A new dawn for the RAF… or is the sun finally setting on this troubled organization?

Massive changes are under way and apparently a rescue plan set into motion by the recently appointed acting CEO of the Road Accident Fund (‘RAF’), Mr. Collins Letsoalo.

The recent developments, which propose radical changes, are not well received by all. The third party industry in general is more sceptical than optimistic, with growing fears that it will become even more difficult to expedite finalization of the claims of road crash victims, or even worse, that the system could potentially collapse.

A fact which everyone seems to agree on, is that the proposed Road Accident Benefit Scheme (‘RABS’) is unlikely the solution for the current predicament which government is facing. It is anticipated that government could announce the scrapping of the proposed RABS legislation, to the relief of many. This follows years of opposition by the human rights organization APRAV predominantly.

Rumour has it that government has realized that RABS will not be a viable alternative to the current flawed system, mostly due to the introduction of a so called “no- fault” system, which will see a massive increase in claims as well as the system being exponentially more expensive.

Abandoning the notion of RABS could however be short lived, as the current RAF model is unsustainable, and the organization is in financial distress. This is mostly due to the high number of new claims (as a result of the exceptionally high number of road accidents on South African roads, together with failing government health care system), as well as mismanagement of the RAF in general.

It is however clear that the present- day system is not sustainable in its current form and is in dire need of change.

The RAF has recently notified its panel of attorneys, that their services would no longer be required, and notifying them to embark on a handover of all litigation files which are currently being defended by the panel. This came as a massive shock and surprise to many. The decision to do away with its panel was emphasized when the pending tender for the appointment of the RAF’s panel of attorneys, which was set to be announced soon, was also cancelled.

The RAF thereafter publicly announced a rescue plan highlighting changes to their business model, with the aim of reducing the average duration of claims, by introducing mediation and reducing litigation.

The CEO states, due to the financial position of the organization, that they have decided to embark on a new strategic direction, which includes reducing the RAF’s spending on legal costs. The RAF will aim to achieve this by finalizing matters quicker through mediation or settlement, and avoiding unnecessary litigation, in the process bringing down legal costs and the need for a dedicated panel of attorneys. This is a noble and very optimistic ideal but raises several practical concerns.

It was further announced that in order to achieve their goal of quick settlements, the RAF is in the process of capacitating its internal team by employing qualified personnel with the necessary legal and medical expertise to enable the RAF to execute its mandate effectively.

The decision by the RAF to notify its panel of the cancellation of the service level agreement, as well as handover of their files, and the cancellation of the pending tender process, resulted in strong disapproval and opposition by the majority of panel attorneys nationwide, as well as organizations including the Law Society of South Africa and the Black Lawyers Association.

The RAF was put on terms to withdraw its decision to terminate its panel and cancel the tender, as it was argued among other things, that the decision was irrational.

This prompted an urgent application launched by 42 applicants seeking to interdict the RAF from demanding handover of the files (on an urgent basis) as well as eventually setting aside the decision by the RAF on the basis that the decision is unlawful, unconstitutional and invalid.

Part “A” of the application, seeking an interdict is set down to be argued on Tuesday, 17 March 2020.

In conclusion it is clear that change is desperately needed. The question however remains whether the proposed changes, which seem drastic and irrational to some, is the change which is needed to bring quicker relief to claimants, simultaneously ensuring the financial sustainability of the organization.

Scepticism also exist among many who are concerned that the proposed changes will not bring about the desired results but will rather roll another stumbling block in front of claimants, making the process more cumbersome and difficult to navigate.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)