A private technology firm is at the centre of a legal battle over deductions applied to payments made by the Social Health Authority (SHA) to hospitals for treating patients under the state-owned insurance scheme.

Documents filed in court by three petitioners, including Busia Senator Okiya Omtatah, allege that Finsprint Limited has received Sh1.2 billion deducted through a two per cent levy from SHA claims paid up to July 1.

Busia Senator Okiya Omtatah.

Photo credit: Dennis Onsongo | Nation Media Group

The contested charge is levied using the Health Information Management System (HIMS), the digital platform through which hospitals submit claims to SHA, obtain pre-authorisation and receive reimbursement for treating patients. It is deducted directly from the value of those claims.

Read: Auditor-General exposes Sh50bn SHA rip-off

In the petition filed at the High Court in Vihiga, the petitioners accuse the government of imposing the deduction without legal authority, parliamentary approval or public participation.

Tech company

The court filing identifies Finsprint Limited as the private firm managing the HIMS System Utilisation Fee and questions its role in the SHA payment system.

Business Registration Service records reviewed by the Nation show Finsprint Limited was incorporated on July 12, 2020, with a nominal share capital of Sh100,000 and a registered address in Mombasa.

The company has two directors: Issa Sheikh Mohamed of Nairobi and Abdulhakim Ibrahim Sheikh of Mombasa. Mr Ibrahim owns 425 of its 1,000 shares, while the remaining 575 shares are held by Impactsoft Technologies Group Limited, making it Finsprint's majority shareholder.

Registry records identify Impactsoft as a Kenyan company but do not provide a registered address. An online search found a company using the name Impactsoft Technologies operating from Wylie, Texas, describing itself as a global provider of information technology solutions and services.

Read: Finsprint, the private firm pocketing SHA billions

However, the Business Registration Service records do not establish whether it is the same entity listed as Finsprint's majority shareholder.

The petitioners—Dr Benjamin Gikenyi Magare, Eliud Karanja Matindi and Mr Omtatah—want interim orders suspending the deduction of the two per cent HIMS System Utilisation Fee from healthcare providers' claims until the case is concluded.

They three also seek orders stopping implementation of any circular, letter, Gazette notice or other instrument authorising the deductions.

The petition names SHA, Finsprint Limited, the Health Cabinet Secretary, the Principal Secretary for Medical Services, the SHA chief executive, the Treasury Cabinet Secretary, the Kenya Revenue Authority, the Digital Health Agency and the Attorney General as respondents.

Read: Duale: Muslim-owned facilities dominate SHA fraud crackdown

The Auditor-General and the Controller of Budget are listed as interested parties.

Surgeon — Dr Magare Gikenyi.

Photo credit: Francis Mureithi| Nation Media Group

According to court papers, Dr Magare discovered the deduction on April 8 while processing claims at a SHA-accredited health facility. He says he wrote to SHA, the Digital Health Agency, the Health Ministry and the National Treasury on July 1 seeking the legal basis for the deduction but received no explanation.

“The respondents did not give any explanation or any feedback, nor did they provide the role of the second respondent (Finsprint Limited) who is believed to be the beneficiary of the two per cent HIMS System Utilisation fee,” the petition states.

It alleges that SHA had disbursed about Sh60.7 billion in claims, translating into approximately Sh1.2 billion deducted through the disputed charge. The figure represents the petitioners’ calculation and has not been determined by the court.

Claiming double taxation, the petitioners contend that no law authorises the deduction from healthcare providers’ claims.

“No legislation or statutory authority authorises the respondents to deduct the said two per cent HIMS System Utilisation fee from the claimed amount,” states Dr Magare, adding the levy lacks a legal and constitutional basis.

He further argues that there is “no clear road map where the fee goes and how it is budgeted and appropriated”.

They also claim the fee amounts to taxation outside the constitutional framework governing public revenue collection.

“The two per cent HIMS System Utilisation fee is not based on any legislation,” the petition says.

It adds that “there was no public participation when introducing the impugned fee.”

Questioning Finsprint’s role in the SHA payment process, the petition alleges the deductions divert part of hospitals’ reimbursement claims to the private company, reducing the amounts paid to healthcare providers.

Read: Auditor-General exposes Sh50bn SHA rip-off

The petition also raises concerns over patient data, claiming that exposing information to a third party would violate constitutional privacy protections and the Data Protection Act.

“A government (whether national or county) or any other body is not allowed to be an agent of private entities, where they collect money from poor Kenyans and instead of paying service providers, the same is diverted to private entities. There is no transparency and accountability in dealing with public funds,” Dr Magare says.

‘No accountability’

“There is no accountability of administrative actions of the respondents as provided in Article 232(1)(e) of the Constitution.”

The dispute comes amid broader scrutiny of SHA's implementation following the transition from the National Health Insurance Fund to the new universal health insurance system.

Private hospitals have recently questioned the unexplained deductions from reimbursement claims and sought disclosure of the contractual or legal basis for the charges. The respondents had not filed responses to the petition at the time of publishing this article, and the court had not determined the allegations.

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jwangui@ke.nationmedia.com