High Court rules medical schemes may recover fraudulent payments

The High Court has dismissed an application by the South African Society of Physiotherapy (SASP) that sought to challenge the constitutionality of Section 59(3) of the Medical Schemes Act (MSA).
23 Jun 2026
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The court ruled that the section — which permits medical schemes to recover payments made in error or losses resulting from fraud, negligence, or misconduct — does not infringe on constitutional rights to just administrative action or access to courts.

Key facts and financial impact

  • Statutory obligation: Medical schemes are legally required to maintain systems to identify, investigate, and recover incorrect or unlawful payments.
  • Cost of FWAE: Fraud, waste, abuse, and error (FWAE) account for an estimated 15% of total medical scheme claims.
  • Financial recovery: Current FWAE management programmes recover approximately R1bn annually. According to industry data, these measures keep member contributions between 4% and 8% lower than they would be otherwise.
  • Investigation triggers: The majority of healthcare providers practice ethically; 80% of FWAE investigations are initiated by tip-offs.

Dispute resolution and legal precedent

The judgment clarified that healthcare providers have legal remedies when disputes arise. Under the MSA, providers can challenge recovery decisions by referring disputes to the Council for Medical Schemes (CMS).

Additionally, the court noted that the Section 59 Investigation Panel found no legal basis for claims of unfair discrimination or racial profiling under the Constitution or the Promotion of Equality and Prevention of Unfair Discrimination Act regarding these recovery processes.


 
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