BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE URBAN

    25^th DAY OF APRIL 2019

O R D E R

SRI. S.L PATIL, PRESIDENT

The complainant has filed this complaint U/s.12 of the Consumer Protection Act, 1986 against the Opposite Party (herein after referred as OP) with a prayer to direct the OP to reimburse medical claim of Rs.2,51,180/- together with interest @ 24% p.a from 28.10.2016 till the date of realization, compensation of Rs.1,00,000/- together with cost of the litigation, alleging deficiency of service.

2. The brief allegations made in the complaint are as under:

That the complainant had obtained Health Insurance policy from OP through their agent vide insurance policy No.P/141130/01/2017/002517 with product name: Senior Citizens Red Carpet under proposal date 26.07.2013.  The OPs agent while rendering his service personally filled the said proposal form and obtained only complainant’s signature on it.  That on date of filing up the above mentioned proposal form, the complainant had stated about his liver disease and its treatment at Fortis Hospital.  But the OP agent had stated that there is no option/space for mentioning the said disease and treatment in the proposal form, per-contra he asked only details about sufferance of diseases like cancer, chronic kidney disease, CVA/Brain stroke, Alzheimer disease and parkinson’s disease.  Since complainant did not suffer any of those problems, he signed the above mentioned proposal form.  That the complainant specifically asked about medical check-up with any of OPs paneled doctors but OP agent clarified that under the senior citizens red carpet health insurance policy there is no such necessity and it will cover all sorts of health problems irrespective of nature as it is subsidized through government policies.

That after completion of three years of holding OPs health insurance policy, the complainant suffered from heart problem relating to his cardiovascular system and took medical treatment at Sri Jayadeva Institute of Cardiovascular Sciences and Research, Hospital, Bangalore.  Though OPs agent assured cashless Health Insurance Policy, during complainant’s medical treatment, the complainant was asked to pay through his own funds with an assurance for later reimbursement.  That the complainant firstly underwent Angiography incurring Rs.18,000/- and secondly underwent Angioplasty incurring hospital bills of Rs.2,33,180/- which were fully paid by the complainant inclusive of other supplemental and ancillary charges.  That the complainant claimed reimbursement of above amounts but OP repudiated unreasonably vide letter dated 27.10.2016 referring to claim intimation No.CLI/2017/141130/0202903 for Rs.18,000/- and OPs another letter dated 28.10.016 referring to claim intimation No.CLI/2017/141130/0207568 for Rs.2,33,000/- on flimsy ground that the complainant had a pre-existing liver disease.

That the complainant protested the said repudiation and made several follow-ups with OP expressing his financial difficulties apart the complainant also produced a doctor’s certificate dated 15.09.2016 which clarified that his liver function was normal and stable before commencement of medical treatment procedures pertaining to his claim.  But finally the OP has cancelled the insurance policy and issued letter dated 01.11.2016.  That the complainant being a senior citizen opted health insurance expecting to meet his emergency medical treatment and paid higher premium.  OP has siphoned complainant’s hard earned money of total four premiums of Rs.38,908/- and have neglected government policies for senior citizens in consonance with social legislations.  That the reasons assailed by OP on the ground of pre-existing liver disease for repudiation of claim and cancellation of policy seems flimsy as the said disease relates to the respiration system of human body.  Whereas the present medical claim of insurance policy relates to cardiovascular system of human body.

That the deliberate negligence on the part of OP to insist pre-medical check-ups for the complainant by their paneled doctor and improper instructions to OP health insurance agent in filing forms could have got known the complete information about complainants health status during pre-sanction of health insurance policy.  Apart the mistake which the OP has raised is also rectifiable in nature i.e., by filing correct details, if at all there is any specific option/space available in proposal form.  The repudiation of claim letter dated 26.10.2016 and 28.10.2016 and policy cancellation letter dated 01.11.2016 in respect of insurance policy No.P/141130/01/2017/002517 with product name: Senior Citizens Red Carpet referring to claim intimations as stated above pertaining to the complainant is unlawful/unjustified/unsustainable and liable to be set-aside.  That the complainant is entitled for reimbursement of total claims amount of Rs.2,51,180/- from OP.  The complainant got issued a legal notice dated 20.11.2016 to the OP.  Neither the OP replied nor redressed complainant grievance.  Left with no other option complainant filed this complainant for appropriate reliefs.

3. After issuance of notice, OP filed version denying the allegations made by the complainant.  The sum and substance of the contents of the version are, on receipt of the intimation of claim for cashless facility, from the hospital, the OP prima facie scrutinized the claim records as provided then by the hospital and the cashless authorization was denied and the same was communicated to the hospital and the insured/complainant through letter dated 12.09.2016.  However, subsequently the insured, complainant submitted a claim for reimbursement of medical expenses; the same was rejected based on the medical records and communicated to the insured vide letter dated 28.10.2016.

1. It is humbly submitted that, On scrutiny of the claim records submitted by the complainant, it is observed that;

2. The discharge summary of Fortis Hospital for the period of hospitalization from 04.05.2013 to 07.05.2013, states the insured patient is a known case of alcohol induced Chronic Liver Disease.

3. And also as per discharge summary of Fortis Hospital for the period of hospitalization from 11.08.2013 to 14.08.2013, the insured patient has undergone gastroscopy on 27.04.2013 which confirms features of fundal varix with portal hypertension.

4. The above findings confirm that the insured patient has Alcoholic Chronic Liver Disease prior to inception of medical insurance policy on 27.07.2013 to 26.07.2014, before obtaining the very first policy itself.

5. Although the present admission of the insured patient is for Ischemic Heart Disease exertional angina, it is the duty of the insured to disclose all the previous material health facts in the proposal form.

6. At the time of inception of the policy which is form 27.07.2013 to 26.07.2014, the insured have not disclosed the above mentioned medical history/health details of the insured-person in the proposal form which amounts to misrepresentation/non-disclosure of material facts.

7. As per condition No.9 of the policy, if there is any misrepresentation / non-disclosure of material facts 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”.

8. Hence, the claims was repudiated and the same was communicated to the insured vide letter dated 27.10.2016 and 28.10.2016.

9. As per Condition No.13 the policy, “the company may cancel the policy on grounds of misrepresentation, fraud, moral hazard, non disclosure of material fact as declared in the proposal form and / or at the time of claim or non-co-operation of the insured person”.

10. Hence, the policy stood cancelled with effect from 11-12-2016 due to non disclosure of Pre-existing disease (PED) i.e., - Alcoholic Chronic Liver Disease and the premium amount of Rs.9,724 was refunded vide D.D No.122662 dated 16-12-2016.  The policy was cancelled and communicated to the insured vide letter dated 20-12-2016.

That as the claim was rejected, the complainant issued legal notice and the same was suitably replied.  That the complainant had made two claims corresponding to the hospitalization stated above and of which the details are as below:

First Claim Details (202903):

1. The insured patient got admitted on 08-09-2016 in Sri Jaydeva Institute of Cardiovascular Sciences Research, Bangalore and discharged on 10-09-2016.

2. Diagnosis – ACS, IHD.

3. The insured, complainant raised a preauthorization for availing cashless facility, then same was denied and communicated to the treating hospital and the insured vide letter dated 12-09-2016.

4. Subsequently, the insured, complainant submitted a claim for reimbursement of medical expenses; the same was rejected based on the contents of the medical records and communicated to the insured, complainant vide letter dated 26.10.2016.

Second Claim Details (207568):

1. The insured patient got admitted on 13-09-2016 in Sri Jaydeva Institute of Cardiovascular Sciences Research, Bangalore and discharged on 17-09-2016.

2. Diagnosis – IHD, CAD, DVD.

3. The insured raised a preauthorization for availing cashless facility, then same was denied and communicated to the treating hospital and the insured vide letter dated 15-09-2016.

4. Subsequently, the insured submitted a claim for reimbursement of medical expenses; the same was rejected based on the medical records and communicated to the insured vide letter dated 28.10.2016.

The below mentioned related documents are produced:

1. Proposal for – Annexure-A.
2. Policy schedule along with policy terms and conditions- Annexure-B;
3. Cashless denial letter dated 12.09.2016 and 15.09.2016 – Annexure-C and C-1;
4. Claim form of both the claims-Annexure-D and D-1.
5. Discharge Summary of admission date 08-09-2016 and 13-09-2016 – Annexure-E.
6. The discharge summary of Fortis Hospital for the period of hospitalization from 04/05/2013 to 07/05/2013 Annexure-F.
7. The discharge summary of Fortis Hospital for the period of hospitalization from 11/8/2013 to 14/8/2013 Annexure-G.
8. A letter of the insured and a formal letter of the treating doctor Annexure-H.
9. Cancellation letter dated 20-12-2016 Annexure-J.

are produced as Annexures A-1 to A-J

On perusal of the proposal form, marked at Annexure-A, the complainant had not stated or disclosed the said past health history of alcohol induced Chronic Liver Disease.  The act amounts non-disclosure of material facts, giving ground for repudiation of the claim.

As per condition No.9 of the policy, “if there is any mispresentation/non-disclosure of material facts whether by the insured person or any other person acting on his behalf, the complainant is not liable to make any payment in respect of any claim”.

Hence, thus and based on the above, for non-disclosure of material facts, the claim was repudiated and the same was communicated.  The Opponent has repudiated the claim for valid and tenable reason.

Without prejudice and assuming that, the complainant proves his eligibility for the claim, the claim is governed by the policy terms and conditions and exclusion clauses some of the amounts spent/incurred are not payable and which are to be boron by the insured.  There is no truthfulness in the claim made hence, the claims and claimed amounts to be proved by the complainant.  That to examine the claim of the complainant in consonance with the above and also as the insured, complainant has suppressed the material fact and has obtained the policy, the opponent is constrained to act as per policy terms and conditions and forced to repudiate the claim and opt for refunding the prorate premium, as guided under the policy and also Insurance Laws.

1. As per condition No.13 of the policy, “the company may cancel the policy on grounds of misrepresentation, fraud, moral hazard, non disclosure of material fact as declared in the proposal form and / or at the time of claim or non-co-operation of the insured person”.

That the suppression of facts has influenced the opponent in accepting the proposal and issuing the policy and hence, the premium was refunded.  Hence, the consent is tainted by suppression of facts and there was no consensus ad idem.  On this ground also the complaint is not maintainable against the opponent.  Further submitted that;

i) Insurance contract is a contract based on Utmost Good Faith.  There is a need and requirement and compulsion on the part of the insured to be truthful and transparent in the proposal to enable the insurer to take and make a conscious decision to underwrite the risk or not.  Failure on the part of the insured, in this regard, would vitiate the very contract of insurance.

ii) The complainant has filed this complaint vexatious and frivolously for the sole purpose of harassing the opposite party with the intention for getting unlawful enrichment from the opposite party who are dealing with public money and functioning under the guidelines of IRDA controlled by the Government of India.  As public money is held in trust, the company must exercise abundant caution in dealing with the claims by applying all conditions correctly.

iii) In the matter of Satwant Kaur Sandhu v. New India Assurance Co. Ltd. (2009) 8 SCC 316, the Hon’ble Supreme Court has held that ‘Material Fact’ is to be understood to mean as any fact which influence the judgment of prudent insurer, in deciding whether to accept the risk or not.  If the proposer has the knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form.  Any incorrect answer will entitle the insurer to repudiate their liability because there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost good faith, Uberrime Fides.

In rest of the contents of the version are denying the averments made by the complainant.  Hence on this ground and other grounds OP pray for dismissal of the complaint.   

4. To substantiate the allegations made in the complaint the complainant submitted his affidavit evidence reiterating the allegations made in the complaint.  Sri.John Noronha, Vice President of Zonal Office of OP submitted evidence by way of affidavit.  Both parties have produced certain documents.  OP has submitted their written arguments.  We have also heard oral arguments.

5. The points that arise for our consideration are:

        6. Our answer to the above points are as under:

REASONS

7. Point No.1 & 2:- Since point No.1 & 2 are inter connected hence we have taken point Nos.1 & 2 together for discussion just to avoid repetition of facts.

8. We have briefly stated the contents of the complaint as well as the version filed by OP.  The undisputed facts which reveals from the pleadings of the parties goes to show that, the complainant has obtained insurance policy (hereinafter referred as the said policy) through the agent of OP with product name Senior Citizens Red Carpet under proposal dated 26.07.2013.  It is also not in dispute that as on the date of taking the treatment the said policy was in force.  It is also not in dispute that the complainant has submitted the two bills for an amount of Rs.18,000/- and for Rs.2,33,180/- as stated in the complaint.  The said claims are rejected by the OP by invoking the clause No.9 of the policy reads thus;

As per Condition No.13 the policy, “the company may cancel the policy on grounds of misrepresentation, fraud, moral hazard, non disclosure of material fact as declared in the proposal form and / or at the time of claim or non-co-operation of the insured person”.

9. Whether the complainant has suppressed the pre-existing alleged disease in respect of alcoholic induced Chronic Liver Disease and fundal varix with portal hypertension?  In this context we placed reliance on the contents of proposal form produced by the complainant by memo dated 21.03.2019 wherein the medical history column reads thus:

10. Further we place reliance on the said proposal form back page wherein it is stated additional questions to be attached to senior citizen’s proposal form reads thus:

Have you ever suffered from / Are you suffering from any of the following diseases?

Place:26.7.13                                       Signature of the proposer

Date:Bengaluru

11. On meticulous reading of the said Star Senior Citizen’s Red Carpet Insurance proposal form submitted by the complainant on 26.07.2013 crystal clear that there is no any specific question much less additional questions in respect of alcoholic induced Chronic Liver Disease so also the fundal varix with portal hypertension.  In our considered view, if the OP has sought for better information in respect of the alleged suppression of the material facts certainly the complainant would have been in a better position to answer the same.  The certificate dated 15.09.2016 issued by the Jayadeva Hospital in respect of furnishing the better particulars To Whom So Ever It May Concern reads thus:

This is to inform you that Mr.Manjunath B.M., aged 67 years, male, admitted for Effort Angina.  Hence ECHO done revealed LV function & no RWMA.  In view of typical symptom CAG done which revealed severe Double Vessel Coronary Artery Disease.  PTCA and Stenting done to RCA & LCX on 14/9/2016.  Patient has Alcoholic liver disease since 2013.  He is on fallow up at FORTIS HOSPITAL for the same.  Liver function test done on 13/8/2016 is normal & suggestive of stable liver disease.  This is for your kind information.  Please to needul.

Emphasis supplied by us

12. If this certificate is strictly construed one thing is clear that the complainant has been admitted for Effort Angina.  Hence ECHO done revealed LC function & no RWMA.  In view of typical symptom CAG done which revealed severe Double Vessel Coronary Artery Disease.  PTCA and Stending done to RCA & LCX on 14.09.2016 i.e., after the long lapse of submitting the Star Senior Citizens Red Carpet Insurance Proposal Forum.  In the said certificate it is further stated that the patient i.e., complainant herein has alcoholic liver disease since 2013.  He is on follow up at Fortis Hospital for the same.  Liver function test done on 13.08.2016 is normal and suggestive of stable liver disease.  So the liver function done on 13.08.2016 i.e., after submitting the proposal form is normal and suggestive of stable liver disease.  In our considered view the said certificate issued by Jayadeva Hospital dated 15.09.2016 instead of helping OP, it is very much helpful to the case of the complainant since the liver function test done on 13.08.2016 is normal and suggestive of stable liver disease and the said disease is no way concerned to the treatment taken by the complainant in Jayadeva Hospital.  Further with regard to the alleged pre-existing disease there was no any medical examination done by the OP.  This Forum has taken judicial note that, when the complainant did appeared before this Forum he appears to be hale and healthy hence the claim repudiated by the OP on the untenable grounds has no legs to stand.  In this context the Hon’ble Supreme Court particularly in the case of United India Insurance Co. Ltd., vs. MKJ Corpn (1996 6 SCC 428), wherein it was held that;

“It is a fundamental principle of insurance law that utmost good faith must be observed by the contracting parties.  Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary.  Just as the insured has a duty to disclose, “Similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured.  Referring to this, submits that, though the insured was examined medically by the prescribed doctors of Corporation, approved by the Development Officer and the Branch Manager, the OP is failing to fulfill its obligation of making the payment on unsustainable grounds.

13. Further the Hon’ble National Commission in the case of National Insurance Company Ltd., v. Raj Narain, dated 15.01.2008 reported in 1 (2008) CPJ 501 NC, wherein para 7 it is held as under:

The District forum also relied on clause 4.1 of the policy which states that it is not material whether the insured had knowledge of disease or not, and even existence of symptoms of the disease prior to effective date of insurance enables the insurance company to disown the liability.

If this interpretation is upheld, the insurance company is not liable to pay any claim, whatsoever, because every person suffers from symptoms of any disease without the knowledge of the same. This policy is not a policy at all, as it is just a contract entered only for the purpose of accepting the premium without the bonafide intention of giving any benefit to the insured under the garb of pre-existing disease. Most of the people are totally unaware of the symptoms of the disease that they suffer and hence they cannot be made liable to suffer because the insurance company relies on their clause 4.1 of the policy in a malafide manner to repudiate all the claims. No claim is payable under the mediclaim policy as every human being is born to die and diseases are perhaps pre-existing in the system totally unknown to him which he is genuinely unaware of them. Hindsight everyone relies much later that he should have known from some symptom. If this is so every person should do medical studies and further not take any insurance policy. Even on the facts on record, there is no material to show that the petitioner had any symptoms like chest pain, etc., prior to 11.08.2000. Since, there were no symptoms, the question of linking up the symptoms with a disease does not arise. In any case, it is the contention of the Complainant that he was thoroughly checked up by the doctors who were nominated by the insurance company and at that time he was found hale and hearty. In such set of circumstances, it would be difficult to arrive at the conclusion that the insured had suppressed the pre-existing disease.

In view of the above discussions and from the records available before us, in our opinion, the Complainant has proved that he was unaware of the disease at the time of taking the policy and hence the complaint is allowed.

14. The Hon’ble Supreme Court as well as the Hon’ble National Commission in catenae of the decisions repeatedly held that diabetic and hypertension are not the diseases.  In this context we come to the conclusion that there is a deficiency of service on the part of the OP.  Hence the claim repudiated by OP by its letter dated 26.10.2016 for an amount of Rs.18,000/- and another letter dated 28.10.2016 for an amount of Rs.2,33,000/- are illegal against the settled proposition of law as laid down by the Hon’ble Supreme Court reported in (1996 6 SCC 428) cited supra.  Further we noticed that, OP has refunded an amount of Rs.9,724/- to the complainant through DD No.122662 dated 16.12.2016 which amount is deductable out of the total amount of Rs.18,000/- + Rs.2,33,000/- comes to Rs.2,41,276/-.  Accordingly we answered point Nos.1 & 2.

15. Point No.3:- The complainant has sought for another relief to set aside the cancellation of the policy under letter dated 01.11.2016 marked as document No.8 found at ink page No.22 by invoking the condition No.11.  The policy clause which reads as follows:

“We draw your attention to condition no.11 in the policy clause which reads as follows.

The Company may cancel this policy on grounds of non disclosure of material fact 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.

Therefore, you are hereby informed that as per the above clause, we intend to cancel the policy in respect of the above person w.e.f. 11-DEC-16.  This letter shall be taken as the notice of cancellation as per the above mentioned Condition no.11 of the policy clause”.

16. As to know before the cancellation of the policy, the OP has issued notice to the complainant.  If notice was not issued for cancellation of the policy which is not only arbitrary which illegal as per the decision reported in IV (2017) CPJ 374 (NC) in the case of Nitaben Bhikhalal Bamb & ORS. versus Oriental Insurance Co. Ltd., & ANR, wherein it is held as under:

Consumer Protection Act, 1986 – Sections 2(1)(g), 14(1)(d), 21(b) – Insurance – Cancellation of policy – Notice not given – Refund of premium (pro-rata) – Deficiency in service – District Forum dismissed complaint – State Commission dismissed appeal – Hence revision – Insurance Company was obliged not only to return to “Insured” last paid premium less pro-rata part thereof, it was also required to send notice in this behalf to “Insured” at his last registered address in its books – Insurance Company is directed to pay to complainants the assured sum of Rs.5,00,000/- - Compensation @  Rs.1,00,000 awarded for mental agony and harassment suffered on account of non-payment of assured sum within a reasonable time.

17. In the light of the decisions cited supra the policy cancelled by the OP without issuance of the notice to the complainant to put forth the said matter is in violation of the natural justice.  Accordingly the policy is to be revoked and the premium if any to be paid by the complainant is to be accepted and the said policy renewed.  Accordingly answered the said point.

18. Point No.4:- In view of our findings on point Nos.1 & 2 the complainant is entitled for the relief sought for an amount of Rs.2,41,276/- with compensation of Rs.25,000/- and litigation cost of Rs.5,000/-.  Further OP is directed to renew the said policy by accepting premium is any due to be payable by complainant.  Failing which the amount of Rs.2,41,276/- carries interest @ 8% p.a from the date of repudiation till the date of payment.  Accordingly, we answered point No.4.

          19. Point No.5: In the result, we passed the following:         

  O R D E R

The complaint filed by the complainant is allowed in part.  OP is directed to pay an amount of Rs.2,41,276/- (Rupees Two Lakhs Forty One Thousand Two Hundred Seventy Six only) Rs.18,000/- + Rs.2,33,000/- = 2,51,000-00 - 9,724 = 2,41,276/- to the complainant together with compensation of Rs.25,000/-and litigation cost of Rs.5,000/-.

Further OP is directed to renew the said policy by accepting premium if any due to be payable by complainant.  This order is to be comply within four weeks from the date of receipt of the order.  Failing which the amount of Rs.2,41,276/- carries interest @ 8% p.a from the date of repudiation till the date of payment.

Supply free copy of this order to both the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Forum on this 25^th day of April 2019)

MEMBER                                                              PRESIDENT

Vln*

Witnesses examined on behalf of the complainant dated 12.04.2017.

Mr.Manjunath B.N,

Documents produced by the complainant:

  Witnesses examined on behalf of the Opposite party dated
  17.07.2017.

        John Noronha

Documents produced by the Opposite party:

MEMBER                                                               PRESIDENT

Vln*