Haryana

StateCommission

A/329/2020

STAR HEALTH AND ALLIED INSURANCE CO.LTD. - Complainant(s)

Versus

RAJPAL LATHER - Opp.Party(s)

PUNIT JAIN

06 Apr 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                      First Appeal No.329 of 2020

                                                Date of Institution: 11.08.2020

                                                          Date of order:06.04.2023

 

1. Star Health and Allied Insurance Company Limited, Regd. And Corporte office 1, New Tank Street ValluvarKottamHigh road, Nungambakkam Chennai 600034 through its Authorized signatory.
2.  M/s. Star Health and Allied Insurance Company Limited, Sector-13, Market, Urban  Estate, Karnal.

                                                                    ....Appellants

Versus

Rajpal Lather S/o Shri Bhim Singh Lather, R/oVillage Manak MajraGadian, Post Office ButanKheri, Tehsil Indri Distt. Karnal.

                                                                                           ...Respondent

CORAM:    S.P.Sood, Judicial  Member

         

Present:-    Mr.Punit Jain, Advocate for theappellants.

                   Ms.Savita Rana, Advocate for the respondent.

                                                ORDER

S P SOOD, JUDICIAL MEMBER:

          There is a delay of 109 days in filing the appeal. Appellant has not even filed any application seeking condonation of delaysupported with an affidavit.Taking into consideration  of these facts in the content of settled principle of law, this Commission does not find it a fit case to condone delay of 109 days in filing of the appeal.

2.      The brief facts of the case are that the complainant had obtained Family Health Optima Insurance policy from the opposite party againstyearly premium of Rs.19,417/-and duly deposited by the complainant. The insurance policy was valid from 17.07.2018 to the midnight of 16.07.2019 covering the insurance of complainant Rajpal Lather and his wife Smt.Chander Lather. After conducting some medical tests, insurance policy was issued by the Ops in favour of the complainant.   However afterwards as complainant was feeling some physical problem, so he underwent some clinical tests from  Naveen Computerized Laboratory and report dated 27.09.2018 depicted some minor increase of S.Creatininereported as 1.6 Mg/dl and blood urea was found to be 48.5 mg/dl whereas reference range for the same was given as 20.0-45.00 mg/dl. And other test reportreadings  were OK. After this development complainant started taking treatment from Rama Super Speciality and Critical Care Hospital Chowk, Model Town, Karnal  which continued from this hospital uptill 11.03.2019. The complainant got himself admitted in Max Healthcare Hospital Delhi, remained hospitalised from 11.03.2019 to 18.03.2019 and thereafter he again got admitted on 19.03.2019 and was discharged in the evening on same day i.e. 19.03.2019 and this is how he spent Rs.2,50,000/- on his treatment.  The complainant filed claim but OP rejected the claim vide letter dated 18.03.2019 on the ground that complainant did not discloseabout his pre-existing disease. Faced with this situation, he got issued legal notice dated 02.05.2019 to the OP, but in vain.Thus there was clear cut deficiency in service on the part of the OP, hence this complaint.

3.      Upon notice, OP filed its written version stating therein that complainant had concealed true and material facts and complaint being bad for want of cause of action, jurisdiction, maintainability etc. and requested to dismiss the complaint.

          On merits, it was averred that the complainant had availed Family Health Optima Insurance Plan covering himself, Mrs. Chander Lather-spouse (PED-Diseases related to Female Genital system and their complications diseases of Gastrointestinal system and their complications), vide policy No.P/211114/01/2019/002989 for the period  from 17.07.2018 to 16.07.2019 for a sum insured of Rs.5,00,000/-. The insured patient was hospitalized in Max Smart Super Speciality Hospital on 21.03.2019 and raised pre authorization request for the treatment of Hemodialysis, catheter insertion and dialysis. On scrutiny of the pre authorization documents  it was noted that:-

1. As per the pre authorization form, the insured was provisionally diagnosed with Advance Uremia and Pneumonia was admitted for Hemodialysis and catheter insertion. The insured has a past history DM since 8 years & has Chronic Kidney disease.
2. As per the progress Note dated 12.03.2019 and consultation slip of Max Hospital dated 12.03.2019, the insured was chronic intermittent NSAID (Nonsteriodal anti-inflammatory drugs) use, DM since 8 years was on medication for the same  and CKD detected 9 months ago (i.e. 5/2018).
3. As per the initial assessment sheet dated 12.03.2019, the insured is a known case of CKD since May 2018.”

          The above said reason affirm that insured patient has kidney disease since May 2018 i.e. 2 months prior to inception of the policy and same was not disclosed in the proposal form The policy was cancelled and same was informed to the insured with the prior notice dated 18.03.2019. Thus, the pre authorization was rejected and the same was informed to the insured vide letter dated 30.03.2019. The insured submitted  a representation alongwith the treating doctor justification stating that legedema of May 2018 was not followed up with immediate lab test and first detection of an elevated level of creatinine was on October 2018, whereas it was observed that insured was detected with CKD prior to policy and insured has DM since 8 years and was on medication for the same.  Hence the representation could not be considered and same was informed vide letter dated 30.03.2019. The insured has not submitted claim for reimbursement, thus Ops were not aware of the expenses spent on the insured. Thus there was no deficiency in service on the part of the Ops and prayed for dismissal of the complaint.

4.      After hearing both the parties, the learned District Commission, Karnalhas allowed the complaint vide order dated 03.03.2020, which is as under:-

“Thus, as a sequel to abovesaid discussion, we allow the present complaint and direct the Ops to pay Rs.2,50,000/- to the complainant with interest @ 9% per annum from the date of repudiation of the claim till its realization. We further direct the Ops to pay Rs.20,000/- to the complainant on account of mental agony and harassment suffered by him and Rs.5500/- towards the litigation expense.”

5.      Feeling aggrieved therefrom, OPs-appellants have preferred this appeal before this Commission.

6.      This argumentswere advanced by Sh.Punit Jain,learned counsel for appellant andMs.Savita Rana, learned counsel for respondent. With their kind assistance entire record of appealas well as original record of the District Commission including whatever evidence has been led on behalf of  both the parties has also been properly perused and examined.

7.      It is not disputed that the complainant had purchased a Family Health Optima Insurance Plan covering himself and his wife for a sum assured of Rs.5,00,000/- from the opposite party.  It is also not disputed that during the subsistence of the policy in question,one of the insured was hospitalised for some treatment. It is also not disputed that the complainant spent Rs.2,50,000/- on his treatment. The claim was repudiated by the opposite party only for the reasonthat the complainant was having pre existing disease. The plea of the complainant was that at the time of obtaining the policy, there was no known pre existing diseasethat he was suffering from. Some type of medication used by the complainant cannot be taken as concealment of pre existing disease and the Ops have no right to repudiate the claim of the complainant  on this ground.  The case law relied upon by the counsel for the appellant titled Branch Manager, Bajaj Allianz Life Ins. Company Ltd. And Ors. Vs. Dalbir Kaur decided on 09.10.2020 of Hon’ble Supreme Court is not applicable because the facts and circumstances of the case were different from that of the present case in hand. The case law relied upon by the counsel for the respondent titled Manmohan Nanda Vs. United India Assurance Co. Ltd. &Anr. Law Finder Doc Id # 1920530 of Hon’ble Supreme Court is applicable in the case in hand because the facts and circumstances of the case is similar that of the present case in hand.  Ex.C-8 statement of Dr. Ala Bhasin  reveals that first detection of an elevated level of creatinine was on October 2018, whereas complainant obtained the policy in the month of September. Ex.C-8 and C-9 dated 11.03.2019 reveals that  some blood tests were normal and some were with slightly higher readings.  Since at the time of filling the proposal form dated 18.07.2018, the complainant was not having any knowledge of any sort of pre-existing disease, so the repudiation of the claim was bad in the eyes of law and was not justified. The OP has illegally repudiated the claim of the complainant.

8.      It is a matter of common experience, insurance companies often repudiate claims on grounds of non-disclosure of material information by the consumer. However they conveniently forget that there is an even greater statutory obligation cast on them to give full information to the consumer about the products they sell.

The responsibilities of the insurer towards full disclosure is even more because (a) the Insurance Regulatory and Development Authority’s (IRDA) Regulation on the protection of Policyholders’ Interests’ specifically mandates this and (b) the contracts of insurance, which are ‘Adhesion Contracts’ or ‘Standard Form Contracts’ are drawn up unilaterally by the dominant party-the insurer. The consumer, being the weaker party has no bargaining power, nor knowledge of the terms of the contract. So, the apex court has often said that these contracts, therefore, demand a very high degree of fairness, good faith and disclousure on the part of the insurer.

          Here are two cases where the Supreme Court has reminded insurers of their obligation in this regard and warned them against violations. The two cases also show-case the kind of unfair practices indulged in by insurers.

          In Texco Marketing Pvt. Ltd. Vs TATA AIG General Insurance (CA No. 8249 of 2022, date of judgment: November, 9, 2022), for example the insurance company insured after due inspection, a shop loacated in a basement under the Standard Fire and Special Perils Policy, despite the fact that the policy specifically excluded basements. Subsequently, following a fire, when the policyholder made a claim, the insurer repudiated it on the basis of the exclusion clause!

          While ruling in favour of the consumer, the apex court observed that first and foremost, the insurer did not bring the exclusion clause to the notice of the consumer. And then, despite having knowledge of the exclusion clause, it insured the basement and received the premium benefits. After this, repudiating the policyholder’s claim on the basis of the exclusion clause was certainly an unfair trade practice. “This view is fortified by the finding that the exclusion clause is an unfair term, going against the very object of the contract, making it otherwise un-executable from its inception,” the apex court said.

          Some of the observations of the court in this case would go a long way in upholding the rights of the policyholders. For example, the court made it clear that an exclusion clause, if not brought to the notice of the consumer by the insurer or agent, would not be binding on the consumer. Similarly, an unfair term in an insurance contact would be un-executable. The Supreme Court also reminded insurers that an exclusion clause “is not a leverage or safeguard for the insurer, but is meant to be pressed into service on a contingency, being a contract of speculation”.

          Said the court: “Before we part with this case, we would like to extend a word of caution to all the insurance companies on the mandatory compliance of Clause (3) and (4) of IRDA Regulation, 2022. Any non-compliance on the part of the insurance companies would take away their right to plead repudiation of contract by placing reliance upon any of the terms and conditions included thereunder”.

9       The learned District Commissionhas rightly allowed the claim of the complainant. The learned District Commission had committed no illegality while passing the order dated 03.03.2020.  The appeal is also devoid of merits and stands dismissed.

10.    The statutory amount of Rs.1,53,161/- deposited at the time of filing the appeal be refunded to the complainant-respondent-Raj Palagainst proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

11. Applications pending, if any stand disposed of in terms of the aforesaid order.

12. A copy of this order be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986/2019. The order be uploaded forthwith on the website of the commission for the perusal of the parties.

13.              File be consigned to record room after due compliance.

 

06thApril, 2023                                                                                S. P. Sood                                                                                                                            Judicial Member                            

S.K(Pvt. Secy.)