The Consumer Protection Act 68 of 2008 in a medical context

First of its kind in SA Came into effect on 1 April 2011 Applies to every transaction occurring within SA Involving the supply of goods / services In exchange for consideration Unless such transaction is exempted from application of

CPA

What is the CPA?

To protect and develop social and economic welfare of consumers – in particular vulnerable consumers

Patient = consumer of medical services / goods

Vulnerable consumers = illiterate, medically incapacitated, uneducated, uninformed

Main aim of CPA

Regulatory authority (HPCSA, MCC) may apply to Minister of Health for an industry wide exemption from one or more provisions of the CPA on grounds that provisions of CPA overlap / duplicate a regulatory scheme already in existence

South African Medical Device Industry Association (SAMED) applied for exemption to DG of Health in October 2010.

Pharmaceutical industry applied for exemption and had meeting with Consumer Commissioner on 14 June 2011.

What transactions are exempted?

Very wide

If conflicting with other concurrent health care legislation eg. Health Professions Act / Medical Schemes Act/ Medicines Act/ Pharmacy Act - the act offering the greater protection to the consumer will apply

Scope of CPA

1. Right to equality in consumer market2. Privacy3. Choice4. Disclosure and information5. Fair and reasonable marketing6. Fair and honest dealing7. Fair, just and reasonable terms and conditions8. Fair value, good quality and safety

8 fundamental consumer rights

Consumer has right to:- expect goods to be reasonably suitable for purposes they

are generally intended for- expect goods to be in good working order, free from

defects- usable, durable for reasonable period of time

Example: implants of medical devices, prostheses,

- expect performance of services in a manner, quality that persons are generally entitled to expectExample: sonars, surgical interventions

Strict liability for damage caused by goods /services

CPA provides for implied warranty in each transaction relating to supplying of goods to consumer

The importer, distributor, retailer each warrants that goods comply with requirements, standards stipulated in CPA

Implied warranty

- harm caused as a result of supplying unsafe goods- a product failure, defect or hazard in goods- insufficient instructions or warnings to the consumer

relating to any hazard arising from or associated with the use of goodsExample: injury, death

irrespective of whether the harm is the result of negligence on the part of any of these parties

Producer / importer / retailer/ goods or service provider is liable for:

Consumer entitled to institute action against anyone in the supply chain (producer, importer, distributor, retailer, service provider) and hold such person(s) jointly and severally strictly liable for damages suffered as a result of the death / injury / illness of a consumer resulting from the consumption or use of defective / hazardous goods or services supplied to the consumer

Example: defective protheses, implants, pacemakers, medications

Liability

Since the healthcare professional who delivered the care is the most easily (and usually the only) identifiable person in supply chain, he/she can be held strictly liable for damages that follows

Example: defective prostheses, implants, pacemakers, medication resulting in damages

Practical impact on health care practitioner

- no statutory provision for strict liability- liability founded in either contract or delict- contract: where seller/service provider breached

expressed / implied warranty- delict: seller/service provider fraudulently not disclosed

defect, consumer must prove negligence on side of seller/service provider and defect in product and can sue for damages suffered

- still had to prove fault / negligence

Prior to the CPA

- strict liability = no fault liability- only needs to prove, on a balance of probabilities, that

relevant goods (that were unsafe, defective, hazardous or contained inadequate instructions pertaining to hazard) have caused harm.

NB: although all medication inherently dangerous – it is still subject to the CPA

Since the CPA

unsafe feature of product, hazard, failure or defect result from compliance with any public regulation

alleged unsafe feature, hazard, failure or defect did not exist in goods when goods were supplied to another person alleged to be liable

unreasonable to expect distributor or retailer to have detect unsafe feature, failure, defect or hazard

claim will prescribe if brought 3 years after date of death / injury occurred

Exceptions/defences to no-fault liability regime:

Review medical malpractice insurance to ensure it includes sufficient cover for product liability

Suppliers should improve quality control Suppliers should, if part of a supply chain, obtain

appropriate indemnities from all other parties Medical defence organisations (MPS) assist members

faced with medico-legal problems

Precautions

- CPA prohibits any supplier to discriminate unfairly against any person(s) in relation to access, priority, supply and pricing or the termination of an agreement, eg: applying a different standard in respect of benefit options - providing generic medicines to those medical scheme members on low-cost plans only.

- CPA restricts unwanted direct marketing. Must ascertain whether potential patient has register a “pre-emptive block” prohibiting you from sending any material for promotional purposes

Marketing

CPA prohibits agreements containing unfair, unreasonable or unjust terms or where consumer must waive any liability of the supplier on terms that are unfair, unreasonable or unjust.

Unfair, unjust or unreasonable terms will constitute:- excessive pricing of goods / services - excessively favouring a person other than the consumer- being so adverse to consumer that it is unequitable- false, misleading or deceptive representations made on

behalf of supplier on which consumer relies to his detriment (including statement of opion)

Contractual aspects

- Consists of medical opinion or diagnosis- Need not necessarily be false or misleading to be

regarded as unfair and unjust - patients must merely act on these opinions to their

detriment (strict liability) - statement of opinion vs. contractual term - contractual term = communal term agreed on between

parties

Statement of opinion

parties’ relationship to each other (trust, expert) parties’ relative - capacities

- education - experience - sophistication - bargaining position - whether parties have negotiated - extent of negotiation

Factors in determining fairness, justness, reasonableness of contractual terms

No contract may limit or exempt any supplier of goods or services from liability for any form of damages resulting from gross negligence by the supplier or any person acting under his supervision or on his behalf

eg. hospital admission contracts excluding liability in case of serious, reckless disregard or carelessness – not allowed

Gross negligence

Any contractual terms purporting to limit the liability of a supplier must be brought to the attention of the consumer, especially if such terms concerns activity (surgical intervention) that is subject to any risk:- of an unusual nature- that could result in serious injury or death- whose presence a consumer cannot reasonably

expect to be aware of, notice or contemplate

Supplier must specifically draw consumer’s attention to fact, nature and potential affect of risk

Purported limitation of liability

drawing the patient’s attention to the fact, nature and effect of all relevant risks

explain the above in plain language afford patient sufficient time to consider and comprehend

risks patient must consent to and sign these terms in contract Include clause containing complete breakdown of all

financial obligations of patient in terms of agreement furnish patient with copy of contract or free access to a

copy of such contract keep record of all agreements (verbal ones as well)

Minimising liability risks

entails improper, unethical conduct of such degree that it would shock the conscience of any reasonable person.

CPA prohibits:- use of undue influence- use of pressure (marketing directed at emotionally

vulnerable consumers)- use of duress, harassment, unfair tactics

CPA codifies common law position ito duress and undue influence and extend this beyond consensus between parties to include marketing, supply, negotiation, execution and enforcement of contract

Unconscionable conduct

Cunsumer’s right to select supplier provides inter alia that supplier may not group or bundle goods, unless:

- convenience of bundling outweighs the limitation on the freedom of choice of the consumer

- bundling is to the economic benefit of the consumer - bundled goods and services are also offered

seperately at individual prices

Eg. designated service providers selected by medical funds as preferred providers (?)

Bundling of goods and services

Consumer has right to:- fair value, good quality, safety- performance of services in manner and quality that

persons are generally entitled to expect- expect that goods required for the performance of a

service are of generally expected quality and free from defects

- receive goods that are reasonably suitable for the purpose for which they are intended and will be usable and durable for a reasonable period of time

(subject to implied warranty)

Quality of goods /services supplied

If a supplier accepts a reservation to supply goods or services on a specific date and time, then fails to provide accordingly, the supplier must refund the consumer exceptif shortage of capacity is due to circumstances beyond the control of the supplier and the supplier took reasonable steps to inform the consumer of this as soon as practicable possible

Consumer entitled on payments already effected, interest from date of such payment and costs “directly incidental” to supplier’s breach of contract (eg. loss of income)

Overselling and overbooking

Marietjie Botes

marietjie@dyason.co.za

The Consumer Protection Act 68 of 2008