SWAZIMED ORDERED TO PAY MEDSCHEME OVER E26.6M

MBABANE – The protracted battle between SwaziMed and Medsheme has ended costly for the former as they have been ordered to pay over E26 million.

This is according to an arbitration ruling which was made by Judge Phillip Levinsohn, who was the arbitrator. According to the ruling, Swaziland Medical Aid Fund (SwaziMed) has since been directed to pay Medscheme an amount of about E21.9 million by way of damages and an additional E4.7 million in respect of administration fees for the months of January to March 2017. In total, the amount due to Medscheme is E26 685 558.08. According to the award ruling, the judge stated that Medscheme had instituted the action where it sought four orders; one of which was to seek an order declaring the decision of Swazimed’s Board dated May 12, 2016 to terminate the agreement between the two parties to be invalid.

Medscheme specialises in the business of administering medical aid schemes and it was stated that on April 30, 2007 entered into a written agreement in terms of which SwaziMed appointed Medscheme to administer and manage its medical aid fund for a period of five years. Any renewal, it was stated that the parties should enter into negotiations six months prior to the expiry date, failing which the agreement shall automatically review with effect of January of each year for a further fixed period of five years. Under the arbitration, Medscheme also sought an order declaring the appointment of a new principal officer on May 12, 2016 as invalid and further claimed payment of E4.7 million in unpaid administration fees.

The E21.7 million was claimed as damages which would have been fees that Medscheme would have earned had the agreement between the two subsided. In its statement of defence, Swazimed disputed that its medical aid rules formed part of the agreement and stated that a proper interpretation of the clauses in the agreement were to the effect that the contract expired on December 31, 2016. SwaziMed pleaded that it lawfully gave notice of termination in terms of Clause 5.3 which was given pursuant to a decision of its board of directors. Swazimed stated that it denied that the said notice not to renew was invalid and averred that such termination took effect on December 31, 2016.
Under the third claim, Swazimed denied liability for the amount claimed. It stated that any amount owing in respect of management fees fall to be offset by Medschemes indebtedness to Swazimed arising from the latter’s counter claim in the amount of E16.9 million.

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