BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 12^TH DAY OF JANUARY 2024

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP for the following reliefs against the OP:-

1.  Direct the OP to reimburse the hospitalization expenses as sought in the claim dated 07.10.2020 which is an amount of INR 2,83,272/- under the top up policy and further interest at the rate of 18% p.a., as may accrue till the date of actual repayment.
2. Direct the Op to reimburse the hospitalization expenses as sought in the claims made between 23.10.2020 and 08.04.2021 which is an amount of INR 25,90,882 under the Top Up policy and further interests at the rate of 18% p.a., as may accrue till the date of actual repayment.
3. Direct the OP to pay a sum of INR 5,00,000/- for the mental agony suffered by the complainant.
4. Direct the OP to cover the legal costs of this complaint.
5. Pass such other orders that are necessary in the interest of justice and equity.

2. The case set up by the complainant in brief is as under:-

The complaint is filed by the legal representatives of deceased B.Ramaswamy owing to his demise on 12.10.2022.  The complainant No.1b and 1c are represented by complainant 1a who is their power of attorney holder.  The OP is an general insurance company offering various insurance policies including health insurance policies.

3. It is the case of the complainant that the deceased B Ramaswamy and the complainants have subscribed to health insurance policies offered by the OPs since 1994.  They have maintained continuous coverage and paid insurance premium to the OP for over 28 years. The base policy dated 25.04.2018 for the period of 25.04.2018 to 24.04.2019 was issued to the deceased B.Ramaswamy by the OP without any involvement of the agents the TPA opted by the deceased complainant for the policy period of 2018, 2019 was medi assist TPA.  
4. The deceased around April 2019 visited the office of the OP in Sadashivanagar to renew the policy and as per the advice of the Senior Manager namely Mr.S.Uday Kumar came to know that he is eligible for enhancement of the sum from four lakhs to five lakhs and under the policy and a possibility of obtaining top up policy of an amount of Rs.22,00,000/- subject to a threshold of INR 8,00,000. The deceased was informed by the OP manager that he is required to undergo medical examination and approval from panel of doctors is a pre-requisite for enhancement of the said assured sum.
5. Subsequently the complainant was provided with list of tests and he was recommended to undergo tests at the RV Metropolis Hospital.  The deceased complainant complied with pre-requisite and underwent tests to the satisfaction of the OP before the OP granted enhancement of base policy and top up policy. He has also submitted the report to the OP. After submission of the medical reports the OP have not at all sort any further information from the physician who certified the medical examination report and also not advise the complainant to undergo any further investigation.  The OP have accepted the medical report. 
6. The deceased complainant subscribed to the top up policy on 24.04.2019 and the period of insurance was 25.04.2019 to 24.04.2020. The TPA opted by the complainant for the said period was medi assist TPA.  The enhancement of the amount under the base policy was done for both the deceased complainant and his wife, the complainant 1(a) and an additional premium was paid to cover both of them.  The complainant has also marked NO and NA for the column for pre-existing disease in the base policy and also in the top up mediclaim policy for the period 2019-20.  
7. The main grievance of the complainants is that the deceased complainant was diagnosed with stomach cancer on 26.04.2019 on the same day the doctor advise him to undergo a PET scan, which clearly indicates that the complainant was diagnosed with stomach cancer on 26.04.2019. the deceased began to undergo treatment for his condition as and when advise by the doctors and raised claims for the same with the TPA from time to time which were processed and cleared by the OP.
8. It is further grievance of the complainant that as per the stipulated process of yearly renewal the base policy was renewed on 21.04.2020 for the deceased and the complainant NO1a for the period from 25.04.2020 to 24.04.2021. As per the terms and conditions of the policy the deceased and complainant 1a were accorded with a cumulative bonus of Rs.1,25,000/-.  At the time of renewal for the period from 25.04.2020 to 24.04.2021 the deceased was switched to health insurance TPA of India ltd.,  Hitpa, as its new TPA without informing the complainant and the deceased.  This is in violation of the IRDA rules and regulation.
9. The deceased was periodically receiving treatment and accordingly submitted claims towards expenses related to the hospitalization from the date of admission at the hospital i.e., 20.08.2020 through the hospital under the base policy.  The claims made through the hospital dated 20.08.2020, 27.08.2020, 05.09.2020, 12.09.2020, 21.09.2020 and 26.09.2020 are all approved by the TPA and OP and a total of INR 6,25,000/- was paid by the OP towards the claims raised by the complainant.  The OP paid claims after approval upon TPA not only under the base policy but also enhanced amount under the policy which was in effect from 25.04.2019.  In addition to this a cumulative bonus had accrued and that has been added to the base policy with effect from 25.04.2020.  In addition to this the deceased himself submitted cashless claim for the expenses to the tune of Rs.2,83,272/- incurred on his treatment as the total claim amount of Rs.10,37,640/- cumulative surpassed the threshold of Rs.8,00,000/- the complainant was entitled to the reimbursement of cashless claim of Rs.2,83,272/- under the top up policy.
10. The deceased complainant co-operated with the TPA and submitted all the documents clarification requested by them from time to time. Despite the complainants attempting to contact the TPA several times, there was no response. After that to the shock of the complainant and the deceased the TPA repudiated the claim by sending a message on 17.12.2020 without assigning any reason for such repudiation.  No formal repudiation letter was sent to the deceased complainant, except a casual statement that the repudiation of the complainant’s claim was on account of illness being a pre-existing disease.  Despite the request of the deceased complainant the TPA refuse to furnish a formal letter for repudiating the claim submitted by the deceased complainant.  Thereafter the OP vide letter dated 07.01.2021 repudiated the insurance claims made by the deceased complainant on the ground that

a)  Close proximity with the pre-existing disease clause.

b)   First Thirty Days waiting period clause and

c)   Specific waiting period clause

11. When the OPs have failed to settle the claim of the complainant, he has also filed a complaint before the Insurance Ombudsmen and the Insurance Ombudsmen had dismissed the complaint of the complainant holding that the claims made under the base policy till date had been cleared and the claims made under the top up policy is repudiated as the insurance was obtained by misrepresentation of the facts.  The reason for repudiating the complainant’s claim was an account of illness being pre-existing disease and the same is excluded from the scope of the insurance under the exclusion clause pertaining to pre-existing diseases.  The medi assist approved the deceased complainant claim for the same under like condition and the same policy coverage. The new Hitpa has rejected the claims based on untenable grounds and the reasons best known to them.  The OP has taken such actions merely to harass the complainant and the deceased. Hence the complainants have filed this complaint for the deficiency of service on the part of the OP.
12. In response to the notice, OP appears and files version. It is the case of the OP that the complaint is completely false, frivolous, vexatious and filed without legal factual basis.  The complainant is not entitled for any relief sought in their prayers.  The complainants have alleged deficiency in service, unfair trade practice and sought for reimbursement of hospitalization expenses, damages for mental agony and other costs.  
13. It is further case of the OP that the report submitted by the doctors, vide letter dated 03.12.2019 states that the insured has been diagnosed with carcinoma gastro since 26.04.2019 which is mentioned in the PET-CT scan report. The clinical indications of K/C/O GE junction CA for staging.  This shows that the deceased complainant had signs symptoms of the said ailment before enhancing the sum insured under the base policy from four lakhs to twenty five lakhs and taking up a fresh top up policy for twenty five lakhs for the period with an intention to deceive this OP.
14.  It is further case of the OP that the complainants have also filed a complaint before the Insurance Ombudsmen and the learned Ombudsmen had dismissed the complaint and further held that the case of the complainant is excluded under clauses 4.3.1.1.  Further the Ombudsmen has observed that exclusion No.4.3.1 specifically excludes “all internal and external benign tumors, cysts, polyps of any kind”. The Ombudsmen further recorded a finding that it does not find any flaw with the decision of the R1 in restricting the claim as per the policy terms and conditions.  Further the Ombudsmen placed reliance on the report dated 26.04.2019 and has reached a finding that;

“Retroperitoneal lymph node metastasis Occurs in most pelvic and abdominal malignant tumours at different stages of the primary disease.  Due to its unique anatomical location, some primary tumours are controlled after surgery or radiotherapy or chemotherapy.  Vast amount of details regarding the same are available on the internet”. It further stated that the Ombudsman observed that the PET CET REPORT dated 26.04.2019 shows as K/C/O GE Junction Ca for staging which means the complainant had a pre-existing disease before the inception of the first policy period from 25.04.2019 to 24.04.2020.

15.   It is further contention taken by the OP that the claims made under the base policy till date had been cleared and the claims made under top up policy is repudiated as the insurance was obtained by misrepresentation of facts.  The reason for repudiating the complainants claims is on account of illness being a pre-existing disease and the same is excluded from the scope of insurance under the exclusion clause pertaining to pre-existing diseases.
16. It is further contention taken by the OP that the repudiation of the claim was made after examination of the misrepresentation by the deceased complainant No.1. The insured is duty bound to make full disclosures of the ailments and pre-existing disease before renewal or obtaining a fresh policy/top up policy. The application form for top up had categorically sought for disclosures of pre-existing ailments which was misrepresented by the deceased complainant No.1.  The wait period for the enhanced top up would attract the 30 day waiting period as per the agreement. The base policy did not attract the waiting period as there was continuous coverage.  However the top up was obtained by misrepresentation of facts. Therefore the contract is void. 
17. The mear perusal of the prayer sought by the complainant would establish the malafide intentions of the complainants. They are seeking exorbitant amount from this OP and they have sought to take advantage of the beneficial legislation in order to make illegal gains. The filing of the complaint is an abuse of process of the courts. Therefore, OP prayed for dismissal of the complaint with exemplary  punitive cost.
18. The complainant 1(a) has filed his affidavit evidence and relies on 42 documents.  Affidavit evidence of official of OP has been filed and OP relies on 06 documents.
19. Heard the arguments of advocate for the complainant only.  Perused the written arguments and citations filed by both the parties.

20. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OP?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

21. Our answers to the above points are as under:

Point No.1:  Affirmative

Point No.2: Affirmative in part

Point No.3: As per final orders

REASONS

22. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, version, affidavit evidence of both the parties, written arguments and documents filed by both the parties.

23. There is no dispute that the complainants who are the wife and his late mother, his daughter and his son of deceased complainant have subscribed to health insurance policies and they have maintained continuous coverage and paid insurance premium to the OP for over 28 years.  The base policy under which health insurance policies of the OP covered both the deceased complainant and his wife.  The deceased complainant No.1 wish to proceed with the enhancement of the sum insured under the base policy and subscription of the top up policy. He underwent a detailed medical examination. After completing the scrutiny of the medical examination report the OP have approved enhancement of the amount sought to be enhanced under the base policy and the subscription to the top up policy.

24. The OP was also fully satisfied that there was no pre-existing diseases in the base policy dated 24.04.2019 for the year 2019-20 as well as the top up policy dated 24.04.2019 for the year 2019-20. While renewing the base policy for the year 2019-20 the amount insured was enhanced from four lakhs to twenty five lakhs and additional premium as required for the enhanced sum was also paid to deceased complainant on 24.04.2019.

25. It is the specific grievance of the complainant that at the time of renewal for the period from 25.04.2020 to 24.04.2021 the OPs have changed the health insurance TPA India Ltd., from Mediclaim without informing the complainant and it is in violation of IRDA regulations.  As per the IRDA regulations the policy holder can choose the TPA of their choice from amongst the TPAs engaged by the insurer. The deceased complainant No.1 was diagnosed with stomach cancer on 26.04.2019. The complainant began to undergo treatment for his condition as and when advised by the doctors.  The complainant has raised claims under the policy when he was undergoing treatment for his illness since 2019 and the same was processed by the TPA being medi assist TPA and it was cleared by the OP.

26. It is further grievance of the complainant that after unilateral change in the TPA by the OP without notifying the complainant the new TPA i.e., HITPA have rejected the claim of the complainant, even though the deceased complainant has produced all the documents related to the hospitalization from the date of admission till the discharge. They have not even sent formal repudiation letter to the complainant except the casual statement.  The deceased complainant came to know after contacted the Senior Manager of OP that the claim was repudiated on account of his illness being a preexisting disease.  At last the OPs have sent a letter dated 07.01.2021 repudiating the claim of the complainant on three grounds.

a) Close proximity with the pre-existing disease clause.

b) First Thirty Days waiting period clause and

c)  Specific waiting period clause

27. The complainant approached the Insurance Ombudsmen and filed their complaint and it was also dismissed by the learned Ombudsmen confirming the decision taken by the OP for repudiation of the claim of the complainant.

28. The main contention taken by the OP is that they have repudiated the claim of the complainant after examination of the misrepresentation made by the complainant.  The deceased complainant has been diagnosed with carcinoma gastro since 26.04.2019 and it clearly shows that the complainant had signs and symptoms of said ailment before enhancing the sum insured under the base policy from four lakhs to twenty five lakhs and taking up a fresh top up policy for Rs.25,00,000/- for the said period with an intention to deceive the OP.  The insured is duty bound to make full disclosures of the ailments and pre-existing disease before renewal or at the time of obtaining fresh or top up policy.  The complainant has misrepresented that there was no pre-existing ailment at the time of obtaining top up policy.  

29. On these back ground, the LRs of the deceased complainant No.1a filed affidavit evidence and relied on 42 documents. On the other hand in order to prove their contention the Assistant Manager of the OP company namely Ella Makkar, filed affidavit evidence and relied on 06 documents.

30. The complainants have also relied on the decision of the Hon’ble Supreme court and other apex courts.

31. It is clear from the decision of the Hon’ble Supreme Court in Kanwaljit Singh –vs- National Insurance co. ltd., that the insurance company cannot repudiate claims if there was no preexisting disease when the initial policy was taken and has been continuously renewing. The insurance company is bound by the principles of estopple acquiescence and waiver, approbate and reprobate. The consumer forum ought to take into account the conduct of insurer to be taken into consideration while decide claims.

32. It is clear from the documents relied on by the complainants that the deceased complainant was not suffering from any pre-existing diseases when the base policy was taken by the deceased in the year 1994.   The complainants and the deceased were covered under the policy till 2019 as per Ex.P4. The policy was renewed on 21.04.2020 for the deceased and the complainant No.1a for the period from 25.04.2020 to 24.04.2021 as per Ex.P9. The top up policy was also renewed for the same period as per Ex.P10 from 25.04.2020 to 24.04.2021. The column for marking about pre-existing disease it was marked as NO and NA in Ex.P9 and P10. The deceased was diagnosed with carcinoma gastro on 19.04.2019.  The OP having accepted the medical reports and also enhanced the base policy and the top up policy for the year 2019 to 2020. Later the OP have repudiated the claim relying on the report dated 19.04.2019.  

33. It is also clear from the decision of the Hon’ble Apex court, the OP have repudiated the claim for the first time vide its letter dated 07.01.2021 as per Ex.P15 and has wrongly relied on the older version of the definition of pre-existing diseases even though the new definition for pre-existing diseases is applicable to the present case of the complainant.

34. It is also clear from the Ex.P16 the IRDAI FAQ’s relied by the complainant that the waiting period will not be applicable for subsequent policies under renewal.  It is pertinent to note that the deceased complainant has renewed his base policy and the enhanced policy in the year 2020 and the period of insurance was 25.04.2020 to 24.04.2021. The enhancement of the base policy occurred during the renewal in the year 2020 and as per the Ex.P16 the waiting period is not applicable to the case of this complainant as it is simply a subsequent policy under renewal. The renewed policy for the year 2021 will apply for the reimbursement of cashless claim being raised by the complainant.

35. The OP has relied on the exclusion clauses. It is settled position of law that the exclusion clause in a contract of insurance has to be interrupted differently as insurance contracts are special contracts premised on the notion of good faith. (Texo Marketing Pvt. Ltd., -vs- TATA AIR General Insurance company Ltd., 2023 1 SCC 428, Para 12).  The exception clauses to be interrupted to the benefit of the insured. The apex court also noted that the insurance company and the TPA find several ways to repudiate the claim even it is a genuine one just to harass the claimant and to make him run from piller to post. In such cases the very repudiation of the claim amounts to deficiency in service and it is unfair and unacceptable.

36. It is pertinent to note here that immediately after coming to know that the deceased was diagnosed with stomach cancer on 26.04..2019 as per Ex.P8 he began to undergo treatment for his condition as and when advised by doctors and raised claim and same was processed by the TPA and it was approved and cleared by the OP.  The OP has totally paid Rs.6,25,000/- towards the claim raised by the complainant, the OP paid claims not only under the base policy but also enhanced amount under the policy which was in effect from 25.04.2019 and in addition to their cumulative bonus of Rs.1,25,000/- which had accrued and been added to the base policy with effect from 25.04.2020.

37. In addition to the claim submitted through the hospital the deceased complainant himself submitted a cashless claim on 07.10.2020 for the expenses to the tune of Rs.2,83,272/- incurred on his treatment, the total claim amount Rs.10,37,640/- and the OPs have settled Rs.8,00,000/- and they have rejected the reimbursement of the claim of Rs.2,83,272/- towards cashless claim under the top up policy. In view of this it is clear that the OP having approved a part of the claim is estopped from repudiating the cashless claim and subsequent claim on the grounds of pre-existing disease. It is also clearly held by the Hon’ble Supreme court Kanwaljit Singh –vs- National Insurance co. ltd., if the insurance company has allowed the claim to a certain extent it would imply that the question of pre-existing disease of the claimant was not considered to be material to the insurance company.

38. It is also contention taken by the OP that the complaint is bad for non-joinder of necessary parties. It is also clearly held by the SCDRC, Panjab, Chandigarh, that it is settled position of law that in the absence of contract between the TPA and the complainant, the TPA is not the necessary party to the dispute between the insured and insurance company.  Therefore the non-joinder of TPA is not fatal to the complaint filed by the complainant.

39. The OP having accepted the medical reports Ex.P5 series and also permitting the enhancement of the base policy on top up policy and also satisfy the claim of the complainant in part have repudiated the claims on the ground of pre-existing disease.  The main contention taken by the OP is that the complainant has mislead the facts. It is clear from the evidence and documents produced by the complainants that the OP has renewed the base policy and also issued the top up policy only after the medical reports submitted by the deceased complainant and after knowing the deceased was undergoing treatment for carcinoma gastro. Under these circumstances the OPs failed to establish that the complainants are not entitled for the relief as they have misrepresented the facts, that there was no pre-existing disease at the time of approval of policy and also at the time of issue of top up policy.  The OPs have rejected the claim of the complainants by adopting untenable means and reasons. Hence the repudiation made by the OP have to be rejected and they are liable to pay the claim made by the complainants. The very repudiation of the claim made by the OPs amounts to deficiency of service. hence the complainants have clearly established the deficiency of service and negligence and the methods adopted by the OPs for rejection of the claim in order to avoid paying the amount to the complainants. Hence we answer point No.1 in affirmative and point No.2 partly in affirmative.

40. Point No.3:- In view the discussion referred above we proceed to pass the following;

O R D E R

1. The complaint is allowed in part.
2. OP is hereby directed to reimburse the hospitalization expenses of Rs.2,83,272/- and Rs.25,90,882/- under the top up policies with interest @ 10% p.a., from the date repudiation till realization.
3. OP is further directed to pay compensation of Rs.1,00,000/- with litigation expenses of Rs.10,000/- to the complainant.
4. The OP shall comply this order within 60 days from this date, failing which the OP shall pay interest at 12% p.a. after expiry of 60 days on Rs.2,83,272/- and Rs.25,90,882/- till final payment.
5. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 12^th day of JANUARY 2024)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party – R.W.1;