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

Thursday the 28^th day of November 2024

CC.239/2016

Complainants

1.               Subhalakshmi (Died),

20/26 A, “Sreenivas”,

Edodi, Vatakara,

Calicut – 673001

      Suppl.2.    G. Nirmala,

                        W/o. A.G.H. Guruswami,

“Sreenivas”, Edodi, Vatakara.P.O,

Kozhikode - 673101

    Suppl. 3. Sivakumar,

                   S/o. Ramakrishna,

                   Door. No.36,

                   Rageev Nagar,

                   K.K. Pudur Road,

                   Coimbatore North,

                   Tamilnadu – 641030

    Suppl. 4.  Kasthuri. G,

                   W/o. Givindaraj. R,

                   No. 111, Kavundappam Street,

                   4^th Cross, Saibaba Colony,

                   Coimbatore North,

                   Tamil Nadu – 641000

    Suppl. 5.  Lakshmi. M,

                   C/o. Magesh,

                   19/20, Bharathi Park,

                   8^th Cross, Alageshan 2^nd Street,

                   Saibaba Colony, Coimbatore North,

                   Tamil Nadu – 641011.

    Suppl. 6.  Badrinath,

                   C/o. Ramakrishnan, 42 Jayapushpa Illam,

                   K.K. Pudur, Kovilmedu, Coimbatore North,

                   Tamil Nadu - 641025

Opposite Parties

1.                     Star Health and Allied Insurance Co. Ltd,

KRM Centre, VI Floor, No.2,

Harrington Road, Chetpet,

Chennai – 600031

2.                     Star Health and Allied Insurance Co. Ltd,

Sea Shell Buildings, NH Bypass,

Vatakara – 673101

3.                     Star Health and Allied Insurance Co. Ltd,                                                                                                                                                                                                                                                                                                                                                                2^nd Floor, Nalanonkandy Arcade,

Near Puspa Junction, Kallai.P.O,

Calicut – 673003(By Adv. Sri.Z.A. Zachariah and Sri. T. Firos)

(The original complainant died and her legal representatives were impleaded as supplemental complainants 2 to 6  as per order dated 20/06/2024 in IA No. 394/2023)

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:

In November 2014 the complainant was approached by one Mr. Sasi claiming to be a representative of Neetha.L.S, an agent of the opposite parties, to canvas for the different medi claim policies of the opposite parties. Lured andcarried away by the promises and claims made by the opposite parties, the complainant availed Senior Citizen’s Red Carpet Insurance Policy of the opposite parties for the period from 20/11/2014 to 19/11/2015. The insured amount was Rs. 1,00,000/-. The premium paid was Rs. 5,095/-. The complainant was educated only up to the 5^th standard and she was not in aposition to understand or fill up the elaborate form which was in English. Hence Mr. Sasi collected all the required information for filling up the application and he completed the application for submission. The policy was renewed for the period from 20/11/2015 to 19/11/2016.

3.  On 13/11/2015 while at Coimbatore the complainant sustained fracture left femur due to an accidental fall from skidding in spilled water. She was under treatment as an inpatient in Ganga Medical Centre and Hospital Pvt Ltd, Coimbatore and treated for closed sub trochanteric fracture to the left femur. She was discharged on 23/11/2015. The treatment details and pre authorisation for the claim was forwarded to the opposite parties by the hospital to process his claim for cashless treatment. However, the opposite parties denied the pre authorisation for cashless treatment. Later, an intimation was received from the first opposite party about the repudiation of the claim stating that though the admission was for fractured femur, it was observed from a consultation report dated 12/12/2014 from Vadakara Sahakarana Asupathri that the complainant suffers severe aortic stenosis since 2006 and it was further stated that as the complainant had not disclosed this at the time of inception of the policy, the same amounts to misrepresentation/non-disclosure of material facts and the first opposite party repudiated the  insurance claim and cancelled the renewed policy. The complainant paid all the hospital bills out of his own pocket. Then the complainant’s son approached the insurance company at Calicut with all the relevant medical reports and discussed with the manager, which was also of no avail. The complainant is not well educated to understand the meaning of the alleged terms and conditions in the policy as the same was in English. She was never told or made aware of any such exclusion clause. There has been no wilful suppression of any material facts. There is no nexus between the fall and injury sustained for which the treatment was taken and the alleged suppression. The opposite parties rejected the claim without valid reason and cancelled the renewed policy. The act of the opposite parties amounts to deficiency of service and unfair trade practice. The opposite parties are liable to settle the hospitalisation and treatment expenses of Rs. 1,71,220/- with interest and to pay compensation to the tune of Rs. 5,00,000/-. It is also prayed to reinstate the renewed policy which was illegally and improperly cancelled by the opposite parties and to direct them to discontinue the unfair trade practice being indulged by them and not to repeat the same.
4. The opposite parties have resisted the complaint by filing written version wherein they have denied all the allegations and claims made against them in the complaint. The opposite parties have alleged that there is suppression of material facts by the complainant. According to them, only pre-existing diseases which are specifically declared by  the complainant in the proposal  form are covered under the policy. The insured has mentioned only hypertension and its related complications in the proposal form. Based on this information the opposite parties have provided coverage for hypertension and its related complications from the first year of the policy with 50% co-payment and thereby issued a policy schedule.
5. It is admitted that the complainant was admitted at Ganga Medical Centre and Hospital Pvt Ltd. at Coimbatore on 13/11/2015. The pre authorisation request from the hospital was also received. As per the documents submitted by the hospital, it was revealed that the complainant is a known case of heart disease for the past 5 years and CAG was also done 3 years ago. Hence it was not possible to sanction the cashless facility.
6. After discharge from the hospital,  the complainant submitted a claim form along with discharge summary, medical bills and lab reports. As per the submitted documents, it was seen that the complainant is a known case of CAD for the last 5 years and was on medical management for the same. Hence a query was sent asking the complainant to submit her previous treatment records and the present echo reports. To this query, the complainant submitted the echo report and prescription of Vadakara Co-operative Hospital Ltd. From the said documents it was revealed that the complainant was suffering from severe aortic stenosis since 2006. This was prior to the commencement of the first policy on 20/11/2014. She obtained the policy by suppressing the fact about her past cardiac illness. Hence the claim was repudiated on 25/01/2016 and intimated to the complainant. The renewed policy was also cancelled with effect from 09/03/2016 and refunded the full premium amount of Rs. 5,095/-. If the true and correct facts were disclosed, the company would not have issued the policy. The complainant is guilty of concealment of true facts and breach of basic conditions of insurance. There was no negligence, deficiency of service or unfair trade and business practice on the part of the opposite parties. None of the reliefs sought for is allowable. With the above contentions, the opposite parties pray  for dismissal of the complaint with costs and complimentary costs.
7. The original complainant died and her legal representatives were impleaded as supplemental complainants 2 to 6  as per order dated 20/06/2024 in IA No. 394/2023.
8. The points that arise for determination in this complaint are;
   1. Whether there was any deficiency of service or unfair trade and business practice on the part of the opposite parties, as alleged?
   2. Reliefs and costs.
9. Evidence consists of the oral evidence of PW1 and Exts A1 to A31 on the side of the complainant. Proof affidavit was filed by the Assistant Manager (Claims) on behalf of the opposite parties. But he did not make himself available for cross examination and no documents were marked on the side of the opposite parties. 
10.  Heard. Complainant has filed argument notes.
11. Point No 1:     The deceased original complainant filed this complaint with a grievance that the claim put in by her with connection with her treatment was repudiated by the opposite parties without valid reason and that the renewed policy was cancelled by the opposite parties illegally and thereby there was deficiency of service and unfair trade and business practice on the part of the opposite parties. The complainant, who was a senior citizen,  passed away and her legal representative have been impleaded.
12. The complainant’s brother and son-in-law Sri. AGS Guru Swami was examined as PW1 and he has filed proof affidavit and deposed in terms of the averments in the complaint and in support of the claim. Ext A1 is the copy of policy document, Ext A2 is the  copy of advance premium receipt dated 18/11/2015, Ext A3 is the copy of the email  dated 23/11/2015 regarding denial of pre authorisation for cashless treatment, Ext A4 is the copy of the email dated   16/12/2015 requesting additional documents /details, Ext A5 is the copy of the email dated 23/11/2015 regarding the withdrawal  of the authorisation, Ext A6 is the copy of the repudiation letter dated 25/01/2016, Ext A7 to A25 and A28 are the copies of bills/invoice/receipts, Ext A26 is the copy of the discharge summary, Ext A27 is the list of drugs and their expenses incurred in the operation theatre, Ext A29 is the copy of the advance payment receipt, Ext A30 is the copy of the letter dated 08/03/2006 intimating cancellation of the policy and return of premium and Ext A31 is the copy of the reply letter dated 17/03/2016 issued by the complainant to the opposite party.
13. The case advanced by the opposite parties is that the pre-existing disease and medical history of the complainant were not disclosed in the proposal form and thus there was suppression of material facts and thereby there was violation of the principles of utmost good faith and insurance contract has become void  abinitio and no contractual obligation arises. Hence according to the opposite parties, they have repudiated the claim as per Ext A6 letter and cancelled policy and refunded the premium as per Ext A30. As already stated, though an affidavit in lieu of examination in chief was filed on behalf of the opposite parties, the deponent did not make himself available for cross examination and no document was marked on the side of the opposite parties.
14. That the deceased original complainant had availed  Ext A1 Senior Citizens Red Carpet Helath Insurance Policy of the opposite parties is admitted. The insured amount is Rs. 1,00,000/-. The complainant was under treatment in Ganga Medical Centre and Hospital Pvt Ltd, Coimbatore for closed sub trochanteric fracture left femur from 13/11/2015 to 23/11/2015 as can be seen from Ext A26 discharge summary. The medical and treatment expenses amounted to Rs. 1,71,220/-. Exts A6 to A25 and Ext A28 are the bills/receipt/invoice produced by the complainant. The opposite parties denied the pre authorisation for cashless treatment as per Ext A3.  After discharge from the hospital, a claim was preferred by the complainant and the same was repudiated by the opposite party as per Ext A6 letter. Later the renewed policy was also cancelled and the premium was refunded to the complainant as per Ext A30 letter. There is no serious dispute on the above aspects.
15. Ext A6  shows that the claim was repudiated for the reason that while applying for the policy,  the complainant has supressed the material fact that she was suffering from severe aortic stenosis since 2006, which is prior to inception of the medical insurance policy. The case advanced by the opposite parties is that on a scrutiny of the medical records, it was revealed that the complainant was suffering from aortic stenosis since 2006 and this has been supressed in the proposal form.
16. It is well settled that the contract of insurance is a contact uberimmae fidei and every material fact must be disclosed. 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 paragraph 8 of the aforesaid decision, it has been held as follows.

“It is the fundamental principle of insurancelaw that utmost good faith must 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 duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally”.

17. 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:

1. 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.
2. What may be a material fact in a case would also depend upon the health and medical condition of the proposer.
3. If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound  the duty to disclose all material facts.
4. If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. 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.
5. 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.
6. 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.
7. 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”.

18.  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 Asssurance 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 bond 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 reasons 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 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”.
19. The definite case of the complainant is that she has studied only up to 5^th standard and was not able to understand or fill up the proposal form which was in English and hence it was Mr. Sasi who collected all the required forms for filling up the application and completed the forms for submission. In this context, it is pertinent to note that the opposite parties have not taken any effort to get the proposal form admitted in evidence. It is not known what was the answer given by the complainant to the query with regard to medical history in the proposal form. It is not known whether the said query was answered by the complainant or whether the column was left blank. The opposite parties have not let in any evidence.  Despite  opportunity being provided, the opposite parties have failed to lead evidence to rebut the evidence produced by the complainant. Without producing the proposal form and without knowing the answers furnished by the complainant, this Commission is not able to conclude that there was suppression or non-disclosure of the previous medical conditions justifying the repudiation of the claim stating that reason. The opposite parties have no case that while issuing or receiving the policy they have enquired about the medical status of the complainant or about any of the alleged pre-existing medical conditions. There is nothing to indicate that the insurance company had verified the information supplied by the complainant in the proposal form by obtaining suitable expert opinion.  The opposite parties have not produced the affidavit of the treating doctor or any other medical practitioner to prove the pre-existing medical conditions. The opposite parties failed to show any evidence regarding pre-existing disease suffered by the complainant at the time of the policy. They failed to show the evidence that any medical tests or examinations were done before issuing the policy. Mere mention about existence of disease in the medical records alone is not a sufficient reason for rejection of the claim without any supporting documents.  
20. Further, it may be noted that there is absolutely no nexus between the alleged pre-existing condition and the present treatment regarding which the claim was preferred. The complainant was not suffering from any pre-existing illness or condition having nexus to the present claim. The fall injury from skidding in water, for the treatment of which, the complainant has preferred the claim,  is not a condition which is a consequence of pre-existing disease. The treatment availed was not for any pre-existing disease. The fall injury has no nexus with the alleged cardiac illness of the complainant.
21. Further in paragraph 69 of the decision 2021 (0) Supreme (SC) 779- (Manmohan Nanda V/s United India Insurance Company Limited.) it has been held by the Hon’ble Apex Court that “The object of seeking a medi claim policy is to seek indemnification in respect of a sudden illness of sickness which is not expected or imminent and which may occur overseas. If the insured suffers a sudden sickness or ailment which is not expressly excluded under the policy, a duty is cast on the insurer to indemnify the appellant for the expenses incurred there under”.
22. From the above discussion,  what emerges is that the claim was wrongly repudiated by the opposite parties. The act of the opposite parties in wrongly repudiating the claim and thereby denying the legitimate claim amounts to gross deficiency of service.  The claim is for Rs. 1,71,220/-. But the sum insured is Rs. 1,00,000/-. So the opposite parties are bound to settle  the claim of the complainant by reimbursing  the hospital and treatment expenses to the tune of Rs. 1,00,000/-. Undoubtedly, the act of the opposite parties has resulted in intense mental agony and hardship to the claimant, entitling for  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. There is a prayer to    reinstate the renewed policy of the deceased complainant which was cancelled by the opposite parties.  The said prayer has now become infructuous.  Rs. 5,000/- is allowed as cost of the proceedings. Point found accordingly.
23. Point No. 2:- In the light of the finding on the above point, the complaint is disposed of as follows;

                  a)  CC.239/2016 is allowed in part.

b) The opposite parties are hereby directed to settle the medi claim of the deceased original complainant by reimbursing the hospital and treatment expenses to the tune of Rs. 1,00,000/- (Rupees one lakh only) to the  suppl.  complainants 2 to 6 with interest @ 9% per annum, from the date of the complaint i.e 6/06/2016  till actual payment.    

c) The opposite parties are hereby directed to pay a sum of Rs. 10,000/- (Rupees ten thousand only) as compensation to suppl. complainants 2 to 6.  

d)  The opposite parties are directed to pay a sum of Rs. 5,000/- (Rupees five thousand only) as cost of the proceedings to suppl. complainants 2 to 6. 

e)  The order shall be complied with within 30 days of the receipt of copy of this order.

Pronounced in open Commission on this, the 28^th day of November, 2024.

Date of Filing:   06.06.2016

                                                          Sd/-                                                        Sd/-                                                    Sd/-

                                                 PRESIDENT                                            MEMBER                                          MEMBER

APPENDIX

Exhibits for the Complainant :

Ext.A1 – Copy of policy document.

Ext.A2 – Copy of advance premium receipt dated 18/11/2015.

Ext.A3 – Copy of the email dated 23/11/2015 regarding denial of pre authorisation for cashless treatment.

Ext.A4 – Copy of the email dated   16/12/2015 requesting additional documents /details. 

Ext.A5 – Copy of the email dated 23/11/2015 regarding the withdrawal of the authorisation.

Ext.A6 – Copy of the repudiation letter dated 25/01/2016.

Ext.A7 – Copy of bills/invoice/receipt.

Ext.A8 – Copy of bills/invoice/receipt.

Ext.A9 – Copy of bills/invoice/receipt.

Ext.A10 – Copy of bills/invoice/receipt.

Ext.A11– Copy of bills/invoice/receipt.

Ext.A12 – Copy of bills/invoice/receipt.

Ext.A13 – Copy of bills/invoice/receipt.

Ext.A14 – Copy of bills/invoice/receipt.

Ext.A15 – Copy of bills/invoice/receipt.

Ext.A16 – Copy of bills/invoice/receipt.

Ext.A17 – Copy of bills/invoice/receipt.

Ext.A18 – Copy of bills/invoice/receipt.

Ext.A19 – Copy of bills/invoice/receipt.

Ext.A20 – Copy of bills/invoice/receipt.

Ext.A21 – Copy of bills/invoice/receipt.

Ext.A22 – Copy of bills/invoice/receipt.

Ext.A23 – Copy of bills/invoice/receipt.

Ext.A24 – Copy of bills/invoice/receipt.

Ext.A25 – Copy of bills/invoice/receipt.

Ext.A26 – Copy of the discharge summary.

Ext.A27 – List of drugs and their expenses incurred in the operation theatre.

Ext.A28 – Copy of bills/invoice/receipt.

Ext.A29 – Copy of the advance payment receipt.

Ext.A30 – Copy of the letter dated 08/03/2006 intimating cancellation of the policy and return of premium.

Ext.A31 – Copy of the reply letter dated 17/03/2016 issued by the complainant to the opposite party.

Exhibits for the Opposite Party

Nil.

Witnesses for the Complainant

PW1 -  Guruswami.

                                                        Sd/-                                                        Sd/-                                                    Sd/-

                                                 PRESIDENT                                            MEMBER                                          MEMBER

True Copy,      

                                                                                                                                                                Sd/-

                                                               Assistant Registrar.