Bhisho loses bid to stop R400m in claim payouts

Judgment referred to NDPP to consider possible prosecution of accounting officers

The broke provincial health department may have to immediately cough up almost R400m, with interest, in negligence claims to dozens of successful litigants after the department, the treasury and the premier’s office failed in a high court bid to stop the payments.

In its ruling against the departments, a full bench of the Makhanda high court also referred its judgment to the National Director of Public Prosecutions to consider possible prosecution of accounting officers for what it said was wholesale financial mismanagement.

This had led to massive unauthorised expenditure in the form of unbudgeted medicolegal claims which were in contravention of the Public Finance Management Act — an offence that carries a possible five-year jail term.

The extraordinary legal application to stop the payout of huge courtordered damages claims for medical negligence was launched against more than 20 provincial law firms and about 41 of their clients, all of whom had successfully litigated against the health department.

Most of the claimants are mothers whose babies suffered significant damage during childbirth due to hospital negligence.

The treasury and health department warned in court papers that payment of existing medicolegal judgment debts could lead to the total collapse of health services in the province.

The provincial government also sought to stop litigants from attaching money in its bank account in respect of unpaid judgment debts.

The health department argued it would lose control of its bank account, which would wreak havoc with its ability to pay suppliers and provide services. But judge Jannie Eksteen, with judges Nomatamsanqa Beshe and Justin Laing agreeing, said the state was wrong to contend that the State Liability Act precluded the attachment of money in its bank account.

The court judgment reveals that in 2020-2021 alone, writs in execution amounting to more than R921m were successfully issued against, and paid from, the departments bank account.

Now it will have to out a further R397m for which writs of execution have been issued.

And waiting in the wings are dozens of so far unresolved medicolegal cases amounting to R38.67bn.

In its scathing judgment, the judges said most of the people being litigated against by the state were indigent, rural citizens of the province.

“The [health department] through its employees, as the wrongdoer, has inflicted a lifetime of suffering upon the injured parties through its negligence.”

While the health department conceded that its negligence had been proved and the judgments against it were legitimate, it argued it would rather halt the system of lump sum payouts and resort to smaller annual payments.

It wanted these lump sum payments to be interdicted, pending an application to change the judgments to allow for payments in instalments.

The enormous sums of damages often ordered in these matters are required for lifelong support of babies and children whose disabilities caused by the department’s negligence require specialist equipment, care and support.

Eksteen said the judgments ordering the lump sum payments were valid and binding.

At the time the matters were argued, the department had never asked for payments by instalment.

The judges were sharply critical of the provincial executive and the provincial heads of health and the treasury for not budgeting for the rise in medical negligence claims. Eksteen said the fiscal management of both departments was cause for “grave concern”.

“As a direct result of the conscious decision not to budget for these claims, any payment of a judgment debt constitutes an unauthorised expenditure in terms of the PFMA.”

The auditor-general had pointed this out to the departments.

“The conclusion is inescapable that the management of the finances of the Eastern Cape government and in particular the [health department] falls far short of the standard demanded of the PFMA ...

“This flagrant disregard for legislation designed to ensure proper financial planning of the fiscus is ominous.”

He said it was appropriate to refer the judgment to the NDPP.

“One of the central obligations of the HOD for health is to prevent unauthorised expenditure, and a wilful failure to do so constitutes an offence punishable by imprisonment of up to five years.”

The three litigating departments will pay heavily in more ways than one for what the court termed their “ill conceived” court application.

They will have to foot what is likely to be a hefty legal bill for the application.

The province will have to pay for the services of more than 30 advocates — many of them senior counsel — and dozens of attorneys’ firms for the failed application.

Three organisations, including the Personal Injury Plaintiff Lawyers Association, also joined the application as amicus curiae (friends of the court).

Health departmental spokesperson Yonela Dekeda said the department was still studying the judgment and could not yet comment.

“Both the MECS and HODS for treasury and health will need to be briefed on the implications of the judgment.”