accident fund change 'will not stop fraud'
23 March 2007
The Law Society of SA has warned the Road Accident Fund (RAF) against its planned exclusion of attorneys from the system in the payment of vehicle accident victims, saying that would not necessarily “reduce fraud” or improve its service delivery. The RAF announced two weeks ago that it was in the process of implementing a new business model that would transform the way in which it administered claims.
The fund said that it was designing a streamlined payment system that would enable it to pay claimants and suppliers of medical services directly.
“In conjunction with the development of a direct payment system, the (RAF) will be linking electronically with medical services providers in much the same way as medical aid schemes. This will allow the RAF to pay medical services providers within weeks, if not days, of treatment being rendered,” the fund’s CEO, Jacob Modise, said.
The society’s co-chairmen, Nosidima Ndlovu and David Macdonald, said that the implementation of a direct payments model and the removal of attorneys from the system would effectively deny injured road accident victims access to justice, legal representation and the courts. The society’s motor vehicle accident committee said the implementation of the direct payment model would have a negative effect on the public, particularly on illiterate or unsophisticated litigants who might be unable to open bank accounts to receive electronically transferred funds or to bank cheques.
The society said in terms of the current system, where fault was the basis of compensation, most if not all claims were dealt with on a contingency basis.
“No legal representative would be prepared to take a claim on risk, which often calls for a substantial financial investment, without the assurance that if successful, the proceeds of the claim will be paid to the legal representative,” the society said in its submission to the fund.
It said the process often enabled legal representatives to recoup their expenses. The society said it was not uncommon that during the course of finalising a claim, legal representatives assisted the claimant financially. It said without legal representation, the pressure on the fund to deliver would stop and the RAF had already been promoting its customer service in which it was encouraging claimants to file their claims directly to the fund.
There are cases where the fund is being sued for negligence in handling claims directly and under-settling. The society said an assumption that claimants committed fraud only because they were aided by attorneys was wrong.
“At least attorneys are identifiable and accountable, and if guilty of fraud, there is a reasonable prospect of recovery from either the attorney concerned or the fidelity fund.” The society said the assumption that removing attorneys from the system would eradicate fraud was “wishful thinking”.
Ernest Mabuza, www.businessday.co.za