South Africa: Funds, Serious Funds

Last Updated: 19 March 2012
Article by Deon Francis and Letrisha Mahabeer

Subsequent to the amendments of the Road Accident Fund Act (56 of 1996) the judiciary is slowly making headway into the interpretation and application of the Regulations, specifically those pertaining to general damages, as governed by s17(1A). There are already crucial implications for the Fund and for practitioners.

In terms of s17(1A), read together with Regulation 3 of the Act, the Fund is only liable to compensate a third party for non-pecuniary loss if the injuries sustained are "serious", that is, a 30% or more impairment of the Whole Person as provided for in the AMA Guides. However, the injury may still be assessed as serious if it has resulted in a serious long term impairment or loss of body function, constitutes a permanent serious disfigurement, resulted in severe long term mental or severe long term behavioural disturbance or disorder, or has resulted in loss of a foetus (the "narrative test").

An RAF 4 serious injury assessment form must be completed by an AMA registered medical practitioner and must be furnished to the Fund before the period for lodging the claim prescribes. The medical practitioner should indicate to what degree the injury has resulted in impairment of the Whole Person and the narrative test should be completed.

The narrative test closely resembles the Australian Transport Accident Act 111 of 1986. Dr Ntlopi Mogoru stated in his article "What is the narrative test?" that it " takes into consideration the likelihood of further injury, lengthy rehabilitative treatment, future deterioration and complications, past experience and risk of relapse.... It is ... not the description of the actual injury that is important but rather what the consequences of the initial injury are for the individual claimant".

The court in the case of C A Daniels & 2 Others v The Road Accident Fund & 2 Others, Case No: 8853/2010 (the "Daniels" case), held that the AMA Guides and the narrative test "fall to be used collectively". For example, even though a fractured femur does not result in a 30% or more impairment of the whole person, if the injury has for instance caused a leg shortening, then the third party will still be able to claim for non-pecuniary loss by relying on the narrative test. It follows that if the third party sustained orthopaedic injuries, then the orthopaedic surgeon carrying out the medico-legal assessment should also complete the RAF 4 form as he/she will be able to determine what limitations the injuries sustained impose on the third party.

According to Regulation 3(2)(b), the Fund may pay for a serious injury assessment if it is of the opinion that there is a reasonable prospect that the claimant's injury will be assessed as serious and if the claimant cannot afford to pay for the assessment. Therefore, in order for the claimant to rely on this Regulation there must be prima facie evidence that the injury is serious. It would be unreasonable to expect the Fund to pay for all such assessments just because the claimant lacks the funds to pay for them. The majority of claimants claiming for compensation from the Fund are poor.

In the Daniels case, the uncontested evidence placed before the court indicated that the cost of obtaining a serious injury assessment stands at approximately R7000. The third applicant alleged that she was unable to afford the cost of a serious injury assessment and thus submitted a request to the Fund for financial assistance. After some time, the Fund declined the request and contended that it was only liable to pay for the costs of a serious injury assessment in the event that the claimant had sustained serious injuries that resulted in not less that 30% or more impairment of the Whole Person. Having regard to the third applicant's claim form, the Fund concluded that the injuries were not serious enough to warrant it accepting liability for the costs of a serious injury assessment.

The court concluded that the hospital records in respect of the applicant's claim were uninformative but that there was sufficient information to determine that the third applicant was treated at hospital and had sustained a fracture to the lower leg and that there were some complications. It said further that there was insufficient information at hand to determine whether or not the narrative test "might provide a viable alternative gateway to general damages". The Judge went on to state that the application to the Fund would probably have been assisted by some form of motivation in support of the allegedly serious effect of the injuries sustained by the third applicant and that the attorneys' letter in terms of which the applicant's claim was submitted was lacking in this respect.

It was argued by the Fund that once a request for financial assistance in respect of the RAF 4 assessment is received, the attorney is requested to substantiate why the injuries are presumed to be serious. He is also asked to furnish the Fund with hospital records, clinical notes and any medico-legal reports setting out the injuries sustained by the claimant and describing the sequelae thereto.

The Judge stated that "it is misdirected to compare a serious injury assessment report with a medico-legal report". He indicated that the provision of a medico-legal report is not a sine qua non to a claim for compensation. A serious injury assessment report is, however, a statutory pre-requisite to the prosecution of a claim for general damages. He noted that "its requirement is an incidence of the limitation of constitutional rights and consequently there is an obligation on the Fund, as the relevant organ of state, to conscientiously consider the requests for Funding in terms of Regulation 3(2)(b) of the Act, and, when the information submitted in support of such requests appears deficient, to request that it be supplemented before any decision is made in respect of the application".

Based on the information at hand, the Judge concluded that the Fund should have requested further information before the applicant's request was denied. There was no indication that the staff member of the Fund had applied his/her mind to the applicant's request and further did not consider that the narrative test fell to be applied together with the AMA Guides as a collective. He stated that "it was apparent that the Fund's consideration in terms of Regulation 3(2)(b) does not give proper recognition to the role of the narrative test".

So much for the implications for the Fund. We turn now to the implications for plaintiffs and their attorneys. In the current environment the plaintiff's attorneys generally work on contingency and if so, will undoubtedly brief medico-legal experts, at their cost, to examine the claimant and determine the sequelae flowing from the injuries sustained. As already noted, a medico-legal assessment is not a statutory pre-requisite to the prosecution of a claim for general damages. However, a RAF 4 serious injury assessment report is – and must be completed by a registered medical practitioner. The question then arises as to why plaintiff's attorneys appear to be reluctant to fund the costs of a serious injury assessment; we examine this in more detail.

Many medico-legal experts are registered in terms of the AMA Guides and could therefore easily carry out a medico-legal assessment at the same time as an RAF 4 assessment. The claimant has ample time to submit the serious injury assessment report to the Fund (the form may be submitted separately from the claim form at any time before the expiry of the periods for lodgment of the claim). With regards to the costs aspect, Regulation 3(2)(a) provides that if an injury is found to be serious then the Fund will bear the costs of the assessment.

When looking at the limitation of a claim for general damages, one must look at whether there is a rational connection between the legislation and the achievement of a legitimate government purpose. The reasoning behind compensating claimants who have sustained serious injuries is so that there will be sufficient funds available to compensate claimants for pecuniary loss as well as to compensate deserving claimants for general damages.

In the Daniels case there was uncertainty regarding the severity of the applicant's injuries, and the plaintiff's attorneys, instead of bearing the risk of sending their client for the assessment at their own cost and knowing that if the applicant's injuries were indeed serious then they would be compensated by the Fund for the assessment, chose to rely on Regulation 3(2)(b).

Even though it was alleged in the Daniels case that the applicant was unable to afford the costs of such assessment, the same can be said for the majority of the claimants claiming compensation from the Fund. It seems more logical for the plaintiff's attorneys to have their RAF 4 assessment done simultaneously with the medico-legal assessment if they believe that there is a reasonable possibility that Regulation 3(1)(b)(iii) is applicable. In the vast majority of cases there is nothing stopping the plaintiff's attorney from having the plaintiff medico-legally assessed to determine the extent of the injuries and furnishing the Fund with such report.

There is a duty on the plaintiff to prove his case, including a claim for general damages. Attorneys who act on a contingency basis (and in matters concerning the Fund the majority do) do so on risk. If they are not willing to bear the cost of a statutory assessment for which he will eventually be compensated, then why should the Fund bear the costs of the assessment up-front?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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