency.
Payments will be made directly to medical service providers and beneficiaries.
Periodic payments of structured benefits or lump sum amounts (under certain conditions) will be paid to successful claimants.
No payments will be made for compensation for general damages i.e. pain and suffering, loss of amenities of life and disfigurement.
Personal or private occupational insurance will be encouraged as they could supplement the limited benefits provided by RABS.
RABS will allow injured road users to have limitless access to emergency medical and appropriate healthcare only if the victim complies with the requirements imposed by the administrator.
These benefits may be suspended or terminated should the victim not comply with a condition or fails to comply with a request to attend an interview.
The RABS claim process is designed to be simple and accessible and it is expected that claimants would be able to administer their claims themselves.
RABS would be able to review, revise and terminate the claimants’ benefits with a system of medical peer review that is supposed to facilitate objectivity and consistency of the medical and disability assessments.
RABS (Administrator) offers the following benefits:
- Medical and Healthcare services
A cumbersome system of claiming for payment and pre-authorization will most likely result in delays;
The nature and extent of treatment falls within the sole discretion of the administrator;
This will imply that the injured will be denied the freedom to choose the nature and extent of treatment;
To our knowledge no tariffs has been published for comment (if any reference is taken to the 2005 Amendment Bill the tariffs will be so low that the private sector will not participate;
- Income benefit support subject to thresholds and ceilings
Income limited to R 219 820 per annum, with only 75% of a 100 % disabled victim’s income being paid;
The maximum payment of R 13 738.75 per month can be reduced at any time, in the administrator’s discretion (residual earning capacity being considered regardless of actual employment);
No compensation for the first 60 days and only payable from age 18 to 60 years;
The benefit terminates upon death of the victim which means that if a victim was the sole breadwinner his family will be left destitute;
A vast number of indigent victims will find the benefits inaccessible as such benefits can only be applied for and substantiated by costly medical reports as a pre-requisite;
- Loss of earning capacity will depend on the degree of disability and actual income at the time of the accident;
It is unclear how the administrator will deal with people who are economically inactive at the time of the accident;
As the Act currently stands it will have devastating consequences for children, students and young adults;
The denial of a loss for earning capacity is manifestly unjust even more so because they will not be able to afford additional top-up insurance.
For the victim who qualified there are further restrictions as his residual earning capacity can be deducted from any benefits received;
Should the victim’s residual income be more than the maximum R 13738.75 per month, no claim will be allowed, even if an actual loss has been suffered.
This benefit is only paid for two years after which a victim has to apply for long-term income support benefits;
- Family support benefit subject to prescribed thresholds and ceilings;
Support is limited to a maximum of 15 years regardless of the age of the dependants;
Children are only supported to the age of 18;
No support paid to dependants who are resident abroad;
If both the deceased and the surviving spouse earned more than the pre-accident income cap, or are deemed to have earned the average national income, there will be no claim for loss of support, despite the fact that a loss might has arisen.
- R 10 000.00 capped funeral cover.
This contribution would be inadequate to cover all necessary expenses.
The aim of RABS:
RABS is aimed at addressing the disparities in access to treatment and benefits.
The benefit scheme should optimize limited resources and facilitate timely and appropriate health care and rehabilitation.
The Bill is further aimed at providing financial support to reduce a victim’s income vulnerability.
It will provide a benefit which would not cover the full extent of the loss as the purpose is to encourage an injured victim to return to as to curb the culture of dependency.
Key aims of RABS are to ensure a reasonable, equitable, affordable and sustainable system of structured benefits.
Let’s take a look at a typical claim under the RABS system:
Joe Soap is an illiterate 58-year-old man who stays in Mount Frere who earns an income by doing manual labour.
Joe is injured in an accident when he is run down by an unidentified driver of a vehicle and suffers a severe back and knee injury.
Joe receives “free medical treatment” and is discharged 3 months after the accident (a benefit that current road accident victims already enjoy).
Joe is unable to do any physical work because of his injuries and has no other means of supporting his wife and three children.
Joe must wait 60 (sixty) days before he would be able to apply to RABS for assistance;
Joe only has three years to lodge a temporary income benefit claim;
Joe now needs to travel to the closest RABS – “Branch” to be assisted with his claim;
The entitlement to a temporary income benefit is determined by a doctor after a physical examination has been done;
To qualify for a long term income benefit he must subject himself to an examination by a Fund appointed occupational therapist or another suitable expert;
Entitlement to long term income support excludes the period ending two years after the date of the accident.
Joe’s claim prescribes as he is unaware of the stringent time limits determined by RABS.
Joe (like many indigent claimants) does not have the financial means to travel to the closest RABS -“Branch”.
Joe is unable to attend the assessments required by RABS and is disqualified from claiming from RABS.
Joe is able to travel to the nearest RABS -“Branch” with the help of a family member.
Upon arrival Joe is informed to attend an assessment at a future date and time as there is a shortage of medical practitioners that can perform assessments.
In terms of RABS they are supposed to pay for the medical assessments – however chances are that they will not pay if they are of the opinion that the matter does not justify such an evaluation.
Joe would be expected to see a doctor at his own expense as to comply with the further requirements of the Act.
Joe will then submit his claim to RABS who has 180 days in which to decide whether Joe qualifies for any benefits.
Joe must accept that if he has not heard anything from RABS after 180 days, he must accept that his claim was denied.
Joe now has to lodge an appeal to RABS who based upon the original claim will re-consider his matter.
Joe is not allowed (even if he could afford it) to make use of any additional medical documentation.
Joe may be represented by an attorney at his own cost.
Joe does not have the money to secure the services of an attorney but RABS expects him to go to Court if he wants further relief.
Joe turns 60 and forfeits his right to claim against RABS.
Joe turns 60 and loses his RABS benefits as he is required to support himself from his government pension fund (RABS only covers successful road accident victims up to the age of 60).
If Joe was a 5-year-old who was left quadriplegic neither Joe nor his parents will be able to access any benefits until Joe turns 18.
- National Average Income (NAI) is not clearly defined by RABS and, considering census data, might be in the region of R 130 000.00 per year.
- RABS: Benefit = X*75% minus Z, where X is actual income before the accident and has minimum of NAI estimated at R130000.00 and a maximum of about R 220 000.00; Z = actual earning capacity.
If Joe was a final year graduate student and left incapacitated after a motor vehicle accident he would be regarded as an unemployed person and his income benefits would be based upon the annual national income without the prospect of having his academic history and/or prospective income into account.
Joe is a graduate professional who earned R 2 m per year;
Joe’s residual income, after a serious motor vehicle accident, is R 220 000.00 per year, which is more than the R 165 000.00 per year (R 75% of R 220000.00), maximum allowed by RABS, per year;
Joe will receive no income benefit from RABS.
Joe is a labourer who earned R 20 000.00 per year prior to the accident;
Joe is injured and has a 5% loss of earning capacity and now earns R 19 000.00 per year;
Joe can now receive an income benefit of R 78 500.00 (75% of R 130000.00 less R 19 000.00)per year.
The introduction and implementation of RABS is “sugar coated” with the prospect of more victims having access to benefits based upon a no fault system and the fact that you may supplement your claim with personal insurance.
Truth is most road users do not have the financial means to afford insurance.
The fact that no fault applies does not automatically grant you access to RABS benefits nor does it mean that you will be compensated in full.
In terms of the regulations victims would be required to lodge their claims electronically – most of the road accident victims will not be able to comply with this requirement.
The public pays more and receives fewer benefits.
A road accident victim will still need to be reviewed and qualified and is expected to confront the RABS on his own without professional help or the assistance of an attorney to champion his/her case.
RABS effectively prevents the victims of car accidents from claiming due and proper compensation.
In fact looking at the practical implication of RABS the whole system is aimed towards frustrating and discouraging road accident victims from claiming.
Victims are effectively denied access to Courts and an independent review of his/her claim.
The ideal of RABS in as far as rehabilitation and access to Health Care is solely dependent on the National Health Insurance (NHI).
NHI is supposed to ensure “universal healthcare access” to a legal resident of South Africa – it was envisaged that it will be implemented over a period of 15 years.
RAF CEO, Eugene Watson is adamant to implement RABS as soon as possible as he said in a recent article: “it is hoped that RABS will come into effect next year”.
Minister Aaron Motsoaledi said at a press briefing in August of 2011, that hospitals need to be radically improved, infrastructure developed, human recourses systems put in place and information technology developed.
Payments towards NHI will be compulsory for higher earners and employers to which inference may be taken to the individual road user who fills up his vehicle (in contrast to for example a taxi driver who transports 10 people) and contributes to a large portion of the RAF’s revenue.
The Minister said that wealthier citizens who decide to make use of private medical aids would still have to contribute to the NHI.
Higher earners will receive less benefits under the caps applicable in RABS.
Under RABS, wealthier road accident victims will have to secure personal “top-up” income and related insurance as their exposure to compensation will be drastically limited under RABS.
A policy document admits that Government Hospital require a complete “overhaul”.
Motsoaledi admitted that the NHI would not be successful unless “radical changes in the administration and management of hospitals” takes place.
The document said that the public healthcare services “have deteriorated or remained poor”.
There is a shortage of doctors in public healthcare but the document is mute on how the shortage will be dealt with.
How government will attract specialist staff to smaller hospitals and deal with severe staff shortages of medical professionals was not discussed by the Minister of Health.
Studies have shown that an estimated R 20 billion will be required to find and train the doctors and medical staff needed for NHI.
An estimated 170 000 new nurses are needed for NHI to work.
RABS aim to rehabilitate and ensure that road accident victims return to their jobs through rehabilitation and vocational rehabilitation.
Eugene Watson, CEO of the RAF has yet to explain how RABS will contribute to job creation for disabled road accident victims under circumstances where it is already difficult for able bodied people to secure jobs.
Eugene Watson, CEO of the RAF still need to explain how RABS intends on achieving one of RABS’ main goals being rehabilitation and access to proper healthcare under circumstances where the Minister of Health admitted that the National Healthcare system, as it is, is in a dire situation.
Further, Eugene Watson, CEO of the RAF is not explaining how RABS intend on servicing the whole of South Africa’s claim demand.
South Africa has one of the largest accident rates per capita in the world.
According to Watson around 15 000 people are killed (that may result in more than one claim) and 60 000 seriously injured annually on South African roads.
Currently the RAF only provides for seriously injured and loss of support claims, under RABS everyone that is injured in a vehicle accident will be allowed to approach RABS for structured benefits.
Rehabilitation (which includes vocational rehabilitation) as a primary objective has many challenges in our current society that stands in the way of this ideal:
- The employment rate of working-age people with disabilities in our country remains low;
- There is a vast lack of facilities that offer vocational rehabilitation;
- Vocational rehabilitation is a lengthy and costly process and patients usually need to attend a facility on an outpatient basis; there are no adequate facilities that would offer this service on a daily basis (numerous of these facilities would have to be made available over the country);
- In order to return to a job a road accident victim would have had to have a job to start off with (many claimants are unemployed at the time of the accident).
- Vocational rehabilitation does not include training or education and as such vocational rehabilitation will have little or no value in a country with as high an unemployment rate as South Africa;
- For vocational rehabilitation to have a successful outcome the road accident victim should be placed in a specific job he or she was skilled to perform as at the time of the accident.
- This would require such a job to be locally available and prospective employers should be willing to accommodate a person with some kind of disability in the workplace.
- Unfortunately, not all employers are willing to allow a person with residual difficulties to work, especially in your high risk industries like the mining sector and the reality that there is usually an abundance of able bodied people competing for the same job.
- Currently no such system exists to assist possible road accident victims that could benefit from vocational rehabilitation.
- It would be an enormous task to develop such a system as it would have to be rolled out on a national basis and what are the cost going to be to facilitate the RABS infrastructure in terms of personnel, resources, etc.
- The current system is working efficiently in respect of identifying appropriate candidates who would benefit from rehabilitation and vocational rehabilitation.
It is generally accepted that the enactment by parliament of laws governing personal injuries caused by or arising from motor vehicle accidents was in order to provide the road accident victim with the “widest possible protection”.
The basis of the right of road accident victims has been and still remains a common law right to claim damages where damage or loss is suffered as a result of the negligent driving of a motor vehicle.
The road accident victim has the right to:
- Bodily integrity;
- Pursue a claim for damages for pain and suffering caused by the negligent infringement of his/her bodily integrity; and
- Claim for the common law right to maintenance in the case of death of the breadwinner.
RABS is not reasonable as the public would be required to pay more and receive even less benefits;
Should it turn out that RABS is more expensive than the existing system there will be a demand for a higher fuel levy and higher taxes.
No provision is made for General Damages (non-patrimonial loss).
Traditionally indigent road accident victims were afforded the opportunity utilize payment under this head of damage as their only means to access private healthcare.
Eugene Watson told the Business Day Live on 2 July 2014 that general damages will not be awarded under RABS to ensure that sufficient resources are available to prioritize rehabilitation.
Considering that rehabilitation has been proven to be effective in less than 5% of road accident victims this trade could never equate to a compensatory advantage.
By not awarding a lump sum payment i.e. general damages and considering the fact that the national health system is in a desperate state these road accident victims would have very limited if any opportunity to obtain treatment under RABS.
In a media statement no fault, according to the deputy director-general of governance counsel at the Department of Transport, Dr Maria du Toit, is the trade off to the public.
According to Dr du Toit, the fact that everyone would be able to claim under a no fault system is justification enough to abolish this most enshrined common law right.
General Damages is a constitutional right and where such rights are abolished or affected it must be supplemented by an adequate compensatory advantage.
What the minister, with all due respect, does not realize is that no fault does not guarantee a road accident victim benefits under RABS – look for instance at the situation of a person under the age of 18.
RABS affords no compensating advantage whatsoever and to the contrary severely restricts the road accident victim’s rights
In fact, the application of RABS results in exactly the opposite of adequate compensation – completely the opposite of the original aim of providing the widest possible cover.
Benefits terminate upon the death of the beneficiary – this would mean that when Joe as the sole breadwinner dies his wife and children would be left destitute and additional strain will be placed upon the state in terms of social grants etc.
Only an “injured person” older than 18 years of will be eligible to claim.
This would mean that the parents of a severely injured child will have to wait until the child reaches the age of 18 before they will be able to engage RABS;
This will in turn also place an additional strain on the state in terms of other social grants and health care.
The question regarding affordability is left open for discussion as the basis of many of RABS’ qualifications i.e. national annual income, the financing of medical and related care etc. need to be obtained.
Further, without NHI being in place, who will carry the burden of these medical and related expenses?
Equitable, there can never be any question of equity where an “Administrator” in this case RABS, plays judge and jury.
Taking inference from recent cases publicized in which direct claims was largely under settled and or left to prescribe begs for a system in which cheques and balances are in place, in the interest of the road accident victim and the public as an interested party.
In a recent budget speech, it was said that with the RAF-on-the Road programme over 23000 claimants were reached and over R 260 million was paid in benefits.
This amounts to R 11304.34 per claimant which is hopelessly inadequate.
The distinction between certain “classes” of injured persons begs the question of inequity.
There is no sanction available to a claimant should RABS fail to process a claim timely.
Sustainability of the RABS system is unclear as Eugene Watson, CEO of the RAF has yet to explain how RABS will be funded and if the existing fuel levy will cover the additional burden of medical and related treatment and services.
To fund the NHI Government would need to find an additional R 100 billion over and above the R120 billion they are already spending on Healthcare.
This would entail a 15% increase in taxation – would this imply that Eugene Watson will request Parliament for in increased fuel levy if the existing levy does not meet the additional RABS demands and obligations?
According to reports a parallel system of existing claims and claims under the RABS are envisaged.
The administration fees for a national system would be very high – for health care alone this would amount to an estimated R 8 billion per year.
RABS will be attacked on Constitutional grounds which would include but not be limited to:
- The issue regarding the discrimination between different classes of road accident victims – Section 9(1) of the Constitution;
This approach is in direct conflict with section 9(1) of the Constitution.
The fact that a road accident victim is denied non-pecuniary loss as opposed to a victim of medical malpractice, rail accident or assault who will still qualify for non-pecuniary loss.
- The fact that General Damages is abolished under RABS;
RABS abolishes this right to achieve a financial saving;
Financial constraints provide no ground for the curtailment of common law rights;
It is general knowledge that the financial position in which the RAF finds itself could be ascribed to the manner in which the RAF goes about its business;
In the RAF’s 2013 financial statements it shows fruitless expenditure ascribed to law administration of 20 million and 22 million in 2012.
The legislature must provide an adequate and compensatory advantage should they wish to abolish common law rights.
RABS affords no compensating advantage whatsoever and to the contrary severely restricts the road accident victim’s rights.
Also see “Fruitless and Wasteful expenditure” supra.
- The fact that a road accident victim right to claim the excess of his claim from the wrongful party;
The RABS bill abolishes the road accident victim’s right to claim compensation not paid by RABS while for example Section 39(1)(a) of COIDA, retains such rights.
- There is a constitutional duty on RABS to ensure that claims are processed timeously and effectively and to ensure that benefits are allocated as soon as possible;
The RAF is mandated to provide “compulsory cover to all users of South African roads, citizens and foreigners, against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa; this cover is in the form of indemnity insurance to persons who cause the accident as well as personal injury or death insurance to victims of motor vehicle accidents and their families.”
The fact that the number of unpaid or unresolved claims has been allowed to grow to such an extent is a travesty.
With the RAF bleeding funds due to a backlog of claims estimated at well over R42 billion, it is clear that not enough is being done to manage the situation.
Recent news reports have also indicated the RAF has been accused of continuously losing files and letting down road accident victims. Case in point are the Zithwane orphans from the Eastern Cape, who, according to reports, have been waiting for the past three years to get compensation from the RAF after their mother had been killed in a road accident during July of 2008. This is but one example and my Shadow Deputy Minister, Greg Krumbock and I receive countless requests and complaints about claims being ignored.
Transport Minister Ben Martins must step in to rectify the situation.
I will be raising the DA’s concerns and will call on Minister Martins to put forward solid and urgent proposals as to how the situation will be addressed during a meeting of the Transport Portfolio Committee, scheduled for Wednesday 25 July 2012, where committee members are set to be briefed by the Department of Transport on the RAF transitional provisions bill.
The situation cannot be allowed to continue. The Department must act urgently to ensure that the victims of accidents on our road are properly taken care of.
Statement issued by Ian Ollis MP, DA Shadow Minister of Transport, July 22 2012
In a television interview on 16 March 2014, CEO of the RAF, Eugene Watson said : “when it comes to the more serious claims we have shown that if you come directly to us we can settle it within two and a half years”
The RAF is openly “tauting” in disregard for the constitutional rights of victims to access to legal advice.
The on the road campaign by the RAF are being held without having the victim medically examined, without inputs being obtained by various experts.
Nowhere in the RAF act does it make provision for the RAF to act on behalf of a road accident victim, yet the RAF are settling claims in a representative capacity on an average of less than
R 12 000.00 per claim, which is totally inadequate, unreasonable and in direct contrast to the public’s interest.
Is this a taste of things to come under the RABS – Administrator?
- The fact that a road accident victim is prevented and/or limited in his right to access the Courts – Section 34 of the Constitution.
Under RABS the road accident victim has no legal recourse or sanction to compel the Administrator (RABS) to attend to his or her claim.
In terms of RABS no claim may be submitted within 60 (sixty) days of the cause of action;
The administrator then has 180 days (six months) to decide whether or not benefits may be allocated – in terms of the Act the administrator need not even reply to the claim the road accident victim must accept that his claim was denied if not replied to within the prescribed period.
- The right to bodily integrity, fact that a victim will not be able to choose where and how he would like to receive medical treatment – Section 12(2) of the Constitution.
- The fact that a child’s right to support is affected as no support is payable to a child living abroad regardless of the fact that the deceased had a legal obligation to pay support – Section 28 of the Constitution.
In an article in NEWS 24 on the 26th of July 2014, it was said:
ANC lekgotla agrees to avoid rushed legislation :
Johannesburg – The ANC wants to re-assess the passing of rushed legislation which may lead to it being deemed unconstitutional or excluding certain sectors of society, the SABC reported on Saturday.
“We are walking away from rushing legislation because we want to finish, we have to look at laws thoroughly because we do not want any piece of legislation to produce unintended consequences,” African National Congress chief whip Stone Sizani was quoted as saying.
“This is one serious issue we have agreed we should re-look.”
Sizani was speaking at a two-day ANC Lekgotla in Parliament, chaired by the party’s deputy president Cyril Ramaphosa.
He is standing in for President Jacob Zuma.
The ruling party wanted to make sure all laws that were tabled, debated and passed by both Houses of Parliament were in line with the Constitution, Sizani reportedly said.
The traditional courts bill was criticised for excluding women.
An obvious issue Eugene Watson, CEO of the RAF needs to explain is how he expects to deal with the additional workload that RABS will cause because of the “no fault system” if the RAF isn’t capable to deal with the current workload which Mr. Watson earlier explained in an article had deteriorated to half the annual number of what it was before the introduction of the 2008 Amendment Act?
Foreigners will only be entitled to emergency health-care expenses – this approach will have an influence on the Tourism industry.
Fruitless and Wasteful expenditure
Section 1 of the Public Finance Management Act (PMFA), 1999(Act No. 1 of 1999) defines fruitless and wasteful expenditure as “expenditure which was made in vain and would have been avoided had reasonable care been exercised”.
- Tainted tender process by RAF
The costs of the tainted tender by the RAF in the appointment of a new panel of attorneys will run into “tens of millions of rands”;
The RAF is aware of the chaos and wastage of funds caused by insisting that cases be handed over from the old to new panel attorneys.
This means that each file must be copied and a memorandum drafted about each case which involves additional costs for the RAF.
The new attorneys now have to peruse the file and familiarize themselves with the file effectively duplicating the workload and the costs which the taxpayer would be liable for.
- Any expenses occurred in the implementation of RABS before NHI is fully operational.
There are no current systems in place that would ensure that road accident victims would benefit from vocational rehabilitation or other adequate emergency and/or health care as envisaged by the NHI.
- Abolition of the AMA guide in the assessment of general damages
The fact that general damages is abolished under RABS begs the question of fruitless and wasteful expenditure by the RAF in the training and development of a system under the AMA guides applied for the sole purpose of determining the eligibility of road accident victim under the current system, only to abolish same under RABS.
In terms of Regulation 3 of the Road Accident Fund Act a serious injury is determined by a health care professional that has undergone a training programme as prescribed by the Minister.
RABS abolishes the whole approach and application of the AMA criteria introduced, in terms of the current RAF Act, at great costs for the RAF i.e. the training of doctors and other health care professionals.
The benefits and requirements of RABS are totally inconsistent with the nature and character of the South-African road accident victim and falls way short of the ideal of providing the “widest possible cover”.
RABS will be a complicated and costly system fraught with disparities that would leave the South African road accident victim totally destitute and dependent on the State and will lead to countless court cases chipping away at the unconstitutional cornerstones of RABS.
The fact that the functionality of RABS is greatly dependent on NHI makes any prospects of implementing such a system before NHI is fully operational, premature and highly irresponsible and will prove very costly.
The constitutional issues raised in RABS will be in direct contrast to the ANC lekgotla “the ruling party wanted to make sure that all laws that were tabled, debated and passed by both houses of Parliament were in line with the Constitution”.
The fact that the administrator is only accountable to the Minister and himself will leave the victim vulnerable to being denied compensation without any sanction or recourse as is currently experienced with the RAF on the road campaigns.
There is a better more effective and cost saving alternative that can be found in innovative thinking, involving all the relevant stake holders which would ultimately lead to better benefits being awarded to the road accident victim.
Open Letter to Minister of Transport, the Honourable Dipuo Peters. – 12 MAY 2015
The Association for the Protection of the Rights of Road Accident Victims (APRAV) is a non-governmental association formed to protect the rights of road accident victims. APRAV has with concern noted the comments made by the Honourable Minister of Transport during her speech on the Transport Department’s budget on 5 May 2015.
Holistic approach: Government’s Constitutional Duty
In our view the South African road accident victim’s destiny requires a holistic approach which does not only concentrate on the consequences of road accidents in South Africa but also addresses the causes. The government has a Constitutional duty to ensure the safety of road users. Nothing relating to this duty appears in the Department of Transport budget for 2015/2016 despite the fact that internationally South Africa rates as one of the worst countries as far as road safety is concerned. The recent record Easter road deaths underscores the fact that comparatively speaking, South African road users are at considerable peril. Instead of properly funding the Road Traffic Management Corporation in compliance with its constitutional duty in an effort to improve road safety and consequently prevent citizens from becoming road accident victims, the Government in its 2015/2016 budget opted to rather spend R10 billion on the consequences of its failure to comply with its constitutional prevention duty by increasing the Road Accident Fund fuel levy by 50 cents a litre than comply with its constitutional duty to prevent harm to the motoring public thereby further burdening the already financially beleaguered citizen and strangling the embattled South African economy.
We are of the view that the Honourable Minister misidentifies the actual causes of the funding crisis in the road accident victim compensation system. In the first instance, the road accident victim compensation reform process is entirely driven by the perception that the system faces a R46 billion deficit. This deficit is an actuarial figure which is calculated on the basis that the compensation system is insurance based. This is not the case. The compensation system is and has always been a dedicated tax funded social benefit scheme. If this is accepted, the Government cannot use a lack of funds as a reason to change a system which has proven to be equitable and effective for more than 50 years. It cannot use the actuarial shortfall argument when dealing with other constitutional obligations to provide housing, care grants and medical care so how can it do so when dispensing social benefits to road accident victims?
The Honourable Minister makes the sweeping statement that the woes of the Road Accident Fund are entirely the consequence of the actions of “unscrupulous stake-holders including lawyers and doctors just to mention a few”. This statement cannot go unchallenged. This completely ignores the role that the Road Accident Fund plays in the compensation system and assumes that no blame for the current financial crisis is in any way attributable to the way in which the Road Accident Fund is structured and functions in practice. Contrary to the Honourable Minister’s implied assertion that the RAF has no part in the compensation crisis, it is APRAV’s conviction that the problem primarily lies with the RAF. In the first instance the governance of the RAF is structured as if it is a public company while it in essence dispenses social security. The CEO is remunerated more than our Honourable President Mr. Jacob Zuma and even more than American President while the RAF executive and board receive above average remuneration. In contrast the Compensation Commissioner who essentially has the same mandate as the CEO of the RAF receives one-fifth of the remuneration of the CEO of the RAF.
The RAF dismally fails in its constitutional duty to expeditiously and equitably deal with the claims of road accident victims – a fact which can be gleaned from judgments handed down by various courts over a number of years in which the RAF was severely criticised for its sub-standard administration. The RAF spends R4,6 billion p.a. on litigation when it has been held by a commission of enquiry that only 1% of RAF matters are actually heard by the courts and that 99% of all claims against the RAF are capable of early settlement prior to trial. In a judgment handed down by the High Court in Pretoria in March 2014 the following was said of the RAF: “As I stated above it was clear the no instructions were forthcoming from the defendant (RAF). Because of the defendant’s lackadaisical attitude to third party litigation it is those funds that are ostensibly being protected that are actually being wasted. However, that is not the issue. In my view the courts ought to adopt a stricter approach to the obstructive and ineffective role played by the defendant (RAF) in third party cases in allowing cases to go on trial when such cases can and should be settled. …As at 3 March 2014 this case could and should have been settled. The plaintiff had supplied the defendant (RAF) with everything it required to consider the claim as a whole. Instead no decisions were made until the last minute, when counsel’s first day fees had already been incurred, and then on the pretext that it is dealing with public funds, the Defendant (RAF) tries to justify its actions or inactions on the basis that public funds should be protected. This however has an impact on plaintiffs in third party cases who have to pay additional amounts, more often than not large amounts, being those not recoverable on the scale as between party and party.” (we italicise). Two similar instances were reported in the press on 25 May 2015 and another instance in Natal in the same week where the judge called upon claims handlers to show cause whether they should not be held personally liable for the legal costs as a result of their neglect to attend to a seriously injured RAV’s claim (see http://www.iol.co.za/motoring/industry-news/accident-fund-gets-tongue-lashing-1.1862782#.VWapjkZrv2Q and http://legalbrief.co.za/story/raf-claims-handlers-to-pay-costs) For the information of the Honourable Minister: This is the actual reason why court rolls are congested with RAF matters. The RAF furthermore spends approximately R20 million p.a. on preventable expenditure in the form of costs for writs of execution and interest on late payment of court judgments. Finally, if unscrupulous stakeholders succeed in their alleged quest to impoverish the Road Accident Fund as suggested by the Honourable Minister it is only because the Road Accident Fund has allowed them to do so by not complying with the provisions of the act of parliament which is administers. The RAF Act contains a raft of provisions designed to curtail and prevent litigation but unfortunately the application of these provisions are by and large sorely neglected by the RAF.
The current system is entirely common law driven and it is quite impossible for the current system to cause and perpetrate inequality or abuse as compensation awards are based on common law and subject to judicial scrutiny. The view that the system is unequal is fully based on perception. According to the RAF annual statements only 5% of claims exceed R500 000. It is therefore simply untrue that a small percentage of claimants are compensated by being paid the lion’s share of available funds while other road accident victims go without compensation. On the other hand, if the allegation is proven to be true, then the counter argument is that this is the case because of bad RAF administration allows this to happen. The oblique reference to the RAF Amendment Act (RAFAA) as the Act which brought about equality is unfortunate. It must be remembered that the RAFAA passed constitutional scrutiny largely on the basis that it was an interim measure. Furthermore, the RAFAA all but constructively abolished the majority of road accident victims’ right to receive compensation while curtailing the seriously injury road accident victim’s right to full compensation without any compensatory advantage – all in order to balance the government’s books.
The vague reference to anecdotal information regarding the RAF’s “successes” without hard facts is disingenuous – especially when recent reported instances in the media regarding some of the outcomes of the “RAF on the Road” campaign is considered. The RAF persuaded Frans Mabitsi to settle his claim for R38 000,00. After consulting an attorney he recovered R1.5 million (http://www.news24.com/Archives/City-Press/Road-accident-fund-leaves-middleman-high-and-dry-20150429). In another instance a legal practitioner reported that her client was persuaded by the RAF to accept R21 500,00 and was later awarded R975 000,00. Samkelo Vapi was paid R905 000,00 by the RAF directly as guardian for his brain injured child when the claim was later admitted for R1,2 million (see http://legalbrief.co.za/story/judge-orders-review-of-raf-claim/). Other instances of under settlement can be supplied on request. A document sourced from within the RAF seems to suggest that “RAF on the Road” is being run at the expense of RAV’s. Not only are the amounts which claimant’s receive far less than claims where RAV’s are represented but it seems that unrepresented claimant’s claims are favoured at the expense of represented claimants. From the preceding examples indicating the way that the RAF deals with some direct claimants, it is quite apparent that the removal of attorneys from the compensation system poses a real threat to the rights of road accident victims. More so if it is remembered that the administration of RABS will simply be the RAF in a different guise. As far as the case of the claimant present in Parliament referred to by the Honourable Minister is concerned, the benefits received by Ms Gunuza were benefits which accrued to her in terms of the current compensation system and not RABS.
RABS as THE SOLUTION
The acceptance of Government of a no fault system in the South African context seems to be a serious lapse in policy and direction and an is an entirely wrong policy given the South African road safety record, the composition of the South African road accident victim population and the limited funds available to fund such a system. Although APRAV supports the notion of no-fault as beneficial to the interests of the road accident victim it has serious reservations in respect of its unqualified implementation in South Africa. Firstly, the introduction of a no fault system was not unreservedly recommended by the Road Accident Commission (2002) and was found to be unaffordable by all the previous South African commissions of enquiry who investigated the no fault option. The report of the RAF Commission indicates that further research, especially regarding cost, is required before such a system can be introduced. Secondly, the protagonists of RABS state that South Africa, by adhering to a fault based system, is out of step with leading other global legal jurisdictions such as Australia, Canada and the USA. In order to assess whether these arrangements and/or systems in these jurisdictions can be successfully implemented in South Africa, factors such as accident rate, unemployment and GDP need consideration. A comparison shows that the RSA accident rate overwhelmingly exceeds all of the countries in question. The Australian accident rate is 7 casualties per 100 000 vehicles, Canada 9,3 and the USA 13,6. The casualty rate for South Africa is 156.4. The unemployment rate in Australia is 5,8%, Canada 6,5%, the USA 13,6% and South Africa 26%. The GDP in Australia is $1 560 597, Canada $1 826 769 the USA $16 800 000 and South Africa $350 630. The accident rate and GDP alone suggest that a very careful consideration of the financial implications and affordability of no fault in South Africa is deserving of very incisive and meticulous scrutiny. More so, if the fact that some jurisdictions who have opted for no fault reverted to fault and that in other voices for the change in the no fault approach have arisen. This truly a situation of “act in haste and repent at leisure”. In addition, the important policy question as far as South Africa is concerned, is whether no fault sits well with the enforcement of road traffic legislation compliance by South African drivers and the improvement of road safety and whether no fault will result in indirectly rewarding careless and negligent drivers for the lack of compliance with the rules of the road with tax money.
We have roughly estimated the cost of the introduction RABS. Because of the high unemployment rate we estimate the non-employment benefit in terms of RABS alone to be in the order of R20 billion p.a. If medical costs, loss of support, loss of employment income, funeral expenses and legal costs are added, RABS benefits exceed the available budget of R30 billion p.a. by a very large margin. Our concern is that due to the limited budget, the only way that RABS will be able to function will be through the limitation of rights and benefits. In this regard we observe a trend in past government actions (see the introduction of limitations with the Road Accident Fund Amendment Act of 2005) that budgetary aims are achieved at the expense of the rights of road accident victims and we are deeply concerned that the introduction of RABS means a further erosion and worsening of the position of the road accident victim in South Africa – especially for the more productive tax-paying section of this constituency. Apart from the affordability if RABS we are concerned that RABS is not aligned to the needs of the average South African road accident victim and in essence seeks to compensate ignoring the profile of the average South African road accident victim. It also abolishes the constitutionally enshrined common law rights of the road accident victim and his/her constitutional right to access to the courts. We contend that the government’s failure to protect the road user’s constitutional right against harm and the introduction of RABS present a double jeopardy to road accident victims and is not at all a reflection of a government that cares for its citizens. We call on you and Government to enter into a dialogue with us and all other interested parties to explore a suitable solution to compensation of the South African road accident victim so that the best interests of the road accident victim and our country may be served and assured.
12 MAY 2015
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