REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
CONSTITUTIONAL AND HUMAN RIGHTS DIVISION
PETITION NO. E524 OF 2024
DR CLARENCE EBOSO MWERESA…………………1 ST PETITIONER
DR DARWIN AMBUKA…………………………….2 ND PETITIONER
DR CHERONO SIELE……………………………….3 RD PETITIONER
DR BOSIBORI ONDARI……………………………4 TH PETITIONER
VERSUS
SOCIAL HEALTH AUTHORITY………………..1 ST RESPONDENT
THE ATTORNEY GENERAL……………………2 ND RESPONDENT
AND
THE LAW SOCIETY OF KENYA……………1 ST INTERESTED PARTY
THE MINISTRY OF HEALTH……………..2 ND INTERESTED PARTY
NATIONAL HEALTH
INSURANCE FUND……………………….3 RD INTERESTED PARTY
FEDERATION OF KENYA EMPLOYERS…4 TH INTERESTED PARTY
JUDGMENT
Background
In October 2023, the National Assembly enacted the Social Health Insurance Act (SHIA) which established the Social Health Insurance Fund (SHIF) as one of the three funds to be managed by the Social Health Authority (SHA).
The SHIA made it mandatory for every Kenyan citizen to register as a contributor to SHIF. The Act mandated the Cabinet Secretary for Health in consultation with SHA to formulate regulations to determine the rate of contribution to the Fund and the tariffs and benefits to be enjoyed by contributors under the basic care package. The Cabinet Secretary gazetted regulations containing tariffs. The regulations provide, among others, a monthly contribution of 2.75% of every employee’s gross salary and 2.75% of unemployed person’s household income as determined by a means testing tool.
The Cabinet Secretary further designated 1 st October 2024 as the date for rolling out SHIF with commencement of the process of registering contributors. As part of the transition, employers were directed to enrol their employees onto SHIF and were to begin deducting and forwarding employees’ monthly contributions.
The Federation of Kenya Employers (the 4 th interested party) directed its members to transfer employees’ personal information and effect monthly deductions. Some employers gave notices to their employees requiring them to register with SHIF as a pre-condition to processing and receiving their salaries. The Ministry of Health also directed NHIF to automatically transfer its members’ personal data to SHIF.
In the meantime, the Cabinet Secretary for Health designated 23 rd November 2024 as the date when the SHIF would become effective and NHIF was to be wound up. The NHIF Act was to stand repealed on 22 nd November 2024. These developments prompted the petitioners to file this petition challenging the respondents and some of the interested parties’ actions
Petitioners’ case
The petitioners who described themselves as voluntary members of NHIF, filed this petition as public interest litigants for enforcement of rights and fundamental freedoms. The petition is supported by an affidavit and supplementary affidavit. The petitioners asserted that their rights to privacy, freedom from discrimination and equal protection of the law were being violated or threatened with violation. They brought this petition not only on their own behalf and that of other members of the now defunct NHIF, but also persons who work and earn income.
The petitioners raised issues which they felt aggrieved them, namely; the relationship between the government’s power to tax and the fundamental right to property under Article 40 of the Constitution; the extent of the state’s power to acquire an interest in private property under Article 40; the limits on transfer of personal data between statutory agencies without the consent of the data subject (owner of the data) under the Data Protection Act; employers’ obligation to protect an employee’s personal data under the Data Protection Act and employers’ obligation to deduct employees’ contribution under SHIA and whether any deductions under the Act may be made without the employee registering with SHIF.
The petitioners took issue with sections 26(1) and 27(2) of SHIA which they argued, require every Kenyan to register with SHIF and every Kenyan household on registering, would be liable to contribute to the Fund. The petitioners further made reference to section 26(5) which provides that “Any person who is registrable as a member under this Act shall produce proof of compliance with the provisions of this Act on registration and contribution as a precondition of dealing with or accessing public services from a national or county government entities.”
The petitioners contended that to the extent that the Act would be construed as creating mandatory obligation for all Kenyans to be registered and to be contributors, such construction violates an individual’s rights and fundamental freedoms.
According to the petitioners, while the Act requires employers to deduct a percentage from the employees’ monthly gross salary as contribution, those not in formal employment to make contribution of similar percentage from annual household income determined through a means testing tool, amounts to differential treatment. The Act further confers powers on the Cabinet Secretary for Health in consultation with SHA, to make regulations to determine the rate of contribution and benefits to be drawn from such contributions, the regulations which provide for contributions of 2.75% of every employee’ gross monthly income, and 2.75% of every unemployed person’s household income as determined by a means testing tool defined by the regulations affect rights of contributors.
The petitioners asserted that to the extent that the determination of the contribution under the Act and regulations is based on different parameters for those in employment and the unemployed persons’ incomes, this is discriminatory and a violation of the right to equality before the law. This is so, because the regulations again provide for tariffs where the benefits for those contributing the most to SHIF would not match the market value of their contributions, yet the same regulations provide that all persons are entitled to the same essential healthcare services and packages despite the difference in the contribution between the those in employment and those not in employment.
The petitioners averred that the mandatory nature of the Fund and contributions that do not translate into equivalent and just value for the contributions violate the contributors’ right to property guaranteed under Article 40 of the Constitution.
It is the petitioners’ case, that while the objectives of SHIA are intended to fulfil the state’s obligation to guarantee socio economic rights under Article 43 of the Constitution to cushion the poor using the contributions made, this duty cannot be collectively transferred to other members of the society in their individual capacity. This is because Article 43 envisages that the obligation would be met fro taxes raised by the state and not by compelling other citizens to take up the state’s responsibility.
The petitioners asserted that under Article 209 of the Constitution, the state is only allowed to collect revenue through taxation and other specific charges for services offered. In that respect, the taxation is only administered through tax laws namely; the Tax Procedure Act, the Income Tax Act, the VAT Act, Excise Duty Act, Miscellaneous Fees and Levies Act and Regulations made under the tax laws.
The petitioners took the view, that upon payment of taxes under the tax law regimes; the money left constitutes a person’s private property which is protected under article 40 of the Constitution. Any other form of revenue collected from citizens can only be levies or charges for the actual services consumed individually by citizen and should be payment for the valuable service rendered. The petitioners asserted that under articles 40 and 209, there can be no lawful regime that compels a citizen to apply his money in a manner that the citizen does not obtain commensurate service for the money paid. The petitioners maintained the Constitution does not contemplate a situation where private property can be used to guarantee public goods without valuable consideration.
The petitioners maintained that the directive by the Cabinet Secretary that employers deduct and pay employees’ contributions to SHIF without employees having registered with the Fund is unlawful and contradicted the Act and the regulations as there is no requirement for automatic deduction of contributions by employers without the employee first registering with the Fund.
The petitioners also took issue with the Ministry’s directive that NHIF transfers all its members’ personal data to the SHIF. They asserted that the automatic transfer of personal data as if members had registered with SHIF, violates the provisions in SHIA and the regulations; the Data Protection Act; the right to privacy and the international principles on data privacy.
According to the petitioners, sections 25 and 26 of the Data protection Act provides for the principles of data protection and rights of a data subject, including the right to object to the processing of any data, while section 32 of the same Act provides for conditions for consent. The petitioners asserted, therefore, that any processing of personal data received from NHIF without consent of the data subject is unlawful.
The petitioners were of the view, that by implementing SHIF through mandatory registration; imposing a fixed percentage rate of contribution from an employees’ gross income and in providing for unequitable payments to the Fund, the Ministry constructively converted the contribution into an income tax and Parliament unlawfully delegating the power to tax to the Cabinet Secretary. According to the petitioners, the directive by the Cabinet Secretary to employers to enrol employees with SHIF and deduct contributions from their salaries was done in disregard of section 27 of SHA which requires that employees voluntarily register before making contributions under the Act.
Responding to the contention that the petition is both res judicata and sub judice , the petitioners argued in the negative. They took the position that the cases relied on related to the formulation of the regulations while this petition is on the implementation of the regulations. Parties in the petitions are also different. In the petitioners’ view, the primary concern in the decision in Aura v Cabinet Secretary, Ministry of Health & 11 others; Kenya Medical Practitioners & Dentist Council & another (Interested Parties) (supra) ( the Aura Case ) was not the mandatory nature of registration, but the potential discrimination of persons who fail to register.
According to the petitioners, regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 was an afterthought and an overreach. It was introduced after Kenyans raised concerns over SHIF and purports to grant the executive power to handle data and limit the right to privacy outside the provisions of SHA.
The petitioners maintained that the replying affidavit did not disclose the specific interest to the data subject, or the specific public interest or legal obligation that justified the processing of personal data without consent. In any case, they argued, Kenyans only received message from SHA purporting to have transferred their personal data from NHIF.
Flowing from the above concerns, the petitioners sought the following relief:
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That upon hearing of the petition, the court find and a declaration be issued that the registration to the Social Health Insurance Fund is not mandatory.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the Social Health Insurance Act prescribes a contribution of a percentage of gross salary from salaried persons, and a percentage of income as defined by a means testing tool for other unemployed but income earning persons is unlawfully discriminatory.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the regulations prescribe a mandatory post-tax contribution of a percentage of a person’s income to the fund is unconstitutional for violating the person’s right to property.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the regulations prescribe a mandatory contribution of a person’s post-tax income to the fund in the public interest without a just equitable benefit of valuable consideration is unconstitutional for unlawfully infringing the person’s rights under article 40.
That upon hearing of the petition, the court find, and a declaration be issued that the income of any person after payment of income tax under the Income Tax Act is absolutely the person’s private property and is protected under the constitutional right to property.
That costs of this petition be provided for.
Respondents and 2 nd and 3 rd interested parties’ case
The respondents and the 2 nd and 3 rd interested parties, (herein respondents, for ease of reference), opposed the petition through grounds of opposition and a replying affidavit sworn by Elijah Gichanga Wachira (Mr. Wachira).
Grounds of opposition
In the grounds of opposition, the respondents contended that the petition is both res judicata and sub judice as the issues and prayers sought are pending determination in Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura & 13 others. The petition is also intended to defeat the orders issued by the Court of Appeal.
The respondents stated that this court cannot determine the nature and amount of contribution because the implementation of the provisions of the Social Health Insurance (General) Regulations, 2024 (Legal Notice No. 49 of 2024) is directly in issue in High Court Petition E513 of 2024 (Okiya Omtatah v The Hon. Attorney General and others).
The respondents asserted that the petition is premature and offends the doctrines of separation of powers and exhaustion. According to the respondents, the petitioners ought to have raised their concerns with Parliament pursuant to articles 94(6), 118 and 119 of the Constitution as read with Part IV of the Statutory Instruments Act.
It was the respondents’ position that the petition invites this court to interfere with the principles in article 20(5)(c) of the Constitution; the government’s obligation under article 43 of the Constitution and policy decisions. The respondents maintained that public interest lies in upholding the presumption that all laws enacted by Parliament are constitutional.
It is the respondents’ further position that this court lacks jurisdiction to determine the mandatory nature of contributions and the rate of contributions because the petitioners are barred by the doctrines of res judicata and sub judice owing to Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura & 13 others pending before the Court of Appeal . The issues further relate to policy decisions of the executive and legislature and resonate with the provisions of article 24 of the Constitution.
Replying affidavit
The respondents asserted through the replying affidavit, that SHA was enacted to fulfill article 43 of the Constitution and ensure the realization of the Universal Health Coverage through the establishment of the three Funds, namely: the Primary Healthcare, SHIF and Emergency, chronic and Critical illness Fund.
Pursuant to the transitional clauses, the petitioners stated, all NHIF obligations and assets moved to SHA as provided for in SHIA. The effect of paragraphs 2 and 3 of the First Schedule to the Act was to assets, rights, duties and powers in NHIF in SHA, including the databases.
The respondents maintained that in line with articles 21(1) and (2) and 43(1) (a) of the Constitution, the Authority has upheld the constitutional rights to health through its efforts to operationalize SHIA through the development of a benefit package for each of the Funds and tariffs for each of the benefits that will accrue to members of the Authority.
According the respondents, SHIA established the Primary Healthcare Fund to purchase primary health services from health facilities; the SHIF and the Emergency, Chronic and Critical Illness Fund to defray costs of management of chronic illness after depletion of the social health insurance cover and to cover the cost of emergency treatment. The three Funds are managed by SHA.
The respondents contended that in order to ensure that beneficiaries continued to access healthcare services, the Cabinet Secretary prescribed an essential health care benefits package that would be accessed by every registered member as provided in section 31(1) of SHIA which was done on 8 th March 2024 through The Social Health Insurance Regulations 2024 (Legal Notice No 49).
In addition to the benefits, the respondents stated, the Authority also published Tariffs vide Legal Notice No. 146 published on 20 th September 2024. In order to access the prescribed benefits, beneficiaries have to be registered members of SHIF as required by section 26 of SHIA. In that respect, therefore, SHIA provides for a reliable, predictable and essential benefit package that addresses the needs of the people of Kenya. There is assurance of contributions for households with low-income levels (or no income) by the state; all Kenyans are guaranteed an optimal health package with a similar and standard level of care and the SHIF benefit package is expanded and has additional benefits compared to the benefit packages that were offered by NHIF.
The respondents contended that during registration, a person is required to provide all particulars requested by the Authority, including documentary proof of identification and fingerprints or other biometric data in line with Regulation 66 of the Social Health Insurance Regulations 2024. The data provided is used by the Authority for the provision of healthcare services to members and to administer the healthcare services within the limits provided in the benefits package applicable to each member.
The respondents maintained that access to these benefits was to commence on 1 st October 2024 in line with regulation 11(1) of the Social Health Regulations 2024 that were amended by Social Health Insurance (Amendment) Regulations 2024. To ensure timely and seamless access to benefits by beneficiaries, the Authority transitioned NHIF members to SHIF upon verification of their data by the Authority using existing relevant government databases.
The respondents asserted that before the transition, the Authority through the Social Health Insurance (Amendment) Regulations 2024, informed the public of its intention to transition all NHIF members to SHIF through Legal Notice No. 147 published on 20 th September 2024. In the view of the respondents, sections 28(2) and 30(1) of the Data Protection Act provide for incidences when automatic transfer of data can be done, as was the case here.
The respondents further asserted that pursuant to regulation 68(1) (c) of the Social Health Insurance Regulations, 2024, members of the Authority can access their data that was transitioned upon request and can amend any misleading information or object to the sharing of all or part of their personal data without their consent. No objection was received objecting to the automatic transfer of data. According to the respondents, contributions to the Fund will enable the Authority acquire benefits from health care providers under SHIF. This can only be achieved through members’ monthly contributions and annual contributions from self-employed persons.
The respondents maintained that the 2.75 % contribution from both the employees and the self-employed is not discriminatory. Contributions made under the SHIA is not also a tax. It was the respondents’ position with regard to compulsory contributions, that the Court held in the Aura case that the requirement met the test in article 24 of the Constitution.
Submissions
This petition was disposed of through written submissions with oral highlights.
Petitioners’ submissions
The petitioners argued, highlighting their written submissions, that the petition is neither res judicata nor sub judice since the subject matters in the petition are different from the previous petition. They argued that the subject matter in petition E513 of 2024- Okiya Omtata v Attorney General & Others , is unknown to them while Civil Appeal E565 of 2024 which is an appeal from High Court Petition E 473 of 2023, the petition related to the validity of the Digital Health Act, The Social Health Insurance Act and the Primary Health Care Act.
The petitioners submitted that this petition impugns the respondents’ interpretation and implementation of SHIA, the overreach of the regulations which goes beyond the scope of the Act, and the state’s authority to alienate individuals’ post tax income without equitable value. The regulations had also not been promulgated when the previous petition was determined. The petitioners relied on the decision in John Florence Maritime Services Limited & another v Cabinet Secretary Transport & Infrastructure & 3 others [2021] KESC 39 (KLR) and Dina Management Limited v County Government of Mombasa & 5 others [2023] KESC 30 (KLR) on res judicata.
The petitioners further relied on sections 26, 27 and 50 of SHIA to argue that the Act does not provide for automatic transfer of data or automatic registration of persons by SHIF. The petitioners argued that mandatory registration and contribution provided for under sections 26(5) and 27(4) of SHIA would offend the law on non-discrimination, if registration and contribution were made mandatory for all persons, yet the services would only be available to those who had contributed. They further argued that the Act ought not be construed as compelling any person to only obtain healthcare services through the SHIF because section 34 of the Act gives the leeway to healthcare provider the option to either be contracted or decline to be contracted with the Fund.
The petitioners took the view, that construing registration with the Authority as mandatory as the respondents have, violates the Competition Act and turns the Authority into a monopoly in healthcare. They relied on Article 260 of the Constitution to argue that a laborer’s salary and a person’s income is personal property.
The petitioners asserted that post taxation, the state has no right outside of the provisions of Article 40 to determine how a person will lawfully apply his property or interest in the property. The petitioners therefore took issue with the 2.75% contribution from a person’s gross monthly income and argued that the import is that higher income earners would contribute more than lower earners yet the benefits would be the same, a phenomenon that should not be allowed.
The petitioners submitted that in prescribing a fixed rate of contribution is not justifiable and rational. Making contribution mandatory for all-natural persons with an income and further making the contribution unequitable, the Cabinet Secretary unlawfully abrogated to himself taxation powers and purported to make contribution an income tax.
The petitioners took the position that the regulations made pursuant to section 27 on contributions by salaried and non-salaried persons are discriminatory and put those in formal employment at a disadvantage because their gross income includes income that must be used to meet other obligations before the surplus can be used for household needs. On the other hand, estimates from the means testing instruments make use of household items which is the net income after a person has spent on other obligations/necessities.
The petitioners again argued that the benefits outlined in the regulations and deemed as Tariffs are inequitable, unjust and disproportionate to the contributions collected. Although the tariffs are the purported benefits a household will receive upon contributing to the Fund, the contributions are to be received for each member of a household who is over 18, regardless of whether or not they earn income thus, limiting the right to health.
On data protection, the petitioners reiterated that public interest requires that processing of personal data conform with article 24 of the Constitution and the law. They relied on the decision in Kenya Anti-Corruption Commission v Deepak Chamanlal Kamari & 4 others [2014] eKLR.
It was the petitioners’ position, that the Data Protection Act does not transfer any duty to the data subject to object to data processing. They reiterated that they were notified of data transfer through SMS that had no return address. It was the petitioners’ further position, that the 1 st respondent contravened article 31 (c) of the Constitution as SHIA expressly delineated that registration to the Fund is through a prescribed form yet information regarding families, beneficiaries, list of ailments, personal and private affairs and much more had been transferred from NHIF without express consent.
The petitioners maintained that reliance on amended regulations allowing transfer of data was fatal in law since the regulations could not go beyond the scope of the primary legislation. They urged the court to allow the petition.
Respondents’ submissions
The respondents argued that that the public notice issued to employers was lawful. They urged the court to take cognizance of the fact that the roll out of the three Health Laws; the Primary Health Care Act; the Digital Health Act and SHIA have been in force since 1 st October 2024.
According to the respondents, operationalization of the three Acts has faced legal challenges. The High Court declared the Acts unconstitutional. That decision was challenged in the civil appeal (Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura &others), which is pending . The Court of Appeal stayed execution of the judgment of the High Court, effectively permitting the roll out of the Fund from 1 st October 2024. According to the respondents, the communication was not meant to create a directive beyond that contemplated by the law, but was to aid a smooth roll out of SHIF.
The respondents argued that the transfer of data from the defunct NHIF to SHIF did not violate the provisions in SHIA. The communication on the transfer of the data was based on sections 26 and 50 of the Act and Regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 as read with paragraph 3 of the First Schedule to the SHIA.
The respondents urged the court to note that the petitioners had not challenged the constitutionality of regulation 5 of Social Health Insurance (Amendment) Regulations, 2024 which is in accord with Paragraph 3 of the First Schedule to the Act. According to the respondents, since the basis of the petition was the alleged forced or automatic transfer of data without legal basis or enabling legislation, the petitioners are bound by their pleadings and cannot raise an issue regarding the scope of section 50 of SHIA. They relied on the decision in Independent Electoral and Boundaries Commission & Another v Stephen Mutinda Mule & 3 others [2014] eKLR.
The respondents maintained that section 50 (1) of SHIA empowers the Cabinet Secretary to make regulations for the better carrying out of the provisions of the Act. Clause 2 (g) enables the Cabinet Secretary to prescribe such regulations on anything which is required for the better giving effect to the provisions of the Act. Further, that at the time of data transfer, the amendment was deemed constitutional.
It was the respondents’ position that the right guaranteed under article 31 of the Constitution is not absolute and can be limited within the purview of article 24 of the Constitution. In that regard, they argued, sections 28(2) and 30 of the Data Protection Act provide for circumstances under which the right to data can be limited. The respondents relied on the decisions in Justice K.S. Puttaswamy (Retd) v Union of India AIR 2018 SC (SUPP) 1841; O’ Hartigan v Department of Personnel 118 Wn. 2d 111 (1991) and Ministry v Interim National Medical and Dental Council and Others (1998) (4) SA 1127 (CC), to submit that the transfer of data was informed by law and was necessary as a transition mechanism to ensure seamless access by beneficiaries to benefits under the Fund, hence was lawful.
The respondents asserted that section 47(4) of the Social Health Insurance Act and sections 3 and 4 of the Digital Health Act provide for additional safeguard to private information in the custody of the Authority (SHA). Furthermore, the transfer was done in line with section 25(f) of the Data Protection Act and Regulation 5 of the Social Health Insurance (Amendment) Regulations 2024. The data subject was given an opportunity to update relevant personal data.
The respondents argued that having previously consented under the defunct NHIF Act and the purpose for which consent was obtained remained the same, it was not necessary to obtain additional consent in light of regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 and paragraph 3 of the First Schedule to SHIA. No complaint was received from any data subject regarding alleged breach of right to privacy by virtue of the transfer.
The respondents asserted that allegations that construction of registration and contribution to the Fund as being mandatory offends the Constitution, and that the mandatory contribution of 2.75 % pegged on gross income amounts to converting the contribution to an income tax; are barred by the doctrine of res judicata and sub judice , as the issue was determined in the Aura case . The issue is also pending in the civil appeal (No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura &
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IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
CONSTITUTIONAL AND HUMAN RIGHTS DIVISION
PETITION NO. E524 OF 2024
DR CLARENCE EBOSO MWERESA…………………1 ST PETITIONER
DR DARWIN AMBUKA…………………………….2 ND PETITIONER
DR CHERONO SIELE……………………………….3 RD PETITIONER
DR BOSIBORI ONDARI……………………………4 TH PETITIONER
VERSUS
SOCIAL HEALTH AUTHORITY………………..1 ST RESPONDENT
THE ATTORNEY GENERAL……………………2 ND RESPONDENT
AND
THE LAW SOCIETY OF KENYA……………1 ST INTERESTED PARTY
THE MINISTRY OF HEALTH……………..2 ND INTERESTED PARTY
NATIONAL HEALTH
INSURANCE FUND……………………….3 RD INTERESTED PARTY
FEDERATION OF KENYA EMPLOYERS…4 TH INTERESTED PARTY
JUDGMENT
Background
In October 2023, the National Assembly enacted the Social Health Insurance Act (SHIA) which established the Social Health Insurance Fund (SHIF) as one of the three funds to be managed by the Social Health Authority (SHA).
The SHIA made it mandatory for every Kenyan citizen to register as a contributor to SHIF. The Act mandated the Cabinet Secretary for Health in consultation with SHA to formulate regulations to determine the rate of contribution to the Fund and the tariffs and benefits to be enjoyed by contributors under the basic care package. The Cabinet Secretary gazetted regulations containing tariffs. The regulations provide, among others, a monthly contribution of 2.75% of every employee’s gross salary and 2.75% of unemployed person’s household income as determined by a means testing tool.
The Cabinet Secretary further designated 1 st October 2024 as the date for rolling out SHIF with commencement of the process of registering contributors. As part of the transition, employers were directed to enrol their employees onto SHIF and were to begin deducting and forwarding employees’ monthly contributions.
The Federation of Kenya Employers (the 4 th interested party) directed its members to transfer employees’ personal information and effect monthly deductions. Some employers gave notices to their employees requiring them to register with SHIF as a pre-condition to processing and receiving their salaries. The Ministry of Health also directed NHIF to automatically transfer its members’ personal data to SHIF.
In the meantime, the Cabinet Secretary for Health designated 23 rd November 2024 as the date when the SHIF would become effective and NHIF was to be wound up. The NHIF Act was to stand repealed on 22 nd November 2024. These developments prompted the petitioners to file this petition challenging the respondents and some of the interested parties’ actions
Petitioners’ case
The petitioners who described themselves as voluntary members of NHIF, filed this petition as public interest litigants for enforcement of rights and fundamental freedoms. The petition is supported by an affidavit and supplementary affidavit. The petitioners asserted that their rights to privacy, freedom from discrimination and equal protection of the law were being violated or threatened with violation. They brought this petition not only on their own behalf and that of other members of the now defunct NHIF, but also persons who work and earn income.
The petitioners raised issues which they felt aggrieved them, namely; the relationship between the government’s power to tax and the fundamental right to property under Article 40 of the Constitution; the extent of the state’s power to acquire an interest in private property under Article 40; the limits on transfer of personal data between statutory agencies without the consent of the data subject (owner of the data) under the Data Protection Act; employers’ obligation to protect an employee’s personal data under the Data Protection Act and employers’ obligation to deduct employees’ contribution under SHIA and whether any deductions under the Act may be made without the employee registering with SHIF.
The petitioners took issue with sections 26(1) and 27(2) of SHIA which they argued, require every Kenyan to register with SHIF and every Kenyan household on registering, would be liable to contribute to the Fund. The petitioners further made reference to section 26(5) which provides that “Any person who is registrable as a member under this Act shall produce proof of compliance with the provisions of this Act on registration and contribution as a precondition of dealing with or accessing public services from a national or county government entities.”
The petitioners contended that to the extent that the Act would be construed as creating mandatory obligation for all Kenyans to be registered and to be contributors, such construction violates an individual’s rights and fundamental freedoms.
According to the petitioners, while the Act requires employers to deduct a percentage from the employees’ monthly gross salary as contribution, those not in formal employment to make contribution of similar percentage from annual household income determined through a means testing tool, amounts to differential treatment. The Act further confers powers on the Cabinet Secretary for Health in consultation with SHA, to make regulations to determine the rate of contribution and benefits to be drawn from such contributions, the regulations which provide for contributions of 2.75% of every employee’ gross monthly income, and 2.75% of every unemployed person’s household income as determined by a means testing tool defined by the regulations affect rights of contributors.
The petitioners asserted that to the extent that the determination of the contribution under the Act and regulations is based on different parameters for those in employment and the unemployed persons’ incomes, this is discriminatory and a violation of the right to equality before the law. This is so, because the regulations again provide for tariffs where the benefits for those contributing the most to SHIF would not match the market value of their contributions, yet the same regulations provide that all persons are entitled to the same essential healthcare services and packages despite the difference in the contribution between the those in employment and those not in employment.
The petitioners averred that the mandatory nature of the Fund and contributions that do not translate into equivalent and just value for the contributions violate the contributors’ right to property guaranteed under Article 40 of the Constitution.
It is the petitioners’ case, that while the objectives of SHIA are intended to fulfil the state’s obligation to guarantee socio economic rights under Article 43 of the Constitution to cushion the poor using the contributions made, this duty cannot be collectively transferred to other members of the society in their individual capacity. This is because Article 43 envisages that the obligation would be met fro taxes raised by the state and not by compelling other citizens to take up the state’s responsibility.
The petitioners asserted that under Article 209 of the Constitution, the state is only allowed to collect revenue through taxation and other specific charges for services offered. In that respect, the taxation is only administered through tax laws namely; the Tax Procedure Act, the Income Tax Act, the VAT Act, Excise Duty Act, Miscellaneous Fees and Levies Act and Regulations made under the tax laws.
The petitioners took the view, that upon payment of taxes under the tax law regimes; the money left constitutes a person’s private property which is protected under article 40 of the Constitution. Any other form of revenue collected from citizens can only be levies or charges for the actual services consumed individually by citizen and should be payment for the valuable service rendered. The petitioners asserted that under articles 40 and 209, there can be no lawful regime that compels a citizen to apply his money in a manner that the citizen does not obtain commensurate service for the money paid. The petitioners maintained the Constitution does not contemplate a situation where private property can be used to guarantee public goods without valuable consideration.
The petitioners maintained that the directive by the Cabinet Secretary that employers deduct and pay employees’ contributions to SHIF without employees having registered with the Fund is unlawful and contradicted the Act and the regulations as there is no requirement for automatic deduction of contributions by employers without the employee first registering with the Fund.
The petitioners also took issue with the Ministry’s directive that NHIF transfers all its members’ personal data to the SHIF. They asserted that the automatic transfer of personal data as if members had registered with SHIF, violates the provisions in SHIA and the regulations; the Data Protection Act; the right to privacy and the international principles on data privacy.
According to the petitioners, sections 25 and 26 of the Data protection Act provides for the principles of data protection and rights of a data subject, including the right to object to the processing of any data, while section 32 of the same Act provides for conditions for consent. The petitioners asserted, therefore, that any processing of personal data received from NHIF without consent of the data subject is unlawful.
The petitioners were of the view, that by implementing SHIF through mandatory registration; imposing a fixed percentage rate of contribution from an employees’ gross income and in providing for unequitable payments to the Fund, the Ministry constructively converted the contribution into an income tax and Parliament unlawfully delegating the power to tax to the Cabinet Secretary. According to the petitioners, the directive by the Cabinet Secretary to employers to enrol employees with SHIF and deduct contributions from their salaries was done in disregard of section 27 of SHA which requires that employees voluntarily register before making contributions under the Act.
Responding to the contention that the petition is both res judicata and sub judice , the petitioners argued in the negative. They took the position that the cases relied on related to the formulation of the regulations while this petition is on the implementation of the regulations. Parties in the petitions are also different. In the petitioners’ view, the primary concern in the decision in Aura v Cabinet Secretary, Ministry of Health & 11 others; Kenya Medical Practitioners & Dentist Council & another (Interested Parties) (supra) ( the Aura Case ) was not the mandatory nature of registration, but the potential discrimination of persons who fail to register.
According to the petitioners, regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 was an afterthought and an overreach. It was introduced after Kenyans raised concerns over SHIF and purports to grant the executive power to handle data and limit the right to privacy outside the provisions of SHA.
The petitioners maintained that the replying affidavit did not disclose the specific interest to the data subject, or the specific public interest or legal obligation that justified the processing of personal data without consent. In any case, they argued, Kenyans only received message from SHA purporting to have transferred their personal data from NHIF.
Flowing from the above concerns, the petitioners sought the following relief:
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That upon hearing of the petition, the court find and a declaration be issued that the registration to the Social Health Insurance Fund is not mandatory.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the Social Health Insurance Act prescribes a contribution of a percentage of gross salary from salaried persons, and a percentage of income as defined by a means testing tool for other unemployed but income earning persons is unlawfully discriminatory.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the regulations prescribe a mandatory post-tax contribution of a percentage of a person’s income to the fund is unconstitutional for violating the person’s right to property.
That upon hearing of the petition, the court find and a declaration be issued that to the extent that the regulations prescribe a mandatory contribution of a person’s post-tax income to the fund in the public interest without a just equitable benefit of valuable consideration is unconstitutional for unlawfully infringing the person’s rights under article 40.
That upon hearing of the petition, the court find, and a declaration be issued that the income of any person after payment of income tax under the Income Tax Act is absolutely the person’s private property and is protected under the constitutional right to property.
That costs of this petition be provided for.
Respondents and 2 nd and 3 rd interested parties’ case
The respondents and the 2 nd and 3 rd interested parties, (herein respondents, for ease of reference), opposed the petition through grounds of opposition and a replying affidavit sworn by Elijah Gichanga Wachira (Mr. Wachira).
Grounds of opposition
In the grounds of opposition, the respondents contended that the petition is both res judicata and sub judice as the issues and prayers sought are pending determination in Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura & 13 others. The petition is also intended to defeat the orders issued by the Court of Appeal.
The respondents stated that this court cannot determine the nature and amount of contribution because the implementation of the provisions of the Social Health Insurance (General) Regulations, 2024 (Legal Notice No. 49 of 2024) is directly in issue in High Court Petition E513 of 2024 (Okiya Omtatah v The Hon. Attorney General and others).
The respondents asserted that the petition is premature and offends the doctrines of separation of powers and exhaustion. According to the respondents, the petitioners ought to have raised their concerns with Parliament pursuant to articles 94(6), 118 and 119 of the Constitution as read with Part IV of the Statutory Instruments Act.
It was the respondents’ position that the petition invites this court to interfere with the principles in article 20(5)(c) of the Constitution; the government’s obligation under article 43 of the Constitution and policy decisions. The respondents maintained that public interest lies in upholding the presumption that all laws enacted by Parliament are constitutional.
It is the respondents’ further position that this court lacks jurisdiction to determine the mandatory nature of contributions and the rate of contributions because the petitioners are barred by the doctrines of res judicata and sub judice owing to Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura & 13 others pending before the Court of Appeal . The issues further relate to policy decisions of the executive and legislature and resonate with the provisions of article 24 of the Constitution.
Replying affidavit
The respondents asserted through the replying affidavit, that SHA was enacted to fulfill article 43 of the Constitution and ensure the realization of the Universal Health Coverage through the establishment of the three Funds, namely: the Primary Healthcare, SHIF and Emergency, chronic and Critical illness Fund.
Pursuant to the transitional clauses, the petitioners stated, all NHIF obligations and assets moved to SHA as provided for in SHIA. The effect of paragraphs 2 and 3 of the First Schedule to the Act was to assets, rights, duties and powers in NHIF in SHA, including the databases.
The respondents maintained that in line with articles 21(1) and (2) and 43(1) (a) of the Constitution, the Authority has upheld the constitutional rights to health through its efforts to operationalize SHIA through the development of a benefit package for each of the Funds and tariffs for each of the benefits that will accrue to members of the Authority.
According the respondents, SHIA established the Primary Healthcare Fund to purchase primary health services from health facilities; the SHIF and the Emergency, Chronic and Critical Illness Fund to defray costs of management of chronic illness after depletion of the social health insurance cover and to cover the cost of emergency treatment. The three Funds are managed by SHA.
The respondents contended that in order to ensure that beneficiaries continued to access healthcare services, the Cabinet Secretary prescribed an essential health care benefits package that would be accessed by every registered member as provided in section 31(1) of SHIA which was done on 8 th March 2024 through The Social Health Insurance Regulations 2024 (Legal Notice No 49).
In addition to the benefits, the respondents stated, the Authority also published Tariffs vide Legal Notice No. 146 published on 20 th September 2024. In order to access the prescribed benefits, beneficiaries have to be registered members of SHIF as required by section 26 of SHIA. In that respect, therefore, SHIA provides for a reliable, predictable and essential benefit package that addresses the needs of the people of Kenya. There is assurance of contributions for households with low-income levels (or no income) by the state; all Kenyans are guaranteed an optimal health package with a similar and standard level of care and the SHIF benefit package is expanded and has additional benefits compared to the benefit packages that were offered by NHIF.
The respondents contended that during registration, a person is required to provide all particulars requested by the Authority, including documentary proof of identification and fingerprints or other biometric data in line with Regulation 66 of the Social Health Insurance Regulations 2024. The data provided is used by the Authority for the provision of healthcare services to members and to administer the healthcare services within the limits provided in the benefits package applicable to each member.
The respondents maintained that access to these benefits was to commence on 1 st October 2024 in line with regulation 11(1) of the Social Health Regulations 2024 that were amended by Social Health Insurance (Amendment) Regulations 2024. To ensure timely and seamless access to benefits by beneficiaries, the Authority transitioned NHIF members to SHIF upon verification of their data by the Authority using existing relevant government databases.
The respondents asserted that before the transition, the Authority through the Social Health Insurance (Amendment) Regulations 2024, informed the public of its intention to transition all NHIF members to SHIF through Legal Notice No. 147 published on 20 th September 2024. In the view of the respondents, sections 28(2) and 30(1) of the Data Protection Act provide for incidences when automatic transfer of data can be done, as was the case here.
The respondents further asserted that pursuant to regulation 68(1) (c) of the Social Health Insurance Regulations, 2024, members of the Authority can access their data that was transitioned upon request and can amend any misleading information or object to the sharing of all or part of their personal data without their consent. No objection was received objecting to the automatic transfer of data. According to the respondents, contributions to the Fund will enable the Authority acquire benefits from health care providers under SHIF. This can only be achieved through members’ monthly contributions and annual contributions from self-employed persons.
The respondents maintained that the 2.75 % contribution from both the employees and the self-employed is not discriminatory. Contributions made under the SHIA is not also a tax. It was the respondents’ position with regard to compulsory contributions, that the Court held in the Aura case that the requirement met the test in article 24 of the Constitution.
Submissions
This petition was disposed of through written submissions with oral highlights.
Petitioners’ submissions
The petitioners argued, highlighting their written submissions, that the petition is neither res judicata nor sub judice since the subject matters in the petition are different from the previous petition. They argued that the subject matter in petition E513 of 2024- Okiya Omtata v Attorney General & Others , is unknown to them while Civil Appeal E565 of 2024 which is an appeal from High Court Petition E 473 of 2023, the petition related to the validity of the Digital Health Act, The Social Health Insurance Act and the Primary Health Care Act.
The petitioners submitted that this petition impugns the respondents’ interpretation and implementation of SHIA, the overreach of the regulations which goes beyond the scope of the Act, and the state’s authority to alienate individuals’ post tax income without equitable value. The regulations had also not been promulgated when the previous petition was determined. The petitioners relied on the decision in John Florence Maritime Services Limited & another v Cabinet Secretary Transport & Infrastructure & 3 others [2021] KESC 39 (KLR) and Dina Management Limited v County Government of Mombasa & 5 others [2023] KESC 30 (KLR) on res judicata.
The petitioners further relied on sections 26, 27 and 50 of SHIA to argue that the Act does not provide for automatic transfer of data or automatic registration of persons by SHIF. The petitioners argued that mandatory registration and contribution provided for under sections 26(5) and 27(4) of SHIA would offend the law on non-discrimination, if registration and contribution were made mandatory for all persons, yet the services would only be available to those who had contributed. They further argued that the Act ought not be construed as compelling any person to only obtain healthcare services through the SHIF because section 34 of the Act gives the leeway to healthcare provider the option to either be contracted or decline to be contracted with the Fund.
The petitioners took the view, that construing registration with the Authority as mandatory as the respondents have, violates the Competition Act and turns the Authority into a monopoly in healthcare. They relied on Article 260 of the Constitution to argue that a laborer’s salary and a person’s income is personal property.
The petitioners asserted that post taxation, the state has no right outside of the provisions of Article 40 to determine how a person will lawfully apply his property or interest in the property. The petitioners therefore took issue with the 2.75% contribution from a person’s gross monthly income and argued that the import is that higher income earners would contribute more than lower earners yet the benefits would be the same, a phenomenon that should not be allowed.
The petitioners submitted that in prescribing a fixed rate of contribution is not justifiable and rational. Making contribution mandatory for all-natural persons with an income and further making the contribution unequitable, the Cabinet Secretary unlawfully abrogated to himself taxation powers and purported to make contribution an income tax.
The petitioners took the position that the regulations made pursuant to section 27 on contributions by salaried and non-salaried persons are discriminatory and put those in formal employment at a disadvantage because their gross income includes income that must be used to meet other obligations before the surplus can be used for household needs. On the other hand, estimates from the means testing instruments make use of household items which is the net income after a person has spent on other obligations/necessities.
The petitioners again argued that the benefits outlined in the regulations and deemed as Tariffs are inequitable, unjust and disproportionate to the contributions collected. Although the tariffs are the purported benefits a household will receive upon contributing to the Fund, the contributions are to be received for each member of a household who is over 18, regardless of whether or not they earn income thus, limiting the right to health.
On data protection, the petitioners reiterated that public interest requires that processing of personal data conform with article 24 of the Constitution and the law. They relied on the decision in Kenya Anti-Corruption Commission v Deepak Chamanlal Kamari & 4 others [2014] eKLR.
It was the petitioners’ position, that the Data Protection Act does not transfer any duty to the data subject to object to data processing. They reiterated that they were notified of data transfer through SMS that had no return address. It was the petitioners’ further position, that the 1 st respondent contravened article 31 (c) of the Constitution as SHIA expressly delineated that registration to the Fund is through a prescribed form yet information regarding families, beneficiaries, list of ailments, personal and private affairs and much more had been transferred from NHIF without express consent.
The petitioners maintained that reliance on amended regulations allowing transfer of data was fatal in law since the regulations could not go beyond the scope of the primary legislation. They urged the court to allow the petition.
Respondents’ submissions
The respondents argued that that the public notice issued to employers was lawful. They urged the court to take cognizance of the fact that the roll out of the three Health Laws; the Primary Health Care Act; the Digital Health Act and SHIA have been in force since 1 st October 2024.
According to the respondents, operationalization of the three Acts has faced legal challenges. The High Court declared the Acts unconstitutional. That decision was challenged in the civil appeal (Civil Appeal No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura &others), which is pending . The Court of Appeal stayed execution of the judgment of the High Court, effectively permitting the roll out of the Fund from 1 st October 2024. According to the respondents, the communication was not meant to create a directive beyond that contemplated by the law, but was to aid a smooth roll out of SHIF.
The respondents argued that the transfer of data from the defunct NHIF to SHIF did not violate the provisions in SHIA. The communication on the transfer of the data was based on sections 26 and 50 of the Act and Regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 as read with paragraph 3 of the First Schedule to the SHIA.
The respondents urged the court to note that the petitioners had not challenged the constitutionality of regulation 5 of Social Health Insurance (Amendment) Regulations, 2024 which is in accord with Paragraph 3 of the First Schedule to the Act. According to the respondents, since the basis of the petition was the alleged forced or automatic transfer of data without legal basis or enabling legislation, the petitioners are bound by their pleadings and cannot raise an issue regarding the scope of section 50 of SHIA. They relied on the decision in Independent Electoral and Boundaries Commission & Another v Stephen Mutinda Mule & 3 others [2014] eKLR.
The respondents maintained that section 50 (1) of SHIA empowers the Cabinet Secretary to make regulations for the better carrying out of the provisions of the Act. Clause 2 (g) enables the Cabinet Secretary to prescribe such regulations on anything which is required for the better giving effect to the provisions of the Act. Further, that at the time of data transfer, the amendment was deemed constitutional.
It was the respondents’ position that the right guaranteed under article 31 of the Constitution is not absolute and can be limited within the purview of article 24 of the Constitution. In that regard, they argued, sections 28(2) and 30 of the Data Protection Act provide for circumstances under which the right to data can be limited. The respondents relied on the decisions in Justice K.S. Puttaswamy (Retd) v Union of India AIR 2018 SC (SUPP) 1841; O’ Hartigan v Department of Personnel 118 Wn. 2d 111 (1991) and Ministry v Interim National Medical and Dental Council and Others (1998) (4) SA 1127 (CC), to submit that the transfer of data was informed by law and was necessary as a transition mechanism to ensure seamless access by beneficiaries to benefits under the Fund, hence was lawful.
The respondents asserted that section 47(4) of the Social Health Insurance Act and sections 3 and 4 of the Digital Health Act provide for additional safeguard to private information in the custody of the Authority (SHA). Furthermore, the transfer was done in line with section 25(f) of the Data Protection Act and Regulation 5 of the Social Health Insurance (Amendment) Regulations 2024. The data subject was given an opportunity to update relevant personal data.
The respondents argued that having previously consented under the defunct NHIF Act and the purpose for which consent was obtained remained the same, it was not necessary to obtain additional consent in light of regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024 and paragraph 3 of the First Schedule to SHIA. No complaint was received from any data subject regarding alleged breach of right to privacy by virtue of the transfer.
The respondents asserted that allegations that construction of registration and contribution to the Fund as being mandatory offends the Constitution, and that the mandatory contribution of 2.75 % pegged on gross income amounts to converting the contribution to an income tax; are barred by the doctrine of res judicata and sub judice , as the issue was determined in the Aura case . The issue is also pending in the civil appeal (No. E565 of 2024- Cabinet Secretary, Ministry of Health v Joseph Enock Aura &
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