A private technology company linked to the Social Health Authority payment system is facing a court challenge over claims that it received about Sh1.2 billion through a two percent deduction imposed on money paid to hospitals treating patients under the government health insurance programme.

The disputed deduction is applied through the Health Information Management System, the digital platform used by hospitals to submit claims, request approval and receive payment after treating patients covered by SHA.

Court documents filed at the High Court in Vihiga identify Finsprint Limited as the company managing the HIMS System Utilisation Fee, which is deducted directly from the value of hospital claims before the final payment reaches healthcare providers.

The petitioners say SHA had paid about Sh60.7 billion in hospital claims by July 1, placing the estimated value collected through the two percent deduction at about Sh1.2 billion.

The figure comes from calculations presented by the petitioners and has not yet been confirmed by the court, SHA, the National Treasury or any other state agency named in the case.

The petition was filed by Busia Senator Okiya Omtatah, Dr Benjamin Gikenyi Magare and Eliud Karanja Matindi, who are seeking orders stopping the deductions until the case is heard and determined.

They accuse SHA and other government agencies of introducing the charge without an Act of Parliament, a Gazette notice, public participation or any clear legal process authorising deductions from money owed to healthcare providers.

The petitioners have asked the court to suspend any circular, letter, notice or administrative direction used to authorise the two percent charge, arguing that no law permits its collection.

Finsprint Limited was incorporated on July 12, 2020, with nominal share capital of Sh100,000 and a registered office in Mombasa, according to company registration records reviewed in connection with the case.

The company has two directors, Issa Sheikh Mohamed of Nairobi and Abdulhakim Ibrahim Sheikh of Mombasa, with Ibrahim holding 425 of the company’s 1,000 issued shares.

The remaining 575 shares are held by Impactsoft Technologies Group Limited, making it the majority shareholder in Finsprint and giving it control of more than half the company.

Registry records identify Impactsoft as a Kenyan company, but they do not show a registered address or provide further information explaining its operations, ownership history or involvement in the SHA system.

An online company using the Impactsoft Technologies name operates from Wylie, Texas, and describes itself as an international information technology services provider, though registration records do not confirm any link between the Texas company and the Kenyan shareholder.

The case has placed Finsprint’s role inside the national health payment system under fresh examination, particularly since the deduction is applied automatically before hospitals receive money for treatment already provided.

Dr Magare says he noticed the deduction on April 8 when processing claims at a health facility accredited by SHA, after part of the approved reimbursement was removed under the HIMS System Utilisation Fee.

He later wrote to SHA, the Digital Health Agency, the Ministry of Health and the National Treasury on July 1, seeking documents explaining the legal basis for the deduction and the role played by Finsprint.

The petition says the agencies did not provide any response explaining who authorised the charge, where the money was being deposited or how it was being budgeted and accounted for.

The petitioners argue that the charge reduces money meant for hospitals, clinics and other healthcare providers after they have already treated patients and submitted approved claims through the SHA system.

They further claim that the government is collecting money on behalf of a private company without showing the contract, procurement process, payment arrangement or law supporting the deductions.

SHA, Finsprint Limited, the Health Cabinet Secretary, the Principal Secretary for Medical Services, the SHA chief executive and the National Treasury Cabinet Secretary are among the respondents named in the case.

The Kenya Revenue Authority, the Digital Health Agency and the Attorney General have been joined as respondents, with the Auditor General and Controller of Budget listed as interested parties.

The petitioners say the two percent deduction amounts to an unlawful tax imposed outside the constitutional process governing the collection, budgeting and spending of public revenue.

They have questioned whether the fee was approved by Parliament, included in any national budget or subjected to public participation before hospitals began losing two percent from every approved payment.

The court papers further raise concerns over patient information processed through HIMS, with the petitioners claiming that allowing a private company access to medical data could breach privacy rights and data protection laws.

Healthcare providers have already complained about unexplained deductions from their SHA reimbursements and have demanded records showing the contractual and legal basis used to take money from approved claims.

The dispute comes as SHA continues facing questions over delayed hospital payments, rejected claims, system failures and the transfer of patients from the former National Health Insurance Fund to the new insurance arrangement.

No response had been filed by the respondents at the time the case was reported, and the court had not made any finding on the Sh1.2 billion figure, the legality of the fee or Finsprint’s role in the payment system.

The case will now determine whether the two percent deduction was lawfully created, whether Finsprint was properly appointed and whether money taken from hospital claims was collected and handled within the law.