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Johannesburg - The Council for Medical Schemes (CMS) is proceeding with its application to have Bonitas Medical Fund placed under curatorship.
In a statement on Friday, it said the reasons for its application were clear and had been confirmed by independent investigations.
According to the CMS, material irregularities existed in the governance of the scheme.
"Bonitas is not run as prescribed in the Medical Schemes Act (Act 131 of 1998) or in its own registered rules."
CMS alleged that the board of trustees was neither fit nor proper to manage or control the affairs of the scheme.
The CMS added that the board did not appreciate the nature and extent of its duties and did not discharge its functions.
It failed to act with the necessary care, diligence, and skill required by the Medical Schemes Act and it had failed to act when action was required, the CMS said.
Furthermore, the board had never had proper control of the scheme, it had been negligent and it had breached its fiduciary duties towards the scheme and its beneficiaries, the CMS added.
The board also had contravened various provisions of the Medical Schemes Act as well as the rules of the scheme and it had failed to protect the interests of beneficiaries.
The CMS thus remained of the opinion that the governance structure at Bonitas was fundamentally flawed and that the board should be removed.
"The CMS believes it is necessary, desirable, and in the best interests of the beneficiaries of the scheme to appoint a curator at Bonitas to address the problems at the scheme and introduce good corporate governance."
The matter began when the acting Registrar of Medical Schemes Craig Burton-Durham, with the concurrence of the CMS, approached the High Court in Johannesburg on January 26 2010 asking for an urgent hearing to place Bonitas under curatorship.
"The court was expected to hear the matter on March 9 2010 but Bonitas opposed the application and approached the CMS with a proposal to settle the matter out of court."
The CMS said it had responded with a counter-offer which Bonitas had then rejected.
The administrator of the scheme, Medscheme Holdings, then decided to belatedly join the proceedings with an interlocutory application.
It asked the court to disregard the inspection report which questioned its behaviour in relation to Bonitas.
"The CMS believed Medscheme's application has no merit and filed papers to oppose it.
A new hearing date was now awaited.
The CMS stressed that Bonitas remained "financially sound" and that its claims-paying ability had not been affected by the proceedings.
Bonitas is the third-largest medical scheme registered in the country and the second-largest open medical scheme after Discovery Health Medical Scheme.
- Sapa
