Changes to employer-funded Occupational Injuries scheme will create havoc in healthcare system

Tim Hughes of the Injured Workers Action Group (IWAG) tells BizNews why amendments to the Compensation for Occupational Injuries and Diseases Amendment Bill will create chaos in the health system – and put healthcare out of reach for many. Also at stake is a sizeable pot of taxpayers’ funds – into which every person who employs a domestic worker is expected to contribute. – Jackie Cameron

Tim Hughes on the Injured Workers Action Group:

The Injured Workers Action Group is really an alliance of medical service providers, worker groups and employer groups that came together over a year ago, because of the dysfunctionality of the compensation fund. It’s been problematical for many years. Therefore, there’s been a series of qualified audits by the Auditor General. We’ve had seven so far.

But things really came to a head about a year and a half ago, where the compensation fund switched off its old system, and three months later switched on a new interface system – which simply didn’t work. People couldn’t log on. They couldn’t make claims. Doctors couldn’t make claims against the fund.

Employers couldn’t make claims, let alone workers. So we got together, as the alliance, to see what we could do to bring about some change, or to bring attention to these matters, see where there were areas of common concern and to see how we could improve matters. 

On the new bill and what it seeks to regulate:

The bill is an amendment bill of the Compensation for Occupational Injuries and Diseases Act. There are some good parts to it. It’s a bit like a curate’s egg. The really good parts to it, is the inclusion of domestic workers now under the purview of the bill. This is a constitutional victory for domestic workers. Obviously, everyone’s very happy about that. That’ll add about another 900,000 beneficiaries to the fund.

But of course, there are systematic issues that go with that. The real problematical area of the bill is actually section 43(4). And what it does, [is] it remove the right of medical service providers to cede their claims against the fund. So right now it doesn’t work well at all. So what doctors, medical service providers, physiotherapists, occupational therapists do, [is] they work with administrators and sometimes banks who handle their administration with the compensation fund.

But obviously the asset that they use – the financial asset that they use – is the claim against the fund itself. It’s the invoice. In order to secure that, so that they get administrative support, they cede this claim – either to a bank to get working capital or to an administrator to get pre-funding. Now, the fund, the 43(4) for actually removes that right. It makes the session of those claims null and void. Now, we think that the consequence of that will probably lead doctors not to deal with the fund, because it is so problematical.

And actually, the reason many doctors deal with the fund, is that they can use administrators to d0 the administration and their claims. If you remove that right, then the fear from our side is that doctors simply won’t treat injured workers. It means workers will have to go to the public health system. It also means employers are contributing to a fund of which they’re not getting any benefits. So the consequences, we feel, could be quite dire. And, of course, for those domestic workers who will be disadvantaged by this clause themselves, before they receive any benefits from the fund.

On how the funding works:

The relationship is that every employer contributes to the fund and there are certain sectors that don’t. So [the] mining sector has its own fund. But apart from that, it’s sort of an industrial conglomerate or anything of that nature. Yes, indeed. They pay a certain amount to the fund every month and those contributions amount to about R9 billion a year.

So remember, the fund is sitting on cash of r26 billion. It’s not that it’s insolvent. It just doesn’t process the claims. what happens is the employer makes these contributions, and because of that, the fund builds up a number of funds, assets and cash and invests these things – so that when a medical service provider treats an injured worker, the fund actually pays the medical service provider.

But it also pays out an employer, if the employees away for a long time – let’s say, 90 days – or it pays out a pension to the worker as well. The problem is that it doesn’t pay well at all. There’s a high degree of dissatisfaction. I think something like 70% of employers are unhappy. Only 30% of medical service providers are happy. We know of cases where workers haven’t been paid for 18 years. So it is dysfunctional. Unfortunately, as much as people are paying into it, the benefits themselves are not being paid out.

What will happen, is that now with domestic workers, everybody who employs a domestic worker – and remember, a domestic worker could be employed by more than one person – every employer will contribute to the compensation fund. That will cut across the entire employment spectrum in South Africa, which is a good thing – but it also complicates issues for the compensation fund.

On corruption within the fund:

The Auditor General got to the point where he declared that the fund was so dysfunctional, that if it were not a statutory obligation, he would not audit the fund. The cases of corruption, malfeasance, maladministration, wasteful expenditure – and I would include in that, systems and software that doesn’t work, which is wasteful – is all on record.

Each time the compensation fund goes before parliament, it sets up the problems of the fund and it comes with the turnaround strategy. Yet demonstrably, by any metric, it is not improving. And there’s an irony here, too, insofar as people attached to the fund – the commissioner, the director general and chief director – argue that removing these third-party administrators will remove corruption from the fund.

The irony and the paradox here is that these third-party administrators and banks actually clean up claims. They obviously couldn’t put in a claim that was either fraudulent, and they point out where fraud is being is taking place. In fact, they streamline the administration of the fund. Our concern is removing these third parties and the banks from the operations of the fund actually will probably deepen corruption or increase the opportunities for corruption in the fund.

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