FINAL ORDER/JUDGEMENT

Smt. SAHANA AHMED BASU, Member,

The case of the Complainant, in a nutshell, is that, the Complainant purchased a health insurance from the OP1 vide Policy No. 0285038275 on 27.10.2016, the same was renewed in every year by paying the renewal charges accordingly. On November 2018 the Complainant paid a sum of Rs.11,220/-to the OP1 as renewal charges of said policy including GST and the said policy continued November 29,2018 to November 29, 2019. During subsistence of such policy the wife of the Complainant was admitted under OP2 on 02.08.2019 with the disease of early gastric cancer and discharged on 04.08.2019. The OP2 raised the bill amount include all testing sum of Rs.53,122.00/-  and the Complainant paid the same and send all documents to the OP1 for approval of the said claim vide Claim No. 19100500021 but the OP1 rejected the claim without showing any valid ground. Again on 06.09.2019 the wife of the Complainant admitted under OP3 and bill amount raised by the OP3 was Rs.98,462.00/-. The Complainant paid the bill and sent all the documents to the OP1 for approval of the said claim vide Claim No. 19100100163. The OP1 rejected the said claim vide letter dated 01.10.2019on the ground of pre-existent hypertension. But the wife of the Complainant never had hypertension while inception of the policy. The medical team of the OP3 recorded that the said patient had hypertension for last 4 years and subsequently after proper checkup Dr. Anand Dotihal attached to OP3 issued a certificate dated 11.09.2019 clarifying that aforesaid patient never had hypertension for last 4 years and no even required to take any medicine for hypertension and also certified that her BP is normal. Said documents was forwarded to OP1 for approval of the claim but OP1 rejected the same. Thereafter the Complainant sent two legal notices on 06.09.2019 in respect of Claim No. 19100500021 and Claim No.19100100163. But the OP1 did not bother to reply. Therefore the Complainant has compelled to file the instant case before this Commission praying for relief/reliefs.

OP1 & OP2 contested the case by filing WV and denying the allegations made in the complaint petition. Despite service of notice, OP3 did not appeared before the Commission and file WV denying the allegations made in the complaint and the case has proceeded ex parte against the OP3.

The contention of the OP1 is that the Complainant had availed Mediclaim Policy bearing No. 02850982750200 from the OP1 for the period from 29.11.2018 to 28.11.2019 covering the Complainant and his family members. The OP1 provided cover subject to specific terms and conditions as stipulated in the policy, which governs the instant claim of the complainant. The wife of the Complainant was admitted under OP2 on 02.08.2019 and discharged on 04.08.2019 after treatment. OP3 raised the bill amount including all testing for a sum of Rs.53,122/-  and the Complainant lodged the claim to the OP1. O receipt of the claim intimation the OP1 immediately provided the claim No. being 19100500021. Again on 06.09.2019 the wife of the Complainant admitted under OP3 for a necessary surgery and was discharged from there on 09.09.2019. The OP3 raised a bill of Rs.98,462/- and the Complainant raised the claim to the OP1 and the OP1 provided the claim vide no.19100100163. On perusal of the discharge certificate dated 09.09.2019 it has been found that the said patient had a past history of hypertension and she was under treatment for past 4 years. She also suffers from hypothyroidism and appendectomy. The proposer of the subject policy did not disclose the aforesaid facts in the Proposal Form on 27.10.2016 i.e. the inception of first policy. In view of the aforesaid circumstances and the terms and conditions of insurance the OP1 declined to entertain the claim as the proposer of the policy did not disclose about the pre-existing diseases of his wife eve before the inception of the policy. Therefore the claim of the Complainant was repudiated by the OP1 vide letter dated 06.12.2019. As such this instant case should be dismissed as there is no deficiency in service.

The case of the OP2 is that the complainant has not claim any relief against them. The OP2 has demonstrated its role completely. Therefore the case is not maintainable against them.

In support of his case the complainant and OP1 have tendered evidence supported by an affidavit and also relied upon documents annexed with the complaint petition. OP2 failed file questionnaire and E/chief despite getting several chances. We have heard argument on merit and have also perused the record.

Evidently the Complainant has purchased a health insurance from the OP1vide Policy No. 02850982750200 on 07.10.2016 which was renewed accordingly. There is also no doubt that wife of the Complainant availed treatment from OP2 and OP3 for which the Complainant has to pay a sum of Rs.53,122/- and Rs.98,462/- respectively. Fact also remains that the Complainant lodged claims for approval of abovementioned incurred to the OP1 which are repudiated by the OP1 on the ground of pre-existing disease.

Before we proceed, it is necessary to discuss two aspects of the matter which give rise to the controversy in the present appeal. The first is what may be expressed in the legal maxim Uberrimae Fidei or the principle of good faith and the corresponding principle of disclosure of all material facts by the parties to an insurance policy. The second principle is expressed in the contra proferentem rule,Uberrimae Fidei.

It is observed that insurance contracts are special contracts based on the general principles of full disclosure inasmuch as a person seeking insurance is bound to disclose all material facts relating to the risk involved. Law demands a higher standard of good faith in matters of insurance contracts which is expressed in the legal maxim Uberrimae Fidei.

Mac Gillivray on Insurance Law 13th Ed. has summarized the duty of an insured to disclose as under:

“...the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non­disclosure induced the making of the contract on the relevant terms.”

Lord Mansfield in Carter v. Boehm (1766) 3 Burr 1905 has summarized the principles necessitating disclosure by the assured in the following words:

“Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risk run is really different from the risk understood and intended to be run at the time of the agreement. The policy would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.”

The aforesaid principles would apply having regard to the nature of policy under consideration, as what is necessary to be disclosed are “material facts” which phrase is not definable as such, as the same would depend upon the nature and extent of coverage of risk under a particular type of policy. In simple terms, it could be understood that any fact which has a bearing on the very foundation of the contract of insurance and the risk to be covered under the policy would be a “material fact”.

Under the provisions of Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations,2002 the explanation to Section 2 (d) defining “proposal form” throws light on what is the meaning and content of “material” For an easy reference the definition of “proposal form” along with the explanation under the aforesaid Regulations has been extracted as under:

“2. Definitions.­­In these regulations, unless the context otherwise requires­

    (d) "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.

Explanation: "Material" for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer.” Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer in deciding whether to undertake the risk or not.

 Just as the insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of the policy that is going to be issued to him and must strictly conform to the statements in the proposal form or prospectus, or those made through his agents. Thus, the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and vice versa. This inherent duty of disclosure was a common law duty of good faith originally founded in equity but has later been statutorily recognized as noted above. It is also open to the parties entering into a contract to extend the duty or restrict it by the terms of the contract.

The duty of the insured to observe utmost good faith is enforced by requiring him to respond to a proposal form which is so framed to seek all relevant information to be incorporated in the policy and to make it the basis of a contract. The contractual duty so imposed is that any suppression or falsity in the statements in the proposal form would result in a breach of duty of good faith and would render the policy voidable and consequently repudiate it at the instance of the insurer. 

In this instant case, on perusal of the records furnished by the parties it is found that in the Discharge Summary issued by the OP3 it is mentioned that the said patient having treatment of Hypertension for 4 years and she also has the past history of hypothyroidism, LSCS (1), Appendectomy. Therefore the OP1 repudiated the claim of the Complainant on the ground of non-disclosure of pre-existing hypertension at the time of inception of the policy in question. On the other hand, photocopy of the certificate dated 11.09.2019,certified by the treating doctor Dr. Anand Dotihal (Con. Gastroenterologist), attached with the OP3 goes to show that:

TO WHOM IT MAY CONCERN

Mrs. Pampa Saha, 31 yrs old female, Hospital no : 4765579 underwent Endoscopic surgery for gastric neoplastic lesion. Her BP is normal and she is not on any anti- hypertensive medication.

It was erroneously noted that she was having high BP 4 years back.

Kindly do the needful/.

It was contended by Ld. Advocate for the Complainant that the repudiation of the contract on the ground of suppression of pre­existing disease by the OP1 is wholly erroneous. Our attention was drawn to the fact that OP1 had repudiated the claim on the premise that the wife of the Complainant was suffering from hypertension at the time of seeking the insurance policy and in fact had been prescribed statins, which fact had not been disclosed to the insurer. In fact, the proposal form itself stipulates that it should be completed to the best of the insured’s “knowledge and belief”. The Complainant has stated that his wife is not suffering from hypertension. Ld. Advocate for the OP1, on the other hand, argued that the insured has a past history of hypertension. In support of his stand, the Ld. Advocate for the OP1 relied upon the discharge summary issued by the OP3 and at the same time interpreted the certificate dated 11.09.2019 of the treating doctor Dr. Anand Dotihal as “afterthought”. In this regard we may refer the Def. 26 in the Section 5 of the Insurance Policy which defines the terms “Pre­existing Conditions”:

Pre-existing Conditions means any condition, ailment or injury or related condition(s) for which Insured Person had signs or symptoms, and/or were diagnosed, and/or received medical advice/treatment, within 48 months prior to the commencement of his first being covered under an MediPrime Policy issued by us.

In light of the aforesaid definition, there is no evidence let in by the OP1 to show that the pre­existing condition of Hypertension is the cause for the GASTRIC LESION? EARLY GASTRIC CANCER ESD DONE ON (6/9/2019).The Insured is not a Doctor, so it is not possible for him to assume or diagnose the disease.

In view of the above, we find that OP-1 had contested the case on lame technical point to repudiate the claim. It is also there liability to prove the point that patient had pre-existing disease and the Complainant deliberately suppressed the fact. As the Complainant is a layman regarding medical knowledge. Moreover, every person to whom a mediclaim policy is offered, would have, at some point of time, suffered from some disease or illness but for the same to be considered as a pre­existing disease, ailment, condition or illness on which ground a claim could be repudiated, there is need for a specific definition to be incorporated in the policy. This is because every disease or illness cannot be considered as a pre­existing disease or condition so as to exclude the benefit of the policy to a policy holder. The nature of a disease or illness which would exclude a policy holder or an insured from the benefits of the said policy must be clearly mentioned in the policy itself. The same cannot be vague or non­specific so as to enable the insurer to interpret the policy to its benefit whenever a claim is made under the mediclaim policy.

The object of seeking a mediclaim policy is to seek indemnification in respect of a sudden illness or sickness which is not expected or imminent and which may occur anytime. 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 thereunder.

From the analysis of forgoing observations, we find that the Complaint cannot be dismissed. OP-1 grabbed the Clause 4.5 of the Proposal Form to repudiate the claim which is not applicable in the instant case.

Hence, in the instant case, the repudiation of the policy by the OP1 is illegal and not in accordance with law. Consequently, Complainant is entitled to be indemnified under the policy. In view of the aforesaid discussion, we are inclined to allow the Complaint case on contest against the OP1 and dismissed case on contest against OP2 and on ex parte against the OP3.   

The appeal is allowed in the following terms:

1. The OP1 is directed to indemnify the appellant regarding the expenses incurred by him towards his medical treatment i. e. Rs.53,122/- + Rs.98,462/- = 1,51,584/- with interest at the rate of 6% per annum from the date of filing the claim petition before the Commission till realization.
2. OP1 is further directed to pay an amount of Rs. 10,000/- to the Complainant as litigation cost and Rs. 20,000/- as compensation for harassment and mental agony within stipulated period.
3. If the OPs transgress comply the order within the said period, the Complainant shall be at liberty to put the matter into execution as per Law.
4. Abovementioned order should be complied within a period of 45 days from the date of receipt of a copy of this judgment failing which the amount of medical treatment shall attract the interest @ 12% p.a. for the same period. 

Copy of the judgement be supplied to the parties as per rules. Judgement be uploaded on the website of this Commission forthwith for perusal of the parties.