South Africa’s second-biggest open medical scheme, Bonitas, has pushed against a lawsuit by medical scheme administrator Medscheme seeking to interdict the appointment of two new service providers — a deal that ended the administrator’s 44-year relationship with the medical scheme.
Bonitas, which covers more than 730,000 people, last week appointed Momentum to take over its administration service contract and awarded the contract for managed care services to Private Health Administrators (PHA).
The move not only dealt a financial blow to Medscheme, Bonitas’ administrator since 1982, but also to its parent company, JSE-listed investment company Afrocentric.
Medscheme handled the administration of 680,000 beneficiaries of the Bonitas medical scheme.
Medscheme launched an urgent application against Bonitas in December, alleging the tender process was compromised, and requested the court to interdict the awarding of the administrator and managed care provider contracts pending the outcome of the Council for Medical Schemes probe into alleged tender irregularities.
Bonitas principal officer Lee Callakoppen, in his answering affidavit, argues the awarding of the contracts to new service providers on January 28 renders moot Medscheme’s application, in which it seeks to halt the awarding of the tenders.
Despite the awarding of the tenders, Afrocentric will proceed with the litigation.
The matter is set down for hearing on March 3 at the high court in Johannesburg.
“The allegation levelled by Medscheme is that tenders 3 and 4 [awarded last week] have been engineered by Bonitas in such a way to ensure PHA would be awarded both contracts.
“This would mean that Medscheme, on its own version, would be excluded from being considered and being appointed to render the services. That is factually incorrect,” the Callakoppen affidavit reads.
Medscheme’s application challenging the recent tenders, which went out for bidding in 2025, is pinned on the Council for Medical Schemes’ decision to initiate a probe into two tenders awarded in 2022 and 2024 in which allegations of irregularities were made against Bonitas.
The alleged irregularities were flagged in a marketing and sales distribution services tender awarded to Agile Business Solutions, led by Tobie du Preez, a former Afrocentric Group executive, in 2024. The contract was previously awarded to Afrocentric Distribution Services, part of Afrocentric.
The appointment of PHA in 2022 to administer Bonitas’ low-income option, Boncap, previously administered by Medscheme, forms part of the probe.
Callakopen contends the tenders from two to four years ago were unrelated to the ones recently awarded to Momentum and PHA.
“Bonitas is satisfied that proper procurement processes have been followed [in the two recent tenders], which have been independently verified,” Callakoppen argues.
Callakopen accuses Medscheme of turning to the court to remain the only service provider for Bonitas because the medical scheme contributes about 40% of its income.
He argues Medscheme is “conflating issues” by launching the application, which relies on “unsubstantiated claims” of irregularities on contracts awarded two to four years ago.
“Medscheme’s ulterior purpose … is to delay and prevent appointments of new service providers and therefore seeks to thereby continue to reap the financial benefits emanating from its position as the existing service provider.”
Callakoppen maintains it could take years before the Council for Medical Schemes issues an outcome on its probe, adding that should the Medscheme interdict be made a court order, Medscheme would remain on Bonitas’ payroll for years without having won the tenders.
“Essentially, Medscheme seeks to remain as the service provider for administration and managed care services in circumstances where it has not been the legitimate preferred bidder.”
He dismisses the argument that the interdict would be vital should the Council for Medical Schemes find that the 2022 and 2024 tenders were unlawful, which would trigger disruption in the administration of Bonitas’ clients’ claims amounting to more than R20bn.
“The crux of Medscheme’s contention is that Bonitas and its members will suffer harm if a new service provider is ever appointed to render the administration and managed care services. The only way to avert any harm, according to Medscheme, is for Bonitas to retain Medscheme as the service provider, preferably indefinitely, to avoid any disruption.
“The harm apprehended by Medscheme is unreasonable and unfounded,” Callakoppen argues.
The tenders have been concluded, and the contracts have been signed with successful bidders. Therefore, the interlocutory relief sought by Medscheme and further relief premised thereon is moot. It is also an abuse of court process.
— Lee Callakoppen, Bonitas principal officer
He accuses Medscheme of seeking to usurp the Council for Medical Schemes’ powers by “asserting that it should remain as the service provider in perpetuity to safeguard Bonitas and its members”.
Callakoppen maintains the decision is solely the council’s right.
“The tenders have been concluded, and the contracts have been signed with successful bidders. Therefore, the interlocutory relief sought by Medscheme and further relief premised thereon is moot. It is also an abuse of court process.”
The Boncap contract was the first one with Bonitas that Medscheme lost in 2022. Callakoppen argues that before awarding the tender to PHA, Bonitas attempted to negotiate with Medscheme for better prices because the medical scheme was sustaining financial losses in the contract.
After negotiations failed and Medscheme did not apply when bidders were sought for the contract, Callakoppen says it was awarded to PHA.
For the second tender under contention, the marketing one previously handled by Afrocentric Distribution Services (ADS) but awarded to Agile Business Solutions in 2024, Callakoppen argues Bonitas terminated the contract due to an ineffective marketing strategy.
“It became apparent that ADS failed to align its marketing strategy with that of Bonitas. Instead, it was focused on achieving the objectives of Santam Life Insurance, which had gradually increased its shareholding in the Afrocentric Group, currently holding a 60% shareholding.
“Sanlam sought to utilise Bonitas’ membership base as a platform to drive its customer growth. At some stage it suggested that Bonitas be rebranded as Sanlam Health, a suggestion that was rejected.”
Callakoppen accuses Medscheme and Afrocentric of intending to seize control of Bonitas by any means necessary and leverage its membership base to suit their own ends.
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