AT HYDERABAD.

F. A. 149/2008 against C.C. 401/2007, Dist. Forum-III, Hyderabad.

Between:

Y. Santhosh Kumar, S/o.  Y. Anjanyulu

Age: 33 years,  Employee

H.No. 12-1-508/B/55

Sripuri Colony, Near  Railway Quarters

Moula Ali, Hyderabad -500 040.                 ***                         Appellant/

Complainant

                                                                    And

Managing Director

B. Somaraju

Care Hospital, 5-4-199

Near  Exhibition Grounds

J.N. Road, Nampally

Hyderabad.                                                           ***                         Respondents/

Ops.

Counsel for the Appellant:                          M/s. S. Srinivasa  Sarma.

Counsel for the Resps:                               M/s. A. Srinath.  

CORAM:

HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT

&

                 SMT. M. SHREESHA, MEMBER

TUESDAY, THIS THE THIRTEENTH DAY OF JULY TWO THOUSAND TEN

Oral Order: (Per Hon’ble Justice D. Appa Rao, President)

                                                          *****

1)                 Appellant is unsuccessful complainant. 

2)                The case of the complainant in brief is that when he was working with Eveready Industries Limited, the respondent extended the Care Hospital healthy insurance plan for the employees and family members and the premium  agreed to be paid by the company from out of his salary.   He took policy for the period from  29.7.2005 to 28.7.2006  for himself, his wife and parents and a card was also issued by the respondent hospital.    When his father become sick on 25.5.2006 having high temperature and throat infection admitted in Polomi hospital which recommended some pathological tests.    He informed the same to the respondent hospital and after getting clearance, he was shifted to respondent hospital on 26.5.2006.     It was  informed that his father was  suffering from chronic COPD and   it does not cover the policy.  They were unaware that his father had such problem.    He worked in the same industry for 33 years without any medical problem.   He was medically checked up regularly.  Later he was discharged on 3.6.2006 after collecting Rs.  65,391/- However, they refused to pay the amount though covered by policy.   Therefore he claimed the said amount together with compensation and costs. 

3)                 The respondent hospital resisted the case.  While admitting coverage of policy under ‘Care Health Plan’   in association with National Insurance Company  it alleged that the benefits would be given subject to exceptions attached to the policy.  There is a clause wherein the claims would be settled by a  third party administrator as per the guidelines issued by Insurance Regulatory Development Authority (3^rd party) Administrators - Health Services) Regulations 2001.   The card was not issued after medical check up and it is not a condition precedent.    It alleged that it was unaware of the treatment underwent by his father at Polomi hospital.  However, it admitted that he was admitted in the respondent hospital upon being shown the Health Plan card that was issued by them.    In fact when claim was made, the administrator has examined the claim and opined that it would come under the exclusion clauses.    The insurance company is a necessary party.    Since the disease was not covered by the terms and conditions of the policy he was not entitled to any compensation, and therefore prayed for dismissal of the complaint with costs. 

4)                The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A8 marked while the respondent filed the affidavit evidence of   its Chairman & Managing Director Dr. B. Somaraju and got Exs. B1 to B3 marked. 

5)                The Dist. Forum after considering the evidence placed on record opined that the complainant’s father was suffering from pre-existing ailment and therefore the respondent has rightly repudiated the claim and consequently dismissed the complaint. 

6)                Aggrieved by the said decision, the complainant preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective.    The fact that his father was a chronic patient was never disclosed nor he was aware of it.    For entitlement of these benefits under the scheme the patient should undergo treatment with the respondent hospital only.    If any amount is to be collected, it is for them to collect from  3^rd party administrator as it was introduced for their convenience.    Since the liability is by way of indemnity the question of impleading the insurance company will not arise, and therefore prayed that the appeal be allowed. 

7)                The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?

8)                It is an undisputed fact  the respondent hospital  by introducing a health plan scheme  in association with National Insurance Company  extended the scheme to the complainant  and his family members extending the benefits viz.,  Rs. 1 lakh for free in-patient treatment, 40% discount  on out-patient doctor’s fee, 30% discount on out-patient tests, and unlimited free causality  consultations and  in-patient  treatment up to Rs. 1 lakh vide Ex. A1 card.    The complainant’s father Sri Y. Anjaneyulu   was admitted when he had fever and throat pain.   He was admitted initially  in Polomi hospital.     At their request he was referred to Care hospital.    He spent Rs. 9,366/- at Polomi hospital  evidenced under Ex. A3.    Equally he spent  Rs. 10,391/- and  Rs. 40,391/- evidenced under bills Exs. A5 & A6 respectively in the respondent hospital.    When he claimed the amount it was repudiated on the ground that  it was a chronic disease and he  suppressed the said fact. 

9)                 At the outset, we may state that there was no mention as to the nature of  diseases that cover the policy.   The exclusions are in general terms by mentioning, existing and pre-existing and  chronic diseases without defining the said terms.     There is no  mention that the disease  was existing or  pre-existing at the time when he joined in the hospital.  Though it was termed as chronic, no literature or authority was filed in order to show  that it was  a chronic ailment.   At the time of commencement of policy  on 29.7.2005  there is no evidence that the father of the complainant was having  this ailment.  For the first time he  joined on 25.5.2006  in Polomi hospital almost 10 months after policy was taken.    From this it cannot be deduced  that  he could have  this ailment by the date of taking of the policy.    May be,   it was chronic by the time when  he was admitted in the hospital,  but it cannot be termed that he had such ailment  and that it was  chronic when he had taken the policy.     

10)              The contention  is  that his father was suffering from  ailment  even before taking of the policy  could not  develop into chronic  stage  but for the fact that it must be pre-existing by the date of taking policy. 

11)              The fact that the father of the complainant knew that he had this ailment  is not evidenced by any document.   In fact the  Hon’ble  Supreme  Court  made it clear in  M/s. Modern  Insulators Ltd. Vs. Oriental Insurance Company  (AIR 2000 SC 1014)  that “ It is  the fundamental principles of insurance law that utmost good faith must be observed  by the contracting parties and good faith forbids either party from non-disclosure  of the facts which  the parties known.  The  insured has a duty to disclose and  similarly  it is the duty of the insurance company  and its agent to disclose   all material facts  in their knowledge  since  obligation  of good faith applies to both equally  and in this respect.  

13.      The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. In this respect, the decision of the Hon'ble Supreme Court in LIC Vs. Smt. G.M.Channabasemma (1996 (III) CPJ 8 (SC) may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the LIC of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not.

14. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.

                                                                                                 (emphasis supplied)

15.   The Hon'ble National Commission in National Insurance Co. Ltd. Vs. Bipul Kunda (2005 CTJ 377 (CP) (NCDRC)  has held that for repudiating a claim of an insured, it is for the insurer to show that a sttement on a fact, which was material for the policy, had been suppressed by the insured and that statement

Burden to prove concealment of insurer.

22.  It may be stated here that if the  claim is repudiated by the insurance company  on the ground that the insured had suppressed the material facts, the burden shall  lie  heavily  on the insurance company  and for that the law laid down by the Hon’ble  Supreme Court  in the case of LIC of India Vs.  G. H. Channabasamma (1991) 1 SCC 357, AIR 1991  SC 392  may  be referred to. 

Meaning of pre-existing disease:

23.  Pre-existing disease is one for which the insured should have undergone hospitalization  or undergone long treatment or operation.   Otherwise, for laymen these day to day normal problems  are not to be disclosed  as even otherwise medical terminology of such problems  is difficult to understand and know.

24.  Merely because some positive science  in respect of so called disease are noticed later on, but for that, that disease could not be treated as pre-existing disease.

25.   It may be stated here that a person might be suffering from a disease but he may not take care to that and go to a doctor.  Quite often  a person, who might be  having some problem with  the heart may not be knowing about it and may not go to a doctor.  The question always  which has to be determined, is, was the pre-existing disease  to the knowledge of the insured.   That knowledge  could be attributed  if the person takes  some  or the  other  treatment from a doctor/hospital and on point of pre-existing  disease  the law laid down  by this Commission in the case of New  India Assurance Company Ltd.  Vs. Vishwanath Manglunia (2006) 3 CPJ 68 may be referred to.  

(emphasis supplied)

12)              Coming to the facts, admittedly  Ex. B1 policy has  commenced from 29.7.2005.  For the first time   complainant’s father  admitted in Polomi hospital   for the said ailment on 25.5.2006 and later  to the respondent hospital on 26.5.2006 and was discharged on 3.6.2006.    The respondent though filed  affidavit evidence mentioning that  it was  pre-existing  and a chronic one, could not let in any evidence  to show that  by the date of policy  he was having this ailment.  There is no proof that he was aware of it.    There was no suppression of any fact.    This contention  was taken  only in order to  get over payment of  the amount.    

13)              Yet another contention that it was sent for clearance by 3^rd party  administrator  as required by  IRDA.    We may state that for unjust repudiation by the respondent  Care hospital on the ground of suppression of material fact may induce the  insurance company to repudiate.  When the complainant has submitted his application for processing the claim, it is for the  respondent hospital to take up the cause.  It ought to have sent it for clearance.     The respondent hospital itself had taken up the cause for taking up this  health plan scheme.  Ex. A2  shows this was mooted  in association with National  Insurance Company.    It had promised to pay the amounts  evidenced from Ex. A1,  their own brochure.    Since the insurance company admitted indemnification  for the amount spent by the complainant, unless the respondent admits the claim,  the question of  insurance company paying the amount will not arise, more so, when the respondent itself  repudiates the claim by stating that it was a chronic and pre-existing disease which in fact was not proved.  Therefore the insurance company is not a necessary party.  It is up to the respondent  to pay the amount, and in turn collect the same from the insurance company. 

14)              In the result the appeal is allowed setting aside the order of the Dist. Forum, consequently the complaint is allowed.  The respondent is directed to pay Rs. 65,391/- to the complainant  with interest @ 6% p.a.,  from the date of complaint viz., 27.4.2007   till  the date of realization together with costs of Rs. 5,000/-.  Since interest is awarded, we do not intend to award any compensation in this regard.    Time for compliance four weeks.

1)       _______________________________

PRESIDENT                 

2)      ________________________________

 MEMBER          

   Dt.  13. 07.  2010.

*pnr

“UP LOAD – O.K.”