Better application of the Treasury’s accounting guidelines for medical-negligence claims has led to a sharp drop in the contingent liabilities facing provincial health departments.
This is significant because it signals a decrease in one of the key financial risks to provincial governments.
Data provided to Business Day by the Treasury shows the medico-legal contingent liabilities facing the provinces declined from a peak of R110.4bn in 2019/2020 to R62.4bn in 2023/2024. The biggest year-on-year decline was recorded in KwaZulu-Natal, which saw its contingent liabilities drop by more than half, from R7.3bn in 2022/2023 to R3.3bn in 2023/2024. Its contingent liabilities had peaked at more than R26bn in 2021/2022.
A marked decline was also reported by Gauteng, which saw its contingent liabilities fall by a third year on year, from R18.4bn in 2022/2023 to R12.3bn in 2023/2024. Contingent liabilities in Gauteng had peaked in 2017/2018 at R21.7bn and hovered around this level until 2022/2023.
Provincial health departments had initially accounted for all medical negligence claims as though they would be paid out in full, said the Treasury’s acting head of intergovernmental relations, Ogaletseng Gaarekwe.
The Treasury’s office of the accountant-general had then issued guidelines on how to account for medical negligence claims, which takes account of whether or not the provincial health department admits liability and whether the matter is before the courts or a mediator. If the department had not yet reviewed or assessed a claim, no disclosure was required.
The Treasury did not have verified data yet on the amounts paid out by provincial health departments in 2023/2024, said Gaarekwe. However, health minister Aaron Motsoaledi told parliament in October they had paid R1.51bn to successful claimants in 2023/2024, almost half of which was paid by Gauteng.
The improvement in provincial departments’ accounting practices has taken place in parallel with efforts by SA’s law enforcement authorities to tackle fraudulent claims.
In August, Motsoaledi said a nationwide probe by the Special Investigating Unit (SIU) that began in 2022 had saved the state more than R3.1bn. The SIU launched investigations into thousands of cases, and found evidence of fraud committed by multiple law firms, he said at the time. Part of the savings had arisen when law firms withdrew spurious claims when faced with scrutiny by the SIU.
The Treasury said in the medium-term budget policy statement (MTBPS) last month that the health department was improving its capacity to defend claims, by instituting better record keeping and ensuring that documentation was captured electronically. Provincial health departments cannot defend cases if they do not have the patients’ records on hand.
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