DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOZHIKODE

PRESENT: Sri. P.C. PAULACHEN, M.Com, LLB    : PRESIDENT

Smt. PRIYA.S, BAL, LLB, MBA (HRM) :  MEMBER

Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER

Wednesday the 15^th day of November 2023

CC.48/2015

Complainant

Subaida. K,

Shahina Manzil,

Kudumoolipuray Post,

                 Chelambra,

                 Malappuram – 673634

(By Adv. Sri. P. Manjith)

Opposite Parties

Star Health and Allied Insurance Com. Ltd.

                        2^nd Floor, City Tower,

                        Kunnamangalam,

                        Kozhikode.

                       (By Adv. Sri.Z. P. Zachariah)

ORDER

By Sri. P.C. PAULACHEN  – PRESIDENT

            This is a complaint filed under Section 12 of the Consumer Protection Act, 1986.

2.  The case of the complainant, in brief, is as follows:

                  The complainant is a diabetes patient aged 51 years. The complainant subscribed a diabetes safe insurance policy of the opposite party by paying Rs. 27,022/- as total premium. The period of insurance was from 30/09/2014 to 29/09/2015. The sum insured was Rs. 3,00,000/-

3. On 11/11/2014, the complainant was treated as an inpatient for diabetes in Nirmala Hospital Kozhikode. She claimed cashless treatment for the same. But the opposite party denied the same for the reason that the ailment did not require inpatient treatment. Hence the complainant was compelled to pay the entire treatment expenses in the hospital from 11/11/2014 to 15/11/2014 amounting to Rs. 5,860/-. The complainant’s husband contacted the opposite party and they gave assurance that the matter would be taken up with their head office. But till now there is no positive response at their end.
4. On 8/12/2014, the complainant was admitted in the Christian Medical College Vellore, for specialised treatment for diabetic mellitus and incidental diseases. She was discharged on 13/12/2014. Total inpatient discharge bill amounted to  Rs. 39,820/- . The claim for cashless treatment raised by the complainant through the said hospital on 8/12/2014 was denied by the opposite party stating the reason that the ailment falls under first two year exclusion clause and also favours pre-existing disease.  At the time of canvasing the policy, the complainant was not apprised of any such riders and what was assured was total cashless hospitalisation treatment for Rs. 3,00,000/-. The conditions of the policy were not served to her. She had not signed or executed any such conditions. In the policy certificate issued, no such conditions are attached. Hence the complaint to direct the opposite party to pay the entire treatment expenses of Rs. 45,680/- to the complainant along with compensation of Rs. 1,00,000/- for the mental agony suffered by her.
5. The opposite party has resisted the complaint by filing written version wherein all the allegations and claims made are denied. The policy is admitted. The sum insured was Rs. 3,00,000/-. When the request for cashless treatment is rejected, the complainant ought to have submitted claim form along with relevant treatment records to the opposite party. Without preferring a claim the complainant has no locus standi to approach this commission. On a scrutiny of the cashless treatment and initial records made available from Nirmala Hospital, it was found that the treatment for which the complainant got admitted did not require hospitalisation and could be treated as an outpatient. Hence the claim for cashless treatment was rejected.
6. The treatment at CMC Vellore was for type 2 Diabetes mellitus, hypothyroidism and peri arthritis right shoulder. The claim for cashless treatment falls under 2 year exclusion clause and also under pre-existing disease and hence the same was also rejected.
7. The allegation that at the time of canvasing the policy the complainant was not apprised of the riders is not correct. The allegation that the conditions of the policy are not attached to the policy schedule is not correct and hence denied. The terms and conditions of the policy were issued to the complainant along with the policy schedule. The cashless treatment is only a facility meant for giving extra comfort to the customer. Whenever cashless facility is rejected, the insured is supposed to submit the claim form duly filled up with the supporting documents. The complainant had not submitted any claim form within the time limit. There is no unfair trade practice or deficiency of service on the part of the opposite party. The complainant is not eligible to claim any compensation. With the above contentions, the opposite party prays for dismissal of the complaint.
8. The points that arise for determination in this complaint are;

(1). Whether there was any deficiency of service on the part of theopposite party, as alleged?

           (2) . Reliefs and costs

9. Evidence consists of the oral evidence of PW1 and Exts A1 to A6 on the side of the complainant. The Senior Executive (Claims) of the opposite party has filed proof affidavit. But the complainant remained absent and did not avail the opportunity to cross examine him. Exts B1 to B6 were marked.  
10. The complainant did not advance any arguments despite giving amble opportunity. Heard the opposite party. 
11. Point No. 1:  The complainant has approached this Commission with a grievance that there was neglect on the part of the insurer to honour the claim for cashless treatment as per the policy, for the medical treatment undergone by her in the Nirmala Hospital, Kozhikode and Christian Medical College,   Vellore.
12. The complainant had availed diabetes safe insurance policy from the opposite party. The sum insured was Rs. 3,00,000/-. The period of insurance was from 30/09/2014 to 29/09/2015. The total premium paid was Rs. 27,022/-. Ext A1 is the policy. The policy is admitted by the opposite party.  On 11/11/2014, the insured was admitted in the Nirmala Hospital, Kozhikode for treatment of diabetes mellitus, hypothyroidism, old LWMI, hyper tension and dyslipidemia. She was discharged on 15/11/2014. According to the complainant, the medical and treatment bill amounted to Rs. 5,860/-. The complainant had claimed cashless treatment through the hospital. But the claim was denied stating that the ailment does not require admission or inpatient treatment and she could have been treated on OPD basis.
13. Again on 8/12/2014, the insured was admitted in the Christian Medical College Hospital Vellore, for treatment of type 2 diabetes mellitus, hypothyroidism, systemic hyper tension, fatty liver, peri arthritics right shoulder etc. She was discharged on 13/12/2014. The request for cashless treatment was made to the opposite party by the complainant through the hospital on 8/12/2014. But the cashless claim was rejected by the insurer for the reason that the ailment falls under first 2 year exclusion clause and also under pre-existing disease.
14. The husband of the complainant was examined as PW1. He has filed proof affidavit and deposed in terms of the averments in the complaint and in support of the claim. PW1 has asserted that the complainant was not aware of the policy conditions at the time of taking the policy and she was not told about the same or furnished the copy of the terms and conditions. PW1 has added that at the time of commencing the policy, complainant was not apprised of any such conditions or exclusions. Ext A1 is the policy, Ext A2 is the letter dated 12/11/2014 denying pre-authorisation for cashless treatment at Nirmala Hospital, Kozhikode, Ext A3 is the copy of the letter dated 10/12/2014 denying pre-authorisation for cashless treatment at Christian Medical College, Vellore, Ext A4 is the discharge summary of Nirmala Hospital, Kozhikode, Ext A5 is the copy of the discharge summary issued by CMC Vellore and Ext A6 is the inpatient discharge bill dated 13/12/2014 of CMC Vellore.
15. The Senior Executive (Claims) of the opposite party filed proof affidavit supporting and reiterating the contentions in the version. The complainant did not avail the opportunity to cross examine this witness. Ext B1 is the copy of the policy schedule with conditions, Ext B2 is the copy of the pre-authorisation request dated 11/11/2014, Ext B3 is the denial letter dated 12/11/2014, Ext B4 is the pre-authorisation request dated 8/12/2014, Ext B5 is the denial letter dated 10/12/2014 and Ext B6 is the copy of the proposal form.
16. As already stated, the sum insured as per Ext A1 is Rs. 3,00,000/-. The medical and treatment expenses in the Nirmala Hospital amounted to Rs. 5,860/-. It is true that the complainant has not produced the medical bills of Nirmala Hospital. But the opposite party has not disputed the quantum. The claim was rejected by the opposite party for the reason that the ailment suffered by the complainant does not require inpatient treatment and it could have been treated on OPD basis. Now the point to be considered is as to whether the denial of the claim for the above reason is justified in this case. Ext A4 shows that the diagnosis was diabetes mellitus, hypothyroidism, old LWMI, hypertension and dyslipidemia. She was admitted with a history of extreme tiredness and shivering – 1 day Palpitation +.  She was treated with Eltroxin, Ecospirin, Inj, H mixtard, antihypertensives and antidepressants. ENT and psychiatry consultation sought and managed accordingly. She was discharged on 15/11/2014 and was asked to come for review after one week. Considering the diagnosis and the treatment given, it cannot be said that inpatient treatment was not necessary. It is a matter to be decided by the treating doctor as to whether the patient should be admitted and treated as an inpatient or not. The patient has no role in this matter. Moreover, the insurer cannot dictate that a patient with a particular ailment should be treated as an outpatient only. For the aforesaid reasons, we are of the view that there is no justification for denying the claim made by the opposite party for the treatment in the Nirmala Hospital stating the reason that the ailment does not require admission or IP treatment and it could have been treated on OPD basis. The medical and treatment expenses in Nirmala Hospital is Rs. 5,860/- and the opposite party is liable to pay the said amount to the complainant.
17. The complainant was admitted in CMC Vellore on 8/12/2014 for type 2 diabetes mellitus, hypothyroidism and peri- arthritis right shoulder and was discharged on 13/12/2014. The claim for cashless treatment was rejected by the opposite party for the reason that the ailment for which she had applied for cashless treatment falls under first 2 years exclusion clause and also under pre-existing disease. The definite case of PW1 is that the complainant was given only Ext A1 policy schedule and the conditions of the policy were not furnished or explained to her and she was totally unaware of the same. PW1 has asserted that at the time of canvasing the policy, the complainant was not apprised of the exclusions and conditions etc. Even though PW1 was subjected to searching cross examination on this aspect, nothing has been brought out to discredit his version. There is absolutely no reason to disbelieve PW1. It is the duty of the opposite party to disclose the terms and conditions of the policy to the insured and furnish the same to her.
18. The opposite party has produced before this Commission the copy of the policy schedule with conditions of the policy (Ext B1). There is absolutely nothing in evidence to hold that the above conditions were furnished to the complainant. Ext A1 shows that the opposite party is liable to pay all medical expenses incurred by the insured during the period of the policy up to Rs. 3,00,000/-. Since the clauses regarding exclusions were not supplied or explained to the insured, the same is not binding on her. Moreover, it may be noted that the treatment in CMC, Vellore was for type 2 diabetes mellitus also.
19. In Modern Insulators Ltd vs. Oriental Insurance Co. Ltd. (2000) 2 Supreme Court cases 734, the Hon’ble Supreme Court has held that the non-disclosure of the terms and conditions is violation of utmost good faith which is the base of insurance contract. In paragraphs 8 and 9 of the afore said decision, it has been held as follows:

“ It is the fundamental principle of insurance law that utmost good faithmust be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties know. The insured has a duty to disclose and similarly it is the dutyof the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally.

In view of the above settled position of law we are of the opinion that the view expressed by the National Commission is not correct. As the above terms and conditions of the standard policy wherein the exclusion clause was included, were neither a part of the contract of insurance nor disclosed to the appellant respondent cannot claim the benefit of the said exclusion clause. Therefore the finding of the National Commission is untenable in law”

20. In order dated 01/12/2014 in Revision petition No. 3934/2013 (Bajaj Allianz General insurance Company Ltd. And another vs. Achala Rudranwas Marde) the Hon’ble  National Consumer Disputes Redressal Commission has held that  non-disclosure of the terms and conditions is violation of utmost good faith which is the base of insurance contract between the parties. If such exclusion clause etc. are not explained or furnished to the insured, the same is not binding on him. The decision of the Hon’ble Supreme Court in Modern Insulators Ltd vs. Oriental Insurance Co,. Ltd was relied upon in the above decision of the Hon’ble National Consumer Disputes Redressal Commission.
21. The above dictum is squarely applicable in this case. The terms and conditions of the policy wherein the exclusion clause etc. were included were neither a part of the contract of the insurance nor disclosed to the complainant herein and hence the benefit of the said clause cannot be claimed by the Insurance company. The legitimate dues to the insured for her treatment in CMC Vellore is Rs. 39, 820/-. The opposite party is liable to pay the said amount to the complainant.
22. The Hon’ble  Apex Court in 2021 (0) Supreme (SC) 779- (Manmohan  Nanda V/s United India Insurance Company Limited)  has observed as follows; (paragraph 52)

     “On a consideration of the aforesaid judgments, the following principles would emerge:

     (!). 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.

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

(!!!). 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.

(!!!!). 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 non-disclosure 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 proposed 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 pre-existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing 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 dependent on the queries made in the proposal form and the answer to the said queries given by the proposer.”

23. In this context, it is worthwhile to have a glance at the decision of the   Hon’ble National Consumer Disputes Redressal Commission in Arum  Kumar vs. New India Assurance Company Ltd., reported in III (2017) (CPJ) 553 (NC) wherein it has been held as follows: “It is not denied that the complainant has been taking the insurance policy since the year 1997. It was the bound duty of the Insurance Company to have verified the information given in the proposal form by obtaining the suitable expert opinion. In case certain column in the proposal form were left blank, it was obligatory on the Insurance Company to ask him to fill the required information, before taking decision to issue the insurance policy. It is a matter of grave concern that the Insurance Companies,  whether in the public sector or the private sector, do not make any effort to examine the proposal properly or get the necessary verification done, at the time of issuing the policies in question. However, when the claims are filed, minute scrutiny starts at that stage and the claims are repudiated, even for minor lapses on the part of the proposer. In the present case, the discharge summary of Sitaram Bharatiya Hospital stated that the complainant had difficulty in walking for a long time and history of borderline hypertension, but not on any medication. The District Forum had rightly observed that non-disclosure of such conditions in the proposal form cannot be blown out of proportion, so as to disentitle the complainant from the claim amount from the Insurance Company. We have no reason to differ with the conclusion arrived at by the State Commission, because the conditions so mentioned in the report of the hospital, do not imply that the complainant was suffering from any serious disease. It is held, therefore, that the claim has been wrongly repudiated by the Insurance Company on the ground of non-disclosure of information about the health conditions in the proposal form.”
24. From the above discussion, what emerges is that the claims were wrongly repudiated by the opposite party. The conduct and attitude of the opposite party including the non-disclosure of the terms and conditions to the insured at the proper time and denying the legitimate claim amounts to gross deficiency of service. The opposite parties are liable to pay the entire expenses of treatment amounting to Rs. 45,680/-  (Rs. 5,860+Rs. 39,820)  to the complainant. It goes without saying that the acts of the opposite parties have caused mental agony and hardship to the complainant. The complainant is entitled to be compensated adequately. The claim for compensation is Rs. 1,00,000/-. The claim appears to be excessive. However, the complainant is entitled to get a reasonable amount of compensation. Considering the entire facts and circumstances, we are of the view that a sum of Rs. 10,000/- will be reasonable compensation in this case.
25. Point No.2:  In the light of the finding on the above point,  the complaint is disposed of as follows:

1.  CC 48/2015 is allowed in part.
2. The  opposite party is hereby directed to pay the complainant an amount of Rs. 45,680/-  (Rupees forty five thousand six hundred and eighty only)  with interest @ of 6% per annum from the date of the complaint ie. 24/01/2015 till actual payment. 
3. The opposite party is directed to pay a sum of Rs. 10,000/- as compensation to the complainant for the mental agony and hardship suffered.
4. The order shall be complied with within 30 days of receipt of copy of this order.
5. No order as to costs.

Pronounced in open Commission on this, the 15^th day of November, 2023.

Date of Filing: 24.01.2015

                                               Sd/-                                                  Sd/-                                              Sd/-

                                       PRESIDENT                                      MEMBER                                   MEMBER

APPENDIX

Exhibits for the Compla0inant :

Ext A1 -Policy.

Ext A2 - Letter dated 12/11/2014 denying pre-authorisation for cashless treatment at Nirmala Hospital, Kozhikode.

Ext A3 -Copy of the letter dated 10/12/2014 denying pre-authorisation for cashless treatment at Christian Medical College, Vellore.

Ext A4 - Discharge summary of Nirmala Hospital, Kozhikode.

Ext A5 - Copy of the discharge summary issued by CMC Vellore.

Ext A6 - Inpatient discharge bill dated 13/12/2014 of CMC Vellore.

Exhibits for the Opposite Party

Ext B1 - Copy of the policy schedule with conditions.

Ext B2 - Copy of the pre-authorisation request dated 11/11/2014.

Ext B3 - Denial letter dated 12/11/2014.

Ext B4 - Pre-authorisation request dated 8/12/2014.

Ext B5 - Denial letter dated 10/12/2014 and Ext B6 is the copy of the proposal form.

Ext B6 - Copy of the proposal form.

Witnesses for the Complainant

PW1 -  Muhammed. M (Husband of the complainant)

Witnesses for the opposite parties 

Nil

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                               PRESIDENT                                         MEMBER                                    MEMBER

True Copy,

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                                                                                                                                           Assistant Registrar