Sri.G.V.Balasubramanya,<br /> Member,<br /> <br /> 1. The complainant is a holder of mediclaim policy issued by the second opposite party. She underwent a surgery at Vikram Hospital, Mysore for removal of stones and sent the bills of the hospital for reimbursement to the first opposite party who is the third party administrator. The bill amount was Rs.56,512/-. Since the opposite parties did not settle her claim she has filed this complaint. She has prayed that the opposite parties be directed to settle her claim and also pay her compensation of Rs.10 lakhs for mental agony. <br /> 2. Both opposite parties have put in their appearance and filed their version. According to the first opposite party, the complaint had obtained a medicalim policy from the second opposite party having taken the policy for the first time on 30.1.2003. It is further stated by them that she had undergone major cholecystectomy surgery prior to the inception of the Insurance policy and had not disclosed this fact in the proposal form. Such non-disclosure contravenes the terms of the policy and releases the insurer from liability to reimburse the insured. Further, the ailment of the complainant being a pre-existing one, it will not get cover under the policy as per clause 4.1 of the terms of the policy. Thus, the 1st opposite party has prayed for dismissal of the complaint on the ground that there is no deficiency in service.<br /> 3. The 2nd Opposite Party has merely stated that though the mediclaim policy was issued by their company, all claims are to be processed and settled by the 1st Opposite Party as per IRDA Regulations. The 2nd Opposite party further says that their company has no role to play in the settlement of the claim and that in any case the 1st Opposite Party has repudiated the claim of the complainant for violating the terms of the policy. <br /> 4. From the above contentions, the following points arise for our consideration.<br /> <br /> i. Whether the complainant proves that the Opposite Parties have rendered deficient service by repudiating her claim?<br /> ii. Whether the complaint is maintainable against the 2nd Opposite Party?<br /> iii. Whether the 1st Opposite Party proves that the complainant has contravened Clause – 5.7 of the policy?<br /> iv. What relief or order?<br /> 5. After hearing both parties and perusing the records, we have answered the above points as under;<br /> Point No.I : In the affirmative.<br /> Point No.II : In the negative.<br /> Point No.III : In the negative.<br /> Point No.IV : As per final order.<br /> REASONS<br /> 6. Point No.I & III:- It is not in dispute that the complainant had taken mediclaim policy from the 2nd Opposite Party from 30.01.2005 to 29.01.2006. The Opposite Parties have stated that the complainant took the policy for the first time on 30.01.2003. It is the case of the complainant that she underwent investigations for suspected calculi on 25.10.2005 and an ERCP procedure was performed on 31.10.2005 at Vikram Hospital. Subsequently, she filed her claim with the 1st Opposite Party. The claim was repudiated on the ground that the complainant had undergone cholecystectomy prior to inception of the policy in 2003. <br /> 7. The Opposite Parties have produced the entire office file pertaining to the complainant. The medical opinion given by Dr.K.V.Shenoy, medical insurance panel doctor is on record and the same reads as under:-<br /> “The above medical notes given in chronological order of the facts of the case indicate that the insured had undergone a major cholecystectomy surgery prior to the inception of the insurance policy and not declared in the proposal form as per the medical questionnaire from Item 12 h (Query about any disorder of the stomach, ulcer, bowel or gall bladder, kidney stones etc) This a clear case of non-disclosure of a major ailment to the insurance company as per the contract of insurance where it is mandatory on the part of the insured to truthfully disclose any pre-existing ailments or occurrences prior to the policy to the insurer and if it comes to light at any later stage like in this case the insurance company has no legal liability to reimburse the insured party as per clause 5.7.<br /> The history of having undergone Cholecystectomy which is done for acute or chronic cholecysttis (inflammation of the gall bladder due to stones) is clear that the insured has a history of gall stones formation and the earlier surgery complications leaving a stump with calculi formations in the stump cannot be considered a new development but continuation of the complications of the pre-existing gall bladder ailment followed by the surgery and related developments / complications of the gall bladder appendage (stump leading to this present claim”.<br /> 8. It is therefore the case of the Opposite Parties that the present treatment undergone by the complainant is a consequence of the earlier cholecystectomy and further non-disclosure of having undergone cholecystectomy contravenes Clause – 5.7. Hence, repudiation has been done under clauses – 4.1 & 5.7 respectively. Clause – 4.1 reads as under:<br /> “The company shall not be liable to make any payment under this policy in respect of any expenses whatsoever incurred by any insured person in connection with or in respect of all diseases / injuries which are pre-existing when the cover incepts for the first time”.<br /> 9. From the documents submitted by the Opposite parties, it is seen that the complainant had undergone cholecystectomy even before she obtained medical insurance cover for the first time on 30.01.2003. On 08.10.2005 & 24.10.2005 she had a consultation with a Doctor at Dhanvanthri Co-operative Hospital, Mysore. The ultra sound scan report of M/s Kannan Diagnostic Centre revealed “4-5 calculi in the neck/cystic duct”. Subsequently, she was advised an ERCP procedure for which she got admitted to Vikram Hospital, Mysore on 31.10.2005. ERCP was done on 01.11.2005 for Choledocholithiasis and CBD stone was extracted. An exploratory laparotomy was performed on 07.11.2005 for excision of Cystic stump. The repudiation is based on the presence of residual calculi in the cystic duct pouch and also common bile duct which is generally considered to be a consequence of cholecystectomy. <br /> 10. The complainant has provided the Opposite Parties an extract from the book Gastrointestinal and Liver disease by Sleisenger & Fordtran’s (6th Edition Vol-I). The relevant portion reads as under:-<br /> “15% of patients with gallbladder stones also have stones in the CBD. In patients who present with Choledocholithiasis months or years after cholecystectomy, it may be impossible to determine whether the stones were overlooked at the earlier operation or have formed since. Obviously, if the chemical composition of the CBD stones is determined, it could be surmised that cholesterol or lack pigment stones were left behind after the original operation, whereas bound pigment stones presumably could have formed de novo in the interval after the cholecystectomy”.<br /> 11. Essentially, we have 2 contrasting arguments. It is the contention of the opposite parties that the claim of the complainant is referable to an earlier operation undergone by her but not disclosed in the proposal form. Per contra the complainant has provided medical literature that if the patient remains asymptomatic for several years after cholecystectomy, then it is impossible to determine whether the stones were overlooked at the earlier operation or have formed since then. We do not have any medical record pertaining to cholecystectomy undergone by the complainant. The opposite parties have repudiated solely on the ground that a residual calculi was found in the cystic duct pouch. In this connection we may also refer to “Choledocholithiasis and cholangitis” by Sean Tierney / Henry A.Ptt. The relevant portion reads as under<br /> “Common bile duct stones can be classified as either primary or secondary. Primary duct stones develop within the biliary ductal system, whereas secondary stones are formed within the gallbladder and subsequently pass into the ducts. The distinction between primary and secondary stones is important because significant differences exist in their pathogenesis and management”.<br /> In the absence of any medical record pertaining to cholecystectomy it is not possible to conclude whether there was any spillage of stones to cystic duct, though it is not uncommon. Repudiation cannot be made on the basis of a presumption that spillage of stones occurred. When it comes to Insurance claims, benefit of doubt shall always go to the insured. The 1st opposite party has repudiated on the hypothetis that the stones spilled into cystic duct at the time of cholecystectomy. We cannot accept a hypothesis and deliver judgement. Judgement shall be based on proof. In the absence of proof, the insured should benefit. Where two interpretations of a given situation are available, we have to accept that interpretation which benefits the insured. It is quite possible that spillage of stones may have occurred in the case of complainant. However, there is no evidence to that effect and the complainant has remained asymptomatic with the stent remaining insitu for 5 years. As per the literature provided by the complainant they could be “de novo” stones. It is here that we are giving the benefit of doubt to the complainant.<br /> 12. Coming to the objection that the complainant having failed to reveal the past cholecystectomy is not entitled to claim any money due to clause 5.7, we feel that the said clause is not applicable. Clause 5.7 demands an element of fraud for invoking it. The opposite parties have not placed any material pointing to fraud by the complainant. Cholecycteomy at once done, question of doing it again does not arise. No fraud can be played on this aspect by anyone. But, it surely amounts to misrepresentation. Every contract of insurance being a contract of utmost good faith, we do not want anyone including the complainant to think that by approaching the Consumer Forum such suppression could be got condoned. Bonafides claim is one thing not disclosing pre-existing disease in the proposal form is another thing. Had the complainant disclosed about cholecystectomy, the 1st Opposite party might have inserted exclusion of choledocholytheasis or charged higher premium to cover it. It is essential the proposes to reveal all such information as necessary for the insurer as underwriter to assess the risk he is underwriting. We have already concluded that the complainant’s claim is not referable to the earlier cholecystectomy. We also conclude that the complainant has erred in not revealing in the proposal form the fact that she had undergone cholecycteomy earlier. By allowing any 50% of the claim. We would like to send out a strong message that such non-disclosure shall not be tolerated. However, such non-disclosure does not amount to fraud. Hence, we answer point I in the affirmative and point III in the negative.<br /> 13. Point No.II:- The insurance policy was no doubt issued by the 2nd Opposite party. But as per the Insurance Regulatory and Development Authority (Third party Administrators – Health Services) Regulations, 2001 only the 1st Opposite party is empowered to deal with and settle the claim. Admittedly, the opposite parties have entered into an arrangement for settlement of claim. Such being the case, the 2nd op who has no role to play to the time of claim settlement is not a necessary party. Hence, we answer the point in the negative.<br /> 14. The claims were made on 28.11.2005 and 21.01.2006. The repudiation was made on 16.02.2006. Hence, the complainant is entitled to a reasonable interest at 8% p.a. from 01.03.2006 till the date of payment. With these observations, we proceed to pass the following order:-<br /> <br /> ORDER<br /> <br /> 1. The Complaint is partly allowed against the 1st Opposite party only and dismissed against the 2nd Opposite party.<br /> 2. The 1st Opposite party is directed to pay the complainant Rs.25,877/- under the two claims made by her along with interest at 8% p.a. from 01.03.2006 within 2 months from today, failing which such amount will carry interest at 10% p.a. thereafter until the date of payment.<br /> 3. No costs.<br /> 4. Give a copy of this order to each party according to Rules.<br />