1.         The present Revision Petition (RP) has been filed by the Petitioner against Respondent as detailed above, under section 21(b) of Consumer Protection Act, 1986, against the order dated 22.11.2018 of the State Consumer Disputes Redressal Commission, Punjab (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 253/2018 in which order dated 15.06.2017 of District Consumer Disputes Redressal Forum, Ludhiana (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 334 of 19.05.2015 was challenged, inter alia praying for setting aside the order dated 15.06.2017 passed by the District Forum and order dated 22.11.2018 passed by the State Commission.

2.         While the Revision Petitioner(s) (hereinafter also referred to as Complainant) was  Appellant before the State Commission and Complainant before the District Forum and the Respondent (hereinafter also referred to as OP/Insurance Company) was Respondent before the State Commission and  Opposite Party before the District Forum. Notice was issued to the Respondent on 27.03.2019.  Parties filed Written Arguments on 10.11.2022 (Petitioner)  and 13.02.2023 (Respondent) respectively. 

3.         Brief facts of the case, as presented by the Complainant and as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that: -

The complainant and his wife Smt. Anju are holders of medi-claim policy effective from 29.08.2014 to 28.08.2015 and have been insured for Rs.5,00,000/- each under the said policy issued by the Respondent/Insurance Company. Earlier, the complainant had got himself medically insured from “Reliance General Insurance” from 10.06.2008 to 09.06.2014. On 27.01.2015, the complainant suffered from chest pain and was admitted in emergency ward for treatment at Hero D.M.C. Heart Institute, Ludhiana. The complainant remained admitted in Hero D.M.C. Heart Institute, Ludhiana from 27.01.2015 to 01.02.2015 and was treated for Coronary Angiography Double Vessel Disease PTCA with Stenting TO OM1.  The complainant spent a sum of Rs.1,76,146/-  (Rs.1,65,955/- paid to the DMC Heart Institute for the said treatment + spent a sum of Rs.10,191/- on medicines purchased from Medical Hall on 01.02.2015, 01.02.2015 and on 07.02.2015 + a sum of Rs.300/- on account of consultation charges with Dr. G.S. Wander).  The complainant submitted his claim to the Respondent/Insurance Company alongwith all the documents in original including Hospital Bill and pharmacy bills for settlement of claim.  Vide letter dated 23.02.2015, the Insurance Company repudiated the claim on the ground that that “From documents it is noted that patient is known case of Hypertension since 10 years (PA), since the ailments are found to be present prior to the inception of policy and is going beyond the coverage of the present policy, hence, claim is repudiated under policy clause 4.1, 4.2.  Hence, the claim is being denied.” Hence, the complainant filed complaint before the District Forum.

4.  Vide Order dated 15.06.2017, the District Forum dismissed the complaint No.334 of 19.05.2015.

5.         Aggrieved by the said Order dated 15.06.2017 passed by the District Forum, Complainant appealed before the State Commission and the State Commission vide order dated 22.11.2018, dismissed the Appeal No. 253/2018.

6.         Petitioner/Complainant has challenged the said Order dated 22.11.2018 of the State Commission mainly on the following grounds:

i)         The order dated 15.06.2017 passed by the District Forum and order dated 22.11.2018 passed by the state Commission dismissing the complaint on the ground that medical condition of the complainant qua sufferance from hypertension before filling up the proposal form, was not disclosed and hypertension is a precursor to the heart disease and could be attributed as one of the significant cause for heart disease and M/s Medi Assist India TPA has not repudiated the claim in haste, but referred the case to Singla’s Clinic for getting opinion before repudiation is wrong and erroneous on account of reasons that the complainant was admitted in emergency ward on account of chest pain and complainant had got his treatment of heart and had not got treatment of hypertension from Hero DMC Heart Institute, Ludhiana.  The disease of Heart which was got treated from the said hospital, was not pre-existing disease. As per discharge summary, complainant was diagnosed with three disease i.e. (i) Hypertension (ii) Acute Coronary Syndrome and (iii) BPH (Benign Prostate) and got treatment of CORONARY ANGIOGRAPHY DOUBLE VESSEL DISEASE and not for Hypertension and BPH (Benign Prostate).

ii)        The report/professional opinion dated 18.07.2015 of Dr. Singla Clinic is malafide and after thought and was not obtained before repudiation of claim on 23.02.2015.  The same was obtained before filing the written statement on 06.08.2015.  Dr. B.C. Singla by whom the above said report was given is not expert and as per interrogatories served upon him, vague answers were given to the relevant questionnaire.  He told his qualification is L.S.M.F. Batch 1968.

iii)       The complainant had filed earlier policies only to prove that he was also insured against mediclaim earlier also since 2008, but he had not availed any claim whatsoever on the basis of earlier of Medi-claim policy which proves that complainant was not earlier suffering from any heart disease.

iv)       The findings of both the Fora below are wrong erroneous as citations referred by counsel for revisionist at the time of arguments were neither discussed nor distinguished by the State Commission in the order. The findings of the Fora below are against law and facts.  

7.         Heard learned counsel of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

7.1       In addition to the averments made under the grounds (para 6), the petitioner contended that claim of the petitioner has been repudiated on the ground that the medical condition of the complainant qua sufferance from hypertension before filing proposal form was not disclosed and hypertension is a precursor to the heart disease and could not be attributed as one of the significant causes for heart disease and  M/s Modi Assist India TPA has not repudiated the claim, but has referred the case to Singla’s Clinic for getting opinion before repudiation, is wrong and erroneous on the ground that (s) M/s Medi Assist India TPA has not repudiated the claim on the basis of report dated 18.07.2015 of Dr. Singla’s Clinic. Dr. Singla’s report is malafide and afterthought and was not obtained before repudiation of claim on 23.02.2015 and was obtained before filing of written statement on 06.08.2015.It is further contended that the complainant had not got treatment of Hypertension from Hero DMC Heart Institute, Ludhiana.  The disease of Heart for which complainant got treatment from the said hospital was not pre-existing disease. The petitioner has relied upon the following judgments:

1) Manivasagam versus The Branch Manager, National Insurance Company, 2015 AIR CC 60 (Hon’ble Madras High Court).

2)  Satish Chander Madan Versus The Bajaj Allianz General Insurance Company, 2016(1)CPJ  613 (National Commission).

3)   Bajaj Allianz General Insurance Co. Ltd. versus Valsa Jose, 2012 (4) CPJ 839 (National Commission).

7.2       On the other hand Respondent contended that The Complainant alongwith his wife purchased “Oriental Bank Mediclaim Policy” valid from 29.03.2014 to 28.08.2015 from the respondent for a sum of Rs. 5 lacs. Before that the complainant had been purchasing the Mediclaim Policies from Reliance General Insurance for the period from 10.06.2008 to 09.06.2014.  Clause 4.1 of the terms and conditions of the Policy excludes pre-existing health condition or disease or ailment/injuries.  Clause 4.2(xvii) excludes expenses on treatment of Hypertension for a period of two years. It is further contended that the respondent took and relied upon the opinion of Dr. Singla who gave his opinion on the basis of documents on record.  It is also contended that the Petitioner gave wrong answers in the Proposal Form thus breaching the principle of utmost good faith meriting repudiation.  In support of its contentions, the Respondent has relied upon the judgment passed by the Hon’ble Supreme Court in Satwant Kaur Sandhu v. New India Assurance Co. Ltd. (2009) 8 SCC 316. It is further contended that in view of the settled position in law, false statements deliberately made by the Petitioner and facts and circumstances of the case and documentary records, both the Fora below rightly dismissed the consumer complaint and the petitioner has failed to show that there is illegality or irregularity necessitating intervention by this Commission under its Revisional Jurisdiction.

8.         We have carefully gone through orders of the State Commission, District Forum, other relevant records and rival contentions of the parties.  During the hearing on 12.03.2024, it was noticed that the claim of the Petitioner herein has been repudiated vide letter dated 23.02.2015 by Medi Assist India TPA Pvt. Ltd., which is a Third Party Administrator of the Respondent Insurance Company.  On a specific query by the Bench as to whether Third Party Administrator (TPA) are authorized on their own to take final decisions on the claims without approval of the competent authority of the Insurance Company, the learned counsel appearing for the Respondent Insurance Company stated that under the IRDA guidelines, insurance companies are authorized to appoint TPA, who are competent to issue repudiation letters.  However, learned Counsel was not in a position to clearly state whether any decision to repudiate the claim has been taken by the Insurance Company itself or the competent authority of the Insurance Company or it was left to the TPA.  Hence, the Respondent Insurance Company was directed to clarify on affidavit whether in the present case, final decision to repudiate the claim has been taken by the TPA itself or by the Insurance Company. In case of former, they were directed to place on record copy of requisite IRDA guidelines, which allow such a decision making by TPA on behalf of the Insurance Company.  In case of later, they were directed to place on record copy of the relevant approval issued by the Insurance Company to the TPA for issuing the said repudiation letter dated 23.02.2015.  In compliance of the above said order dated 12.03.2024, during the hearing on 03.05.2024, when judgment was reserved after hearing both sides, Respondent Insurance Company placed on record copy of the IRDA guidelines pertaining to TPA and drew our attention to Clause 3(2)(b) of the said guidelines and stated that in view of these guidelines it was not necessary for the Respondent Insurance Company to file the Affidavit.  Learned Counsel for the Insurance Company also drew our attention to the repudiation letter issued by TPA dated 23.02.2015, which stated that the claim was referred to the insurer for their opinion and advise and as per the instructions of the Insurance Company, the claim is being denied.  However, the learned Counsel of the Respondent Insurance Company was not in a position to state categorically whether such instructions to TPA were in writing or not. 

9.         We have carefully gone through the Insurance Regulatory and Development Authority of India (Third Party Administrators – Health Services) Regulations, 2016, referred to above.  Clause 3 of the said guidelines is reproduced below:

“3. Health services by TPA:

(1) A TPA may render the following services to an insurer under an agreement in connection with health insurance business:

a. servicing of claims under health insurance policies by way of pre-authorization of cashless treatment or settlement of claims other than cashless claims or both, as per the underlying terms and conditions of the respective policy and within the framework of the guidelines issued by the insurers for settlement of claims.

b. servicing of claims for Hospitalization cover, if any, under Personal Accident Policy and domestic travel policy.

c. facilitating carrying out of pre-insurance medical examinations in connection with underwriting of health insurance policies:

Provided that a TPA can extend this service for life insurance policies also

d. health services matters of foreign travel policies and health policies issued by Indian insurers covering medical treatment or hospitalization outside India.

e. servicing of health services matters of foreign travel policies issued by foreign insurers for policyholders who are travelling to India:

Provided that such services shall be restricted to the health services required to be attended to during the course of the visit or the stay of the policyholders in India.

f. servicing of non-insurance healthcare schemes as mentioned in Regulation 22 (3) of these Regulations.

g. any other services as may be mentioned by the Authority.

(2)While performing the services as indicated at Regulation 3 (1) of these regulations, a TPA shall not

a. Directly make payment in respect of claims

b. Reject or repudiate any of the claims directly

c. Handle or service claims other than hospitalization cover under a personal accident policy

d. Procure or solicit insurance business directly or indirectly

e. Offer any service directly to the policyholder or insured or to any other person unless such service is in accordance with the terms and conditions of the policy contract and the agreement entered into in terms of these regulations.

(3)A TPA can provide health services to more than one insurer. Similarly an insurer may engage more than one TPA for providing health services to its policyholders or claimants.”

10.       A perusal of the Clause 3(2)(b) clearly shows that TPAs are not competent to reject or repudiate any of the claims directly.  Hence, in the present case, the claim of the Petitioner herein having been rejected directly by the TPA and not by the Insurance Company/Competent Officer of the Insurance Company or by TPA with written approval of the Insurance Company for such repudiation, is not valid and this itself is a sufficient ground to quash the repudiation letter dated 23.02.2015.

11.       In normal situation, we could have remanded the matter back to the Insurance Company for fresh consideration and decision of the Competent Officer of the Insurance Company on settling the claim.  However, considering that it is more than 9 years old claim, (date of admission in the hospital is from 27.01.2015 to 01.02.2015), we consider it appropriate in the interest of justice, keeping in view  the summary  nature of proceedings under the Consumer Protection Act, to take up the case on merits, keeping in view the grounds for repudiation stated in the said letter dated 23.02.2015 and stand of the Insurance Company during the proceedings.

12.       The claim has been repudiated on the ground of suppression of material facts in the proposal form and on the ground that the pre-existing ailments are not covered under the policy.  Repudiation letter dated 23.02.2015 is extracted below:

“Subject: Denial of claim 10853757 under 233902/48/2015/2157

We refer to your claim submitted for reimbursement of Hospitalization expenses, the claim was referred to insurer for their opinion and advice. As per the instructions of Oriental Insurance Co. Ltd., the claim is being denied on account of the following:

On perusal of the claim documents it is found that patient admitted with case of Coronary artery disease, hypertension for which surgical management was done during hospitalization. Inception of the policy from Oriental Insurance is from 29/8/2014 (first year). From documents it is noted that patient is a known case of Hypertension since 10 years (PA). Since, the ailments are found to be present prior to the inception of policy and is going beyond the coverage of present policy. Hence, we regret our inability to admit this liability under the present policy conditions and claim is being repudiated under policy exclusion of above mentioned policy clause 4.1, 4.2. Hence the claim is being denied. We also reserve the right to repudiate the claim under any other ground/s available to us subsequently.

The denial clause/s with description is/are reproduced below for your ready reference:

Since the claim does not fall within the purview of the Policy terms conditions, we regret our inability to admit the claim. If you have any other information or documents to substantiate admissibility the claim, please provide the same within 15 days of receipt of this. If you are not satisfied with our denial reason, you may write to Grievance Redressal Cell of the Oriental Insurance Co. Ltd. at its policy issuing office, concerned Divisional Office, concerned Regional Office or the Grievance Cell of the Head Office of the Insurance Company.

If you are not satisfied with the decision of the Grievance Cell/Dept. of the Insurer, you may approach jurisdictional Insurance Ombudsman (located across 12 cities) and established by the Central Government for the redressal of grievances of Individual Policyholders.

Authorized Signatory,

Medi Assist India TPA Pvt. Ltd.”

13.       The case of the Insurance Company is that the complainant is a case of hypertension since 10 years, since the ailments were found to be present prior to the inception of the policy, these are beyond the coverage of the policy.  Hence, repudiated under clause 4.1 & 4.2.  Clause 4.1 of Insurance Policy excludes  pre-existing diseases for ailments/injuries. Clause 4.2 (xvii) excludes expenses on treatment of Hypertension for a period of two years.  On the other hand, the Complainant-Petitioner has contended that the reasoning given by the insurance company that medical condition of the complainant qua sufferance from hypertension before filing the proposal form was not disclosed and  Hypertension is a precursor to the heart disease and could be attributed as one of the significance of the heart disease, is not correct.  The complainant further contended that he has not got the treatment of the hypertension from Hero DMC Heart Institute, Ludhiana.  The disease for which he got treatment from the said hospital was not a pre-existing disease.

14.       The State Commission in its order has observed as follows:

12. The grievances of the appellant and contentious question of dispute in the instant case can be broadly categorised as under:

a. Whether the said mediclaim policy is to be taken as a continuously renewed mediclaim policy or a fresh contract of insurance policy?

b. Whether the treatment taken for coronary artery disease fell under the pre-existing disease clause of the policy or not?

c. Whether the opinion and findings of Dr. Singla by whom the said report was given is of any material value?

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14. Now coming to the second grievance of the appellant that he had got his treatment of heart i.e. Coronary Angiography Double Vessel Disease PTCA with stenting from Hero Heart DMC Hospital and had not been admitted or treated for the treatment of hypertension. It has been vehemently submitted by the learned counsel that heart disease does not fall under the purview of pre-existing disease as the appellant had recently found that he had hypertension. The claim has been wrongly repudiated and the respondent was not justified in holding that the case of the complainant is a known case of hypertension for the last ten years. In this regard, we have perused Ex.R5 which is a discharge summary of the treating hospital and under the Diagnosis Column, it is clearly mentioned; Hypertension, Acute Coronary Syndrome and B.P.H. Whenever a patient is admitted; the doctor is told about the past ailments and diseases if any, by the patient or the family of the patient which becomes the basis for treatment. Hypertension is a precursor to the heart disease and could be attributed as one of the significant causes for heart disease as per medical literature. The doctor prepares a diagnosis report and treatment is commenced on basis of such findings. A perusal of Ex.R17 which is a request for cashless hospitalization claim form itself reveals that the son of the appellant has himself disclosed that his father Sh. Lok Nath is a patient of hypertension for the last ten years and the same is ticked mark as (Right) against the column past history of chronic illness and even the time period is mentioned as ten years. Even the name of the treating doctor is mentioned as Dr. G.S. Wander in Ex.R17 and on the record produced. Hence, we agree with the findings of the District Forum that contents of Ex.R17 are to be taken into consideration as such an admission binds a party as well as his representatives. Although the patient may have taken treatment for heart ailment but the diagnosis of hypertension is well established both by the treating doctor and the report of Dr. B.C. Singla and the claim has been rightly repudiated by the respondent company.

 15. As already observed above that the said policy in question is to be considered as a fresh contract of insurance, therefore the relevant exclusion clauses in the policy would be applicable and are stated as under:-

Exclusion Clause No.4.1

“ The company shall not be liable to make any payment under this policy in respect of any expenses whatsoever incurred by any insured person in connection with or in respect of pre-existing health conditions or disease or ailment/injuries:- any ailment/disease/injury/health condition which are preexisting (treated/untreated, declared, not declared in the proposal form) in case of any of the insured person of the family, when the cover incepts for the first time are excluded for such insured person up to 3 years of this policy being in force continuously. For the purpose of applying this condition, the date of inception of the first indemnity based health policy taken shall be considered, provided the renewals have been continuous and without any break in period, subject to portability condition. This exclusion will also apply to any complications arising from the preexisting ailments/diseases/injuries. Such complications shall be considered as a part of preexisting health condition or disease”.

Exclusion Clause No.4.2(xvii)

“During the period of insurance covered, the expenses on the treatment of hypertension for specified period of 2 years are not payable if contracted and/or manifested during the currency of the policy”.

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17. Sequel to the above discussions, we are of the view that the findings of the District Forum are well reasoned and sustainable in the eyes of law. Accordingly, the appeal is dismissed and the impugned order of the District Forum is upheld.”

15.       No doubt, as held by Hon’ble Supreme Court in catena of judgments[1], the suppression of material fact in the proposal form entitles the insurance company to repudiate the claim but as was laid down by the Hon’ble Supreme Court in Life Insurance Corporation of India Vs. G.M. Channabasamma (1991) 1 SCC 357, the burden of proving that the insured had made false representations and/or suppressed material facts is undoubtedly on the Insurance Company.  Further, in Sulbha Prakash Motegaonkar and Ors. Vs. LIC of India, Civil Appeal No. 8245 of 2015 decided on 05.10.2015, it was held by the Hon’ble Supreme Court that there should be a nexus with the pre-existing disease and the disease for which claim has been made. Further we do agree that under clause 4.2, treatment of Hypertension for specified period of two years is not payable if contracted and/or manifested during the currency of the policy and under Clause 4.1, pre-existing diseases/ailments are not covered.  However, it is the case of the Complainant-Petitioner that he has not received any treatment for hypertension from D.M.C. Heart Institute Ludhiana during the period 27.01.2015 to 01.02.2015, when he was admitted there  He has received treatment during this period only for Coronary Angiography Double Vessel Disease PTCA with Stenting TO OM1, for which the claim of Rs.1,76,146/- was lodged.  Even if hypertension was an existing disease or was acquired during two years from the date of policy, no treatment was undergone for hypertension and no claim for hypertension is made.  Disease for which he was treated i.e. Coronary Angiography Double Vessel Disease PTCA with Stenting TO OM1, was not pre-existing disease.  What the discharge summary states is that Complainant-Petitioner was a known case of hypertension for last 10 years.  It does not state that he was treated for hypertension.  We see merit in these contentions of the Complainant-Petitioner.  We are not in agreement with the observations of the State Commission that  “Hypertension is a precursor to the heart disease and could be attributed as one of the significant causes for heart disease as per medical literature. The doctor prepares a diagnosis report and treatment is commenced on basis of such findings”. State Commissions states in its order that “In this regard, we have perused Ex.R5 which is a discharge summary of the treating hospital and under the Diagnosis Column, it is clearly mentioned; Hypertension, Acute Coronary Syndrome and B.P.H. Whenever a patient is admitted; the doctor is told about the past ailments and diseases if any, by the patient or the family of the patient which becomes the basis for treatment”. However, this does not mean he was treated for hypertension.  There is no evidence to show that the claim made is for hypertension or in addition to Acute Coronary Syndrome, for hypertension also.  The observations of State Commission that  “Although the patient may have taken treatment for heart ailment but the diagnosis of hypertension is well established both by the treating doctor and the report of Dr. B.C. Singla and the claim has been rightly repudiated by the respondent company”  also make it clear, and what is established by discharge summary is the diagnosis/pre-existing ailment of hypertension and not the treatment for hypertension. It was observed by the Hon’ble Supreme Court in Canara Bank Vs. United India Insurance Co. Ltd. & Ors. (2020) 3 SCC 455 that “Insurance Policy must be read holistically so as to give effect to reasonable expectations of all the parties including the insured and the beneficiaries-  it must be interpreted in a commercially sensible manner- coverage clauses to be read broadly, and ambiguity, if any, to be resolved in favour of insured-exclusions to be read narrowly.” 

16.       For the reasons stated hereinabove, and after giving a thoughtful consideration to the entire facts and circumstances of the case, various pleas raised by the learned Counsel for the Parties, we are of the considered view that District Forum went wrong in dismissing the complaint and State Commission went wrong in dismissing the appeal filed by the Complainant.  Hence, the order of State Commission cannot be sustained.  Accordingly, order dated 22.11.2018 of the State Commission and order dated 15.06.2017 of the District Forum is set aside, Revision Petition is allowed.  Complaint is allowed with following directions: -

Respondent-Insurance Company is directed to pay the eligible claim of Rs.1,76,146/- within 30 days of date of this order, along with interest @ 6% p.a. from the date of complaint, failing which, amount payable at the expiry of 30 days shall carry interest @ 9% p.a. from expiry of 30 days till the date of actual payment.  Respondent –Insurance Company shall also pay litigation cost of Rs.25,000/- to the Petitioner-Complainant.

17.       The pending IAs in the case, if any, also stand disposed off.