Union of Kenya Civil Servants v Ministry of Public Service, Youth and Gender, National Hospital Insurance Fund & Attorney General; Public Procurement and Regulatory Authority & Insurance Regulatory Authority (Interested Parties) [2020] KEELRC 1755 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI

PETITION 106 OF 2019

(Before Hon. Justice Hellen S. Wasilwa on 21st January, 2020)

THE UNION OF KENYA CIVIL SERVANTS….....................…..PETITIONER

VERSUS

MINISTRY OF PUBLIC SERVICE,

YOUTH AND GENDER…….........…………….………….1ST RESPONDENT

NATIONAL HOSPITAL INSURANCE FUND….....................RESPONDENT

ATTORNEY GENERAL…….…….....………..….………3RD RESPONDENT

AND

PUBLIC PROCUREMENT

AND REGULATORY AUTHORITY……………1ST INTERESTED PARTY

INSURANCE REGULATORY AUTHORITY…2ND INTERESTED PARTY

RULING

1. Before this Court is the Petitioner’s Application dated 13th June 2019 when the Petitioner seeks the following orders:-

a. Spent.

b. THAT pending the hearing and determination of this application inter partes and or further orders and directions the Honourable Court be pleased to issue temporary conservatory orders of injunction barring the 1st Respondent, its agents, servants and employees from commencing procurement proceedings for the renewal of contract for the provision of medical cover, group life cover and last expense cover to civil servants and or from entering into a direct procurement tender and contract award with the 2nd Respondent for the provision of the said cover and services.

c. THAT pending the hearing and determination of this Petition the Honourable Court be pleased to issue a conservatory order of injunction barring the 1st Respondent, its agents, servants and employees from commencing procurement proceedings for the renewal of contract for the provision of medical cover, group life cover and last expense cover to civil servants and or from entering into a direct procurement and contract with the 2nd Respondent for the provision of the said cover and services.

d. THAT pending hearing and determination of this Petition the Honourable Court be pleased to issue conservatory orders directing the principal administrative secretary/accounting officer of the State Department of Public Service of the 1st Respondent to provide a temporary medical cover, group life cover, and last expenses cover to civil servants upon expiry of the subsisting contract for supply of medical cover between 1st and 2nd Respondents which comprehensive medical cover is scheduled to expire on 30th June 2019.

e. THAT the costs of this application be borne by the 1st and 2nd Respondents.

2. The Application is premised on the grounds set out in the motion and the Supporting Affidavit of Jerry Saoli Ole Kina. They are that the 1st and 2nd Respondents entered into a contract where the 2nd Respondent was to provide a comprehensive medical cover, group life cover and last expense cover to 120,324 Civil Servants, their spouses and 5 dependents for a period of 1 year from 1st July 2018 to 30th June 2019.

3. On the other hand, the 1st Respondent entered into a CBA with the Petitioner where the 1st Respondent undertook to provide the Petitioner’s members with adequate medical care by establishing a comprehensive medical cover to provide medical benefits to the Petitioner’s members, their spouses and dependent children.

4. However, the 2nd Respondent breached the terms of the agreement it entered into with the 1st Respondent as members of the Petitioner were denied medical services from medical facilities because the 2nd Respondent had failed to pay for the services.

5. Further, the 2nd Respondent failed to take action on the medical facilities who offered poor services to the Petitioner’s members and continued to engage medical facilities which lacked capacity. Additionally, the 2nd Respondent directed the medical facilities it had contracted to refer civil servants of job groups A to K to facilities of a lower cadre.

6. It is averred the 2nd Respondent has introduced pre-condition requirements that must be met before a patient can be attended to. The 2nd Respondent’s failure to differentiate the medical scheme under its contract with the 1st Respondent and the other schemes it has pursuant to the NHIF Act and caused confusion causing some medical facilities to take advantage of the situation to provide poor services.

7. It is the Petitioner’s case that despite notifying the 1st Respondent of the contract breaches, no action has been taken thereby causing suffering to the Petitioner’s members. The Petitioner avers that the 1st Respondent is in the process of renewing the contract with the 2nd Respondent’s, its breaches notwithstanding, a fact that has violated its members rights.

8. Additionally, the 1st Respondent intends to directly procure the services of the 2nd Respondent without there being an open tender process as required in the Public Procurement and Asset Disposal Act. The Petitioner avers that if the 2nd Respondent’s services are procured; its members will be denied adequate access to medical services.

9. The 1st Interested Party has opposed the Application vide the Replying Affidavit of Maurice Juma sworn on 1st July 2019. The Affiant contends that a court cannot be used to bar a procuring entity from carrying out a lawful activity without proof that it has breached the law.

10 The Affiant further avers that section 91 of the Public Procurement and Asset Disposal Act provides that open tendering shall be the preferred procurement method for procurement of goods, works and services and further that section 103 (2) provides for instances when a procurement entity may use direct procurement.

11. Nevertheless, the affiant avers that procuring entities do not require any approval from the 1st Interested Party to initiate any tendering proceedings. That they are only required to report to the 1st Interested Party where direct procurement has been used as stipulated in section 62 (3).

12. He avers that the 1st Interested Party has never received a report from the 1st Respondent on the subject matter and that the Petitioner has not provided evidence to prove that the 1st Respondent intends to directly procure the services of the 2nd Respondent.

13. The 1st Respondent opposed the application vide the Replying Affidavit of Mary W. Kimonye sworn on 1st July 2019. She avers that on 20th June 2011, the government approved the conversion of medical allowances, in-patient refunds and ex gratia assistance, to a medical scheme. Thereafter, the Ministry of Public Service invited tenders for provision of a medical insurance cover to civil servants, the Kenya Police Service, Administration Police Service and National Youth Service.

14. The tenders were evaluated by the technical committee comprising of the 1st Respondent and technical advisors from the 2nd Interested Party. However, the tender was not awarded because the requirements of the tender were not met.

15. The 2nd Respondent was subcontracted to provide services to employees of job group A to M, because the 1st Respondent was of the view that the insurance players did not have the capacity to undertake the program, compared to the 2nd Respondent who has practical past experience as it had contracts with health facilities in the 47 counties.

16. The Affiant avers that the Applicant raised complaints to the 1st Respondent’s cabinet secretary on the breach of contract obligations by some health care providers and the quality of service made to scheme members in its letters of 29th January and 28th March 2019.

17. Consequently, the Cabinet Secretary convened a meeting with officials of the Petitioner, which led to the institution of the Inter-agency Technical Working Committee to review the implementation of a comprehensive medical insurance scheme for civil servants so as to improve the scheme’s efficiency and efficacy.

18. The Committee came up with a report and parties agreed to incorporate the recommendations in the 2019/2020 medical scheme contract and which report was approved by the cabinet secretary and forwarded to stakeholders for implementation.

19. It is the Affiant’s position that further monitoring and evaluation of the scheme is undertaken annually by the Applicant, the 1st and 2nd Respondent so as to address the complaints and recommendation raised by members. She further avers that the Applicant has always been included in this process.

20. The Affiant states that the issues raised by the Applicant in the suit were to be discussed in a retreat in Naivasha between 24th to 28th June 2019 and to which the Petitioner was invited. She states that the Petitioner has come to this Court with unclean hands as it refused to attend the retreat after being granted 2 slots instead of the 7 slots it had requested for.

21. It is the Affiant’s position that all the stakeholders are usually involved in the contract negotiations. She further posits that the complaints raised regarding the civil servants who are in job groups A to K and SL1 have been addressed in the contract of 2019/2020 financial year.

22. The Affiant avers that Section 4 (2) of the Public Procurement and Disposal Act allows a government department to acquire stores, equipment and services from a ministry or government department without entering into a competitive tendering process. Further, that the temporary cover suggested by the Applicant is untenable because the Act does not provide for such an arrangement.

23. It is averred that the government commissioned an actuarial study in the year 2007/2008, which recommended conversion of the existing medical benefits for civil servants into a comprehensive insurance scheme.

24. It is her position that if the orders sought are granted then 120, 324 civil servants and their spouses will not be able to access medicine. As such, it is in the public interest that this Court should not issue blanket orders which will impact on greater population.

25. Further, the Applicants have demonstrated the irreparable loss they are likely to suffer if the orders sought are not granted. As such, the balance of convenience tilts in the Respondent’s favour.

26. The 2nd respondent also opposed the application vide the Replying Affidavit of Nicodemus Odongo sworn on 2nd July 2019. He adopted the Affidavit of Mary Kimonye as part of the 2nd Respondent’s response.

27. He avers that the scheme is important as it cushions civil servants, disciplined services and their dependents from out of pocket expenditure on health services while the government enables the right to healthcare services.

28. The Affiant avers that the Applicant was in the standing committee that was established in 2013 to oversee the implementation of the medical scheme. The committee organized for sensitization of the scheme members and bi-annual monitoring and evaluation on the scheme’s performance.

29. He avers that the Applicant opted to institute these proceedings instead of attending the retreat where the discussion entailed “Review of the Comprehensive Medical Scheme Civil Servant.” He reiterated the 1st Respondent’s assertions that the issues raised in the Application were the same issues addressed in the Naivasha retreat.

30. The Affiant avers that following the review of the expired contract, the 1st Respondent engaged NHIF to continue offering the medical cover, group life cover and last expenses for the beneficiaries under the said cover. Further, that it is in the best interests of the civil servants and their dependents that they continue enjoying the medical benefits under the scheme rather than not having one at all.

31. The Applicant filed a Further Affidavit of Jerry Saoli Ole Kina sworn on 2nd September 2019, in response to the affidavits of Mary Kimonye and Nicodemus Odongo. It is the Affiant’s position that the two affidavits are the replica of each other and that they do not deny the facts as outlined by the Applicant regarding its grievances.

32. Further, that they have not adduced any evidence before this Court to demonstrate how these grievances have been addressed by the Inter-agency Technical Working Committee.

33. Regarding section 4 (2), the Affiant states that the medical scheme by the 2nd Respondent does not make provision for a last expense cover yet the 1st Respondent was procuring a medical cover, group life cover and last expense cover from the 2nd Respondent.

34. The Affiant further avers that it is factual knowledge that the 2nd Respondent has sub-contracted the contract to various medical facilities and insurance firms which do not fall within the meaning of Section 4 (2) (c).

35. It is averred that the Applicant’s members are being subjected to great prejudice and inconvenience as the 2nd Respondent has failed to render services as envisaged in the CBA it has with the 1st Respondent.

Submissions by the Parties

36. The Application was disposed of by way of written submissions where parties filed their submissions in support of their cases. There is no record of the Petitioner’s submissions in the Court file.

37. In their submissions filed on 15th July 2019, the 1st and 3rd Respondents submit that the Applicant has not demonstrated to the Court that the renewed contract for the provision of medical cover in the 2019/2020 financial year is inadequate and incomprehensive. As such, the Application is based on speculations and mere allegations and should be disregarded.

38. The 1st and 3rd Respondents further submit that the Applicant has not demonstrated the irreparable damage it is likely to suffer if the orders sought are not granted. Consequently, the balance of convenience tilts in their favour. They rely on the cases of Abel Salim & Others vs. Okongo & Other [1976] KLR 4, Kenya Breweries Limited & Another vs. Washington Okeyo [2002] 1 EA 109and Board of Management of Uhuru Secondary School vs. City County Director of Education & Others [2015] eKLR.

39. In conclusion, they submit that the Applicant has not met the threshold for grant of temporary orders as sought.

40. Like the 1st and 3rd Respondents, the 2nd Respondent submits that the Applicant has not demonstrated a prima faciecase with chances of success. For instance, the Applicant has not demonstrated how the procurement of a medical cover from it would infringe on its members’ rights and fundamental freedoms. They rely on the additional cases of Mrao Limited vs. First American Bank of Kenya Limited vs. 2 Others[2003] KLR 125.

41. It is the 2nd Respondent’s submissions that the Applicant has not demonstrated the irreparable loss it stands to suffer if the conservatory orders are not granted.

42. On the contrary, it is of the view that the Applicant’s members stand to suffer if the orders sought are granted as they will be left without any medical cover, and relies on the cases of Abdullahi Mohammed Ali & 2 Others vs. Adbullahi Shariff & 2 Other [2014] eKLRand The Judges and Magistrates Vetting Board and Others vs. Centre for Human Rights and Democracy & Others [2014] eKLR.

43. The 2nd Respondent further submits that the Applicant has not demonstrated that the balance of probability tilts in its favour and that the grant of the conservatory orders is in the public interest and relies on the case of Kenya Hotel Properties Limited vs. Willesden Investments Limited & Kenya Revenue Authority [2018] eKLR. It is its position that more benefits would accrue to the Applicant’s members if they remained in the scheme and relies on the cases of Kenya Small Scale Farmers Forum vs. Cabinet Secretary Ministry of Education [2015] eKLR and Questa Care Limited vs. Public Procurement Administrative Review Board & 2 Others [2018] eKLR.

44. Lastly, the 2nd Respondent submits that the Applicant has not met the threshold for the issuance of a mandatory injunction and relies on the case of Kenya Airports Authority vs. Paul Njogu Mungai & 2 Others [1997] eKLR.

45. In its submissions filed on 18th October 2019, the 1st Interested Party submits that pursuant to Section 4 (2) of the Public Procurement and Asset Disposal Act, the procurement in question was not subject to the application of the Act.

46. I have examined the averments and submissions of both Parties herein.  The Applicants seek stoppage of renewal of the Medical Cover for its Members who are Civil Servants on the ground that the 2nd Respondent performed dismally in the part cover, which was subsisting.

47. This Court in considering whether to allow the application or not, notes that if the Insurance Cover is not renewed in the FY2019/2020 many Civil Servants and their families will remain vulnerable without any cover subsisting at the moment.

48. The Applicants fear may be genuine based on part performance by the 2nd Respondent but the benefit of convenience lies in not allowing the injunction sought at the moment as the members work at a lasting solution in the future.

49. I therefore find the convenience lies in denying the application sought which I decline to grant the orders sought pending hearing and determination of the main Petition.

50. Costs in the Petition.

Dated and delivered in open Court this 21st day of January, 2020.

HON. LADY JUSTICE HELLEN WASILWA

JUDGE

In the presence of:

Wanga for 2nd Respondent

Mungai holding brief Jaoko for Petitioner

Kinyua for 1st and 2nd Respondents