Punjab

Ludhiana

CC/22/335

dinesh Kumar Goel - Complainant(s)

Versus

Star Health and Allied Ins.Co.Ltd. - Opp.Party(s)

Izaz Alam

11 Jul 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:  335 dated 25.08.2022.                                                       Date of decision: 11.07.2024. 

Dinesh Kumar Goel S/o. Bachan Lal Goel, r/o. House No.184, Ward No.10, Near Kakarwal Pul, Dhuri, presently Permanent resident of House No.527 GX, BRS Nagar, Backside of Lakshmi Petrol Pump, 50/2, Satguru Nagar, Ludhiana-141015. (Email address

                                                Versus

1. Star Health and Allied Insurance Company Ltd., SCO 17, First Floor, Kandhari Complex, Stadium Road, Branch Office, Patiala-147001 through its Authorized Representative. (E-mail id:

Complaint Under Section 35 of the Consumer Protection Act, 2019.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

SH. MONIKA BHAGAT, MEMBER

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Izaz Alam, Advocate.

For OPs                          :         Sh. Rajeev Abhi, Advocate.

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Shorn of unnecessary details, the facts of the case are that the complainant, being a proposer, purchased Senior Citizens Red Carpet Health Insurance Policy No.P/211115/01/2021/002193 for his mother Smt. Darshana Devi having sum insured of Rs.2,00,000/- w.e.f. 20.07.2020 to 19.07.2021 on premium of Rs.9978/-.

                   The complainant stated that in March and April 2021, when pandemic Covid-19 was at peak, his mother got infected with Covid-19 in March 2021. On 21.03.2021, she was admitted in Shri Raghunath Hospital, Agar Nagar, Ferozepur Road, Ludhiana for treatment with a complaint of breathing difficulty and lower SPO2 level. She was administered with antibiotics, Antiviral injections Remdesivir complete 5 doses. She was continued on BIPAP and diagnosed as viral pneumonitis and Covid-19 positive. On 29.03.2021, she was referred to higher center of DMC Hospital for management due to serious condition. Thereafter, she was admitted to Hero DMC Heart Institution on 30.03.2021 due to her serious condition. On 01.04.2021, mother of the complainant was discharged from the hospital as doctors advised the complainant to take her home as there was no chance of her survival. The complainant brought his mother at home on 01.04.2021 where she took her last breath. The complainant further stated that he incurred an amount of Rs.2,72,361/- on the treatment of her mother at various hospitals, the detail of which is reproduced as under:-

The complainant further stated that on 29.09.2021, he submitted claim with the OPs. On 29.10.2021, the OPs asked for additional documents/information to enable them to process the claim i.e. i. complete set of indoor case papers, ii. Patient is known case of Aplastic Anemia, kindly submits prior consultation reports and treatment details, which the complainant submitted vide letter dated 09.11.2021 along with certificate of Raghunath Hospital and record of PGI. According to the complainant, his mother was suffering from Aplastic Anemia in the year 2006 for which she was admitted to Nehru Hospital PGI, Chandigarh and was discharged on 10.02.2007. She got fully recovered and was fit for her normal life and she was not under any treatment/medication for Aplastic Anemia post 2007.  On 19.11.2021, the OPs repudiated the claim on the ground that the mother of the complainant had suffered Aplastic Anemia and discharge summary dated 10.02.2007 of Nehru Hospital PGI, Chandigarh was made the basis for repudiation of his claim. The complainant wrote letter dated 29.11.2020 to the OPs that the claim has been wrongly repudiated as his mother was treated for Aplastic Anemia in the year 2007 and thereafter, she was fit for normal life.  The complainant also sent Email dated 09.12.2021 to the OPs, to which reply through Email dated 18.12.2021 was sent by grievance department calling upon the complainant for documents/information. The complainant vide Email dated 28.12.2021 replied the queries raised by the OPs. Further the OPs vide Email dated 04.01.2022 again repudiated the claim of the complainant by reviewing the claim and opined that claim has been assessed as per policy terms and condition. According to the complainant, the OPs had wrongly repudiated his claim by diagnoses that his mother had suffered from Aplastic Anemia by ignoring the whole hospital record of Shree Raghunath Hospital and Lama summary Hero DMC Heart Institute dated 01.04.2021. The complainant claimed to have suffered mental harassment, financial loss and torture due to unfair trade practice and deficiency in service on the part of the OPs for which the OPs are liable to compensate the complainant. In the end, the complainant has prayed for directing the OPs to reimburse the amount of Rs.2,72,361/- along with interest and also to pay compensation of Rs.1,00,000/- besides litigation expenses of Rs.20,000/-

2.                Upon notice, the OPs appeared and filed joint written statement and assailed the complaint by taking preliminary objections on the ground of maintainability; suppression of material facts; lack of cause of action; the complaint being estopped by her own act and conduct from filing the present complaint etc. The OPs stated that immediately on the receipt of the claim, it was duly registered, entertained and processed. The complainant had obtained Senior Citizens Red Carpet-Revised 2018 policy No.P/211115/01/2021/002193 valid from 20.07.2020 to 19.07.2021 covering his mother Smt. Darshana Devi dependent parent (mother) 73 years of age for a sum insured of Rs.2,00,000/-. The OPs further stated that the Senior Citizen Red Carpet Policy coverage with suitable co-payment i.e. 50% of each and every claim arising out of all the pre-existing diseases as defined and 30% in case of all other claims which are to be borne by the insured. According to the OPs, this fact is mentioned under the head Co-payment, which is reproduced as under:-

"Co-Payment - Co-payment is a cost sharing requirement under a health insurance policy that provides that the insured will bear a specified percentage of the admissible claim amount. A co-payment does not reduce the sum insured."

The OPs further stated that in the policy in clause 1 under the head Coverage, sub clause (J) under the head Co-payment as under:-

"J Co-payment: This policy is subject to co-payment, which is reproduced as under:-

Further it is the condition No.6 of the policy that "the company shall not be liable to make any payment under the policy in respect of any claim if information furnished at the time of proposal is found to be incorrect or false or such claim is in any manner fraudulent or supported by fraudulent means or devices, mis-representation whether by the insured person or by any other person acting on his behalf."

                   The claim was lodged regarding the treatment of Smt. Darshana Devi with Shri Raghunath Hospital, Ludhiana from 21.03.2021 to 29.03.2021 with the diagnosis of Aplastic Anemia and for hospitalization at DMC Hospital, Ludhiana from 29.03.2021 to 01.04.2021 for a sum of Rs.2,72,361/-. The insured/complainant submitted claim documents for reimbursement of medical expenses for the hospitalization of expenses for the treatment of Darshana Devi. It is observed from the discharge summary of Nehru Hospital for the admission on 10.02.2007 that the insured patient namely Smt. Darshana Devi was diagnosed with Aplastic Anemia which is prior to date of commencement of first year of policy. At the time of inception of the policy which was from 20.07.2020 to 19.07.2021, the above said medical history/health details of the insured person was not disclosed in the proposal form which amounts to misrepresentation/non-disclosure of the material facts as per condition No.6 of the policy issued if there is any misrepresentation whether by insured person or any other person acting on his behalf the respondent company is not liable to make any payment in respect of any claim. The OPs further stated that the insured has a duty to disclose all material facts in proposal while buying an insurance policy. 19(2) of Protection of Policy Holder Regulations 2017 which is reproduced as under:-

"The requirements of 'disclosure of material information' regarding a proposal or policy apply under these regulations, both to the insurer and insured."

The proposal, declaration given by the proposer (insured) forms the basis of the contract between the proposer and the company. The proposer, in the proposal form has affirmed that the insured person was in good health and that he has not consulted or taken treatment which could be gathered from the following:-

Health History:

Do you have any health problems?

Answer: None

1.Medical declaration: Have you or any member family proposed to be insured, suffered or are suffering from any disease / ailment / adverse medical condition of any kind especially heart / stroke / cancer / renal disorder / Alzheimer's disease / Parkinson's disease.

Answer: NO

According to the OPs, the insured was well aware of the past medical history of the insured person and failed to disclose the same in the proposal form during the porting of policy, amounting to non-disclosure of material facts and has violated the cardinal principle of the insurance making the contract of insurance voidable and unenforceable. The insured has omitted to disclose the material facts at the time of porting of policy, which amount to non-disclosure of material facts. As per the contract of insurance, it is the duty of the proposer to disclose all the material facts to the insurer so that the insurer has the opportunity to evaluate the material facts and to decide whether to accept the proposal or not as the insurance contract is based on utmost good faith. In case of health insurance contracts, disclosure of health details are the material facts. Insured has to disclose all the past medical history in the proposal form which is material fact for the assessment of risk and issuing medical insurance policy to the insured.

                   The OPs further stated that after the receipt of medical records and after scrutinizing the same and after due application of the mind by the officials of the respondent in terms of the insurance policy, the claim for reimbursement of medical expenses of hospitalization for the treatment of Smt. Darshana Devi was repudiated as no claim vide letter dated 19.11.2021 on the ground of violation of condition No.6 of the policy since at the time of inception of the policy the aforesaid medical history/health details of the insured person was not disclosed in the proposal form which amounts to mis-representation/non-disclosure of material facts. The said letter of repudiation dated 19.11.2021 was duly conveyed to complainant. According to the OPs, the claim of the complainant for reimbursement of medical expenses incurred on the treatment of Smt. Darshana Devi has rightly been rejected on legal and valid grounds.

                   On merits, the OPs reiterated the crux of averments made in the preliminary objections and facts of the case. The OPs have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                The complainant filed replication to the written statement of the OPs reiterating the facts mentioned in the complaint and controverted those mentioned in the written statement of the OPs.

4.                In evidence, the complainant tendered his affidavit as Ex. CA and reiterated his averments of the complaint. The complainant also placed on Ex. C1 copy of policy documents, Ex. C2 is the copy of Referral form dated 29.03.2021 of Shree Raghunath Hospital, Ex. C3 is the copy of death certificate of Darshana Devi, Ex. C4 is the copy of certificate of Dr. Vinita Aggarwal of Shri Bala Ji Hospital, Ludhiana, Ex. C5 is the copy of detail of expenditure of treatment along with bills/receipts etc., Ex. C6 is the copy of claim form dated 29.09.2021, Ex. C7 is the copy of letter dated 29.10.2021 requiring additional documents/information, Ex. C8 is the copy of reply dated 09.11.2021 by the complainant along with documents, Ex. C9 is the copy of repudiation letter dated 19.11.2021, Ex. C10 to Ex. C15 is the copies of E-mail correspondence and closed the evidence.

5.                On the other hand, the learned counsel for the OPs tendered affidavit Ex. RA of Sh. Sumit Sharma, Senior Manager of the OPs along with document Ex. R1 is the copy of proposal form, Ex. R2 is the copy of policy schedule, Ex. R3 is the copy of policy term and condition, Ex. R4 is the copy of IRDA guideline, Ex. R5 is the copy of claim form, Ex. R6 is the copy of LAMA summary dated 01.04.2021, Ex. R7 is the copy of past treatment records, Ex. R8 is the copy of final bill, Ex. R9 is the copy of repudiation letter dated 19.11.2021, Ex. R10 is the copy of billing assessment sheet and closed the evidence.

6.                We have heard the arguments of the counsel for the parties and also gone through the complaint, replication, affidavit and annexed documents and written statement along with affidavit and documents produced on record by the both parties. We have also gone through written arguments submitted by the complainant.

7.                On 20.07.2020, a proposal for obtaining the policy of insurance was submitted by the proposer i.e. complainant Dinesh Kumar Goel for getting health insurance of his mother Smt. Darshana Devi. The proposal form Ex. R1 contained ‘Health History’ “Medical Declaration” and insured Darshana Devi answered all the queries in ‘Negative’. Also, in the said proposal form Ex. R1, insured Darshana Devi  has not disclosed any pre-existing disease. Relying upon the disclosures and declaration of the insured person, the OPs issued an insurance policy Ex. C1 = Ex. R1 to Smt. Darshana Devi, covering herself w.e.f. 20.07.2020 to 19.07.2021 for a sum insured of Rs. 2,00,000/- subject to the policy terms and conditions.  One of the terms and conditions of the policy is clause 6, which is reproduced as under:-

"6. The company shall not be liable to make any payment under the policy in respect of any claim if information furnished at the time of proposal is found to be incorrect or false or such claim is in any manner fraudulent or supported by fraudulent means or devices, mis-representation whether by the insured person or by any other person acting on his behalf."

7.                The insured Smt. Darshana Devi was admitted in Shri Raghunath Hospital, Agar Nagar, Ferozepur Road, Ludhiana on 21.03.2021 due to complaint of breathing difficulty and lower SPO2 level where she was diagnosed as viral pneumonitis and Covid-19 Positive. As such, vide referral form dated 29.03.2021 Ex. C2, she was referred to DMC Hospital but due to her serious condition, she was further admitted to Hero DMC Heart Institution on 30.03.2021. She was discharged on 01.04.2021 vide LAMA Summary Ex. R6. Unfortunately, after bringing her at home, the insured Smt. Darshana Devi expired on 01.04.2021. Thereafter, the complainant lodged a claim of Rs.2,72,361/- with the OPs vide claim form dated 29.09.2021 Ex. C6 = Ex. R5.  The OPs issued a letter dated 29.10.2021 Ex. C7 to the complainant by requiring some additional documents/information, such as: 1 Complete set of indoor case papers; 2. Patient is a known case of Aplastic Anemia. Kindly submit prior consultation reports and treatment details. The complainant vide his letter dated 09.11.2021 Ex. C8 submitted the said additional documents/information with the OPs. On scrutiny of the said documents, the OPs found that from the discharge summary of Nehru Hospital for the admission on 10.02.2007, the insured patient was diagnosed with Aplastic Anemia prior to commencement of first year of policy. Accordingly, the OPs repudiated the claim of the complainant vide repudiation letter dated 19.11.2021 Ex. C9 = Ex. R9 on the grounds, which are reproduced as under:-

“We have processed the claim records relating to the above insured-patient seeking reimbursement of hospitalization expenses for treatment of aplastic anemia.

It is observed from the discharge summary of Nehru Hospital for the admission on 10.02.2007, the insured patient was diagnosed with aplastic anemia which is prior to date of commencement of first year policy.

At the time of inception of the policy which is from 20/07/2020 to 19/07/2021, the above mentioned medical history/health details of the insured-person were not disclosed in the proposal form which amounts to representation/non-disclosure of material facts.

As per Condition 6 of the policy issued to you, if there is any misrepresentation whether by the insured person or any other person acting on his behalf, the company is not liable to make any payment in respect of any claim.

We are therefore unable to settle your claim under the above policy and we hereby repudiate your claim.”

9.                Now point of consideration arises whether the Ops were justified in repudiating the claim of the complainant regarding hospitalization of the insured Smt. Darshana Devi.

10.              Before adverting to the merits of the case, it is desirable to recapitulate the concept of proposal form. In this regard, the Insurance Regulatory and Development Authority of India (IRDAI) in its notification dated 16.10.2002 issued the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations 2002 whereby the “Proposal Form” is defined in Regulation 2(d) as under:-

“2(d) “Proposal form” means a form to be filed in by a proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the s\risk and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.

Further Regulation 4, deals with proposals for insurance as under:-

1. Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.
2. Forms and documents used in the grant of cover may, depending upon the circumstances of each case, be made available in languages recognized under the Constitution of India.
3. In filling the form of proposal, the prospect is to be guided by the provisions of Section 45 of the Act. Any proposal form seeking information for grant of life cover may prominently state therein the requirements of Section 45 of the Act.
4. Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover.”

11.              Also in a case titled as Manmohan Nanda Vs United India Assurance Co. Ltd. and others 2022(I) CPJ 20 (SC) wherein the Hon’ble Supreme Court of India has held as under:-

(i) There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.

(ii) What may be a material fact in a case would also depend upon the health and medical condition of the proposer.

(iii) If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts.

(iv) If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non­disclosure of a material fact, and seek to repudiate the claim.

(v) The insurance company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the insurance company is satisfied about the medical condition of the proposer and that there is no risk of pre­existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre­existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.

(vi) The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.

(vii) In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependant on the queries made in the proposal form and the answer to the said queries given by the proposer.               

12.              Now coming back to the facts of the case, in the LAMA Summary dated 01.04.2021 Ex. R6,  it is mentioned that the patient was a known case of Aplastic Anemia, Post Covid. Admittedly, the insured Smt. Darshana Devi was suffering from Aplastic Anemia disease. As per available medical literature on internet, it is a rare condition in which body stops producing enough new blood cells which develops as a result in bone marrow damage. The damage may be present at birth or occur after exposure to radiation, chemotherapy, toxic chemicals, some drugs or infections including Covid. Its treatment includes supportive care for symptomatic management and can include medication, blood transfusions and stem-cell transplants. Stem-cell transplant is considered to be the only possible care for this deadly disease. In common man language one has to live with this disease throughout his life cycle. It implies that the complainant being son along with other family members must have provided extra ordinary care to the disease which has increased her life expectancy. So, therefore, even the complainant being the proposer was fully aware of the fact that the deceased insured was diagnosed of Aplastic Anemia for the first time in the year 2007 and underwent treatment at PGI, Chandigarh. No evidence has been brought on record to show that any bone marrow transplant was affected so to completely cure the ailment. Further as per LAMA summary Ex. R6, she has been shown to have the symptoms of said disease. Therefore, the OPs have sought the information with regard to medical declaration related information by making specific declaration in the proposal form Ex. R1. It was the duty of the insured to make full disclosure and no information, substance or interest was required to be concealed or omitted. The pre-existing disease/ history of the insured Smt. Darshana Devi being a case of Aplastic Anemia  was a relevant and material fact which was required to be disclosed at the time of obtaining the policy in question by the insured. So there is a concealment and suppression of material facts which could have affected the decision of the opposite parties with regard to the terms and conditions of the policy.

                   Reference can be made to Branch Manager, Bajaj Allianz Life Insurance Company Ltd. and others Vs Dalbir Kaur in 2021 (217) AIC 50 whereby the Hon’ble Supreme Court of India has held that the contract of insurance is one of the utmost good faith and proposer who seeks to obtain policy of life insurance is duty bound to disclose all material facts bearing upon issue as to whether insurer would consider it appropriate to assume risk which is proposed. The Hon’ble Supreme Court has further held that the proposer failed to disclose vomiting of blood which had taken place barely month prior to issuance of policy of insurance and of hospitalization which had been occasioned as consequences. The assured was suffering from pre-existing ailment and judgment of NCDRC directing payment of sum insured was set aside.  

                   Further reference can be made to Reliance life Insurance Co. Ltd. and others Vs Rekhaben Nareshbhai Rathod in 2019 (2) R.C.R. (Civil) 909 whereby the Hon’ble Supreme Court of India has held that two months prior to policy obtained from appellant insured obtained policy from another company and this fact was not disclosed by the insured. Repudiation was made within two years period from commencement of insurance cover. The proposer was aware of contents of form that he was required to fill and disclosure of material for assessment of risk which was being taken by insurer which entitled the insurer to repudiate the claim.

13.               As a result of the foregoing discussion, we are of the considered view that the complainant is guilty of concealment of material facts as the insured failed to disclose in the proposal form that she was a patient of Aplastic Anemia prior to commencement of the policy. Therefore, in our considered view, the claim lodged by the complainant in respect of the treatment of Smt. Darshana Devi has been rightly repudiated. In this regard, the reference can also be made to the law laid down in Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided n 10.07.2009 whereby it has been held that if there was clear suppression of material facts in regard to the health of the insured, the insurer was fully justified in repudiating the insurance contract.

14.              As a result of above discussion, the complaint fails and the same is hereby dismissed. However, there shall be no order as to costs. Copies of the order be supplied to the parties free of costs as per rules. File be indexed and consigned to record room.

15.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

(Monika Bhagat)                              (Sanjeev Batra)               Member                                         President  

Announced in Open Commission.

Dated:11.07.2024.

Gobind Ram.