When an unpaid patient account prescribes
When an unpaid patient account prescribes under South Africa's Prescription Act, what interrupts the clock, and how a practice keeps old balances in view.
By Achekam · · 5 min read · For Healthcare businesses in South Africa
Every practice's debtors list has a tail: patient accounts from years ago, shortfalls the medical scheme never paid, a patient who moved away and stopped answering. They sit there, ageing, until someone asks whether they are still worth chasing, or whether it is already too late.
In South Africa, "too late" has a legal meaning. Under the Prescription Act 68 of 1969, a debt that is not pursued within the prescribed period can be extinguished. This article explains, in general terms, how long an ordinary patient account has, when the clock starts, what stops it, and how a practice can keep old balances visible so the question is answered deliberately rather than by default. It is not legal advice: before you sue on, or abandon, an old account, speak to a lawyer.
Three years for ordinary debts
Section 11 of the Prescription Act sets different periods for different kinds of debt. Thirty years applies to debts secured by mortgage bond, judgment debts and tax debts; fifteen years to certain debts owed to the State from loans or sales or leases of land; six years to debts on a bill of exchange, another negotiable instrument or a notarial contract; and three years to any other debt, unless an Act of Parliament provides otherwise.
An ordinary patient account for consultations, procedures or medicines is not a mortgage bond, a judgment or a bill of exchange, so it will usually fall into the last category. In practice, that means a practice should treat three years as the period that matters for most patient accounts, and confirm with its lawyer for any unusual case.
The Prescription Act as published by the Department of Justice contains the full text of these sections, including the periods, when prescription begins and what interrupts it.
When the clock starts
Under section 12, prescription starts to run as soon as a debt is due. But a debt is not deemed due until the creditor knows the debtor's identity and the facts giving rise to the debt, or could have learned them by exercising reasonable care. If the debtor wilfully prevents the creditor from learning of the debt, prescription does not start until the creditor becomes aware of it.
For a practice, the identity and the facts are usually known on the day of treatment. When the account is actually due will depend on the practice's terms and how it bills, for instance whether the patient is billed directly or the scheme is claimed first. Settle that question with your lawyer once, so your staff know from which date to count.
What interrupts prescription
Three things in the Act matter for a practice that is following up old accounts.
An acknowledgement by the patient. Section 14 says an express or tacit acknowledgement of liability by the debtor interrupts prescription, which then starts to run afresh from the day of the interruption. A patient who writes "I know I owe this and will pay next month" has acknowledged the debt. Whether a particular part payment or a payment arrangement amounts to a tacit acknowledgement is a question for your lawyer, but it is worth recording every payment and every written promise carefully.
Note that section 14 speaks of an acknowledgement by the debtor. A statement or reminder the practice sends is useful, but on its own it is not the patient acknowledging anything.
Serving a summons. Section 15 says prescription is interrupted by serving on the debtor any process claiming payment. The interruption lapses, however, unless the creditor successfully prosecutes the claim to final judgment, or the debtor acknowledges liability. After judgment, prescription runs afresh from the day the judgment becomes executable.
A payment after prescription still counts. Section 10 says that when a principal debt prescribes, any subsidiary debt arising from it, such as interest, also prescribes. But a payment the debtor makes after a debt has prescribed is still regarded as payment of a debt. So when a patient voluntarily settles an old account, the Act still treats the money as payment of a debt.
Prescription has to be raised
Section 17 says a court will not take notice of prescription on its own. A party relying on prescription must raise it in a document filed in the proceedings, although a court may allow it to be raised at any stage. In other words, prescription is a defence the patient must put up. That is not a reason to sue on accounts you know are prescribed; it is a reason to know the dates before deciding what to do.
Keeping old balances in view in Achekam
The danger with prescription is not the law but inattention: accounts drift past the three-year mark because nobody looked.
- The age analysis. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals. The "over 120 days" column is where old patient accounts collect. Review it monthly, starting with the oldest balances, and mark any account approaching three years for a decision.
- Statements and reminders. Credit control is on for new workspaces and once a day e-mails overdue reminders and a monthly statement to customers with a balance, never charges anyone, and records whether each e-mail went out. A customer statement of account can also be produced as a PDF and e-mailed on demand, and the screen says whether it was sent. These keep patients informed; any written reply acknowledging the debt should be filed. How statements and reminders work for patients is covered in statements and reminders for patient accounts.
- Write-offs. When the practice decides not to pursue an account, an unpaid debt can be written off once a partner approves, so the decision is never one person's alone. Scheme shortfalls that end up with the patient are discussed in collecting the balance after medical aid pays part.
A three-year review
Once a quarter, list every patient account older than two years. For each, note the date it became due, any acknowledgement or payment since, and whether action is planned. Decide, with your lawyer where needed, whether to pursue, agree a payment plan or write it off, and record the decision. That way, no account prescribes simply because nobody noticed.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
