Fedhealth held a Special General Meeting (SGM) on Wednesday, 26 July 2023. This meeting took place online and in-person to address and vote on three motions brought forward by five members of Fedhealth (former Topmed and Fedhealth Trustees). The 5 members who requisitioned the SGM are Mr Trevor Jackson, Mr Phil Hemus, Mr Nick Byrne, Mr Andre Fourie and Mr Jakobus Viljoen.

Motion 1

The removal of Mrs Angela Gahagan-Thomson as a member of the Board of Trustees due to an alleged irregularity on her CV.

Response from the Fedhealth Board

• Motion 1 contains statements which are factually incorrect.
• Mrs Angela Gahagan-Thomson was appointed as a Director of the Liberty Business Unit of Medscheme in 2004, for which the Scheme has a copy of her appointment letter as proof. Therefore her CV did not represent her position.
• It is abundantly clear from a review of Mrs Gahagan-Thomson’s CV that she:
• Is a seasoned executive
• Has skills that are valuable to the Board.

As such, the Board’s position was that Motion 1 should be voted against.

Result of voting:

For: 4 votes (2.35%)

Against: 166 votes (97.65%)

Abstain: 13

Motion 2

• Introduce a rule that limits the number of terms for members of the Board of Trustees to two consecutive terms of three years without a break.
• The application of the rule change would be retrospective, effectively ending the continued service of several experienced and knowledgeable Trustees.
• In an ironic twist, the motion was brought by previous Trustees who served far longer than the motion prescribes. It seems that the term limits only became desirable once they were no longer on the Board.

Response from the Fedhealth Board

• While there may be some argument for term limits, those arguments don’t really apply to medical scheme Boards where institutional knowledge is essential, especially if there is a third-party administrator.
• Members have a choice every year to vote off Trustees that they feel are getting too advanced in age, very much as they did with Mr Jackson and then Mr Hemus. This view was endorsed by members at the SGM.

As such, the Board’s position was that Motion 2 should be voted against.

Result of voting:

For: 14 votes (8.00%)

Against: 161 votes (92.00%)

Abstain: 8

Motion 3

A call to replace the Principal Officer by 31 August 2023 as a result of poor scheme performance due to, inter alia, the introduction of the MediVault facility, poor service levels, and a strategy to pursue individuals rather than group membership.

Response from the Fedhealth Board

• The Scheme is not in a crisis and is being well managed with prudent fiscal processes, as evidenced by the retention of the Global Credit Rating score of AA-, the second highest rating and which the Scheme has had since 2007.
• The Medical Scheme industry is facing many challenges, most notably the economic position of the country, forcing many people to choose whether or not to remain on a scheme. Younger and healthier members are less likely to remain on as their medical requirements are commonly less than their contributions. By dropping out they exacerbate the cross-subsidy challenges facing schemes.
• The MediVault product is an innovative way of providing benefits to members that meet their needs and their products.
• The members who brought the motion were all present when the new product was introduced and implemented.
• Complaints regarding the product have dropped dramatically as members have begun to understand the advantages.
• Various enhancements have been made to the product to improve simplicity and ease of operation.
• Scheme operations remain a focus of the management team.
• Medical aid is necessarily complicated; every medical scheme has their administrative challenges.
• Service levels are monitored in several ways to ensure that the measurement processes are not “gamed”.
• Trustees are privy to the operational reports and those with expertise in systems and processes give input.
• The strategy of the Scheme is not to focus only on individuals. Group risk (large employer groups) is often better than individual membership, but it is harder to penetrate.
• The strategy is multi-pronged; individuals, smaller employers, and interfacing with corporate brokers to secure access to larger employers.
• The Scheme has taken numerous steps to address these challenges.

As such, the Board’s position was that Motion 3 should be voted against.

Result of voting:

For: 5 votes (2.65%)

Against: 184 votes (97.35%)

Abstain: 6

Conclusion

There is no doubt that the motions were not brought in the interests of the Scheme or its members. There was an element of malice behind the requisition of the SGM, brought because the members, who’ve all tried to remain on as Trustees, are bitter about not being re-elected onto the Board. The members also demonstrated bad faith by not even bothering to attend the meeting that had been set up at their behest and argue their motions. It is unfortunate that the Scheme had to incur the expense of the SGM for a fruitless exercise just so some ex-trustees could engage in a finger pointing exercise. It is worth pointing out that the ex-trustees are familiar with the Board members and could easily have called a meeting to raise their concerns and hear the Board’s feedback. It is telling that they chose to rather try and embarrass the Board and PO, and impugn the reputation of the Scheme. The Trustees are considering various measures, including a recovery of the costs incurred in holding the SGM and declaring Mr Jackson, as ringleader and instigator, a vexatious complainant.

It is the sincere hope and wish of the Board that brokers will not let this unfortunate incident affect our business relationship. The Scheme is in good hands and is well run.

To view the response from the Fedhealth Board to the motions, click here.

To watch a recording of the full SGM proceedings, click here.