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Private hospitals lose case in SHA suspension row
The court upheld the principle that parties must adhere to contractual and statutory dispute mechanisms, reinforcing judicial restraint in reviewing administrative decisions where alternative remedies exist.
The High Court in Nairobi has rejected a case filed by 19 private healthcare facilities, contesting their suspension by the government's Social Health Authority (SHA) over alleged medical insurance fraud and fictitious claims.
The court ruled that the case was moot since the contested 90-day suspension period had already lapsed, rendering the legal challenge ineffective.
The facilities had accused SHA of suspending their contracts unlawfully between July and August 2025 without granting them a hearing, violating constitutional guarantees of fair administrative action.
They argued that SHA’s decision, enforced through Gazette Notices, was unreasonable and ultra vires.
However, the court found that the applicants failed to act promptly, filing their case in October 2025—months after the suspensions took effect—without justifying the delay.
This was despite the urgency claimed in their application for judicial review orders against SHA.
"The suspension notices took effect immediately upon issuance and have since lapsed. Granting leave for judicial review now would serve no practical purpose," the court observed.
The judge emphasised that judicial review remedies are discretionary and cannot revive expired administrative actions.
Crucially, the judge noted that the healthcare providers bypassed SHA’s internal dispute resolution mechanism—the Dispute Resolution Tribunal established under the Social Health Insurance Act—before approaching the High Court.
A clause in their contracts mandated exhausting this avenue first, permitting court intervention only for interim relief pending tribunal resolution.
SHA had suspended the facilities citing fraudulent billing practices, including upcoding claims, submitting fictitious charges, and falsifying information with intent to defraud the health insurance scheme.
The state authority had alleged that the facilities submitted claims for unperformed services which, under the contract amounts to corrupt and fraudulent practices.
They were also accused of creating suspected and fictitious claims to the Authority, intentionally using higher-paying codes to fraudulently reflect the use of a more expensive procedure, device or medicine that was actually used or was necessary.
The court upheld the principle that parties must adhere to contractual and statutory dispute mechanisms, reinforcing judicial restraint in reviewing administrative decisions where alternative remedies exist.
"Parties cannot disregard agreed dispute resolution clauses and rush to court," the judge stated, citing Section 9 of the Fair Administrative Action Act.
The ruling highlighted that judicial review is a remedy of last resort, quoting precedent: "Where alternative remedies exist, they must be pursued first."
