Periodic Payments in Medico-legal Claims

The news media has for some time now been replete with reports of the enormous financial burden faced by Provincial Health Departments in respect of medical malpractice claims against the Departments. The contingent liability of the Provinces for medical negligence claims runs in the billions of Rands. The Private Health sector has also been dealing with an increasingly challenging medical malpractice exposure with costs of dispute resolution, awards and settlements, as well as the cost of Professional Indemnity insurance rising exponentially over the past few years. The Law Reform Commission is grappling with the problem and has published an Issue Paper. The Discussion Paper, and in due course possible solutions, is awaited but is not expected soon.

A solution undoubtedly doesn’t lie in only legal reform but also in medical reform although the former is often seen, incorrectly I think, as the answer to all the ills currently faced by the medical services industry. Legal reform is in part, an answer.

A significant cost for all defendants in a medico-legal claim is that of a lump sum settlement or award. Currently our law does not permit a court to order payments in instalment of any damages if not agreed to by the claimant. So much time and money is spent in arguing about and determining a claimant’s longevity, which in turn affects the quantum of any future damages (for example medical treatment and loss of income). Significant costs lie in then funding that award in circumstances where longevity may be other than that ultimately determined by the court and future treatments never used but paid for in the lump sum. That can also work to the detriment of the claimant who lives longer than the longevity determined by the court and used to calculate the lump sum.

The Legislature now seeks, as an interim measure, pending any Law Reform recommendations to amend the State Liability Act to provide for periodic payments of certain damages awarded against Provincial or National Health Authorities as the result of wrongful medical treatment. Subject to the tidying up of the drafting, some suggestions are included below, amending our common law to allow for periodic payments is to be welcomed.

As a matter of principle, however, the law should be amended to apply to all such payments for damages arising from personal injury or death (in the case of a dependants claim). The problem which presents at our common law with lump sum payments because of the once and for all rule, requiring all damages to be determined and awarded finally, is not peculiar to medical malpractice claims faced by the State, or private sector but all personal injury claims.

  It would be preferable if amending legislation is not a knee jerk reaction to the financial burden medical malpractice claims present for the State, but of universal application. At its lowest level there should be no reason in principle to not apply the common law amendments to medical malpractice claims in the private sector as well, whose challenges presented by increasingly large malpractice claims and awards and are no different in essence. The public-sector exposure is for various reasons much greater financially, but similar risks are presented for the entire healthcare industry regarding sustainability and service delivery and specialisation.

Amendments to the common law could be done through the Assessment of Damages Act, if not new standalone legislation allowing for periodic payments in all personal injury awards in appropriate circumstances.

What of the proposed amendments themselves? Sensibly a threshold is proposed, of R1million, before periodic payments are considered. The proposed amendments talk of structured settlements, somewhat confusingly when the amendments propose mandatory structured settlements for an award exceeding R1million for a wrongful medical treatment claim for past expenses and damages, necessary immediate expenses, the cost of assistive technology or other aids and appliances and general damages, and periodic damages for future costs without indicating what is contemplated by a structured settlement and forgetting about it seems past loss of earnings.

The amendments do contemplate periodic payments for the cost of future care, medical treatment, and future loss of earnings and only for the lifetime of the injured party on such terms as the court considers necessary. That would substantially alleviate the financial burden imposed by the once and for all rule.  

Either party can apply to the court for a variation of the frequency or amount of the periodic payments, or both, if there is a substantial change in the condition or circumstances of the injured party which necessitate such a variation. That suggests another enquiry into the medical or financial circumstances of the claimant and may be problematic in resulting in an endless series of subsequent hearings, an ill which the once and for all rule sought to avoid. The amendment does allow for the increase of the periodic award by the relevant Consumer Price Index (CPI). Consideration should be given to whether the CPI is an adequate measure and not the medical care index when dealing with medical costs.

More problematic are provisions which allow a court, in its discretion, to order the State to provide treatment to the injured party at a public health establishment in lieu of, or at a reduced amount of the compensation that would have been awarded for the treatment. A facility providing that treatment has to be compliant with the norms and standards as determined by the Office of the Health Standards Compliance. Having regard to the recent pronouncements and report of the Health Ombudsman that will be a significant challenge and it is unlikely a court will currently be persuaded to grant such an order if the patient insists on private medical care. In that regard the proposal that where future medical treatment is to be delivered in a private health establishment the liability of the State will be limited to the potential costs incurred if such care was provided in public health establishment is very problematical in the context of the well-publicised delivery challenges faced by the public sector, the Health Ombudsman’s recent comments and would probably be subject to constitutional challenge.

The proposals, while needing refinement and general application, are an encouraging start to resolving the risks not only to the medical industry but society as a whole, including patients, posed by the wholesale application of the once and for all rule and lump sum awards. 


Donald Dinnie
Group CEO
Natmed Medical Defence (Pty) Ltd
First published June 2018