IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM

Dated, the 28^th day of June, 2024

Present:  Sri. Manulal V.S. President

Sri. K.M. Anto, Member

C C No. 328/2023 (Filed on 29.09.2023)

O R D E R

Sri. Manulal V.S. President

The complaint is filed under Section 35 of the Consumer Protection Act 2019.

The complainant purchased a health insurance named Active Health with plan name, Platinum Enhanced vide Policy No.21-22-3801723-00 on 19.11.2022 from the opposite party. As per the terms of the policy, the complainant and her husband, Sunil Kumar Kartha, are covered for medical treatment expenses, and the policy has been activated 30 days from receipt of payment.  As per the policy's terms and conditions, the policy was activated from 19.12.2022.

On 18.01.2023, the husband of the complainant, Sunil Kumar Kartha suffered some heart problems and was hospitalized at Caritas Hospital, Thellakom, Kottayam and was diagnosed with myocardial infarction. He underwent bypass surgery and was discharged on 25.01.2023. The complainant immediately informed the opposite parties, and the representative of the opposite parties came to the hospital, but they did not pay the hospital bill and the complainant paid ₹ 2,50,000/-. Immediately after the discharge, the complainant approached the opposite parties for reimbursement, but they repudiated the claim on the ground that the policy was issued only on 03.01.2023, making the policy not activated on the date of admission of the patient. On 09.02.2023, he was again admitted for coronary artery disease, underwent another surgery and was discharged on 13.02.2023. An amount of      ₹ 1,87,784/- was paid by the complainant for this, and this claim was also rejected due to the reason that he had a pre-existing disease. The policy was declared null and void, and on 24-03-2023, the claim was repudiated.

The complainant paid the policy amount on 19.11.2022, which was credited to the account of the opposite parties. Due to negligence and service deficiency of the opposite party, they issued the policy certificate on 03.01.2023. The delay was caused due to service deficiency of opposite party and complainant was not liable for it. The opposite parties were liable to pay the treatment expense to the insured as per the policy conditions. The opposite parties repudiated the claim without merit, and it is a clear case of deficiency of service rendered by the opposite parties and an unfair trade practice. The opposite parties are liable to compensate the petitioner.

Hence, this complaint is filed by the complainant praying for an order To direct the opposite parties to pay an amount of ₹ 4,37,784/- as the treatment expenses and to direct the opposite parties to pay an amount of ₹ 1,00,000/- as compensation to the complainant for the unfair trade practice of the opposite parties along with ₹ 15,000/- as cost of this complaint.

Up on notice from this commission, opposite parties appear before the commission and filed version contenting as follows:

The Opposite Party, i.e., Aditya Birla Health Insurance Company, is a Company duly incorporated under the provisions of the Companies Act, 1956, having its registered office at One World Centre, Mumbai, Maharastra- 400013. Nirmala S Kartha and Mr. Sunil Kumar Kartha, submitted a duly filled and signed Proposal Form to apply for the Active Health Platinum Enhanced Plan product. The opposite party accepted the proposal, believing the information provided by the health assured in the proposal form to be true and correct in all aspects and accordance with the underwriting norms of the Company. Consequently, the policy, with Policy No. 21- 22-3801723-00 dated 03.01.2023, was Issued. Under this policy, the complainant and her husband, Sunil Kumar Kartha, are covered for medical treatment expenses. The assured, having fully understood the plans' features and terms and conditions, voluntarily consented and signed the forms. At the proposal stage, the Assured provided all necessary particulars for the apt assessment of risk by the Company. The assured signed a proposal form wherein it was declared that Assured understood the product features, terms, and the importance of medical declarations, and the Company was authorized to terminate the policy and repudiate the claim in case any declaration given in the Proposal Form is found to be misrepresented or false.

 At the time of issuance of the policy, there was a process where the insurance company team telephonically verified and asked questions to the insured regarding their medical history. They replied that they were not suffering from any disease or taking any medical treatment.

On the basis of the information provided in the proposal form and the Medical Examination report, a policy bearing No. 21-22-3801723-00 was issued in the name of Mrs. Nirmala S Kartha and her husband on 03.01.2023, stipulating a single premium of ₹ 29,364 with an effective date of insurance from 03.01.2023 to 02.01.2024. It is submitted that the subject policy is effective after 30 days from the date of issuance and for a sum assured of            ₹ 5,00,000/-. The Insurance Company received the reimbursement intimation and the supporting documents informing that the insured, Mr. Sunil Kumar Kartha, was hospitalized on 18.01.2023 at Caritas Hospital Thellakom, Kottayam. Since the assured Mr. Sunil Kumar Kartha was admitted on 18.01.2023, and the policy issuance date was 03.01.2023, the claim is an early claim. During the verification of documents, it was revealed that the patient was hospitalized for the treatment of anterior wall myocardial infarction on 18.01.2023, which falls within the first 30 days of the policy.

In view of the aforementioned facts, the said claim was repudiated and the same was communicated to the complainant vide its letter dated 24.03.2023. Once again, the opposite party received the reimbursement claim with ID 1122385026494 on 24.03.2023. While verifying the documents provided by the Assured, the opposite party discovered the past medical history of the assured, which was deliberately suppressed. It was revealed that the assured was suffering from Chronic Obstructive Pulmonary Disease before the policy inception, and the assured intentionally with held this information at the time of the policy inception. By not informing the truth and correct facts, assured took away the right of the answering opposite party to underwrite the correct risk involved. In view of the aforementioned facts, the said claim was repudiated, and the same was communicated to the complainant.

Thus, the opposite party has rightly repudiated the reimbursement of the complainant on the grounds of suppression of material facts by assured, which is the moot principle under the contract of insurance. The repudiation of the reimbursement of the complainant is just, proper, legal, valid, and made on the grounds of non-disclosure of material facts.

The complainant filed proof affidavit in lieu of chief examination, and Exhibits A1 to A4 were marked from the side of the complaint. Swastik Chandra, who is the senior manager of legal Complaints of the first opposite party, filed proof affidavit in lieu of chief examination, and exhibits B-1 to B5 were marked from the side of the opposite parties.

We would like to consider the following points in evaluating the complaint, version, and the evidence on record.

1. Whether the complainant had succeeded to prove deficiency in service or unfair trade practice on the part of the opposite parties? 
2. If so, what are the reliefs and costs?

Point Nos. 1 & 2

There is no dispute on the fact that the complainant had availed a health insurance policy named active health Platinum enhanced vide policy number 21-22- 3801723 -00 on 19.11.2022. On going through the exhibit A2 policy schedule, we can see that the complainant is the policyholder, and Sunil Kumar Kartha, who is the husband of the complainant, is one of the insured under the policy, and the sum assured was ₹ 5,00,000/-. According to the complainant, on 18.01.2023, the husband of the complainant, Sunil Kumar Kartha suffered some heart problems and was hospitalized at Caritas Hospital, Thellakom, Kottayam, and was diagnosed with myocardial infarction and underwent bypass surgery and discharged on 21.01.2023.

It is proved by the discharge summary attached to Exhibit B3 (a) that the second insured Sunil Kumar Kartha was treated in Carita's hospital from 18.01.2023 to 22.01.2023 as inpatient and had undergone coronary angiogram and primary PCI to LAD done on 18-1-2023. It is proved by exhibit A3 pre-authorization repudiation letter that the opposite party has repudiated the pre-authorization for treatment expense of ₹ 2,50,000/- by stating that the date of commencement of the policy is 3-1 -2023 and the complainant was hospitalized before the treatment for myocardial infraction on 18.01.2023 which falls within the first 30 days of the policy. The premium certificate attached to the exhibit B-2 policy terms and conditions proves that the opposite party received the premium of ₹ 29,364/- on 19.11.2022 vide receipt number RR- 22-23-316889 by a payment mode of RTGS/NEFT. Page 89 of exhibit B2 is the proposal form, a perusal of the same suggests that the amount of ₹ 29,364/- is shown as a premium amount, and the payment of the same is shown on  19.11.2022.  It is further proved that the complainant filed the proposal form on 19.11.2022. Thus, it will be seen that the policy was desired to be effective, and risk commenced retrospectively with effect from 19.11.2022.

It is pertinent to note that though the opposite partly received the proposal form and premium amount on 19.11.2022, they verified the medical condition of the insured persons only on 31.12.2022 through a telephonic verification. The opposite parties fix the date and time for the medical verification and the insured persons can only submit their details regarding their physical condition if the insurer activates the telephonic verification method. It is evident from exhibit B3 medical examination report that there was a delay of more than one and half months on the part of the opposite parties to conduct the telephonic verification for the medical health condition of the proposed insured persons which caused a delay in issuing the health insurance policy to the complainants.Without doubt, if opposite parties needed more time for proposal evaluation to issue the policy, there was no reason to receive the money, which in any case has substantial residual life for encashing. Receiving the premium amount into the opposite party's bank account amounts to acceptance of consideration and signifies that the insurer was agreeable to the issuance of the policy. If the insurance company did not issue the acceptance letter immediately after receiving the premium, the complainant has genuine reason to believe it would be issued at any time. If there was an undue delay, it was the fault and the liability of the opposite parties.

IN   Mrs. Bhumikaben N. Modi &Ors. …Appellant(s) Versus Life Insurance Corporation of India(Civil Appeal No.270 of 2012) decided on May 08, 2024 hon’ble Supreme Court has held as under.

"24. In the circumstances referred to in the orders of the District Forum and the State Commission, as also noted hereinbefore, the question is whether a clear presumption as to the acceptance of the policy by the insurer is available in the case on hand. In Annexure B, Page 30 of 35, receipt of the first premium, it is specifically stated that the acceptance of payment would place the corporation at risk with effect from the date of the said Acceptancecum-First Premium Receipt, subject to the realization of the amount in cash and the terms and conditions of acceptance printed overleaf. What is printed overleaf is not on record as the same was not produced, though it should be a part of Annexure B. Thus, the entire circumstances discussed based on the documents in the orders of the District Forum and the State Commission hereinbefore in this judgment, in the light of the decision in D. Srinivas's case (supra) constrain us to hold that the proposal was accepted."

Therefore, we are of the opinion that the opposite party committed deficiency in service by rejecting the pre-authorization for the treatment expenses of the insured by stating that the policy was issued on 03.01.2023 and the complainant was admitted to the hospital on 18.01.2023, which is within the first 30 days of the waiting period under the Exhibit A2 policy. According to the complainant, the second insured on 09.02.2023 was again admitted for coronary artery disease, underwent another surgery, and was discharged on 13 -02- 2023. The discharge summary attached to Exhibit B4 proves that the second insured was treated in Caritas Hospital as an inpatient from 09.02.2023 to 13.02.2023 and underwent PTCA to RCA with 2DES=IVUS on 12.02.2023. It is admitted by the opposite party that they received a reimbursement claim on 24.03.2023. This time, the claim was repudiated by the opposite parties, stating that the insured wilfully suppressed a material fact that he had chronic obstructive pulmonary disease. On going through exhibit B3, the medical examination report obtained by the opposite party through the telephonic verification, we can see that Sunil Kumar Karta, the second insured under the policy, answered negatively to all questions regarding his health condition.

In order to prove their case, the opposite parties produced exhibit B3, which is the treatment records from Caritas hospital. On going through the treatment records, we can see that Sunil Kumar Karta was referred to Caritas hospital on 18.01.2023 from SH Medical Center, Nagambadom, complaining of chest pain. On going through the discharge summary issued from Caritas hospital, we can see the second insured was admitted there on 18.01.2023 and discharged on 22.01.2023. The diagnosis was coronary artery disease, chronic obstructive pulmonary disease, and an infected abscess in the left lumbar region.

In the clinical summary, it was recorded as ".This 57-year-old male, a known case of chronic obstructive pulmonary disease, infected abscess on the left lumbar region,   was referred from a local hospital with anterior wall myocardial infarction for further management and had a history of chest pain for two days." Thus, it is evident that the second complainant has no prior history of heart disease. Though the opposite parties allege that the second insured had suppressed material facts regarding that he is suffering from chronic obstructive pulmonary disease, however on perusal of exhibit B3 we cannot see that the second insured, Sunil Kumar Kartha, has been under treatment, for the chronic obstructive pulmonary disease. The opposite parties did not adduce any evidence to prove that the said Sunil Kumar Kartha was under treatment and had medication for the chronic pulmonary disease.  In Satwant Kaur Sandhu v. New India Assurance Co. Ltd. [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316: Supreme Court held that under a contract of insurance, the insured is under a "solemn obligation" to make a true and full disclosure of information asked for in the proposal form:

"18. ... Nonetheless, it is a contract of insurance falling in the category of contract uberrimaefidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a 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 is material for the purpose of the policy or not. Of course, the 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 one possesses. His opinion of the materiality of that knowledge is of no moment."

Thus, the second insured is obligated to disclose only the facts known to him at the time of submitting the proposal form. He is not obligated to reveal the facts unknown to him at the time of the proposal form. The onus of proof lies on the insurer to prove that the insured suppressed material information or provided false information material to the grant of the insurance coverage. In the absence of cogent evidence to prove suppression of material information about a pre-existing illness or impersonation at the medical examination, this complainant is liable to succeed.

It is proved by exhibit A3 pre-authorization repudiation letter that the opposite party has repudiated the pre-authorization for the treatment expense of ₹ 2,50,000/- for the first admission of the second insured in Caritas hospital for the period of 18.01.2023  to 25.01.2023. Exhibit B5 proves that the opposite parties repudiated the claim for an amount of ₹ 1.87,784/- which is the treatment expenses incurred by the second insured for his treatment at Caritas Hospital from 09.02.2023 to 13.02.2023.

In view of the foregoing discussion and the facts and circumstances of this case, the complaint is allowed, and we pass the following order.

1. We hereby direct the opposite parties to pay ₹ 4,37,784/- which is the treatment expense incurred by the second insured.
2. We hereby direct the opposite parties to pay ₹ 20,000/- as compensation to the complainant for the deficiency in service on the part of the opposite parties.
3. We hereby direct the opposite parties to pay ₹ 3000/- as the cost of this litigation.

Order shall be complied with in 30 days from the date of receipt of copy of this order. If not complied as directed, compensation amount carry 9% from the date of order till realisation.

 Pronounced in the Open Commission on this the 28^th day of June, 2024

    Sri. Manulal V.S, President   Sd/-

   Sri.K.M.Anto, Member           Sd/-                                                      

APPENDIX :

Exhibits from the side of the Complainant :

A1     -         Copy of the Account Statement of Sunil Kumar Kartha of the    

         Federal Bank, Nagampadam branch for the period of 15.11.2022 to     

         30.11.2022.        

A2     -        Copy of the Policy certificate.
A3     -        Letter dated 18-01-2023 (Repudiation letter)

A4     -        Repudiation letter dated 24.03.2023.

Exhibits from the side of the Opposite Parties :

B1     -         Copy of authorization letter in favour of AR.

B2     -         Copy of the Proposal form and Medical Examination Report.

B3     -         Copy of the Medical Examination Report.

B3 (a)-        Copy of the Medical Examination Report.

B4     -         Copy of the reimbursement claim intimation form.

B5     -         Copy of the repudiation letter.

By Order,

                                                                                           Assistant Registrar