Before the District Consumer Dispute Redressal Commission [Central], 5th Floor ISBT Building, Kashmere Gate, Delhi
Complaint Case No.-124/2019
Ajay Kumar s/o Late sh. Sewa Ram
r/o E/56, Saravgyan Ward No. 013,
Kandhla, Muzaffarnagar, Uttar Pradesh
Pin code-247775 ...Complainant
Versus
Star Health and Allied Insurance Co. Ltd.
Through its Managing Director
Branch Office at:
Office no. 18, 2nd Floor, Ashoka Chamber,
5b Pusa Road, Near Rajindra Place Metro
Station, Opposite metro pillar no. 151
New Delhi-110005 ...Opposite Party
Date of filing: 01.06.2019
Date of Order: 11.08.2023
Coram: Shri InderJeet Singh, President
Shri Vyas Muni Rai, Member
Ms. Shahina, Member -Female
Vyas Muni Rai
ORDER
1.1.This complaint has been filed by Sh. Ajay Kumar (in short complainant) against Star Health and Allied Insurance Company through its Managing Director ( in short OP) under Section 12 of the Consumer Protection Act, 1986.
1.2. Complainant had purchased the health insurance policy dated 20.10.2016 vide policy no. P/161212/01/2017/005909 and insured persons included the complainant, Mrs. Sunita Rani, Spouse and Sh. Ankit Goyal- the dependent child.
1.3. Complainant had renewed the above policy from time to time vide policy no. P/161212/01/2018/007533for the year 2017-2018 having period of insurance from 20.10.2017 to 19.10.2018 in this policy and in the policy mentioned in para 1.2 sum insured is Rs. 3,75,000/- each.
1.4. The complainant was admitted in Sir Ganga Ram Hospital, New Delhi on 18.05.2018 for the treatment of giant bullae in the right lung causing Mediastinal shift and was advised for the surgery for the said disease.
1.5. The complainant had renewed the policy for the year 2017-2018 and now the said policy has been increased to Rs. 7,50,000/- as per terms and conditions of policy.
1.6. The complainant was operated on 19.05.2018 for the VATS Right Upper Lobectomy with wedge resection and Right Middle Lobe done under GA and also operated on 24.05.2018 for the VATS>>Posterolateral Thoracotomy and right Middle Lobectomy done under GA and then discharge on 01.06.2018 by Dr. Arvind Kumar (MBBS, MS, MNAMS, FACS, FICS, FUICC).
1.7. The bill amount paid to the hospital is Rs. 7,67,807/-; the information of hospitalization was given to the OP and its agent on 26.05.2018 and OP gave the assurance that the claim will be disbursed; the complainant also submitted claim form on 06.07.2018 with required details.
1.8. OP sent letter dated 20.08.2018 to the complainant for non-disclosure of pre-existing disease having intimation that this shall be taken as a notice of cancellation as per policy condition.
1.9. OP again sent letter dated 24.09.2018 to complainant for the soft deletion of insured and the insured person covered under the policy was deleted from the coverage with effect from 29.09.2018.
1.10. OP without informing the complainant or making the necessary verification repudiated the claim and cancelled the insurance policy of the complainant on 24.09.2018 which is in violation of the rule of natural justice and equality.
1.11. Complainant was not having any pre-existing disease or non-disclosure of material facts,upon which OP cancelled the policy.
1.12. Complainant approached OP on receipt of letter dated 24.09.2018 but of no use; complainant got served the legal notice dated 22.11.2018 upon the OP requesting to recall the cancellation of policy and to disburse the claim to the complainant. OP replied to the legal notice and the reply of OP is totally bogus and the reason stated in the reply is vague.For the aforesaid acts of the OP, the complainant has alleged deficiency in services and unfair trade practice.
1.13. Complainant has prayed for recalling the cancellation of the policy and to disburse the claim to the complainant of Rs. 7,50,000/- by the OP; in addition, Rs. 1,00,000/- has been claimed for mental trauma and harassment; apart from Rs. 51,000/- as litigation expenses.
2.1. OP has filed the reply, signed by Sh. Rajiv Jain, Chief Manager, in the OP’s company. The terms and conditions of the policy were explained to the complainant at the time of proposing policy and same were served to the complainant with policy schedule. The company’s liability in respect of all claims admitted during the period of insurance, shall not exceed the sum insured per family mentioned in the schedule.The policy covered Mr. Ajay Kumar-self (PED-caleulous disease of urinary system and treatment of diseases related to cardio vascular system), Mrs. Sunita Rani- Spouse (calculous diseases of urinary system), Ankit Goel- dependent children, for sum insured Rs. 3,00,000/-
2.2. It is submitted that while processing the claim medical opinion was sought by the respondent/OP from doctors who submitted his report with categoric findings. The insured submitted pre-authorisation request for the treatment of Giant Bulla, on scrutiny of the pre-authorisation request, it is noted that the insured patient has breathlessness since one and half years. The CT-chest shows severe grade COPD emphysematous chest which is long standing in nature. Thus, the opponent could not process the pre-authorisation request and the same was rejected. Subsequently, the insured submitted the claim form and sought reimbursement of medical expenses for the above mentioned treatment expenses. It is submitted that on perusal of the documents, it is observed from
- The Consultation Report dated 08.05.2018 that the insured patient has a history of pneumothorax right side lung 8 years back.
- The pulmonary function test and HRCT and CECT throax report dated 09.05.2018 shows severe grade chornic obstructive pulmonary disease (COPD). Emphysematous chest, giant emphysemtousbula right upper and middle lobe with left mediastinal displacement, which shows long standing ailment.
Further, the specialist noted that following from the scrutiny of the claim documents submitted by the insured:
The insured has a history of pneumothorax right side lung 8 years back. HRCT and CECT throax report dated 09.05.2018 show severe grade chronic obstructive pulmonary disease (COPD) emphysematous chest, giant emphysemtousbula right upper and middle lobe with left mediastinaldisplacement. All these findings denotes that, the insured patient has long standing disease.
It is to state that pneumothorax occurs when air leaks into the space between lung and chest wall. This air pushes on the outside of lung and makes it collapse. Pneumothorax can be a complete lung collapse or a collapse of only a portion of the lung. The insured has a history of pneumothorax right side lung 8 years back.
That from the above said observation based on above narrated treatment records of insured patient, which was submitted at the time of request for cashless by the treating hospital, it is quite evident that pre-existing disease, but his health complication and medical history was not disclosed in the proposal form, hence a material fact was not disclosed and that amounts to misrepresentation about health complication of the proposed person and therefore the basic principle of insurance contract i.e. utmost good faith has been violated, hence insurance contract is null & void since its inception.
Thus, the claim was repudiated and the same was communicated to the insured vide letter dated 13.08.2018.
2.3.It is submitted that as per the contract of insurance, it is the duty of proposer to disclose all the material facts to the insurance company so that the insurance evaluates the material facts and decides whether to accept proposer or not, as the insurance contract is based on utmost faith.
2.4.At the time of inception of the policy, the insured had not disclosed the above mentioned medical history/health details of the insured persons in the proposal form and other documents/ amounts to misrepresentation/ non-disclosure of material facts, making the contract of insurance voidable as formed by the Supreme Court in Satwant Kaur Sandhu vs New India Assurance Co. Ltd. (2009) 8 SCC 316; as per condition no. 6 of the policy, if there is any misrepresentation/ non-disclosure of material facts whether by the insured persons or any other person acting on his behalf, the company is not liable to make any payment in respect of the claim and as per condition no. 12 policy is liable to be cancelled and the same was cancelled. OP has also relied on Sony Cherian vs Oriental Insurance Co., 1999(6) SCC 451 which will be discussed at appropriate stage in this order.
2.5.Policy issued to the complainant under which the dispute has been raised is governed by limits of liability as per various clauses. That without any prejudice to whatever has been stated earlier in the written statement, even admitting without conceding that the company is liable to pay the claim in terms of the contract of insurance issued to the claimant, the maximum quantum of liability under the terms of the policy. It is further submitted that even if this Hon’ble Forum finds any liability upon the OP that may be limited to Rs. 3,00,000/- (that is sum insured). The OP prayed for dismissal of the complaint.
3.Complainant has filed rejoinder under his signature and allegations made in the reply has been denied except those facts which are material on record.
4.Complainant has filed affidavit of evidence under his signature; it is on the pattern of complaint supplemented with documents filed with complaint.
5.Mr. Rajiv Jain, Chief Manager with the OP company has submitted the affidavit which is on the line of submission in the reply.
6.Complainant has filed the written argument under the signature of his counsel which is more or less, on the line of facts and features given in the complaint. Complainant has also relied upon case law titled Hariom Aggarwalvs Oriental Insurance Co. Ltd. (AIR 2008 Delhi 29) and of Pradeep Kumar Garg vs National Insurance Company Ltd. decided by Hon’ble State Commission of Delhi which will be discussed at appropriate place in this order.
OP has also filed detailed written argument under the signature of its counsel which is on the line of contents in the written reply.
7. (Findings):- We have examined the documents and rival contentions of parties.
8.Complainant, initially purchased health insurance policy dated 20.10.2016 vide policy no. P/161212/01/2017005909 and the said policy got renewed from time to time and lastly for the year 2017-2018 having period of validity from 20.10.2017to 19.10.2018 for a sum assured for Rs. 3,00,000/- on premium of Rs. 21,288/-; the policy had also bonus/ recharge benefit of Rs. 75,000/-. Insured persons are complainant himself; Mrs. Sunita Rani, spouse and Sh. Ankit Goyal- the dependent child.
9.Complainant was admitted in Sh. Ganga Rani Hospital on 18.05.2018 for the treatment of giant bullai in the right lung causing medastinal shift and was advised for surgery; he was operated on 19.05.2018 again on 24.05.2018 for the disease mentioned in para 1.5 and was discharged on 01.06.2018. Complainant submitted claim with OP for Rs. 7,67,807/- the expenses incurred on his treatment (bill voucher of hospital are from page 26-36 of the complainant’s paper book). OP sent letter dated 20.08.2018 to the complainant for non-disclosure of pre-existing disease having intimation that this be taken as a notice of cancellation as per policy condition; the OP also sent letter dated 24.09.2018 to the complainant for the soft deletion of insured and the insured person covered under the policy was deleted from the coverage with effect from 29.09.2018.
10.In the letter dated 20.08.2018 of OP for non-disclosure of pre-existing disease it is mentioned, inter alia, that “during scrutiny of the claim papers, we observed that you have not declared the details; COPD (relating to Mr. Ajay Kumar), which were found to be pre-existing at the time of taking the policy for the first time during 20.10.2016 to 19.10.2017. This amount to non-disclosure of material facts.
We draw your attention to condition no. 15 in the policy clause which reads as follows:-
The company may cancel this policy on grounds of misrepresentation, fraud, moral hazard, non-disclosure of material facts as declared in proposal form and/ or claim form at the time of claim and non-cooperation of the insured by sending the insured 30 days notice by registered letter at the insured person’s last known address. This letter will be taken as notice of cancellation as per above mentioned policy condition. You are hereby informed that as per above clause, we intend to cancel the coverage for above mentioned person w.e.f. 29.09.2018 (letter dated 20.08.2018 for non-disclosure of pre-existing disease and letter and dated 24.09.2018 of soft deletion of insured are at page-37-38 of the complainant’s paper book)”.
Further, OP vide letter dated 20.12.2018 has, inter alia, reiterated that the policy in respect of Mr. Ajay Kumar was cancelled with effect from 29.09.2018 due to non-disclosure of PED. However, letter of OP dated 20.12.2018 expresses merely intention to cancel policy and no separate letter has been filed by OP vide which policy was cancelled, therefore, policy is alive and still exists.
11. In discharge summary dated 01.06.2018 under the column of history it is mentioned that “this 58 years gentleman, complained of severe breathlessness at rest for last 1 year. There was no history of fever, weight loss and cough. He consulted a chest physician who evaluated him with a CT chest. It revealed giant bullae in the right lung causing mediastinal shift for which he was advised surgery. He then consulted us at SGRH and was admitted under our care for further evaluation and management” (discharge summary is at page 19-25 of complainant’s paper book).
Since complainant had purchased health insurance policy initially for the year 2016-2017 and the current policy is w.e.f. 20.10.2017 to 19.10.2018; complainant being unaware of any disease at the time of taking the policy; being also not aware as to what was occurring inside the body; had he been hospitalize or operated upon for the said disease in the near past, say, six months or a year, he is supposed to disclose the said fact to rule out the failure of his claim on the ground of concealment of information as to pre-existing disease. And disease that can be easily detected by subjecting the insured to basic tests like blood test, ECG etc. the insured is not supposed to disclose such disease because of otherwise leading a normal and healthy life and cannot be branded as diseased person.
12. The complainant served upon the OP legal notice dated 22.11.2018 wherein it has been alleged that claim was repudiated and policy was cancelled without making the necessary verification; it was requested to recall the cancellation of the policy and disburse the claim to the client/complainant. The opposite party in its reply dated 20.12.2018 of legal notice has described repudiation of claim letter.(reply of legal notice dated 20.12.2018 and repudiation letter dated 13.08.2018 are at page-69 and 62 of the OP’s documents respectively).
Perusal of the reply of legal notice by OP dated 20.12.2018, inter alia, mentions as under:
“As per condition no. 15, “the company may cancel this policy on grounds on misrepresentation, fraud, moral hazard, non-disclosure of material fact as declared in proposal form/ at the time of claim or non-cooperation of the insured present.” Hence, the policy in respect of Mr. Ajay Kumar was cancelled w.e.f. 29.09.2018 due to non-disclosure of PED to the insured vide letter dated 20.08.2018, however, in the letter dated 20.08.2018, it has been mentioned, inter alia, that this letter shall be taken as the notice of cancellation as per the policy condition. You are hereby informed that as per the clause of policy, we intend to cancel the coverage for above mentioned person w.e.f. 29.09.2018.
From the aforesaid contents of the said letter, the OP was intending to cancel the coverage w.e.f. 29.09.2018 but factually/ actually the policy under reference has not been cancelled except to ‘intention’ to that effect. More so, no separate cancellation letter after the letter dated 20.08.2018 of OP has been issued to the complainant cancelling the policy under reference, resultantly policy under reference still exists.
13. Complainant has cited case law titled Pradeep Kumar Garg Vs. National Insurance Co. Ltd. decided by Hon’ble State Commission, Delhi (Appeal No.- A 482/2005) wherein complaint of appellant seeking reimbursement of the medical expenses incurred on the treatment was dismissed on the ground that appellant concealed the factum of pre-existing disease. In this case complaint was dismissed merely on the premise of report of a Doctor on the panel of insurance company opining that claimed disease is a consequence of Hysterectomy done 10 years back and such ground is highly preposterous, farfetched and untenable in the eyes of law. The Supreme Court has deprecated the practice of Insurance Companies for rejecting the claims in respect of mediclaim policy on the ground of pre-existing disease. Para-6 of this judgment is reproduced as under:-
“We have taken a view that unless and until a person is hospitalized or undergoes operation for a particular disease in the near proximity of obtaining insurance policy or any disease for which he has never been hospitalized or undergone operation is not a pre-existing disease. If a person conceals the factum of his hospitalization of a particular disease or operation undergone by him in the near proximity of obtaining the insurance policy say a year or two, only then it can be termed as concealment of factum of disease and doctrine of good faith u/s 45 of the Insurance Act may be pressed in by Insurance Company and not otherwise. Doctrine of good faith is two-way traffic and not a one-way traffic. If the Insurance Companies take benefit of doctrine of good faith then they have to accept whatever the insured declares and should not subject the insured to medical test and get certificate from the Doctor on the panel that the insured possesses sound and good health and is entitled to mediclaim insurance policy. Such a certificate will be meaningless and of no relevance as to the state of health of a person.”
The complainant has also cited case law titled HariomAggarwal Vs. Oriental Insurance Co. Ltd. AIR 2008 Delhi 29, wherein, inter alia, it was held that ‘now it is universally known that hypertension and diabetes can lead to host of ailments, such as stroke, cardiac disease, renal failure, liver complications etc, depending upon varied factors. That implies that there is probability of such ailments; equally they can arise in non-dibetics or those without hypertension. Unless the insurer spelt out with sufficient clarity, the purport of its clauses, or charged a higher premia, at the time of accepting the proposal, insured would assume and perhaps, reasonably that later, unforeseen ailments would be covered. Thus it would be apparent that giving a textual effect to clause 4.1 would be in most such cases render the medi-claim cover meaningless; the policy would be reduced to a contract with no content, in the even of happening of the contingency. The ratio of both the cases cited by complainant are applicable in the present complaint.
In another case titled Birla Sun Life Insurance Company Vs. Konchada Ravi Kumar, II (2017) CJP 12 B (C.N.) it was held that non-disclosure of pre-existing disease does not amount to suppression of material facts and law declared by Hon’ble Supreme Court has binding effect on all courts in the country and repudiation was found not justified.
14. The OP in its reply and written arguments has relied on case law of SatwantKaurSandhu Vs. New India Assurance Co. Ltd, (2009) 8 SCC 316 and Sony Cherian Vs. Oriental Insurance Co. Ltd. 1999(6) SCC 451(supra) but ratio of PED of these cases are not applicable in the facts and circumstances of the present case.
15. OP in its reply and affidavit has conceded that without any prejudice to what has been stated in the reply has submitted that if the Hon’ble Forum finds any liability upon the OP that may be limited to Rs. 3,00,000/-, this has already been mentioned in para 2.5 of this order.
16.From the aforesaid discussions/deliberations and careful analysis it come to the conclusion that complainant has established his case since after the medical expenses and discharge from hospital complainant submitted his claim of Rs. 7,67,807/- (however insured amount is Rs. 3,00,000/-+ Rs. 75,000/- bonus) for reimbursement of the amount but OP did not reimburse/refund. Since insured amount in the policy is Rs. 3,00,000/- + Rs. 75,000/- totaling of Rs. 3,75,000/- , the claim of the complainant cannot exceed more than this amount. Complainant is held entitled for amount of Rs. 3,75,000/- and remaining amount is declined. Since there is deficiency in service on the part of OP, which caused harassment and mental agony to the complainant; therefore, complainant is held entitled for compensation of Rs. 20,000/- against OP; the complainant has been claiming his valid claim for years together; we allow Rs. 10,000/- in favour of complainant as litigation expenses. Since, complainant was discharged from the hospital in the year 2019 and paid hospital expenses as the same was not reimbursed by OP despite valid claim, the insured was deprived of his money to use the same, therefore, we deem fit to allow 7% interest per annum on the amount of Rs. 3,75,000/- (Rs. 3,00,000/- insured amount + Rs. 75,000/- bonus) from the date of filing of complaint till its realization.
17. We direct OP to pay Rs. 3,75,000/- on account of insured money under mediclaim insurance policy to the complainant along with 7% interest p.a. from the date of filing of complaint till its realization; Rs. 20,000/- as compensation for mental agony and pain, apart from Rs. 10,000/- as litigation expenses within 30 days from the date of receipt of this order.
However, if the aforesaid amount is not paid to the complainant by OP within 30 days from the date of receipt of this order; amount of Rs. 3,75,000/- shall carry interest @ 8% instead of 7% p.a. on this amount.
18. Copy of this Order be sent/provided forthwith to the parties free of cost as per rules for necessary compliance.
19. Announced on this11th August, 2023.
[Vyas Muni Rai] [ Shahina] [InderJeet Singh]
Member Member (Female) President
