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Action group calls for withdrawal of ‘catastrophic’ Compensation Fund regulations

The Injured Workers’ Action Group (IWAG) has called for the immediate withdrawal of the “catastrophic” new Compensation Fund regulations, saying they will have prejudicial consequences for medical service providers and vulnerable, injured workers.

The controversial new regulations were published in the Government Gazette on Friday 10 September, the amendments saying that the Compensation Fund will no longer accept nominated bank accounts of agents, including third party administrators for claims repayment. As from 30 September, the Fund will only make payments into the bank accounts of medical service providers who provided the service to the injured worker.

According to the Injured Workers’ Action Group, which represents more than 40,000 medical practitioners, employees and unions, the Fund has, in effect, side-lined the Parliamentary process to ram through what amounts to a “prohibition on cessions to third party administrators and financial institutions – a prohibition which was specifically removed from the draft COID Amendment Bill by Parliament in August this year”, IWAG says.

The Parliamentary Portfolio Committee on Employment and Labour removed the controversial Section 43(4) of the COID Amendment Bill, which sought to prohibit Medical Service Providers (MSPs) like doctors, physiotherapists, and chiropractors, from ceding their claims for payment by the Compensation Fund to financial institutions or third-party administrators. By removing this section of the Bill, Parliament acknowledged that third party administrators fulfil a critical role in a Fund plagued by dysfunction and corruption.

The Bill was passed in the National Assembly last week.

IWAG spokesperson Tim Hughes said it was “reprehensible that the Fund would be allowed to ignore, and even sideline, the Parliamentary process”.

“The new regulations mean that the Fund will no longer directly pay third party administrators to whom medical service providers have ceded their claims, especially since the inclusion of third-party administrators is the only part of the Fund’s system that works. This has the effect of undermining both the parliamentary process and, critically, the system which has operated efficiently for more than 20 years, whereby medical service providers cede their claims to third party administrators to secure immediate payment for medical services rendered to injured workers”.

He added that doctors, private hospitals, physiotherapists, and other MSPs treat injured workers immediately, but have to wait up to two years to be paid by the Compensation Fund.

“This is because the Fund is wholly dysfunctional, as conceded by both the minister of Employment and Labour, and the Auditor-General. For this reason, MSPs use the services of professional third-party administrators – at no additional cost to employers, injured workers or the Fund itself – to navigate the Fund’s dysfunction, and secure payment for medical services rendered to injured workers. Third-party administrators also play a critical role in the sustainability of medical practices, as they pay MSPs upfront for their invoices.”

Hughes said that if not withdrawn, the impact of the regulations would be disastrous.

The regulations mean MSPs will now need to register a bank account with the Fund. In practice, at best, it takes a minimum of two months for a new bank account to be approved by the Fund, and MSPs are only being given two weeks to comply.

Hughes said this would effectively halt the payment system, leaving already overworked MSPs out of pocket and facing a substantial new administrative burden.

“What is odd is that these new regulations are in fact in conflict with the COID Bill. To avoid fraud, the Department of Employment and Labour and the Compensation Fund introduced into the Bill a provision whereby all beneficiaries, including third party administrators, must register, and be vetted, a process that could include bank verification. If the regulations now provide that payments can only be made directly to medical service providers, this is contrary to the provisions made in the Bill.

“The implications and multiplier effect of these regulations cannot be overstated. Quite simply, if they are brought into force on 30 September they will deepen the dysfunctional rot that characterises the Compensation Fund, and could well herald its final collapse, leaving the country’s most vulnerable workers unprotected.”

IWAG has noted that the regulations were drafted in August, but only promulgated on Friday 10 September. Despite this, the Compensation Fund at no time consulted or shared the draft regulations with Parliament despite its clear relevance to the new Bill.

“Furthermore, it did not consult or engage any affected party, which leaves us with the unfortunate conclusion that they are acting in bad faith,” said Hughes.

“There is absolutely no justification for these regulations, nor do we believe they will pass legal or constitutional muster, and for this reason, we are calling for their immediate withdrawal.”


See more from MedicalBrief archives:


COID Amendment Bill bans the cession of medical invoices to third party administrators and financial institutions


Dates of COIDA Amendment Bill public hearings


Doctors lobby against some proposed Coida amendments


Concern over move to end right to cede work-related compensation claims


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