CONSUMER DISPUTES REDRESSAL FORUM, PALAKKAD
Dated this the 9th day of December 2020
Present: Sri.V.P.Anantha Narayanan, Member(President I/c)
: Smt.Vidya.A, Member Date of Filing:07/11/2018
CC /141/2018
Sarala.V.P,
Vallath House, - Complainant
Kavasserry Post,
Palakkad, Kerala.
(By Adv.C.B.Anand)
V/s
The Manager,- Opposite party
Life Insurance Corporation of India Ltd.,
Branch Office,
Yessar Plaza, Court Road,
Alathur, Palakkad.
(By Adv.T.P.George)
O R D E R
By Smt.Vidya.A, Member
Brief facts of the complaint
The complainant had enrolled in a policy named “Life Insurance Corporation Health Protection Plus Plan” issued by the opposite party on 07/03/2011 with policy No.778574391. The annual premium for the policy was Rs.10,000/-. She decided to join the policy on being satisfied by the advertisements and stipulations given by the opposite party company and after enquiries.
Before taking the policy, the complainant appeared before the medical practitioner and complied all the medical formalities and checkups as directed by the opposite party. After availing the policy, the complainant was fully confident with the acts of opposite party company that she did not even intend to the secondary option of taking another policy. The annual premium of Rs.10,000/- was paid by her regularly upto 2015. On 08/07/2016, she was admitted in hospital and after treatment, she submitted claim form on 28/10/2016 and the same was rejected by the opposite party on 04/04/2017 stating that the complaint had pre-existing illness. The complainant had availed the policy after complying with all medical requirements as asked by the opposite party. She had not done anything or abstained from disclosing anything from her side. The complainant was present for medical examination before the medical practitioner prescribed by the opposite party’s office and there is no suppression or abstinence on the part of the complainant. She had paid the premium upto 2015 without any fail and the rejection of the claim by the opposite party is without any valid reasons and amounts to clear deficiency of service. The complainant had suffered huge mental agony, physical strain and financial loss due to the rejection of the claim by the opposite party. The complainant had caused to issue a lawyer notice dated 14/05/2018 to the opposite party for which the opposite party had sent a reply stating false contentions. The opposite party had not given back the premium amount also. So the complaint was filed in order to direct the opposite party to pay back the premium amount, to pay the damages for the loss caused by non-payment of the bills issued by the hospital, to pay Rs.1,00,000/- as compensation and to pay the entire cost of the proceedings and such other relief as the Forum deems fit and proper to grant.
Complaint admitted and notice issued to the opposite party. The opposite party entered appearance and filed their version.
The main contentions raised by the opposite party in their version:
It is admitted that the complainant had proposed for Health Protection Plus Plan with the opposite party and in the proposal dated 20/02/2011, she had stated that she was in good health and had not taken treatment for any ailment prior to the proposal. Trusting the declaration in the proposal form to be true, the opposite party issued Life Insurance Corporation’s “Health Protection Plus Plan” with policy No.778574391. The date of commencement of the policy was 07/03/2011 and it was issued for a term of 11 years with an annual premium of Rs.10,000/- and the initial daily benefit under the policy was Rs.1,500/-. The policy was issued based on the declarations made by the complainant in the proposal form.
The welcome kit given to the policy holder contains the policy bond and the “conditions and privileges” under the “Health Protection Plus Plan issued along with it forms part of the policy bond and specifies the various benefits payable under the policy and also the conditions of non-admission clause. As per the plan, the benefits under the policy are (1) Hospital Cash Benefit(HCB) (2) Major Surgical Benefit(MSB) and (3) Domiciliary Treatment Benefit. The policy is subject to certain exclusion clauses wherein no benefits are available and no payment will be made by the corporation for any claim under this policy.
The opposite party had received claim papers from the complainant for the treatment of surgical site infection and uncontrolled Diabetes Mellitus at G.G.Hospital, Trivandrum from 08/07/2016 to 21/07/2016. The diagnosis was Ca Breast-infiltrating intraductal Carcinoma(Rt)– Grade III S/P Radical mastectomy - surgical site infection - resolving uncontrolled diabetes Mellitus. The opposite party had forwarded the claim papers to TPA(third party administrator) E-Meditek-TPA Services Limited for processing and medical advice. TPA sent a letter to the complainant calling the following documents(1)Duly signed claim form (2)Indoor case papers (3)Details of duration of Carcinoma breast and diabetes since when and certified by the treating doctor supported by the first consultation paper.
As per the treatment records submitted by the complainant, she had consulted Crescent Hospital, Alathur on 08/12/2016 with history of Diabetes Mellitus and she had been under treatment for that disease for the last 10 years as per the certificate issued by the treating doctor dated 02/01/2017. This fact was not disclosed at the time of proposal and that amounts to suppression of material facts. The policy would not have been issued as per the rules of opposite party, if it had been disclosed by the complainant. So as per the policy condition, claim was repudiated and the policy was cancelled.
Pre-existing medical conditions are excluded and no benefits are available and no payment will be made by the opposite party. Hospital records show that the complainant was suffering from Diabetes Mellitus for the last ten years and was on insulin treatment and the complainant had willfully suppressed the material information and took the policy by violating the terms. Insurance contracts are based on the principle of ’Utmost Good Faith’ or “uberimae Fide” and the complainant is bound to disclose all the correct information in the proposal form. Otherwise, the policy contract is void abinitio and all money will stand forfeited to the opposite party. Hence on account of the violation of the terms of Health Insurance contract, the complainant’s claim was rejected by the opposite party.
Clause (19) in the “conditions and privileges of the policy” is the forfeiture clause and in that it is specifically stated that in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement, declaration and connected documents or in case any material information is withheld, the policy shall be void and all claims to any benefit in virtue thereof shall cease and all money paid in consequence thereof shall belong to the corporation. In this case, the complainant had withheld material information regarding her health condition and by virtue of clause 19 of the conditions and privileges of the policy the opposite party had repudiated the claim and cancelled the policy and therefore nothing is payable to the complainant.
The allegation in the complaint that all medical checkups were done and the policy was issued only after the opposite party was convinced that she had no existing illness is not correct. Medical checkup conducted at the time of taking policy was to know the general health conditions and it is the duty of the policy holder to reveal any past treatment undergone and the details of the pre-existing disease. In this case, the complainant had not disclosed the details of the previous ailments at the time of medical checkup or at the proposal stage, thus vitiating the contract. Moreover the medical reports may give normal values if the person is under medication. The complainant has no cause of action against the opposite party and there is no deficiency of service on the part of the opposite party. The lawyer notice sent by the complainant was duly replied. The allegation that the complainant suffered mental agony and trauma are not correct and hence denied. Hence to dismiss the complaint with cost.
From the side of the complainant, chief affidavit filed. Ext.A1 to A3 marked. No witness was examined. Complainant filed interrogatories and opposite party filed answers to that.
The opposite parties filed chief affidavit and Ext.B1 to B5 were marked from their side and witness(Doctor) was examined as DW1. The opposite party filed argument notes.
Main issues arising for consideration are:
- Whether there is any deficiency of service on the part of the opposite parties?
- If so, what is the relief as to cost/Compensation?
Heard and perused the chief affidavit, documents, argument notes and depositions.
It is admitted fact that the complainant had joined the “Health Protection Plus Plan” issued by the Life Insurance Corporation(opposite party) with policy No.778574391.and the date of commencement of the policy was 07/03/2011, premium paying term was 11 years and initial daily benefit was Rs.1,500/-. The annual premium under the policy was Rs.10,000/-.
According to the opposite party, the policy was issued to the complainant based on the declaration made by her in the proposal form. In the proposal form dated 20/02/2011, the complainant had stated that she was in good health and she had not taken treatment for any ailment prior to the proposal and trusting the declaration the policy was issued. But as per the treatment records called for by TPA and submitted by the complainant, she had consulted Crescent Hospital, Alathur on 08/12/2006 with history of Diabetes Mellitus and she had been under treatment for that disease for the last 10 years. This was not disclosed in the proposal form and it amounts to suppression of material facts. So the claim repudiation and cancellation of the policy is as per the policy conditions.
Here in this case it can be seen that in Ext.B1 proposal form for “Life Insurance Corporation’s Health Protection Plus Policy” under the heading(E) Health details and Medical Information Answers to Qn. No.(2) and 6(b) are answered by the complainant in the negative which means she was not suffering from diabetes and not taking any medicines or drugs either prescribed or not prescribed by a doctor. Further in Ext.B1 proposal form, ‘Declaration by proposer’ is in the following terms “I have understood the nature of questions and the importance of disclosing all material information while answering such questions. I hereby declare that the foregoing statements and answers to all questions, including those in the annexure signed by me, have been given by me after fully understanding the questions and the same is true and complete in every particular and that I have not withheld any information and I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and LIC and that if any untrue averment be contained therein, the said contract shall be absolutely null and void and all monies which shall have been paid in respect thereof shall stand forfeited to the corporation.”
The declaration which was furnished by the proposer constituted the basis for the issuance of the policy. This would show that the complainant had signed the contract of policy after fully understanding its terms.
Ext.B3 is the medical certificate issued by Dr.Alamelu Sashidhar of Crescent Hospital, Alathur. This clearly shows that the complainant had consulted her in this hospital on 08/10/2006 with history of Diabetics Mellitus for ten years and the patient was on Insulin. So the complainant had knowingly suppressed this material fact in the proposal form.
The deposition of the doctor who is examined as DW1 makes it evident. 08/10/2006 Cu patient sugar Bbn«mWv h¶Xv. A¶v AhÀ insulin treatment Bbncp¶p. 2006 hcpt¼mįs¶ 10 hÀjs¯ history Dv. 10 hÀjambn sugar Dv. AhcpsS treatment record hospital- Dv. AXv ]cntim[n¨n«mWv Ext.B3 issue sNbvXn«pÅXv”. So it is a clear case of suppression of material fact which is against the policy conditions. Ext.B2 is the policy copy and “conditions and privileges” referred in the policy document. In this clause(6) “Exclusions” is the provisions which are applicable in cases of (1) Hospital Cash Benefit (2) Major surgical benefits which states that
“No benefits are available hereunder and no payment will be made by the corporation for any claim for Hospital Cash Benefit/Major surgical benefits under this policy on account of hospitalization directly or indirectly caused by, based on, arising out of or howsoever attributable to the following of which “Pre-existing Condition” is an important factor.
From Ext.B3 and the deposition of DW1, it is evident that the complainant was suffering from Diabetes and she was under treatment for the same at the time of taking the policy. The insured at the time of filling the proposal form did not disclose the correct information about her health and habits. She willfully suppressed the material facts. The policy was issued by the opposite party to the complainant on the basis of the information provided by her in the proposal from dated 20/02/2011.
Further, insurance contracts are based on ‘utmost good faith’ and in case this principle is violated, then the contract becomes void.
The contention of the complainant that she had complied all the medical formalities as required by the opposite party and undergone medical checkups before the medical practitioner as directed by the opposite party and the policy was issued only after that and hence the rejection of the claim without valid reasons amounts to clear case of deficiency in service cannot be accepted.
The Hon’ble National Commission in RP 550/2015 Life Insurance Corporation of India Vs Koshalya Devi observed that “The medical examination done by the Doctor nominated by the petitioner Corporation before the grant of insurance cover is immaterial since not all past ailments can be found out in such a clinical examination. That is the reason why a number of questions relating to the state of health of the proposer are asked in the proposal form and since the contract of insurance is based on utmost good faith, it is imperative for the insured to answer all its questions diligently and honestly. The insured having obtained an insurance cover on his life by concealment of material fact with respect to the state of health, the benefit under the insurance cover is not admissible to the complainant”.
The onus to prove that the complainant had a pre-existing illness is on the opposite party. Here the opposite party had discharged their burden of proving that the complainant had a pre-existing illness and she made the misrepresentation knowingly. The deposition of the Doctor together with Ext.B3 letter issued by the Doctor makes it clear that the complainant was a Diabetic patient at the time of availing the policy. Further there was no attempt on the part of the complainant to cross-examine the Doctor and she never disputed the certificate issued by the Doctor. The complainant had not mentioned in the plaint the details of the disease for which she had undergone treatment and the hospital where she had treated. The complainant’s only contention about the policy is regarding the payment of premium till 2015. But she had not produced any receipts to show the payment. Similarly there is no pleading disclosing the amount spent by the complainant in the hospital for treatment and she had not produced the discharge summary or hospital bills in support of her claim.
The complainant was not able to prove satisfactorily that she was not guilty of any misrepresentation or suppression of material facts when she made the proposals for insurance which were accepted by the company.
In Salwant Kaur Sandhu Vs New India Assurance Company(2009) 8 SCC 316 the Hon’ble Supreme Court held that “Thus it needs little emphasis that when an information of a specific aspect is asked for in the proposal form, an assured is under solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge he possesses.”
As per the policy contract concealment of any facts about the pre-existing illness while filling the proposal, make the contract ‘void abinitio’. Since the complainant had made this misrepresentation willfully she is not entitled to any money paid by her in respect of this policy.
In a recent decision, the Hon’ble Supreme Court expounds “Non-disclosure of disease is a valid ground of repudiating insurance policy”.
In Life Insurance Corporation of India Vs Manish Gupta(Civil Appeal No:3944 of 2019) the Hon’ble Supreme Court accepting the contention of Life Insurance Corporation of India held that as the documentary material indicates that there was a clear failure on the part of the respondent/complainant by not disclosing that he had suffered from rheumatic heart disease since childhood, the appellant LIC was on valid ground in repudiating the policy.
Further clause (19) of the Ext.B2 “conditions and privileges under Health Protection Plus Plan” explains about “Forfeiture in Certain Events”. It states “In case the premiums shall not be duly paid or in case any condition herein contained or endorsed hereon shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement, declaration and connected documents or in case any material information is withheld, then and in every such case but subject to the provisions of Section 45 of the Insurance Act 1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys that have been paid in consequence hereof shall belong to the corporation”.
This shows that clause (19) of the insurance plan is subject to the provisions of Section 45 of the Insurance Act which reads as “No policy after the commencement of the Act shall be called in question by the insurer after the expiry of two years unless the insurer proves that there was suppression of fact which is material and the policy holder fraudulently suppressed the fact which was known to him and filled the proposal form.
So as per Section 45 of Insurance Act, the burden of proving that the policies were vitiated by fraudulent suppression of material facts was rightly placed upon the company. Here the opposite party had satisfactorily discharged their burden of proving that the complainant made the misrepresentation knowingly. From the opposite party’s version, it can be seen that the complainant was treated in hospital for surgical site infection and uncontrolled Diabetics Mellitus at G.G.Hospital, Trivandrum from 08/07/2016 to 21/07/2016. As per the records called for by the TPA(Third Party Administrator), she had consulted the Crescent Hospital, Alathur on 08/12/2006 with history of Diabetes Mellitus and she had been under treatment for that disease for the past 10 years and she was on insulin treatment as per the certificate issued by the treating doctor.
Hence it is clear that the complainant suppressed the material fact knowingly thus vitiating the contract of policy thus disentitling her from getting any money under the scheme.
In the result, the complaint is dismissed. No order as to cost.
Pronounced in the open court on this the 9th day of December 2020.
Sd/-
V.P.Anantha Narayanan
Member(President I/c)
Sd/-
Vidya.A
Member
Appendix
Exhibits marked on the side of complainant
Ext.A1 – Original insurance policy issued by the opposite party dated 07/03/2011.
Ext.A2 – Copy of lawyer notice dated 14/05/2018 with acknowledgement card
Ext.A3– Reply notice sent by opposite party dated 13/06/2018.
Exhibits marked on the side of Opposite parties
Ext.B1 – Original proposal form for LIC’s health protection plus policy – Plan 902 dated 20/02/2011.
Ext.B2 – Attested copy of Policy and “conditions and privileges” in the policy document.
Ext.B3 – Letter issued by Dr.Alamelusasidhar dated 02/01/2017(original)
Ext.B4 – Copy of claim rejection letter dated 22/02/2017
Ext.B5 – Copy of claim repudiation letter and policy cancellation dated 04/04/2017.
Witness examined on the side of complainant
PW1 – NIL
Witness examined on the side of opposite parties
DW1 – Dr.Alamelusashidhar
Cost : NIL
