BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 17^TH DAY OF MAY 2023

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP to direct them to pay a sum of Rs.59,136/- towards hospital expenses including necessary laboratory charges and pharmacy bills with interest @ 24% p.a., to the complainant from 02.09.2020 to till the realization of amount along with costs, penalty and such other reliefs.

2. The case set up by the complainant in brief is as under:-

The complainant’s husband late. Sri.H.N.Srinivas has taken group Health Insurance policy from OP through Union Bank of India vide policy No.2876/00053942/000004/000/00 w.e.f. 09.03.2020 to 08.03.2021 for his family consisting complainant, her husband and two sons. During August 2020 husband of the complainant has suffered from fever and cough and breathlessness on 01.09.2020 and on 02.09.2020 he was taken to Sri Lakshmi Multi specialty Hospital for treatment.  He was admitted on the same day and as per the doctors advise again on 03.09.2020 he was admitted to Sparsh Hospital.  The doctors at Sparsh Hospital diagnosed that he was suffering from Viral Pneumonia-Covid-19 positive, severe acute respiratory distress syndrome, multiorgan failure and diabetes mellitus.  He was admitted in ICU and given treatment. Inspite of better treatment he was expired on 07.09.2020. Complainant spent a sum of Rs.59,136/- towards hospital expenses.

On 01.10.2020 complainant submitted the claim form to the office of the OP to settle the claim. Inspite of several reminders over phone to the OP, OP has not settled the claim and has repudiated legitimate claim of the complainant for the reason K/C/O DM since 1 year as per the history recorded in the discharge summary, this information is not disclosed in the proposal form while processing for insurance. In view of the non disclosure of the material information, the contract of insurance becomes void and no claim is payable under this policy and same is intimated to the complainant through letter dated 31.10.2020.  Even though complainant is eligible to get hospital and medical expenses, OP has repudiated the claim on highly technical ground.  Hence complainant got issued legal notice on 10.06.2022, but OP has not replied and not settled the claim. Hence this complaint.

In response to the notice, OP appears and filed version and submitted that the complainant’s husband obtained insurance policy by suppressing the material facts of the condition of health. The insured did not disclose the pre-existing disease. Insured has K/C/O DM since 1 year that is prior to policy inception while the policy start date was from 09.03.2020, but the insured did not disclose such facts when he obtained the policy. In the medical record/discharge summary and Death Summary it was mentioned that “Mr.Srinivas H.N.45 years old patient, K/C/O Diabetes Mellitus” the same was not disclosed in the proposal form when the policy was obtained by the insured.  Wherefore the OP rightly repudiated the claim.

The contract of insurance is based on the basic principle of utmost good faith and hence insured was under a solemn obligation to make full disclosure of material facts. The terms and conditions of the policy bond are binding on the insurer as well as the insured. OP acted as per the terms and conditions of the policy, it cannot be termed as deficiency in service.  Suppression of material facts by the insured amounts to breach of contract, which would justify repudiation of claim by the insurance company. In the instant case it is clearly proved by the medical records that the insured had suppressed material facts regarding her pre-existing disease. OP has repudiated the claim of the complainant by giving parawise reply and prayed for dismissal of the complaint with cost.

3. The complainant has filed his affidavit evidence and relies on 11 documents.  Affidavit evidence of OP has filed his affidavit evidence and relies on 3 documents.

4. Heard the arguments of advocate for the complainant.   Perused the written arguments with decisions filed by both the parties.

5. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OPs?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

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

Point No.1:  Affirmative

Point No.2: Affirmative in part

Point No.3: As per final orders

REASONS

7. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, version, affidavit evidence of both the parties and documents filed by the complainant and written arguments filed by complainant and OP1.

8. The husband of the complainant and the complainant has taken Group Health Insurance Policy vide policy No. No.2876/00053942/000004/000/00 from OP through Union Bank of India w.e.f. 09.03.2020 to 08.03.2021 for his family.

9. The husband of the complainant has suffered from fever and cough and breathlessness on 01.09.2020 and on 02.09.2020 he was admitted to Sri Lakshmi Multi specialty Hospital and as per the doctors advise again on 03.09.2020 he was admitted to Sparsh Hospital.  The doctors at Sparsh Hospital diagnosed that he was suffering from Viral Pneumonia-Covid-19 positive, severe acute respiratory distress syndrome, multiorgan failure and diabetes mellitus.  He was admitted in ICU and given treatment. Inspite of better treatment he was expired on 07.09.2020.

10.  After the death of the husband of the complainant, she has submitted the claim form along with relevant documents for refund of the medical expenses of Rs.59,136/-. The OP has repudiated the claim of the complainant for the reason K/C/O DM since 1 year as per the history recorded in the discharge summary.

11. The OP has repudiated the claim made by the complainant on the ground that as per their investigation the deceased insurer was suffering from diabetic mellitus and it was not disclosed at the time of issuance of policy and hence they have repudiated the claim made by the complainant.  

12. The complainant in order to prove her contention has filed her affidavit evidence and relied on 11 documents. Ex.P1 is the insurance policy and discloses that it is a group health insurance policy and the policy was in force from 09.03.2020 to 08.03.2021.  The complainant husband the deceased has paid the premium. Ex.P2 is the claim form, Ex.P3 is the repudiation letter issued by the OP stating that as per the claim documents the deceased insured was suffering from diabetics mellitus since one year as per the history recorded in the discharge summary and it was not disclosed in the proposal form and it amounts to non-disclosure of material information and the contract of insurance becomes void and no claim is payable under the policy and hence they have rejected the claim.  Ex.P4 is the death summary issued by Sparsha Hospital.  The hospital authorities have mentioned that the deceased was K/C/O diabetics’ mellitus and who was tested positive for covid-19 and he died due to covid 19. Ex.P5 is the medical certificate for cause of death and it clearly discloses that the cause of death is covid-19 positive pneumonia and the deceased died to multiorgan failure.  Ex.P6 is the hospital bills amounting to Rs.59,136/- and Ex.P7 are the test reports and Ex.P8 is the medical certificate issued by Lakshmi Maltispeciality Hospital and Ex.P9 to 11 are the copy of the legal notice and postal receipts and acknowledgement and copy of the letter sent to OP.

13. On the other hand, the authorized person of OP one G.L.Sagar, Assistant Manager, legal, has filed his affidavit evidence and relied on 3 documents.  Ex.R1 is the authorization letter, Ex.R2 is the policy and Ex.R3 is the terms and conditions of the policy.

14. It is clear from the evidence and documents placed by both the parties before this Commission, that the deceased died due to covid 19 and the OP have rejected the claim only on the ground that even though the deceased was suffering from diabetic mellitus before issuance of the policy, he has not disclosed the same and it amounts to non disclosure of material information and thereby they have rejected the claim of the complainant.

15. The complainant in support of their contention has relied on the decision of the Hon’ble Supreme Court dated 20.11.2007 between Bajaj Allianz general insurance company ltd., -vs- Hasmukhlal Fulchand Parekh  and another decision.

16. We have gone through the decision. The Hon’ble Supreme Court while disposing of this matter, has also relied on the decision of the Hon’ble NCDRC in the case of New India Assurance company ltd., -vs- Arun Krishnan Puri.  It is clearly held in this decision.  Although diabetic is not a disease which facts should be mention in the proposal form.  The opponent has not been able to prove that the diabetic is directly connected with the treatment taken by the complainant.  The Hon’ble apex court has also relied on the decision of the NCDRC in the case of LIC of India –vs- Nasim Banu reported in III(2012) CPJ 208 and also the decision of the Hon’ble Supreme Court in case of P..C.Chako –vs- LIC of India. Another decision of the Hon’ble Supreme Court in Rubi(Chandra) Dutt has and also other decisions of the Hon’ble Supreme Court.  

17. It is clear from the aforesaid decision that the burden is on the insurance company to prove that the material consealment by the insured at the time of taking the policy by leading cogent evidences. The above said case is clearly applicable to the facts and circumstances in this case. There is no cogent evidence produced by the OP that the diseased was suffering from diabetic mellitus prior to issuance of the policy and he has obtained the policy by non-disclosure of the material facts.

18. We have gone through the Ex.P4 death summary and the certificate for cause of death. The main cause of death of the deceased was due to covid-19 and not due to diabetic mellitus.  It is also clear that even though the persons who were hale and healthy and not suffering from any other diseases like diabetic and blood pressure were also died due to covid-19.  In this complaint the husband of the complainant the insurer Mr.Srinivas died due to covid-19.  There is no mention in the death summary and the certificate of cause of death, that death was due to diabetic mellitus and it was the direct the cause for the death of the insured. There is no documents placed before this Commission to show that the deceased was suffering from diabetic mellitus even prior to issuance of the policy i.e., prior to 09.03.2020 and he has not at all disclosed the same in the proposal form.

19. The evidence of the complainant also clearly discloses that they came to know about the fact that the deceased was suffering from diabetic mellitus only after admission of the deceased to the hospital and theycame to know about this fact for the first time at the time of his death.  Under these circumstances the repudiation made by the OP is illegal. They have rejected the claim only in order to escape from the liability to pay the amount claimed by the complainant.

20. Therefore complainant has clearly established the deficiency of service and also the mental agony suffered by her in view of the rejection by the OP. Therefore, the complainant is entitled for the relief.  Hence we answer point No.1 in affirmative and point No.2 partly in affirmative.

21. Point No.3:- In view the discussion referred above the complaint is liable to be allowed in part with a direction to OP to pay the hospital expenses of the deceased Rs.59,136/- with interest @ 12% p.a., to the complainant from 02.09.2020 till realization. The complainant also entitled for compensation of Rs.25,000/-  and litigation expenses of Rs.10,000/-. Hence we proceed to pass the following;

O R D E R

1. The complaint is allowed in part.
2. OP is directed to pay the hospital expenses of Rs.59,136/- with interest at 12% p.a., from 02.09.2020 to till realization.
3. OP is directed to pay compensation of Rs.25,000/-  and litigation expenses of Rs.10,000/- to the complainant.
4. The OP shall comply this order within 60 days from this date, failing which the OP shall pay interest at 14% p.a. after expiry of 60 days on Rs.59,136/- till final payment.
5. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 17^TH day of MAY, 2023)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party – R.W.1;