Government Employees Medical Scheme and Others v The Public Protector of the Republic of South Africa and Others

GEMS is a medical scheme registered under the Medical Schemes Act 131 of 1998. Mr Ngwato, whose life partner (Ms Rakgahla) was a GEMS member, sought to be recognized as her beneficiary after her death. GEMS initially refused, requesting a marriage certificate. After a policy change, GEMS recognized Mr Ngwato as a member but ruled he did not qualify for a GPAA subsidy. Mr Ngwato complained to the Registrar of Medical Schemes, who ruled against him on 19 January 2016. He appealed to the Council for Medical Schemes, which dismissed his appeal on 27 October 2016, confirming he was entitled to continued membership but must take up subsidy issues with GPAA. Instead of exercising his further right of appeal to the Appeal Board, Mr Ngwato lodged a complaint with the Public Protector in February 2016. The Public Protector initially closed the file as unsubstantiated but later decided to proceed with the investigation. On 24 April 2018, subpoenas were issued to GEMS' Principal Officer (Dr Goolab) and legal advisor (Mr Kruger). GEMS challenged the Public Protector's jurisdiction to investigate the complaint.

• Whether the Public Protector has jurisdiction under sections 6(4) or (5) of the Public Protector Act 23 of 1994 to investigate a complaint against GEMS
• Whether GEMS performs a 'public function' as contemplated in sections 6(4)(a)(ii) and 6(4)(a)(v) of the Public Protector Act
• Whether GEMS is an 'institution in which the State is the majority or controlling shareholder' as contemplated in section 6(5)(a) of the Public Protector Act
• Whether the Public Protector's power to issue subpoenas is dependent on having jurisdiction to investigate the underlying complaint
• Whether the complaint fell outside the two-year limitation period in section 6(9) of the Public Protector Act

The appeal was upheld with costs, including costs of two counsel. The order of the high court was set aside and replaced with: (i) a declaration that the Public Protector is not empowered by sections 6(4) or (5) of the Public Protector Act to investigate the complaint lodged by Mr Ngwato against GEMS; (ii) confirmation of the rule nisi suspending the subpoenas; and (iii) an order that the Public Protector pay the costs of both the main application and urgent application, including costs consequent upon the employment of two counsel.

The binding legal principle established is that the Public Protector's power to investigate under sections 6(4) and (5) of the Public Protector Act 23 of 1994 is constrained by the jurisdictional requirements set out in those provisions. A medical scheme registered under the Medical Schemes Act does not perform a 'public function' merely because its membership is restricted to government employees. The relationship between a medical scheme and its members is contractual in nature, and complaints arising from scheme rules are domestic matters that do not constitute the exercise of public power. The Public Protector's power to issue subpoenas under section 7(4)(a) of the Act is not an independent, self-standing power but is dependent upon the existence of jurisdiction to investigate conduct falling within sections 6(4) or (5). Subpoenas can only be issued where there is a complaint, allegation or information pointing to conduct referred to in sections 6(4) or (5), and should be interpreted restrictively as a last resort. A complainant's failure to exhaust internal remedies provided by specialized legislation (such as the appeal mechanisms in the Medical Schemes Act) is a relevant consideration in determining whether the Public Protector should exercise jurisdiction.

The court made several important obiter observations: (1) The Public Protector, as a public litigant, has a higher duty to respect the law, fulfill procedural requirements and tread respectfully when dealing with rights. (2) The court suggested, based on Prof De Vos's analysis, that subpoenas should reasonably be interpreted as available only as a last resort and only after a decision has been made to conduct a full investigation (as opposed to a preliminary investigation). (3) The court criticized the approach of officials in the Public Protector's office who insisted on compliance with subpoenas without properly engaging on the jurisdictional challenge, noting this ill-befits an office designed to resolve conflict. (4) The court observed that robust democracy must welcome challenges to the jurisdiction of constitutional institutions, and such challenges should not be perceived as undermining the office. (5) The court noted concern about the Public Protector's failure to address the two-year limitation period in section 6(9) of the Act or provide special circumstances justifying entertaining a late complaint. (6) The court expressed concern about the shifting of focus from the individual complaint to the overall authority of the Public Protector, which served to enlarge the issues and obfuscate the true nature of the inquiry.

This case is significant in South African law as it clarifies the boundaries of the Public Protector's investigative powers under the Public Protector Act. It establishes that the Public Protector's wide powers are not unconstrained and must be exercised within the statutory framework. The judgment emphasizes that medical schemes like GEMS, despite serving government employees, perform private contractual functions rather than public functions and therefore fall outside the Public Protector's jurisdiction. The case reinforces the principle that state institutions, including Chapter 9 institutions like the Public Protector, must act within their statutory mandate and cannot assume jurisdiction not conferred by legislation. It also provides important guidance on the interpretation of subpoena powers, holding that such powers are dependent on the existence of jurisdiction and should be interpreted restrictively. The judgment underscores the rule of law principle that even constitutional institutions must be held accountable to the law and cannot act beyond their statutory powers.