Genesis Medical Scheme v Registrar of Medical Schemes and Another

Genesis Medical Scheme, a registered medical scheme under the Medical Schemes Act 131 of 1998 (MSA), submitted its annual financial statements to the Registrar of Medical Schemes. The Registrar rejected the statements on the basis that Genesis had incorrectly treated members’ Personal Medical Savings Account (PMSA) funds as scheme assets and had appropriated interest earned on those funds to itself. The Registrar relied on the High Court decision in Omnihealth, which held that PMSA funds constitute trust property under the Financial Institutions (Protection of Funds) Act 28 of 2001 and therefore do not form part of a scheme’s assets. Genesis challenged the rejection under PAJA, arguing that Omnihealth was wrongly decided and that PMSA funds are not trust property but assets of the scheme, albeit reflected as liabilities in terms of section 35(9)(c) of the MSA. The High Court agreed with Genesis and reviewed and set aside the Registrar’s decision. On appeal, the Supreme Court of Appeal was divided, with the majority upholding Omnihealth in substance. Genesis then appealed to the Constitutional Court.

Leave to appeal was granted. The appeal was upheld. The order of the Supreme Court of Appeal was set aside and replaced with an order dismissing the Registrar’s appeal with costs. The respondents were ordered to pay Genesis’s costs, including the costs of two counsel.

The case definitively clarifies the legal nature of Personal Medical Savings Accounts under South African law. It overrules the approach in Omnihealth and resolves conflicting High Court and Supreme Court of Appeal decisions. The judgment confirms that PMSA funds are not trust property and provides certainty on accounting treatment, solvency calculations, and entitlement to interest. It has significant implications for medical scheme regulation, financial reporting, and insolvency law.