Medscheme drops Bonitas court fight, clearing path for regulator’s forensic tender investigation

Medscheme has withdrawn its legal application against Bonitas Medical Fund, clearing the way for the Council for Medical Schemes (CMS) to proceed with a forensic investigation into allegations of improper procurement and conflicts of interest.

The legal action was launched after Medscheme said it had gathered evidence of significant impropriety during tender processes involving the administration and managed care of Bonitas’s lower-cost BonCap option, as well as the scheme’s marketing and sales distribution contract.

Medscheme alleged that contracts had been awarded to entities that lacked the required experience, capacity and compliance credentials.

Those allegations have not been tested in court, and no finding of wrongdoing has been made against Bonitas, Private Health Administrators (PHA) or any other party.

New administrator from 1 June

Despite the application, Bonitas awarded its broader administration contract to Momentum Health and its managed-care contract to PHA. The new arrangements took effect on 1 June after Medscheme’s contracts expired on 31 May.

Medscheme has accused Bonitas and PHA of using interlocutory applications and other delaying tactics to prevent the substance of its case from being heard before the handover. It said the evidence supporting its allegations remained unanswered and had not been challenged in court.

However, Bonitas presented a very different version.

In an answering affidavit filed in January, Bonitas principal officer Lee Callakoppen argued that Medscheme had improperly linked two earlier tenders to the more recent contracts it was trying to stop.

He said the earlier processes concerned the 2022 award of BonCap administration and managed-care services to PHA and the 2024 appointment of Agile Business Solutions to handle marketing and sales distribution. The subsequent tenders concerned administration services awarded to Momentum and managed-care services awarded to PHA from June 2026.

Callakoppen said there was no link between the earlier tenders under regulatory scrutiny and the new contracts Medscheme sought to interdict. He argued that the later tender processes had already been completed and binding contracts signed, making the requested interdict moot.

He accused Medscheme of acting to preserve its position as Bonitas’s service provider and the commercial benefits attached to the contracts. Medscheme denies that its application was motivated by commercial self-interest.

As reported by Daily Maverick, the Council for Medical Schemes’ industry report for 2024 reveals that Bonitas had 356,713 members and paid managed care fees of R154.25 per member per month for a total of R55-million a month or about R660-million a year. The administration fees for 2024 worked out to roughly R91.9-million a month, or about R1.1-billion for the year.

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The PHA capacity question

Bonitas also disputed Medscheme’s claims about PHA’s capacity.

In his affidavit, Callakoppen said PHA had previously provided administration and managed-care services to other medical schemes, had been inspected and accredited by the CMS, and had its Bonitas administration agreement reviewed by the regulator. He said Medscheme continued to provide some services as PHA’s subcontractor after the BonCap contract was awarded.

According to his affidavit, Medscheme did not bid for either the BonCap tender or the marketing and distribution tender. Callakoppen maintained that Medscheme and its parent company, AfroCentric, had initially supported the appointment of an alternative provider for the loss-making BonCap option.

He said the marketing tender followed dissatisfaction with the performance of AfroCentric Distribution Services. Bonitas denied that the appointment of Agile was tainted by a conflict of interest.

The regulatory process began after Business Day published an investigation in October 2024. The CMS registrar opened a Section 43 enquiry in February 2025 and requested information about the awards to PHA and Agile.

In November 2025, the CMS said its initial enquiry had found that the allegations warranted further investigation. The registrar resolved to initiate a forensic investigation to examine the claims and make recommendations. The regulator stressed that this did not indicate a predetermined outcome.

The CMS paused its process while the court action was under way.

Medscheme’s withdrawal means the interdict application will no longer determine the dispute. Bonitas’s rebuttal has also not been tested through a substantive court hearing.

The question now moves back to the regulator: whether the tender processes were properly managed and whether the evidence supports further action against any of the parties. DM