Medical scheme taken to court

The Constitutional Court will hear an appeal on Tuesday concerning the LA Health Medical Scheme (LA Health) regarding retrenchment benefits, the court said on Monday.

“On 11 November… the Constitutional Court will hear an appeal concerning whether or not the appellants are entitled to claim and receive redundancy or retrenchment benefits from the first respondent, LA Health Medical Scheme (LA Health), in terms of the Cape Joint Retirement Fund (Fund) rules,” the court said in a statement.

“The Constitutional Court granted leave to appeal on 7 August 2014.”

According to the court, LA Health operates a medical scheme for local authorities in the Western Cape.

The appellants were former employees of LA Health who, as a term of their employment, were members of the Fund.

Due to an administrative reorganisation, the appellants were transferred to Discovery Health. Consequently, the appellants claimed redundancy or retrenchment benefits, in terms of rule 7.1A of the Fund, from LA Health in the amount of R3 million.

“The Western Cape High Court, Cape Town (High Court) and subsequently the Full Court of the High Court on appeal determined that the appellants were entitled to redundancy or retrenchment benefits from LA Health as a “local authority” defined under the Fund rules.

“However, the Supreme Court of Appeal, after interpreting the rule and canvassing its history and context, upheld LA Health’s appeal. The basis for its conclusion was that the rule was a result of collective bargaining between employees and local authorities through the SA Local Government Bargaining Council and that LA Health was not a party to these negotiations.”

It further concluded that the context of the history of the rule indicated that LA Health was not a local authority for these purposes and was thus not required to provide the additional benefits.

“Moreover, the Supreme Court of Appeal found that rule 7.1A was not an “additional benefit” to that found in the member’s conditions of service, but that members were instead only entitled to the rule 7.1A benefit if it was included in their conditions of service in terms of a negotiated collective agreement,” read the statement.

The appellants submitted that the Supreme Court of Appeal (SCA) improperly took judicial notice of the history and context of rule 7.1A, introduced a new ground of appeal and denied them the opportunity to be heard.

LA Health refuted the submissions.

“The appellants submit that, because they received their members’ share as to which they were entitled in terms of rule 7.1A They must be entitled to the redundancy and retrenchment benefits that are also provided for in the rule.

“They contend that the applicable rule states that a member’s conditions of service provide for a benefit in addition to that provided in the rule, as suggested by the introductory sentence of the rule.

“LA Health submits that the SCA’s interpretation of rule 7.1A was proper and that the appellants are not entitled to redundancy or retrenchment benefits,” said the court.


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