Benchmark tariffs stay
In a move that many say will be to the disadvantage of patients, the Supreme Court reversed an earlier High Court ruling that medical aids fall under the realm of the Competition Act.
In the highly-contentious and well-publicised matter over whether medical aids fall under the Competition Act and are essentially businesses, the Supreme Court ruled on Wednesday in favour of Namibian Association of Medical Aid Funds (NAMAF) and several medical aid funds, that they are not undertakings within the meaning of the Act.
On appeal, the court found that whilst medical aid funds are businesses in the form of enterprises and are statutorily enjoined to apply sound business principles in their operations, this is to protect their members' interests by ensuring the solvency of funds.
The ruling follows an earlier High Court decision that medical aid funds do in fact all under the Competition Act. This ruling was reversed on Wednesday.
“The funds fall within the definition of undertaking in the Act,” High Court had found. It had referred to the definition of a medical aid fund in the Medical Aid Funds Act (MAF Act) which states that a fund is a 'business' and found that a fund operates for 'gain' or 'reward' - even if its profits are not distributed.
The High Court had also found that the activity of utilising a benchmark tariff is not excluded from the operation of the Act.
The Namibia Competition Commission (NaCC), along with the Namibia Private Practitioners Fund, had approached the High Court to declare as illegal as well as cease the practice of the Namibia Association of Medical Aid Funds (NAMAF) members benchmarking tariff structures through the association.
However, a full Supreme Court bench consisting of Chief Justice Peter Shivute, Deputy Chief Justice Peterus Damaseb and Acting Judge Dave Smuts, found that being a 'business' did not mean that a fund's economic activity is market-related for the purpose of achieving a gain or reward.
The bench said the MAF Act precludes funds from distributing a surplus and renders them non-profit concerns.
“The social solidarity nature of funds in the context of the protective legislation governing and tightly regulating them, and the statutory purpose of promoting funds, meant that funds are not businesses carried on for gain or reward for the purpose of the definition of undertaking in the Act, which was also considered in the context of the purpose of the Act to promote and safeguard competition to provide consumers with competitive prices and product choices.”
The appellants were Namibian Association of Medical Aid Funds, Namibia Medical Care Medical Aid Fund, Namibia Health Plan Medical Aid Fund, Renaissance Health Medical Aid Fund, BankMed Medical Aid Fund, NAMDEB Medical Aid Scheme, NAPOTEL Medical Aid Scheme, Roads Contractor Company Medical Aid Scheme and NamMed Medical Aid Fund.
The Supreme Court concluded that medical aid funds are not undertakings within the meaning of the Act and that the Competition Commission does not have jurisdiction over them. As the constituent funds are not undertakings, it also followed that NAMAF also did not fall within that definition.
The highest court upheld the appeal and reversed the High Court's decision.
The Competition Commission had said it is convinced that NAMAF and its medical aid fund members are operating like a cartel by annually coming together to agree beforehand on medical aid tariffs to charge consumers, in violation of Namibian competition laws.
The issue raised in the appeal in the Supreme Court was whether the Commission established under the Competition Act has jurisdiction over registered medical aid funds for the purpose of provisions of the Competition Act which prohibits anti-competitive conduct between undertakings as defined in the Act.
The Commission had conducted an investigation under the Act and notified NAMAF and the funds that their conduct of setting prices for medical services by setting benchmark tariffs after collective negotiations, amounted to a contravention of the provisions of Competition Act which proscribes concerted practices between undertakings which directly or indirectly fix purchase or setting prices.
NAMAF and the funds contended in their application that they are not undertakings as defined in the Act because they do not carry on business for 'gain or reward' as is presupposed by the definition in the Act.
They maintained that they are precluded by the MAF Act from distributing profits to fund members or anyone else. They also claimed that the conduct of setting benchmark tariffs is designed to achieve a non-commercial socio-economic objective, thus excluding that activity from the Act by virtue of its provisions. They also argued that the issue of benchmark tariffs is authorised by the MAF Act and as a result excluded from the jurisdiction of the Commission by virtue of provisions of the Act.
FRED GOEIEMAN
On appeal, the court found that whilst medical aid funds are businesses in the form of enterprises and are statutorily enjoined to apply sound business principles in their operations, this is to protect their members' interests by ensuring the solvency of funds.
The ruling follows an earlier High Court decision that medical aid funds do in fact all under the Competition Act. This ruling was reversed on Wednesday.
“The funds fall within the definition of undertaking in the Act,” High Court had found. It had referred to the definition of a medical aid fund in the Medical Aid Funds Act (MAF Act) which states that a fund is a 'business' and found that a fund operates for 'gain' or 'reward' - even if its profits are not distributed.
The High Court had also found that the activity of utilising a benchmark tariff is not excluded from the operation of the Act.
The Namibia Competition Commission (NaCC), along with the Namibia Private Practitioners Fund, had approached the High Court to declare as illegal as well as cease the practice of the Namibia Association of Medical Aid Funds (NAMAF) members benchmarking tariff structures through the association.
However, a full Supreme Court bench consisting of Chief Justice Peter Shivute, Deputy Chief Justice Peterus Damaseb and Acting Judge Dave Smuts, found that being a 'business' did not mean that a fund's economic activity is market-related for the purpose of achieving a gain or reward.
The bench said the MAF Act precludes funds from distributing a surplus and renders them non-profit concerns.
“The social solidarity nature of funds in the context of the protective legislation governing and tightly regulating them, and the statutory purpose of promoting funds, meant that funds are not businesses carried on for gain or reward for the purpose of the definition of undertaking in the Act, which was also considered in the context of the purpose of the Act to promote and safeguard competition to provide consumers with competitive prices and product choices.”
The appellants were Namibian Association of Medical Aid Funds, Namibia Medical Care Medical Aid Fund, Namibia Health Plan Medical Aid Fund, Renaissance Health Medical Aid Fund, BankMed Medical Aid Fund, NAMDEB Medical Aid Scheme, NAPOTEL Medical Aid Scheme, Roads Contractor Company Medical Aid Scheme and NamMed Medical Aid Fund.
The Supreme Court concluded that medical aid funds are not undertakings within the meaning of the Act and that the Competition Commission does not have jurisdiction over them. As the constituent funds are not undertakings, it also followed that NAMAF also did not fall within that definition.
The highest court upheld the appeal and reversed the High Court's decision.
The Competition Commission had said it is convinced that NAMAF and its medical aid fund members are operating like a cartel by annually coming together to agree beforehand on medical aid tariffs to charge consumers, in violation of Namibian competition laws.
The issue raised in the appeal in the Supreme Court was whether the Commission established under the Competition Act has jurisdiction over registered medical aid funds for the purpose of provisions of the Competition Act which prohibits anti-competitive conduct between undertakings as defined in the Act.
The Commission had conducted an investigation under the Act and notified NAMAF and the funds that their conduct of setting prices for medical services by setting benchmark tariffs after collective negotiations, amounted to a contravention of the provisions of Competition Act which proscribes concerted practices between undertakings which directly or indirectly fix purchase or setting prices.
NAMAF and the funds contended in their application that they are not undertakings as defined in the Act because they do not carry on business for 'gain or reward' as is presupposed by the definition in the Act.
They maintained that they are precluded by the MAF Act from distributing profits to fund members or anyone else. They also claimed that the conduct of setting benchmark tariffs is designed to achieve a non-commercial socio-economic objective, thus excluding that activity from the Act by virtue of its provisions. They also argued that the issue of benchmark tariffs is authorised by the MAF Act and as a result excluded from the jurisdiction of the Commission by virtue of provisions of the Act.
FRED GOEIEMAN
Comments
Namibian Sun
No comments have been left on this article