Discovery Health, a subsidiary of Johannesburg-based financial services group Discovery Limited, has won a Supreme Court of Appeal (SCA) ruling preventing South Africa’s Road Accident Fund (RAF) from deducting medical expenses from compensation owed to road accident victims on the grounds that their medical aid schemes have paid, or will pay, those costs. The order takes immediate effect and strengthens medical schemes’ ability to recover qualifying expenses.

The ruling, handed down Friday, followed an appeal by Discovery Health. The SCA overturned a December 2024 Pretoria High Court judgment that had dismissed Discovery’s application alleging the RAF was violating an earlier court order governing compensation for past medical expenses incurred by medical scheme members injured in road accidents.

Court rejects RAF directives

The appeal court declared that the RAF and its former chief executive, Collins Letsoalo, had breached a judgment issued on Oct. 27, 2022, as well as their constitutional duty to obey and implement court orders. The SCA also interdicted both parties from enforcing directives issued on April 13 and Nov. 2, 2023, with immediate effect.

The 2022 judgment had declared unlawful an RAF directive issued on Aug. 12 that year, which instructed employees not to compensate claimants for medical expenses already covered by their medical aid schemes. Discovery argued that subsequent directives continued the practice and circumvented the court’s ruling, including through an allegedly undisclosed directive concerning prescribed minimum benefits for emergency treatment.

RAF faces 14-day deadline

The SCA ordered the RAF and Letsoalo to take all necessary steps to comply with the judgment within 14 days and submit written confirmation to the court registrar and Discovery Health’s attorneys. The court also ordered them to pay the costs of the proceedings, adding financial consequences to the legal setback.

The dispute carries implications for medical scheme members because unpaid claims can leave schemes absorbing costs that they would otherwise recover from the RAF. Discovery has previously estimated that medical schemes collectively suffer irrecoverable losses of about R500 million ($30.3 million) a year when the fund fails to reimburse past medical expenses arising from road accidents.

Premiums at the center

In the earlier proceedings, Judge Mbongwe warned that rejecting such claims could deprive medical schemes of reimbursement, creating unexpected financial pressure that could force them to increase monthly premiums. Members could also face an imbalance: contributing to the RAF through the fuel levy while receiving less compensation for injuries caused by negligent drivers.

The court also cautioned that medical schemes might consider excluding motor vehicle accident-related expenses from their cover, forcing members to pay treatment costs upfront and seek reimbursement later. Such a move, it warned, could undermine the purpose of medical scheme coverage and place additional financial pressure on injured members.

Reimbursement is not sharing

Delivering the SCA judgment, Judge Tati Makgoka, with four fellow judges concurring, said agreements between medical schemes and their members require schemes to pay medical expenses initially, with members reimbursing them when their RAF claims are settled. He said that arrangement does not amount to sharing compensation proceeds.

“Accordingly, an agreement between a medical aid scheme and a member who claims under the RAF Act to reimburse the medical aid scheme for past medical expenses does not fall within the provision’s scope,” Makgoka said.

Discovery’s financial position

Founded in 1992 by Adrian Gore and Barry Swartzberg, Discovery has expanded from a medical insurer into a diversified financial services group spanning health care, insurance, banking, savings and wellness. Gore holds a 6.71% stake in the company, which operates across several financial services markets.

Discovery reported a profit of R13.22 billion ($801.33 million) for its 2026 financial year, up 38.3% from R9.56 billion ($574.54 million) a year earlier. Normalized operating profit rose 17% to R17.75 billion ($1.08 billion), while normalized earnings increased 21% to R11.8 billion ($715.6 million). Discovery Health delivered a 9% increase in normalised operating profit to R4.63 billion ($288.8 million).

Discovery Health is South Africa’s largest medical scheme administrator and managed care provider, overseeing more than 39% of total medical scheme membership in the country. The SCA ruling gives the business a legal victory in its effort to secure reimbursement of accident-related medical expenses and prevent RAF directives from shifting those costs onto medical schemes and their members.