The High Court has stopped government from rolling out a civil servants’ multi-billion kwacha medical scheme after a health insurance firm challenged the awarding of the contract to Medical Aid Society of Malawi (Masm), branding it illegal and unconstitutional.
The legal battle comes after the Department of Human Resource Management and Development (DHRMD) circulated a memo last month informing ministries and government departments that it is introducing a medical scheme under Masm effect March 1 2021.
The circular, reference number HRM/Cs/20, announced that the initiative—to cover all public sector workers on voluntary basis—will adopt a phased approach with the first cohort targeting civil servants Grade D to H.
But a health insurance firm Central Health Limited (CHL) has obtained an injunction stopping DHRMD through the Attorney General from implementing the scheme until “a judicial review or a further order of the court.”
In its application dated February 24 2021, CHL argues that government introduced the medical scheme “without open tender proceedings.”
The firm argues that the decision to award Masm the deal was “procedurally improper, illegal and unconstitutional for failing to adhere to lawful and procedurally fair administrative action as required by Section 43 of the Constitution.”
CHL also said the move is against sections 30 and 37(1) of the Public Procurement and Disposal of Public Assets Act.
The Attorney General’s office did not defend the case and Justice Kenyatta Nyirenda issued the injunction on March 23 2021.
He ruled: “Looking at the circumstances of this case, including the fact that this application is practically undefended despite the defendant having been served, I am inclined to grant the interlocutory order sought by the claimant (CHL). It is so granted.”
The DHRMD said in consultation with the Civil Servants Trade Union (CSTU) it was introducing the medical scheme to improve the welfare of civil servants who are reportedly around 250 000.
In the circular to principal secretaries and heads of departments, the DHRMD said the government will be paying 90 percent of the monthly premiums with the civil servants squaring up the balance.
“Since the scheme is contributory, all eligible civil servants who opt to join will be contributing 10 percent,” the circular which Nation on Sunday has seen reads.
The circular disclosed that the monthly premium for the executive scheme will be pegged at K14 500 with each civil servant paying K1 450. Those in this scheme fall in grades F to H. The VIP scheme will be costing K30 000 with beneficiaries in Grades D and E paying K3 000 each as their 10 percent contribution.
If all civil servants could subscribe to the schemes, Masm would be pocketing around K4 billion monthly translating into nearly K48 billion annually.
Meanwhile, DHRMD public relations officer Kennie Ntonga in an interview said all procurement procedures were followed before Masm was considered.
“From our point of view, all procurement procedures were adhered to when entering into an agreement with Masm,” he said.
Asked to provide evidence and the time they secured approval from the procurement authorities, he asked for time “I can’t be sure of the date, unless I check at the office. Suffice to say that by February we had started alerting all ministries and departments on the same.”
Ntonga could also not be drawn to confirm if they had already rolled out the scheme on March 1 as stated. He, however, said they would honour the court order stopping the process.
In a separate interview, CSTU general secretary Madalitso Njolomole said they agreed to offer Masm the deal because it was already providing a medical scheme for principal secretaries.
“We agreed that starting the tendering again was going to take time before the scheme rolled out. This is the reason we engaged Masm,” he said.
We would not immediately establish if the government and Masm had signed a fresh contract or it just extended the existing one that targeted the principal secretaries.
The Public Procurement and Disposal of Assets Authority spokesperson Grace Thipa said she would only comment if there was evidence that the medical scheme deal was approved by her department.