NHIF in Sh1.2bn court dispute with quantity survey firm

The National Hospital Insurance Fund (NHIF) is locked in a legal dispute with one of its contractors over a Sh1.2 billion claim related to quantity surveying services offered for a proposed resource medical centre in Karen, Nairobi.

The State corporation on August 25 filed a suit at the Milimani Law Courts challenging the jurisdiction of Kairu Bachia as the sole arbitrator on grounds that there was no arbitration agreement between them and Ujenzi Consultants.

NHIF is seeking to have the arbitral proceedings stopped pending the determination of the case.

“The claim herein amounts to more than Sh1.2 billion which if successful would be paid out of public funds and it is, therefore, in the public interest that this matter be heard and determined urgently before any further steps are taken in relation to the arbitration herein,” the parastatal says in court documents.

In a sworn affidavit, Ruth Gakuo, NHIF’s legal affairs manager, says that the health insurer acquired a property in 2002 for a proposed medical resource centre and Ujenzi Consultants was appointed as a quantity surveyor on April 29 of the same year.

According to the statement of claim filed in court documents, the contractor says they provided a project concept paper, feasibility studies and business plan and in April 2011 NHIF instructed the project architects to liaise with them and other consultants to prepare a detailed business proposal and implementation documents for the construction and development of the Karen Medical Centre of Excellence and Institute.

The centre was meant to reflect one of the proposed specialised medical centres of excellence as a flagship project for Vision 2030 within the health docket.

According to court documents, the State-funded medical insurance scheme had settled four fee notes generated by Ujenzi Consultants between 2009 and 2012.

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The first fee note of April 2009 amounted to sh133.5 million and claims of Sh63.5 million, Sh41.3 million and Sh144.3million on the subsequent fee notes.

The quantity surveyor submitted the fifth fee note amounting to sh54.1 million in December 2012 and a sixth claim of Sh873.8 million in May 2013, both of which have remained unpaid to date.

Ujenzi Consultants claims that “in the evaluation and analysis by the government of Kenya Sh811.8 million was assessed to be the professional fees for quantity surveying services due” arising from the last fee note.

The quantity surveyor now wants the government to pay Sh365.2 million as accumulated interest and Sh63 million as penalty and interest on delayed VAT in addition to the fifth fee note and the adjusted sixth fee note.

Appearing before Justice Eric Ogola, NHIF’s lawyer Kennedy Ogetto argued that while they raised the jurisdiction objection to the arbitrator, he dismissed their claims and instead asked them to file submissions for him to rule on the matter.

Justice Ogola issued interim orders preventing the arbitrator, who was absent during proceedings, from making a decision over the matter until it is mentioned before the presiding judge on September 21.