Delhi

East Delhi

CC/235/2018

SUNITA GARG - Complainant(s)

Versus

UNITED INDIA INS. - Opp.Party(s)

08 Jun 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION (EAST)

GOVT. OF NCT OF DELHI

CONVENIENT SHOPPING CENTRE, FIRST FLOOR,

SAINI ENCLAVE, DELHI – 110 092

 

C.C. No. 235/2018

 

 

	Sunita Garg, R/o. 25/74, Shakti Nagar, Delhi-110007. Through Shri Niwas Garg	….Complainant
Versus
1.       2.	United India Insurance Co. Ltd. 2 LSC, Okhla Phase-II, Near C-Lal Chowk, New Delhi-110020.   Heritage Health TPA Pvt. Ltd. 411, Laxmi Deep Building, Laxmi Nagar Distt. Centre, Delhi-110092.	……OP1       ……OP2

 

Date of Institution: 30.07.2018

Judgment Reserved on: 31.05.2023

Judgment Passed on: 08.06.2023

                       

QUORUM:

Sh. S.S. Malhotra (President)

Sh. Ravi Kumar (Member)

Ms.Rashmi Bansal (Member)

 

Order By: Ms.Rashmi Bansal (Member)

 

JUDGEMENT

 

The present complaint is filed by the complainant against the repudiation of her medical insurance claim by OP1 which caused her financial loss, mental agony, and harassment and it is interalia prayed for the release of the claim amount along with compensation and litigation cost. OP1 is the insurance company and OP2 is the TPA of OP1.

The husband of the complainant is an authorized representative and the case was processed by him.

1. Succinctly, the facts unfold from the complaint are that the complainant had been taking the insurance policy from OP1 continuously from the period 2002 to 2014 and also for the year 2015 – 2017, but in between from 2014 to 2015, she opted for an insurance policy from Oriental Insurance Company. The complainant reverted to the policy of OP1 again from 21.09.2015 to 20.09.2016 for a sum insured of Rs. 8,00,000/-. The complainant submits that she underwent knee replacement surgery and had lodged a claim dated 22.09.2016 for Rs. 4,35,645/- under the above-stated policy of 2015 to 2016. Complainant submitted that the OP2 sent an email dated 18.04.2017 for a grant of continuing benefit and the same was in terms of IRDA circular dated 10.02.2001, no. IRDA/ HLT/ Misc./ CIR/030/02/2011, concerning the portability of health insurance policies, however her claim was rejected by OP1 vide repudiation letter dated 18.12.2017, stating the claim is treated as ‘no claim’ under condition number 3.28 of the policy, as the said policy from OP1 is from 21.09.2015 and prior to that the complainant had a policy from Oriental Insurance Company. There was no portability of the policy as per the record of OP1 and the policy was treated as fresh policy of insurance as this claim pertains to pre-existing ailment occurring within 48 months of the policy taken, which falls under the exclusion clause 3.28 of the policy. The complainant further submits that since OP1 did not settle the claim despite issuing the legal notice dated 24.07.2017, therefore she filed the present complaint by submitting that the rejection of her claim by OP1 is wrong and incorrect and amounts to deficiency in service which is not legally sustainable as there is a flagrant and blatant breach/violation of the terms and conditions of the policy of insurance and circular of IRDA.
2. The complainant further submits that she has already paid the entire premium under the policy and hence the complainant cannot be made liable for lapses if any. Moreover, if anything is left, it was the duty of OP1 to see that all the formalities have been duly complied with before receiving the premium amount under the policy. The complainant also submits that she has completed all the formalities required for the portability of the policy and it was for the OP1 to inform the complainant in case of any portability problem but it never informed the complainant about any such issue and kept, on receiving the premium and considering this, the present policy cannot be treated as fresh policy as stated by the OP rather the same has to be treated as continuous policy as the complainant is paying the premium regularly to OP1 since 2002 barred by one year in 2014 to 2015. Therefore, the OP1 is liable to pay a sum of Rs. 4,35,000/-  being the amount spent by the complainant on her treatment along with interest at the rate of 18% per annum from the date of the claim lodged with OP1 that is 01.10.2016 till the date of payment as OP1 is grossly deficient in its services as per Consumer Protection Act. It is further stated that the act of OP1 has caused a lot of irreparable mental tension, pain, agony, harassment, inconvenience and trauma to the complainant, for which OP1 is liable to compensate the complainant for an amount of Rs. 75,000/-.
3. Upon notice, OP1 has filed its reply admitting the issuance of the policy to the complainant from 2002 to 2014 and then from 2015 onwards. OP1 submits that on the recommendation of OP 2, the claim was repudiated under policy exclusion clauses 3.28 and 4.4 as the complainant never ported her policy from OP1 to Oriental Insurance Company when she switched over in the year 2014 to 2015 nor when she again switched to OP1 from Oriental Insurance Company in 2015. Further, as per the record, the complainant underwent total knee replacement surgery which is a pre-existing disease and is covered in the policy after 48 months of continuous coverage only. As per the surveyor record, appointed by OP1, portability benefit was not allowed by the Oriental Insurance Company till 19.10.2015 nor the complainant ported her policy in OP1, so the policy would be treated as a fresh policy and would be considered since 2015 only, hence, the claim of the complainant is not payable as per exclusion clause 3.28 and 4.4 of the policy. Under these circumstances, the claim is not admissible and therefore, repudiated.
4. OP1 further submits that as per the IRDA circular regarding portability, it can be opted for by the insured only at the time of renewal of the policy by submitting a proposal form with complete details to the insurer with a request for portability at least 45 days before the policy renewal date. There is no option to seek portability during the continuation of the policy and the porting insurer is not bound to accept any such request from the insured. Since the complainant never approached OP1 for the same, her policy was treated as a fresh policy from 2015. The OP1 states that the complainant is trying to extort money without any reason and to take advantage of her wrong as she never approached OP1 for the portability benefits. OP1 has also taken objection to the territorial jurisdiction stating that the policy issuing office is not within the territorial jurisdiction of this commission and that there is no cause of action against him and prays for the dismissal of the complaint.
5. Despite notice, OP2 failed to appear and as such was proceeded ex-parte on 17.05.2019.
6. The complainant has filed the rejoinder controverting the contentions of OP1 and reiterating her version in the complaint. Both parties have filed their evidence supported by the documents.
7. The complainant has filed the following documents in her favour :
   1. The copies of the insurance policies, Ex. CW1/1 (colly);
   2. the copies of the medical records, Ex. CW1/2, (colly);
   3. The copy of the email dated 18.04.2017, Ex. CW1/3;
   4. The copy of the circular dated 10.02.11 issued by IRDA, bearing no.

IRDA/HLT/CIR/030/02/2011 relating to the portability of health insurance policies of IRDA, Ex. CW1/4;

5. The copy of legal notice dated 24.07.2017, Ex. CW/5;
6. The documents concerning the portability of the policy, Ex. CW1/6, (colly)

8. The OP1 has filed the following document:
   1. The repudiation letter dated 18.12.2017, Ex. DW1/1;
   2.  Recommendation email of OP2, Ex. DW1/2;
   3.  Circulars related to portability, Ex. DW1/3;
   4.  Survey report dated 13.10.2017, EXTW1/4;
9. The preliminary issue of the OP1 concerning territorial jurisdiction is to be dealt with first. The memo of parties and the document on record shows that OP2 works for gain within the jurisdiction of this Commission and therefore, the objection taken by OP is bereft of any merit and is, therefore, dismissed.
10. This Commission has gone through the complaint, evidence, related documents and written arguments filed by both parties. Since OP2 has failed to participate in the proceedings, the version of the complainant concerning OP2 is accepted as being uncontroverted.
11. The factum of the issue of the policies from time to time is not in dispute. The complainant has proper insurance coverage. The only issue is concerning the porting of the policy.
12. The annexure, CW.1/1, shows that the policy issued by Oriental Insurance Company bearing number 271500/48/2015/2605 was issued for a period from 21.09.2014 to midnight of 20.09.2015, which is a two-page policy showing the insured amount of Rs. 8,000,000/- and the amount of premium paid as Rs. 32,584/-. The terms and conditions are written below the policy but it does not mention any guidelines/terms or conditions concerning the portability of the policy in terms of the above-stated IRDA circular. The next policy issued by OP1 for the period 21.09.2015 to 20. 09.2016, bearing no. 0427002815P107051710 is the single-page policy which shows the date of inception of the first policy as 21.09.2002, there also are no terms and conditions mentioned concerning the portability of the policy. This implies that OP1 was well aware of the fact that at the time of issuing the policy for the year 2015-16 that the inception of the first policy is 21.09.2002, and it also acknowledged that there is no breakage in the policy of the complainant as per the OP1 also. Considering this admission on the part of the OP1, the complainant is very well covered under the policy and the exclusion period is not applicable in her case.
13. Moreover, as per the IRDA circular dated 10.02.2011, reference number IRDA/HLT/MISC/cIR/030/02/2011, Ex. CW 1/3, & as per the circular it is the duty of OP1 to specifically draw the attention of the policyholder to the portability provisions. It reads as follows, –

7. “Insurers shall clearly draw the attention of the policyholder in the policy contract, and the promotional material like prospectus, sale, literature, etc That:

                  i. All health, insurance policies are portable;

                  ii. Policyholders should initiate action to approach another insurer,

to take advantage of portability well before the renewal date to avoid any break in the policy coverage due to delay in acceptance of the proposal by the other insurer.”

OP1 failed to show that they have complied with the above circular and that they brought into the knowledge of the complainant about the portability of the policy.

14. Further, the above-stated circular also states;

“3. all insurance, issuing health insurance policy shall allow for credit gained by the insured for pre-existing conditions in terms of waiting period when he/she switches from one insurer to another, or from one Client to another, provided the previous policy has been maintained without break.

 

For example, if under a previous policy, the condition was excluded from coverage for two years and a new plan with a different insurer that’s close in period for the same condition is three years, the new health insurance policy can only exclude the condition from coverage for one extra year.”

This implies that the complainant's pre-existing disease is well covered under the policy issued by OP1.

15. The Surveyor in its report dated 13.10.2017, vide its para 14.5 has specifically mentioned that the complainant has filed a portability request with IRDA for the continued benefit of the complainant and family and the same was pending at the IRDA portal and the portability process was not complete till 19.10.2015. The request for portability was confirmed by Oriental Insurance Company’s email dated 04.09.2014, a copy of which is filed by the surveyor, which implies that the complainant must have applied for portability before 04.09.2014, but the same remains pending. When the decision on the porting of the policy has taken so much time there is no fault on the part of the insured rather this is the harassment and inconvenience to the insured. There is no document on record to show that the complainant has been informed about the porting result from OIC nor anything to show that complainant knew the same and since.
16. Moreover, Circulars related to portability, filed by OP, Ex. DW1/3; based on which the health department of the OT has issued directions to all regional chiefs which state that the proposal form and insured persons’ details duly completed and signed should also be obtained from the applicant along with the portability application form & since the complainant has taken the policy in the year 2002 and is regular in payment of its premium without any default till 2017 and has proper insurance coverage, this cannot be said that she is liable for any lapse. It was the duty of OP1 to see that all the formalities have been duly completed before receiving the premium amount under the policy and in case anything is required to be done the same should have been brought to the knowledge of the complainant in terms of above-stated circular of IRDA. The complainant has never been informed about the problem with the portability of the policy which is pending till 2015 as per the surveyor’s reports, despite completing all the formalities & therefore it cannot be said that the policy issued for the years 2015–2016 be treated as a new policy.
17. The purpose of the policy is to take indemnification at the time of medical distress. For a person who gets himself insured for the same but does not get benefits despite having taken the policy for years and paying premiums regularly without any default, just because of technical reasons, the denial of her genuine claim is highly unjustifiable. The common man does not know technical things and therefore IRDA has put the burden upon the insurance companies to bring the fact of portability into the knowledge of the insured which OP1 has admittedly failed to do.
18. The exclusion clause, on which the OP relies i.e. clause 3.28 and 4.4 as inserted, appears to be more concerning the new policies taken and to avoid any exploitation by any such person who suppresses the material facts about the pre-existing disease. However, every case should be analysed on its only facts. In the present case, the complainant’s medical condition was in the knowledge of the OP1 since 2002, and there was no question as to the fact of hiding the pre-existing disease. Under such facts and circumstances, repudiation of the genuine claim of the complainant is highly unjustifiable for a person who took insurance to protect his medical interest. Moreover given the submission of the OP1 that porting insurer is not bound to accept any such request from the insured, which can be rejected by it, is proof of the fact that the porting of the insurance policy is a matter of chance, which can be accepted or denied at the end of the insurance company. Therefore, the main question is not of porting but of coverage of the insurance without any default in payment of premium.
19. Admittedly, the complainant has been regular in payment of premiums since 2002 and sought the claim in the year 2016, i.e. after almost 14 years of maintaining the insurance policy, the rejection of her claim on the technical ground is not justifiable, especially because OP1 was well aware that the complainant has taken the policy in the year 2002 itself, and admitted date of inception of the first policy as 21.09.2002 at the time of issuing of the policy for the period 21.09.2015 to 20. 09.2016, bearing no. 0427002815P107051710. The OP1 was also aware that the complainant has taken a break of one year and that the porting is pending with the Oriental insurance company till 19.10.2015, and in the meantime on 21.09.2015, the policy was again transferred to the OP1 and the claim was lodged on 22.09.2016 under OP1’s  policy. Despite knowing all the facts, OP1 failed to inform the complainant about any necessary formalities that may be required to be fulfilled and try to avoid their liability on technical grounds, which is unfair trade practice.
20. All the circulars as filed by the OP1 or by the complainant, the circulars issued by IRDA from time to time, clearly show the intention of the IRDA that the insured should be notified transparently without any delay and no insured person should be allowed to suffer due to the lapse or lackadaisical attitude of insurance companies.
21. Hon'ble Supreme Court of India in Gurmel Singh vs Branch Manager, National Insurance Co. Ltd. in CA 4071 of 2022 has held that the insurance company cannot be too technical to deny the genuine and lawful claim of the insured on technical and flimsy grounds & awarded full claim with interest & costs.
22. In another landmark decision on the rights of the insured, the Hon'ble Supreme Court (SC) in M/s Texco Marketing Private Limited vs TATA AIG - CA 8249–2022 ruled that the exclusion clause cannot be permitted to be used by a party, that introduced it (insurer), becomes a beneficiary and then avoids its liability (of claim settlement). The court delved into the question of whether an exclusion clause destroying the very contract knowingly entered can be permitted to be used by a party who introduced it, becomes a beneficiary and then avoid its liability.The bench also discussed in detail the exclusion clause in an insurance contract. It says, "It is the foremost duty of the insurer to give effect to a due disclosure and notice in its true letter and spirit. When an exclusion clause is introduced, making the contract unenforceable on the date on which it is executed, much to the knowledge of the insurer, non-disclosure and a failure to furnish a copy of the said contract by following the procedure required by statute would make the said Clause redundant and non-existent."
23. Considering the facts, circumstances and the above-stated position, this Commission is of the view that OP1 is deficient in its services in denying the claim of the complainant and has been involved in unfair trade practice and directs him to pay the insurance claim amount of Rs. 4,35,000/- to be payable with interest @7% p.a. from the date of filing of the claim i.e. 01.10.2016. The OP1 is also directed to pay a compensation of Rs. 30,000/- to the complainant along with litigation cost of Rs. 15,000/-.
24. The above state order be complied with within 30 days from the date of the order, failing which the entire amount i.e. 4,80,000/- shall carry interest @9% p.a. from 31^st day till the actual realization by the complainant.
25. A copy of the order is given to the parties as per CPA rules and thereafter the file is consigned to the record room. The order be uploaded to the website.
26. The order contains 11 pages, and each bears our signature.
27. The complaint case could not be decided within the statutory period due to the heavy pendency of the cases before the commission.

Pronounced on 08.06.2023.