Payment backlogs in the Compensation Fund — which compensates all workers injured or made sick at work — have deteriorated so much that hospital groups and private sector specialists are refusing to treat employees covered by the fund.
The problem is poor administration rather than a lack of resources. The fund, financed by a levy paid by employers and which deals with about 850,000 compensation claims each year, had an accumulated surplus of R14bn at the end of March last year.
The medical expenses of thousands of injured workers have not been paid, putting severe strain on medical professionals.
The number of claims processed monthly declined significantly this year, Compensation Fund officials told Parliament’s labour committee on Wednesday.
The head of the fund’s medical payments directorate, Armugam Pillay, said on Wednesday "urgent interventions" since December had resulted in improvements.
At the end of December, unpaid medical invoices amounted to 123,520 with an estimated value of about R300m. Mr Pillay said the number could be higher as all the invoices might not have been recorded by that date.
South African Orthopaedic Association president Dr Allan van Zyl wrote to Public Protector Thuli Madonsela last month asking for her intervention to ensure that injured workers received private medical care. The alternative was for them to resort to the already overloaded state sector.
Dr van Zyl said the administration and payment systems of the Compensation Fund were "on the brink of total collapse".
"This decline has now reached a critical level. Numerous orthopaedic surgeons in private practice as well as private hospitals have now decided to stop all consultation and treatment of workmen’s compensation victims due to the simple fact that payment of accounts for work done has not been made at all or is delayed for years," he said.
Radiological Society of South Africa executive director Richard Tuft also wrote to fund commissioner Shadrack Mkhonto last month, saying the society would support members who wished to withdraw their services.
Department of Labour director-general Nkosinathi Nhleko told Parliament’s labour committee that he had met medical practitioners in the Western Cape and KwaZulu-Natal to address their "threatening" attitude. He said a forensic investigation had been launched.
The fund has received disclaimers or qualified opinions from the auditor-general for the past four years. Mr Nhleko said a similar negative finding was likely for the 2012-13 financial year.
The auditor-general found that it had a poor service culture, lack of skilled staff, inefficiencies, inadequate systems and fragmented business processes.
It was largely a "paper-based operation" crippled by backlogs in the processing and payment of claims. The auditor-general reported that it was not possible to reconcile revenue and debtor accounts.
Mr Nhleko stressed that "the fund cannot continue to function in the same manner it has over the last decade". An internal project team had been appointed to devise a turnaround strategy and external specialists would be brought in to assist.
However, MPs were sceptical, saying they had been presented with turnaround strategies year after year — to such an extent that it was "dizzying".
Democratic Alliance labour spokesman Sej Motau said there were reports of corruption at the Compensation Fund.