Punjab

Ludhiana

CC/20/59

Karan Mahajan - Complainant(s)

Versus

Star Health & Allied Ins.Co.ltd. - Opp.Party(s)

M.S Sethi adv

25 Apr 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:59 dated 12.02.2020.                                                 Date of decision: 25.04.2023.

 

Karan Mahajan S/o. Dixit Mahajan, R/o. #7972, St. No.15, Durga Puri, Haibowal Kalan, Ludhiana.                                                                                                                                                              ..…Complainant

                                                Versus

1. Star Health and Allied Insurance Company Limited, 3369, 4^th Floor, Sandhu Tower-11, Ferozepur Road, Ludhiana through authorized signatory.
2. Star Health and Allied Insurance Company Limited, SRI Balaji Complex, 15, Whites Road, Chennai-600014 through authorized signatory.

…..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

SH. JASWINDER SINGH, MEMBER

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. M.S. Sethi, Advocate.

For OPs                          :         Sh. Rajeev Abhi, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Briefly stated, the facts of the case are that the complainant first time hired the services of the opposite parties for Mediclassic Insurance Policy (Individual) Insurance vide insurance policy No.P/211200/01/2020/000991 for the period 18.05.2019 to midnight of 17.05.2020 on completion of formalities/proposal form and on payment of premium of Rs.5994/- for the sum insured amount of Rs.5,00,000/-.  The complainant submitted that during the policy period, he was admitted in DMC Hospital, Ludhiana on 28.12.2019 with complaint of history of Syncopal attack present on 16.12.2019 but this time the episode was prolonged 10-15 minutes with frothing and clenching of teeth etc. The complainant sent request for cashless facility to the opposite parties but till the time of his discharge, the opposite parties failed to communicate their decision which compelled the complainant to pay the hospital bill amounting to Rs.24,614/-. The cashless facility was denied by the opposite parties vide their letter dated 30.12.2019, on the ground that the insured patient has been suffering complex partial seizure and was on treatment from 1998-2003 which is prior to inception of the first policy. Hence it is a pre existing disease. But the insured has failed to disclose this in proposal form at the time of inception of the first policy and this amounts to concealment of material fact. The opposite parties denied cashless facility as well as claim on this objection and stated that in accordance with condition No.12 of the policy, the policy is also liable to be canceled and the complainant will receive a separate letter in this regard. The complainant further stated that the opposite parties never made the above said policy conditions as part of the policy nor communicated the same to the complainant. In the policy, there was only reference of condition No.4 and there was no reference of other conditions as alleged. The opposite parties have repudiated the claim of the complainant without taking opinion of the treating doctor and as such, the denial of cashless facilities and denial of claim amount on the ground of concealment of facts is not valid, proper and genuine.  The complainant first time had taken treatment only from DMC Hospital for the period from 28.12.2019 to 29.12.2019 and before this never admitted in any hospital against the alleged complex partial seizures and never taken any kind of treatment before 28.12.2019. The opposite parties have never visited the concerned hospital and treating doctor nor asked the complainant for clarification on the objection. The opposite parties have rendered deficient services and have adopted unfair trade practice. In the end, the complainant has prayed for directing the opposite parties to pay the claim of Rs.24,614/- and for quashing the repudiation letter dated 30.12.2019 and also to penalize the opposite parties for Rs.25,000/- as compensation and Rs.7500/- as litigation expenses.

2.                Upon notice, the opposite parties filed  joint written statement and by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint, that the complaint is barred under Section 26 of the Consumer Protection Act, concealment of facts by the complainant, the complainant is estopped by his own act and conduct. The opposite parties stated that immediately on the receipt of the claim it was duly registered and processed. The complainant had obtained Medi-classic Insurance Policy (Individual) covering Mr. Karan Mahajan self for sum insured of Rs.5 lakhs vide policy No.P/211200/01/2020/000991 for period from 18.05.2019 to 17.05.2020. The terms and conditions of the policy were explained to the complainant at the time of proposing policy and the same was served to the complainant along with policy schedule. Moreover, it is clearly stated in the policy schedule "the insurance under this policy is subject to conditions, clauses, warranties, exclusions etc. attached." According to the opposite parties the insurance policy is issued on the principles uberrimae fides. Utmost good faith is a cardinal principle of insurance which means that all the parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal. Material facts are those that would influence an underwriter's as to whether he should or should not accept the risk. If a party fails to adhere to the principles of utmost good faith, the outcome of the claim may be affected. The insurance policy is issued on the basis of the proposal form. The insurance policy is a contractual in nature and the claims arising therein are subject to terms and conditions forming part of the policy. The complainant had accepted the policy agreeing and being fully aware of such terms and conditions and executed the proposal form. It is submitted that the insurance policy is a contract in itself and the parties are bound by the terms and conditions of the policy. It is one of the conditions No.7 and 12 of the policy which states as under:-

Condition No.7

The company shall not be liable to make any payment under the policy irrespective 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 any fraudulent means or device, misrepresentation whether by the insured person or by any other person acting on his behalf.

Condition No.12 - Cancellation

The company may cancel this policy on grounds of misrepresentation, fraud, moral hazard, non-disclosure of material facts as declared in proposal form/at the time of claim, or non-co-operation by the insured person by sending the insured 30 days' notice by registered letter at the insured person's last known address. The insured may at any time cancel this policy and in such event the company shall allow refund after retaining premium at company's short period only (table given below) provided no claim has occurred up to the date of cancellation.

The opposite parties further stated that the complainant in the 7th month of the policy was admitted in DMC Hospital, Ludhiana on 28.12.2019 and was discharged on 30.12.2019 with the diagnosis of seizure disorder. DMC Hospital, Ludhiana raised request for availing cashless treatment of seizure disorder on 28.12.2019. As per the documents received by the opposite party and observed from the discharge summary dated 30.12.2019 that the complainant has been suffering from complex, partial seizure and was on treatment from 1998-2003. The complainant as such was suffering from seizure prior to the commencement of insurance policy as is evident from medical record received from the treating hospital whereas the said disease was not disclosed at the time of taking the policy which amounts to suppression, concealment and non-disclosure of materials facts. The cashless authorization as such was rejected for the aforesaid reasons vide rejection of authorization for cashless treatment dated 30.12.2019 and conveyed to the insured. It is further made clear in the said letter that in condition No.12 of the policy the policy is also liable to be cancelled and the decision of the opposite party to reject the approval for cashless treatment and also to cancel the policy has been taken as per the terms and conditions of the policy issued to the complainant. The opposite parties stated that the information was sought from the complainant on pre-existing disease if any, in column No.5 for a specific query, the complainant answered in the negative and affirmed that the complainant is in good health. The exact information on queries and reply given by the complainant is re- produced as under:-

• 1.Is the person proposed for insurance is good health and free from physical and mental disease or infirmity. If not give details - "Yes".
• 4.Has the person proposed for insurance ever suffered or suffering from any of the following:
•  D.Stroke, epilepsy, fainting attack, chronic headache, Parkinson's disease, Alzheimer's disease -f if yes since when - "No".
•  M) Any Other Problem (pls Specify)-no
•  5. Has the person/s proposed for insurance
•  B. Prescribed any medicine? If yes
• i. Name of the illness for which medicines have been prescribed - No

The complainant answering "No" for the above specific questions relating to medical history in the proposal amounts to non- disclosure of material facts making the contract of insurance voidable.

          The opposite parties further stated that 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 evaluates the material facts and 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 his past medical history in the proposal which is material fact for issuing policy to the insured. Because of non-disclosure, the opposite party company was deprived an opportunity to evaluate the risk and reject the proposal. Moreover, 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 reads 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 opposite parties stated that they have also invoked the condition No.12 of the insurance policy obtained by insured complainant and policy was cancelled for non-disclosure of pre-existing disease w.e.f. 15.02.2020 and in consequence of which a total amount of Rs.5,994/- through DD No. 114933 dated 10.02.2020 had been refunded to the insured in terms of the insurance policy. According to the opposite parties the cashless authorization for treatment of the complainant has rightly been rejected after due application of mind by their officials/medical team in terms of the insurance policy after scrutinizing the documents placed in the claim file and the grounds of rejection are legal, valid, enforceable and are in accordance with the terms and conditions of the policy. Similarly the policy has rightly been cancelled in accordance with the terms and conditions of the policy. Moreover, the claim of the complainant was rejected at the level of preauthorization and the insured has not approached the opponent with the reimbursement documents.

                   On merits, the opposite parties reiterated the crux of averments made in the preliminary objections. However, the opposite parties admitted issuance of Medi-classic Insurance Policy (Individual), payment of premium, completion of formalities/proposal form, issuance of customer ID card. The opposite parties further admitted the rejection of cashless authorization vide letter dated 30.12.2019. The opposite parties have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                In support of his claim, the complainant tendered his affidavit Ex. CA in which he reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of insurance policy w.e.f. 18.05.2019 to 17.05.2020, Ex. C2 is the copy of discharge summary, Ex. C3 is the copy of in-patient final bill, Ex. C4 is the copy of rejection letter dated 30.12.2019 and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Sh. Rajiv Jain, Chief Manager of the opposite parties along with documents Ex. R1 is copy of policy term and condition, Ex. R2 is the copy of policy schedule, Ex. R3 is the copy of proposal form, Ex. R4 is the copy of intimation letter of policy cancellation dated 06.01.2020, Ex. R5 is the copy of endorsement letter dated 08.02.2020, Ex. R6 is the copy of letter in respect of refund premium of policy dated 11.02.2020, Ex. R7 is the copy of pre authorization request, Ex. R8 is the copy of field visit report, Ex. R9 is the pre authorization query letters dated 28.12.2019 and 29.12.2019, Ex. R10 is the copy of preauthorization rejection letter dated 30.12.2019, Ex. R11 is the copy of discharge summary dated 30.12.2019, Ex. R12 is the copy of consultation slip dated 28.12.2019, Ex. R13 is the copy of IRDA guidelines and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavits and documents produced on record by both the parties.

6.                Admittedly, the complainant had obtained Medicassic Insurance Policy (Individual) for a sum of Rs.5,00,000/- for the period from 18.05.2019 to 17.05.2020. Ex. C1=Ex. R1 and Ex. R2 are the policy documents. The complainant remained hospitalized from 28.12.2019 till 30.12.2019 at D.M.C. Hospital, Ludhiana and incurred expenses of Rs.24,614/- for the treatment of seizure disorder. However, the cashless facility was denied by the opposite parties vide letter Ex. R9 and Ex. R10. The reimbursement claim was also rejected vide rejection letter Ex. C4 by the opposite parties by invoking condition No.7 and 12 of the insurance policy. However, in the letter Ex. R4, it is mentioned that the complainant has not declared the details of seizure disorder which was found to be pre-existing at the time of taking the policy and it amounts to non-disclosure of material facts. The policy was also canceled vide letter Ex. R4 w.e.f. 15.02.2020 and an amount of Rs.5994/- was refunded to the complainant vide letter dated 11.02.2020 Ex. R6. At the time of rejecting the pre-authorization for cashless treatment as well as reimbursement claim, the opposite parties have made basis that the complainant has been suffering from complex partial seizure and was on treatment from 1998 to 2003 which is prior to inception of the policy and hence it is pre-existing disease. Its non-disclosure amounts to concealment of material facts.

7.                The opposite parties have not referred to any particular document from where such observation has been derived from. However, assuming it true, the point of consideration arises whether complex partial seizures suffered from 1998 to 2003 amounts to pre-existing disease or not and if not, whether its non-disclosure amounts to violation of any terms and conditions of the policy. Perusal of Ex. R1 policy document defines pre-existing disease which is reproduced as under:-

“Pre-existing disease means any condition, ailment or injury or related condition (s) for which the insured had signs or symptoms and/or were diagnosed and/or received medical advice/treatment within 48 months prior to the insured’s first policy with any Indian insurer.”

This stipulation clearly indicates that any disease prior to the period of 48 months from the date of its inception does not fall within the definition of pre-existing disease. Therefore, the complainant was not under any legal or contractual obligation to disclose any such pre-existing disease, if any, while submitting the proposal form Ex. R3. As such, there is no willful mis-representation or concealment of material facts on the part of the complainant. As such, the opposite parties were not justified in declining the pre-authorization cashless or reimbursement claim and also canceling the policy. So complainant is entitled to the reimbursement of expenses incurred by him during hospitalization in DMC Hospital, Ludhiana minus the amount of Rs.5994/-  refunded to the complainant vide letter dated 15.02.2020  Ex. R4.

8.                As a result of above discussion, the complaint is partly allowed with direction to the opposite parties to reimburse the expenses incurred by the complainant during his hospitalization w.e.f. 28.12.2019 to 30.12.2019 in DMC Hospital, Ludhiana minus the amount of Rs.5994/-  refunded to the complainant vide letter dated 15.02.2020  Ex. R4 within 30 days from the date of receipt of copy of order. The opposite parties shall further pay composite cost of Rs.5,000/- (Rupees Five Thousand only) to the complainant within 30 days from the date of receipt of copy of order. Copies of the order be supplied to the parties free of costs as per rules. File be indexed and consigned to record room.

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

 

(Monika Bhagat)          (Jaswinder Singh)                      (SanjeevBatra) Member                        Member                                       President         

 

Announced in Open Commission.

Dated:25.04.2023.

Gobind Ram.

 

 

Karan Mahajan Vs Star Health & Allied Insurance                             CC/20/59

Present:       Sh. M.S. Sethi, Advocate for the complainant.

                   Sh. Rajeev Abhi, Advocate for the OPs.

 

                   Arguments heard. Vide separate detailed order of today, the complaint is partly allowed with direction to the opposite parties to reimburse the expenses incurred by the complainant during his hospitalization w.e.f. 28.12.2019 to 30.12.2019 in DMC Hospital, Ludhiana minus the amount of Rs.5994/-  refunded to the complainant vide letter dated 15.02.2020  Ex. R4 within 30 days from the date of receipt of copy of order. The opposite parties shall further pay composite cost of Rs.5,000/- (Rupees Five Thousand only) to the complainant within 30 days from the date of receipt of copy of order. Copies of the order be supplied to the parties free of costs as per rules. File be indexed and consigned to record room.

 

 

(Monika Bhagat)          (Jaswinder Singh)             (SanjeevBatra)

Member                         Member                            President

 

Announced in Open Commission.

Dated:25.04.2023.

Gobind Ram.