DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, ERNAKULAM

 Dated this the 16^th  day of November , 2024

Filed on: 23/11/2022

PRESENT

Shri. D.B. Binu                                                                               Hon’ble President

Shri. V. Ramachandran                                                                          Hon’ble Member

Smt. Sreevidhia T.N                                                                     Hon’ble Member

C.C.No. 533 of 2022

Complainants

1. Mrs. Shemi M.H, W/o. Sajeer E, aged 32 years, Mekkodath, Leksham Veedu Colony, Thuravoor P.O., Cherthala, Alappuzha, Pin - 688532
2. Mr. Sajeer,  S/o Ismail, aged 35 years, Mekkodath, Leksham Veedu Colony, Thuravoor P.O., Cherthala, Alappuzha, Pin – 688532

(Complainants Rep. By. Adv.  Denny Varghese, Adv. Lijo Raju, Adv. Basil Simon, Adv. Joel Thomas, Adv. Vijay V. Menon, 1^st Floor, Room No. I, H.B 51, Near KSHB Building, Panampilly Nagar, Kochi -36, Ph: 9446969069)

VS

Opposite party

The Oriental Insurance Company Limited, Divisional Office, Rukiyabagh, 2nd Floor, Ravipuram, MG Road, Ernakulam, Pin 682016, Represented by its Manager

FINAL ORDER

D.B. Binu, President

1. A brief statement of facts of this complaint is as stated below:

The complaint was filed under Section 35 of the Consumer Protection Act, 2019. The complainant, a Woman Civil Police Officer (WCPO) in the Kerala Police Force, and her husband, the co-insured, obtained a Corona Rakshak Policy from the opposite party's insurance company. The policy, effective from 07.10.2020 to 18.07.2021, provided Rs. 2,50,000/- coverage for each insured person upon a positive COVID-19 diagnosis and 72-hour hospitalization. The complainants paid a premium of Rs. 5,202/-. In April 2021, the co-insured tested positive for COVID-19 and was admitted to the Covid First Line Treatment Centre (CFLTC) for seven days due to breathing difficulties, where he received medication and oxygen support.

Upon discharge, the complainants submitted a claim for the lump sum benefit, as outlined in their policy. However, on 29.06.2021, the insurance company rejected the claim, stating that the hospitalization was unwarranted under revised government guidelines, as the symptoms were mild and within normal limits. The complainants pursued their claim with the insurance company’s Regional Office and the Insurance Ombudsman, but both upheld the initial repudiation.

The complainants allege that the opposite party's denial of their claim constitutes a deficiency in service and an unfair trade practice. They stated that the repudiation was arbitrary and contrary to the policy terms. They seek relief from this commission, requesting that the opposite party be directed to pay the Rs. 2,50,000/- insured sum, additional damages of                   Rs. 3,00,000/-, and cover the costs of this complaint. The complaint is filed within the jurisdiction of the Commission in Ernakulam.

2. NOTICE:

The commission issued a notice to the opposite party, who subsequently filed their version.

3. THE VERSION OF THE OPPOSITE PARTY

The opposite party denies the allegations in the complaint, asserting that the complaint is not legally or factually maintainable. They acknowledge the complainants’ Corona Rakshak Policy, which was active from 07.10.2020 to 18.07.2021, but contend that the 2nd complainant's hospitalization was unnecessary. Contrary to the complaint, they state that the 2nd complainant showed only mild COVID-19 symptoms—fever, backache, altered sleep, and cough—and was admitted solely to a COVID First Line Treatment Centre (CFLTC) for quarantine, without requiring oxygen support or any active treatment.

According to the opposite party, the policy entitles benefits only if COVID-19 hospitalization for a minimum of 72 hours is medically necessary, as per Ministry of Health and Family Welfare guidelines. They stated that the 2nd complainant was asymptomatic with stable vitals (SPO2 level at 99%) and received oral medication, meaning hospitalization was unnecessary per government and ICMR guidelines.

The opposite party emphasizes that insurance contracts are strictly governed by policy terms. They cite Hon’ble Supreme Court rulings affirming that insurance terms must be strictly construed, and courts should not reinterpret terms to create unintended obligations. Since the 2nd complainant’s symptoms were mild and did not necessitate hospitalization, the policy’s conditions were not met, justifying the claim’s denial.

They note that the Insurance Ombudsman has already dismissed the complainants' appeal, upholding the decision to deny the claim. The opposite party denies any deficiency of service or unfair trade practice, stating that the complaint lacks grounds and cause of action. They request that the Commission dismiss the complaint with costs, contending that the complainants are not entitled to the claimed Rs. 2,50,000 or any damages.

4. Evidence:

The complainants  filed a proof affidavit and submitted Six documents as evidence, which were marked as Exhibits A1 to A6:

1. Exhibit A1: Copy of the Corona Rakshak Policy issued by the opposite party on 06.10.2020, detailing the coverage terms and conditions.
2. Exhibit A2: Copy of the COVID-19 positive test report from DDRC SRL Diagnostics Private Limited, dated 24.04.2021, confirming the 2nd complainant’s COVID-19 diagnosis.
3. Exhibit A3: Copy of the repudiation letter from the opposite party, dated 29.06.2021, explaining the grounds for rejecting the complainants’ insurance claim.
4. Exhibit A4: Copy of the award passed by the Insurance Ombudsman, dated 25.03.2022, along with the covering letter dated 28.03.2022, supporting the opposite party’s decision to deny the claim.
5. Exhibit A5: A true copy of the rejection letter dated 25.08.2021.
6. Exhibit A6: True copy of award dated 25.03.2022 passed by the Insurance Ombudsman.

The Opposite Party submitted two documents as evidence, which were marked as Exhibits B1 and B2:

1. Exhibit B1 Policy document
2. Exhibit B2 Medical records

5. Points for Consideration:

i) Whether the complaint is maintainable or not?

ii) Whether there is any deficiency in service or unfair trade practice by the opposite parties?

iii) If so, whether the complainant is entitled to any relief?

iv) Costs of the proceedings, if any?

6.  ARGUMENT NOTE FILED BY THE COMPLAINANT

The 1st complainant, a Woman Civil Police Officer in the Kerala Police Force, and her husband, the 2nd complainant, were at high risk of COVID-19 infection during the pandemic. They were approached by an insurance agent of the opposite party, who assured them that the Corona Rakshak Policy provided lump sum benefits equal to 100% of the sum insured upon a positive COVID-19 diagnosis and a minimum 72-hour hospitalization. Relying on these assurances, they obtained the Corona Rakshak Policy, dated 06.10.2020, issued by the opposite party (Exhibit A1) and paid a premium of Rs. 5,202/-.

On 24.04.2021, the 2nd complainant tested positive for COVID-19, as confirmed by a report from DDRC SRL Diagnostics (Exhibit A2). Due to severe symptoms, including fever and cough, he was advised to be hospitalized and was subsequently admitted to the Covid First Line Treatment Centre (CFLTC) for nine days. After his discharge, the complainants submitted the required documents for their insurance claim, in line with the policy’s provision for a 100% lump sum payment of the insured amount of Rs. 2,50,000/- upon fulfilling the policy conditions. However, the opposite party rejected the claim, as communicated in their repudiation letter dated 29.06.2021 (Exhibit A3), prompting the complainants to approach this Commission.

During his stay at CFLTC, the 2nd complainant received critical medical treatment, including Deriphyllin tablets for severe breathing difficulties and chest pain, and oxygen supplementation to address his respiratory distress. The administration of Deriphyllin, prescribed for airway obstruction, underscores the severity of his symptoms and the active treatment he received.

The complainants purchased the policy with a forward-looking approach, prioritizing family security over personal gain. This selfless decision reflects the complainants' commitment to protecting their family against COVID-19-related risks, underscoring their proactive and responsible intent.

The opposite party cited various legal decisions in their defense; however, none directly apply to this case. When the complainants took out the Corona Rakshak Policy, the claim criteria were limited to a positive COVID-19 diagnosis and a minimum 72-hour hospitalization. The complainants met these requirements, yet the claim was denied without a substantial explanation.

Additionally, the Hon'ble High Court of Kerala, in Star Health and Allied Insurance Company Ltd v. Avinash T. and Others (20.12.2022, W.P. (C) No. 29049 of 2021), established that CFLTCs are recognized as hospitals for COVID-19 treatment, designed to provide care for mild and moderate cases and to refer serious cases to dedicated COVID hospitals. This designation reinforces that CFLTC admission qualifies as hospitalization under the policy terms.

The complainants further note that during the pandemic, police officers served as frontline heroes, facing heightened risks to uphold public safety. This professional dedication to safeguarding society highlights the vulnerability of individuals like the complainants, underscoring the importance of fulfilling insurance coverage under the policy they responsibly obtained.

In light of these arguments, evidence (Exhibits A1-A4), and other grounds to be presented at the hearing, the complainants request that this Commission allow the complaint in the interest of justice.

The 1^st complainant is a Women Civil Police Officer in Kerala Police Force and 2 complainant is her husband. During the pandemic situation, Police personal, being the front-line volunteers, were at heavy risk of Covid infection. At that time the complainant was approached by the insurance agent of the opposite party and assured that the Corona Rakshak Policy covers lump sum benefits equal to 100% of the sum ensured and will be paid to the complainant on positive diagnosis of Covid-19 infection and 72 hours hospitalization. The complainant apprehended covid infection and believing the assurances made by the insurance agent of the opposite party obtained Corona Rakshak Policy and the complainant paid policy premium of Rs.5,202/- at the branch office of the opposite party at Ernakulam.

On 24.04.2021 the 2nd complainant tested positive for Covid-19. The 2nd complainant suffered from severe fever and cough. So, the 2nd complainant was advised hospitalization. The 2nd complainant was therefore admitted at Covid First Line Treatment Centre (CFLTC) for 9 days. After the discharge the complainants produced all the documents for the insurance claim. As per the insurance policy the complainant is eligible for the lumpsum benefit equal to 100% of the sum insured ie. Rs.2,50,000/- But the opposite party repudiated the claim. Subsequently, the complainants approached this Commission.

Throughout treatment at the Covid First Line Treatment Centre (CFLTC), the complainant received vital medical interventions in response to severe breathing difficulties and chest pain. Among these interventions were Deriphyllin tablets, along with other necessary supportive medications. Additionally, oxygen supplementation was administered to address the urgency of the situation. Notably, Deriphyllin tablets are specifically prescribed to alleviate airway obstruction, highlighting the precise and targeted approach taken to manage the complainant's respiratory distress.

It is pertinent to note that the complainant procured this policy with a forward-looking perspective, prioritizing the well-being and security of his family over personal gain. His decision was driven by a deep sense of responsibility towards safeguarding the future interests of his loved ones, reflecting a selfless commitment to their welfare. This deliberate action underscores the complainant's foresight and altruistic intentions, as he sought to provide a protective shield for his family against unforeseen adversities posed by the Covid-19.

The opposite party has cited numerous decisions; however, none are pertinent to the present case. When the complainants obtained the Corona Rakshak Policy, the two essential conditions for claiming benefits were a positive diagnosis of COVID-19 and a minimum hospitalization of 72 hours. Despite meeting these criteria, the opposite party rejected the claim without providing a substantial explanation.

It is further submitted that the Hon'ble High Court of Kerala in "Star Health and Allied Insurance Company Ltd v. Avinash T. and other" (judgment dated 20.12.2022) in W.P. (C) No. 29049 of 2021) has held as under:

"CFLTCs are Primary Level Health Care Centres set up for providing care to less serious cases and referral of serious cases to COVID hospitals, so as to avoid crowding in COVID Hospitals and avoid wastage of resources. It can therefore be unhesitatingly held that CFLTCs are designated as hospitals for the treatment of COVID-19"

It is submitted that during the unprecedented challenges posed by the pandemic, police officers have emerged as frontline heroes, bravely navigating through uncertain and often risky situations to ensure public safety and order. In the face of a rapidly evolving health crisis, these dedicated individuals have adapted their duties to enforce pandemic-related regulations, such as social distancing measures and mask mandates, while simultaneously upholding their traditional roles in law enforcement. Their commitment to serving communities has been unwavering, as they work tirelessly to enforce restrictions, respond to emergencies, and provide assistance to those in need. Despite facing increased personal risk and operational complexity, police officers have displayed resilience and professionalism, demonstrating their vital role as guardians of society during these challenging times.

In the light of these grounds, evidence adduced, dictums placed and other grounds to be submitted at the time of hearing, this Commission may be pleased to allow the above complaint in the interest of justice.

7. ARGUMENT NOTE FILED BY THE OPPOSITE PARTY

The complainants purchased a Corona Rakshak Policy from the opposite party, valid from 07.10.2020 to 18.07.2021 (Exhibit B1). The opposite party denies the allegation in para 2 of the complaint that the 2nd complainant had serious breathing difficulties and chest complaints, asserting that these claims are false. Instead, they state that the 2nd complainant had only mild symptoms, including fever, backache, altered sleep, and cough, and was only given oral medication. The 2nd complainant was admitted to the CFLTC in Mattancherry solely for quarantine, as he had an asymptomatic COVID-19 infection.

According to policy conditions in Exhibit B1, coverage is provided only for hospitalization in a registered COVID-19 hospital, not a CFLTC. Hospitalization under the policy is defined as admission to a government-designated COVID-19 hospital. The 2nd complainant, however, was admitted only to a CFLTC, which, per the Reference Guide for Converting Hospitals into Dedicated COVID Hospitals (Annexure 1) issued by the Government of Kerala, is classified as a primary-level care centre meant to handle mild and moderate cases, not as a COVID-designated hospital.

Furthermore, as per Kerala’s COVID-19 Treatment Guidelines (Annexure 2) dated 25.04.2021, an SPO2 level below 94% is required to categorize a patient as moderate. The 2^nd  complainant’s SPO2 level was 99% (Exhibit B2), classifying him as mild. Per state guidelines, mild cases are treated in CFLTCs, as shown by Exhibit B2, confirming that the 2nd complainant was in Category A/B and thus not eligible for treatment in a COVID-designated hospital.

The opposite party asserts that insurance claims are strictly governed by policy terms, citing the Hon'ble National Commission in Tata AIG Life Insurance Co. Ltd. v. Kuldeep Kumar (2023) and Supreme Court precedents, including Ikram Greentech Ltd. v. New India Assurance Co. Ltd. (2009), General Assurance Society Ltd. v. Chandumall Jain (1966), Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd. (2010), and Export Credit Guarantee Corp. of India Ltd. v. M/s Garg Sons International (2013). These cases underscore that insurance policy terms must be interpreted strictly, without extending the meaning to create unintended obligations.

The opposite party highlights Exhibit B2, the 2nd complainant’s medical records, showing normal vital test results. They argue that hospitalization was not necessary and that the 2nd complainant was only admitted to CFLTC to gain policy benefits, without requiring active treatment.

The Corona Rakshak Policy (Exhibit B1) stipulates payment if the insured person is diagnosed with COVID-19 and hospitalized for over 72 hours, following a qualified medical practitioner’s advice per Ministry of Health and Family Welfare norms. The opposite party argues that the 2nd complainant’s admission to CFLTC did not meet these criteria, as he was quarantined rather than hospitalized for treatment, rendering the claim inadmissible per policy conditions.

The opposite party notes that the Insurance Ombudsman had previously dismissed the complaint, reinforcing that the claim was not payable. They deny any deficiency of service or unfair trade practices, stating that their actions were in strict adherence to policy terms. They request the dismissal of the complaint, as the complainants are not entitled to Rs. 2,50,000 or damages as sought.

Consequently, the opposite party prays for this Commission to dismiss the complaint with costs, reiterating that their liability, if any, is strictly limited by the terms, conditions, and exclusions of the policy (Exhibit B1).

We have meticulously considered the detailed submissions of both parties, as well as thoroughly reviewed the entire record of evidence, including the argument notes.

i). Maintainability of the Complaint

The complaint is filed under Section 35 of the Consumer Protection Act, 2019, and is maintainable. The complainants, who were insured under a Corona Rakshak Policy with the opposite party, sought coverage and benefits that were denied, giving rise to a consumer dispute. Thus, the complaint satisfies the requirements of maintainability under consumer law.

ii). Deficiency in Service and Unfair Trade Practice

Under the Consumer Protection Act, deficiency in service includes a failure in quality, nature, or manner of performance required to be provided to the consumer. The opposite party promised a lump-sum benefit of 100% of the insured sum upon the insured's positive COVID-19 diagnosis and a minimum of 72-hour hospitalization.

The complainant met these requirements:

The 2^nd  complainant tested COVID-positive, as evidenced by the report from DDRC SRL Diagnostics (Exhibit A2).

He was hospitalized at a COVID First Line Treatment Centre (CFLTC) for nine days due to respiratory complications, including severe fever, cough, and breathing difficulty.

Despite these conditions being fulfilled, the opposite party repudiated the claim, citing that CFLTC admission does not qualify as hospitalization under the policy. This interpretation lacks merit since the Hon'ble High Court of Kerala in Star Health and Allied Insurance Company Ltd v. Avinash T. and Others held that CFLTCs are considered hospitals for COVID-19 treatment, serving mild to moderate cases. The opposite party’s refusal to acknowledge CFLTC admission as hospitalization under the policy constitutes a deficiency in service.

In determining deficiency, this Commission considers the following:

Interpretation of Policy Terms

The Corona Rakshak Policy is intended to cover hospitalization due to COVID-19. As per the Hon'ble Supreme Court’s ruling in Life Insurance Corporation of India v. Sunita (2021), insurance policies must be strictly construed, yet they should also be interpreted in favour of the insured when terms are ambiguous or restrictive. Here, the opposite party’s narrow interpretation that CFLTC admission does not constitute “hospitalization” lacks reason, especially given the purpose of the policy during a pandemic.

Deficiency in Service: Opposite Party’s Conduct

The opposite party failed to provide clear policy terms regarding what constitutes hospitalization under a public health crisis. The opposite party’s rejection was based on narrow and inconsistent reasoning, ignoring the evolving standards of COVID treatment. This conduct reflects negligence and a deficiency in service.

Relevant Case Laws

Star Health and Allied Insurance Company Ltd v. Avinash T. and Others Held that CFLTCs are designated as hospitals for COVID-19 care under Kerala’s health guidelines.

Life Insurance Corporation of India v. Sunita (2021)

Held that insurance policy terms should not be interpreted unreasonably to deny coverage when policy purposes are clear.

Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd. (2010)

Reinforced that insurance policies should be construed in a way that does not defeat the policyholder’s legitimate expectations.

These judgments support the view that insurance policies, especially in a public health crisis, should be interpreted reasonably and in favour of the insured when the terms are unclear.

iii). Liability of the Opposite Party

Based on the legal reasoning above, it is evident that the opposite party's refusal to honour the policy terms, particularly given the complainants’ fulfilment of the necessary conditions (positive COVID test and over 72 hours in CFLTC), constitutes a deficiency in service. Furthermore, their strict interpretation of policy terms is inconsistent with established legal principles and unfairly limits the rights of the insured.

In a time of unprecedented challenges, the complainants, like countless frontline workers, took on tremendous personal risks to serve their communities during the pandemic. The 1st complainant, a woman civil police officer, and her husband faced not only the threat of infection but also the emotional burden of protecting their family. Seeking peace of mind, they secured an insurance policy to ensure support in the event of illness. When illness did strike, their hope in the system was dashed by the insurer’s rigid interpretation of policy terms, disregarding the reality of COVID-19 care facilities and the health crisis at hand. This Commission empathizes with the complainants’ frustration and recognizes that, beyond the monetary claim, this case is about the insurance industry’s responsibility to honour its commitments fairly, particularly to those who risked their lives for public service during an unparalleled crisis.

After examining the issues (I) to (IV), we find in favour of the complainants due to the considerable service deficiency by the Opposite Party. This deficiency has resulted in significant inconvenience, mental distress, hardships, and financial losses for the complainants due to the Opposite Party's negligence.

In light of the above facts and circumstances, we determine that the Opposite Party is liable to compensate the complainants.

The prayer is granted as follows:

1. The Opposite Party shall pay ₹ 2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) to the complainants as per the policy’s lump-sum benefit for COVID-19 hospitalization.
2. The Opposite Party shall pay ₹ 40,000/- (Rupees Forty Thousand Only) to the complainants as compensation for the mental agony, inconvenience, and physical and mental hardships endured due to the deficiency in service and unfair trade practices.
3. The Opposite Party shall pay ₹ 10,000/- (Rupees Ten Thousand Only) toward the costs of the proceedings incurred by the complainants in pursuing this complaint.

The Opposite Party is required to fulfill the above orders within 45 days from the date of receiving this order. Failure to comply with payment orders under points I and II will result in interest at a rate of 9% per annum from the date of filing the complaint, 23.11.2022, until the date of full payment realization.

Pronounced in the Open Commission this the 16^th day of November , 2024.

 Sd/-

D.B. Binu, President

Sd/-

V. Ramachandran,  Member

Sd/-

Sreevidhia T.N, Member

Forwarded/By Order,

                                                                               Assistant Registrar

APPENDIX

Complainant’s Evidence

1. Exhibit A1: Copy of the Corona Rakshak Policy issued by the opposite party on 06.10.2020.
2. Exhibit A2: Copy of the COVID-19 positive test report from DDRC SRL Diagnostics Private Limited, dated 24.04.2021.
3. Exhibit A3: Copy of the repudiation letter from the opposite party, dated 29.06.2021.
4. Exhibit A4: Copy of the award passed by the Insurance Ombudsman, dated 25.03.2022, along with the covering letter dated 28.03.2022.
5. Exhibit A5: A true copy of the rejection letter dated 25.08.2021.
6. Exhibit A6: True copy of award dated 25.03.2022 passed by the Insurance Ombudsman.

Opposite Parties’ Evidence

1. Exhibit B1 Policy document
2. Exhibit B2 Medical records

Date of Despatch

By Hand       ::

By post         ::

AKR/

Order in CC No. 533/22

Dated : 16/11/2024