November 15, 2017

South African Constitutional Court rethinking the “once-and-for-all rule”

In the recent decision of MEC, Health and Social Development, Gauteng v DZ [2017] ZACC 37, the Constitutional Court considered the potential benefits of allowing defendants to pay future medical expenses by way of structured payments (instalments) in light of the "archaic" once-and-for-all rule.

The increase in medical malpractice claims, together with the high damages awards handed down by our courts in respect of loss of income/earning capacity and future medical expenses, is crippling both the public and private health sector in South Africa. In the public sector, a large portion of the annual health budget allocated is spent on defending claims against the State; thereby reducing the total expenditure available that could otherwise be allocated to increasing the amount of and improving the resources available at institutions of public health.

In the private sector, the increase in medical malpractice claims and quantum of damage awards is leading to an increase in professional indemnity insurance premiums payable by individual practitioners, an increase in hourly charge-out rates in order to cover the increased insurance premiums, and a reduction in the number of qualifying practitioners opting to specialise in traditionally "higher risk" specialisations such as anaesthesiology, oncology and obstetrics and gynaecology.

 As a result of the above, stakeholders including medical practitioners, insurers, the legal profession as well as affected spheres of government have considered methods and means of dealing with these challenges. As future medical expenses typically comprise the largest portion of medical malpractice awards, the structured payment of future medical expenses is one potential method of dealing with these challenges, and is by no means a new concept.

Structured payment of future medical expenses would enable a defendant to, instead of immediately paying the lump sum amount awarded once judgment is handed down, pay future medical expenses as and when they become due and payable. It is believed that structured payments of future medical expenses would not only ease the financial burden on defendants (such as the health ministry), but also lead to greater certainty in respect of reduced life expectancy rates (which is ordinarily nothing more than an actuarial estimate).

The "once-and-for-all" rule, which is well-entrenched in South Africa's common law, poses a challenge to the allowance of structured payments of future medical expenses. There have been various challenges in the recent past wherein the practical application of the "once-and-for-all" rule was questioned, particularly insofar as it concerned medical malpractice litigation. This question arose in the case of MEC, Health and Social Development, Gauteng v DZ [2017] ZACC 37. Briefly, the facts of this case are as follows: In November 2009, the respondent (in her representative capacity as the mother of the minor child) gave natural birth at Baragwanath Hospital but due to birthing complications, the respondent's child was subsequently diagnosed with cerebral palsy.

Action was instituted by the respondent in the High Court for damages due to the negligence of Baragwanath Hospital (in terms of the principles of vicarious liability). The MEC conceded the merits and later also conceded the quantum, amounting to R23 million. Of the R23 million, R19 million was awarded in respect of the minor child's future medical expenses. After conceding both the merits and quantum, the MEC filed an amended plea in terms of which it was alleged that the MEC was not required to have to pay for future medical expenses in lump sum but could undertake to pay the R19 million directly to the healthcare service providers within 30 days of the receipt of a quote. The MEC's amended plea was dismissed in the High Court and, similarly, in the Supreme Court of Appeal on the basis that the "once-and-for-all" rule precludes payment of future medical expenses in instalments. To enable the MEC to make payments by way of instalments, it was held that the common law would need to be developed, however, the MEC did not present evidence to justify developing the common law to make an allowance for structured payments of future medical expenses.

Froneman J, providing the majority judgment in the Constitutional Court, similarly dismissed the MEC's appeal on the basis that no evidence was adduced by the MEC to justify the development of the deeply entrenched "once-and-for-all" rule. However, Froneman J held, that the possibility for future development is not excluded and that structured payments of future medical expenses may well be permitted, provided that evidence is adduced to support a development of the common law. In the interim, it was held that the court is open to defendants disputing claims for future medical expenses on the basis that the plaintiff can obtain less expensive medical services at a public health facility, thereby also potentially alleviating the financial burden of these claims on the public sector.

Jafta J, although ultimately concurring with the majority's decision, held that the "once-and-for-all" rule in its current form does not preclude payments of delictual damages in instalments and that all South African High Courts have an inherent power to allow future medical expenses to be paid in instalments, provided that the defendant has a good reason to elect to pay future medical expenses in instalments, and not by way of a lump sum payment.

The constitutional court has, ultimately, opened the door for defendants to justify that payment of the future medical expenses portion of a damages claim should be paid by way of structured payments, as opposed to a single lump sum.