Star Health And Allied Insurance

Star Health And Allied Insurance ... vs Kapil Bansal on 6 March, 2017

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.

                       First Appeal No.699 of 2013

                       Date of institution : 27.06.2013/01.07.2014
                       Date of Reserve : 06.03.2017
                       Date of decision : 16.03.2017

  1.

Star Health and Allied Insurance Company Limited, through its Assistant Vice President, Claims, Regd. Office No.1, New Tank Street, Valluvar Kottam, High Road, Nungabakkam, Chennai- 600 034.

2. Branch Manager-Star Health and Allied Insurance Limited, SCO 25, First Floor, District Shopping Complex, Ranjit Avenue, Amritsar.

.......Appellants/Opposite Parties Versus Kapil Bansal s/o Pawan Bansal, R/o H.No. B-115, Julkian Mohalla, Chakri Bazar, Batala, District Gurdaspur.

........Respondent/Complainant First Appeal against the order dated 17.5.2013 of the District Consumer Disputes Redressal Forum, Amritsar.

Quorum:-

Hon'ble Mr. Justice Paramjeet Singh Dhaliwal, President Shri Harcharan Singh Guram, Member Present:-

For the appellants : Ms. Vertika H. Singh, Advocate for Shri Nitish Singhi, Advocate.

For the respondent : None.

JUSTICE PARAMJEET SINGH DHALIWAL, PRESIDENT:

The instant First Appeal has been filed by the appellants/opposite parties impugning the order dated 17.05.2013 passed by the District Consumer Dispute Redressal Forum, Amritsar(in short "District Forum") whereby the complaint filed by the respondent complainant has been allowed to the extent of ₹ 2 Lakhs with 9% per annum interest from the date of filing of the complaint till payment and litigation expenses of ₹ 2,000/-.

2. The parties hereinafter to be referred as they are arrayed in the complaint before the District Forum.

3. Succinctly, the complainant purchased a health Medi claim insurance policy from opposite parties, vide policy number P/11111/01/2013/000626 wrongly mentioned in the order of District Forum as P/211111/01/2013/000784 for a period from 27/06/2011 to 26/06/2012 for a total sum assured of ₹2 Lakhs. During the currency period of the policy complainant became ill on 22/02/2012 and consulted Doctor of Medanta Medicity Hospital, Gurgaon, who diagnosed that complainant was suffering from heart problem. On 10/03/2012 complainant was admitted in Medanta Medicity Hospital, Gurgaon in emergency condition, where he underwent Aortic Valve Replacement on 13/03/2012 and was discharged on 20/03/2012. The complainant spent more than ₹ 3 lakhs on the treatment. In this respect, original bills, cash memos and other documents were submitted to the opposite parties claiming the amount as per terms of the insurance policy. The opposite parties repudiated the claim of the complainant, vide letters dated 01/05/2012 and 23/06/2012 on the flimsy ground that complainant insured has not disclosed medical history in the proposal form, which amounts to misrepresentation and nondisclosure of material facts. The categorical stand of the complainant in the complaint is that he suffered from the above problem for the first time on 22/02/2012. The claim has been repudiated illegally which amounts to deficiency in service. The complainant filed the complaint before the District Forum claiming the sum assured of ₹ 2 Lakhs with interest and compensation of ₹50,000/- along with litigation expenses.

4. Upon notice opposite parties appeared and filed written version submitting that as per the documents provided by the complainant, he was traced mild MR and TR with moderate with concentric left ventricular hypertrophic and severe aortic stenosis with moderate AR and LYOT 2.1 cms. Since long duration the disease was in existence as is clear from severity of the disease as to produce syncope. However, this fact was concealed by the complainant at the time of taking the policy and procured the policy by misrepresenting the facts and had violated condition No. 7 of the policy. After scrutiny of the medical record, claim has been repudiated vide letter dated 01/05/2012 and same was reaffirmed vide letter dated 23/06/2012 and denied the other averments in the complaint.

5. The District Forum afforded opportunities to the parties to lead their respective evidence and after appreciating the evidence on record, allowed the complaint of the complainant. Hence this appeal by the opposite parties.

6. We have heard the learned counsel for the appellants and have perused the record of District Forum as well as the appeal.

7. The learned counsel for the appellants raised the arguments, which have been mentioned in the reply to the complaint. Learned counsel contended that it was the duty of the complainant to disclose the pre-existing disease of heart. Within a short span of purchase of policy ailment has appeared. The terms and conditions and the exclusion clauses of the policy are the very basis of the contract. The contract of insurance is a special contract which is based upon utmost good faith. The complainant had knowingly and intentionally concealed the material facts relating to his health with a purpose to take undue advantage. It is further contended that Doctor has clearly mentioned in letter dated 22/01/13 that complainant is a known case of bicuspid Aortic valve with severe Aortic valve with a severe Aortic stenosis moderate aortic regurgitation with previous history of syncope attack. The ECHO dated 11/03/2013 also shows thickened calcified bicuspid Aortic valve with severe Aortic stenosis. The District Forum failed to consider the severity and chronicity of the disease which cannot occur within a short span of 8 months. The claim of the complainant has rightly been rejected as per exclusion clause No. 7 of the policy and proposal form Ex. R-3A, Schedule Ex.R-4, pamphlet Ex.R-5, wherein different conditions have been mentioned and discharge summary Ex.R-6.

8. None appeared on behalf of the respondent-complainant. We have considered the averments in the complaint and the stand taken before the District Forum.

9. We have given thoughtful consideration to the argument raised by the learned counsel for the appellants and have perused the record.

10. The claim of the respondent complainant has been repudiated on the ground that he did not disclose correct facts relating to his pre-existing illness. The age of the life assured i.e. complainant was 29 ½ years (12.12.1981) at the time of purchase of the insurance policy known as "Family Health Optima Insurance Policy'. The claim of the complainant has been repudiated, vide exhibit R-1 dated 01/05/2012 observing: " our medical team has observed from ECHO and discharge summary "operative findings, the insured patient is a case of congenital bicuspid aortic Valve with severe calcified Aortic stenosis, which is of long duration with symptoms (syncope) before the inception of medical insurance policy. At the time of inception of your first policy which is from 27/06/2011 to 20/06/2012, you have not disclosed the above mentioned medical history/health details in the proposal form which amounts to misrepresentation/nondisclosure of material facts. As per condition 7 of the policy issued to you, if there is any misrepresentation/nondisclosure of material facts whether by the insured person or any other person acting on his behalf, the company is not liable to make any payment in respect of any claim."

11. The stand of the complainant is that he suffered this problem for the first time on dated 22/02/2012. There is no previous medical history, so the question of its disclosing does not arise. It is further case of the complainant that only cover note and schedule were supplied to the complainant. Terms and conditions of the policy in question were never supplied and the same never formed part of Contract.

12. In view of the above, below mentioned questions, arise for consideration of this Commission:

A) Whether the complainant has the prior knowledge of the pre-existing disease and thus misrepresented the material facts violating Condition No 7 of the policy? B) Whether the appellant-insurance company has explained and disclosed the terms and conditions of the policy, specifically Condition No. 7 to the complainant?

In Re: Question No.A.

13. The complainant aged about 30 years obtained a "Family Health Optima Insurance Policy" for the entire family which included spouse and minor son. The said policy, Ex.C-2, for a period from 27.06.2011 to 26.06.2012 was purchased through Ms. Rekha Gupta, an agent of the insurance company. Another policy of similar nature was purchased by the complainant for the family from 09/07/2012 to 08/07/2013 through Mr Hitesh Aggrawal. The complainant filed a proposal form and his family underwent necessary medical tests as per the usual practice of the insurance company. The said medical record is available with the insurance company which has not been placed on record. After satisfying the insurable interest of the complainant and his family, the policy in question was issued. The opposite parties have not brought any cogent evidence on record to show that complainant was having prior knowledge of the pre- existing disease. Once the medical examination of the complainant and his family at the instance of insurance company was carried out, then in order to justify the repudiation of insurance claim, onus lies heavily on the opposite parties to establish that insured concealed his medical condition already known to him while filling proposal form before purchasing the insurance policy. The suspicion however strong is not a substitute of the proof. No evidence worth the name has been led by the insurance company in support of its contentions.

14. It is true that insurance contracts are of utmost good faith. It is not only applicable to the complainant, it is reciprocal and applies to Insurance Company also. The company should also explain to the insured person terms and conditions of the policy. The person insured many a times signs on the standard form. The good faith is the foundation of the lasting contract but is not a rule of law by itself nor it is an independent basis for negating the exclusion clause/conditions. It was the duty of the agent of the insurance company to explain the exclusion clause/condition No. 7 to the complainant not to say that he did not expect such a clause in a contract or is the rule rather than exception. In such circumstances we must ascertain whether terms and conditions of the policy are contrary to public policy. The right to life is a fundamental right under Article 21 of the Constitution of India, compelling the complainant to waive of this right by incorporating exclusion clause to obtaining medical treatment would be surely contrary to the public policy. The exclusion clauses/conditions in policy infringe Article 21 of the Constitution of India which give constitutional rights to life, therefore, are contrary to public policy. Section 2 of the Consumer Protection Act, 1986 defines various terms. Section 2 (r) of the said Act defines "unfair trade practice", which reads as under :

"Section 2. Definitions- (1) in this Act unless the context otherwise requires,-

(r) "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely;--

(1) the practice of making any statement, whether orally or in writing or by visible representation which,--

(i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;

(ii) falsely represents that the services are of a particular standard, quality or grade;

(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;

(iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;

(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;

(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;

(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof;

Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(viii)makes to the public a representation in a form that purports to be--

(i) a warranty or guarantee of a product or of any goods or services; or

(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;

(ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods, services or trade of another person. Explanation. - For the purposes of clause (1), a statement that is--

(a) expressed on an article offered or displayed for sale, or on its wrapper or container; or

(b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or

(c) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;

(2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.

Explanation .--For the purpose of clause (2), "bargaining price" means--

(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or

(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;

(3) permits--

(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;

(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest; (3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme.

Explanation. -- For the purposes of this sub- clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised;

(4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods; (5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.

(6) manufacture of spurious goods or offering such goods for sale or adopts deceptive practices in the provision of services."

The perusal of the above definition of "unfair trade practice"

prohibits unfair, unreasonable or unjust trade practices. The spirit of above definition is that the insurance companies are required to explain certain terms and conditions which appear to be detrimental to the interest of the consumer. The attention of the consumer to such a condition as exclusion clause is required to be brought to its notice. The perusal of the documents exhibit R-3, proposal form and Ex. R3A (Schedule) clearly reveal that there is no exclusion clause No. 7. Both the exhibits have been signed by the complainant. The appellants-opposite parties rely upon Exclusions/condition 7 of Pamphlet (exhibit R5) which states that the company shall not be liable to make any payment under the policy in respect of any claim if such claim is in any manner fraudulent or supported by any fraudulent means or devices, misrepresentation, whether by the insured person(s) or by any other person acting on his behalf. In the said pamphlet, pre-existing disease has been defined as pre-existing disease means of any ailment or injury related condition(s) for which the insured person had signs or symptoms and/or was diagnosed and/or received medical advice/treatment within 48 months prior to insured persons 1st policy with the company.

15. The need for interpreting a contract always arises in two situations, (i) when a gap is needed to be filled in the contract and (ii) an ambiguity is needed to be resolved in the contract, then to find out correct intention of the contract, the doctrine of contra proferentem is generally applied. Normally, the insurance policy is a contract of adhesion in which other party is left with hardly any bargaining power as compared to the insurer. Insurance contracts are standard form contracts and are drafted by the insurance company and as such, insurance company is at higher footing than the insured. The benefit of such clause would go to the insured unless the same is explained in clear terms by the insurer. In such circumstances, the court/tribunal would be more oriented towards the interpretation which goes against the party who has inserted/drafted the disputed clause in the agreement/contract. The adjudicating authority is required to look into whether the intention of the party is to exclude or limit liability has been appropriately explained to the other party or not. This Commission while interpreting insurance agreement is to honour the intention of the parties who have signed the agreement. Even if the agreement had general exclusion/condition for misrepresentation still fraudulent misrepresentation and non-disclosure may not be there. The innocent and negligent misrepresentations are to be ignored.

16. In the present case, the proposal forms and other documents (Exs.R-3, R-3/A and R/4) have been signed by the complainant. No condition No.7 is mentioned therein. Even in the schedule, Ex.R-4, no signature of complainant has been obtained. Ex.R-5, the pamphlet in which definitions, exclusions and conditions which are sought to be read as a part of the proposal form has not been got signed from the complainant, meaning thereby exclusion or limiting a party's liability have not been explained to the complainant. Insurance Company cannot take the benefit of Ex.R-5 wherein exclusions/conditions have been incorporated. Insurance Company failed to show that exclusions/conditions were explained to the insured and must bear the risk of lack of clarity and explanation having not been given to the complainant. Admittedly, the policy was purchased through an insurance agent Ms. Rekha Gupta, but her affidavit has not been annexed to show that she has explained all the terms and conditions of the policy to the complainant-insured person. When Insurance Company was getting signatures of insured on various documents, it must have obtained his signatures on the pamphlet Ex.R-5 on which Insurance Company relies. In any circumstances, the insurance company has failed to explain that exclusions/conditions were explained to the complainant. Accordingly, these cannot be used to the disadvantage of the complainant.

17. Pre-existing disease has been defined in Ex.R-5. In the said pamphlet, pre-existing disease has been defined as pre-existing disease means of any ailment or injury related condition(s) for which the insured person had signs or symptoms and/or was diagnosed and/or received medical advice/treatment within 48 months prior to insured persons 1st policy with the company. The first policy (Ex.R-3) was purchased on 27.06.2011, meaning thereby that the insured should not have received medical advice/treatment within 48 months prior to insured person's first policy with the company. The onus to prove that the insured had taken medical treatment during this period was on the insurance company, but no cogent evidence has been brought on record to prove that the insured has taken any such medical advice or treatment during this period or was having knowledge of the symptoms of such disease. The reliance has only been placed upon discharge summary wherein the history is written. This fact cannot be lost sight that complainant was only 30 years old and a young man has taken policy for the entire family. He categorically stated that he came to know of the problem for the first time on 22.02.2012. This assertion has not been rebutted by the appellants by leading cogent and reliable evidence on record. It is common knowledge that the doctor while diagnosing a disease which is of severe nature mentions it as a known case of particular type of disease. To substantiate such averment, a categorical evidence of medical expert is necessary which may affirm that such symptoms must have continuously earlier. The medical literature reveals that many diseases remain lurking in the life a person for decades and spring up in life all of sudden. The dormant period of many heart ailments varies from years to decades. A person of young age if had been suffering from the disease as mentioned in the present case would not have waited for insurance. His first anxiety would be to seek medical advice from a competent doctor. Moreover, as per the Policy, the sum assured is only of Rs.2 lakhs and the expenses are more than that. If the insured would have prior knowledge of this disease, he must have obtained insurance policy for much higher value. Reference in this regard may be made to the judgment of the Hon'ble Supreme Court reported in IV(2011) CPJ 6 (SC) (P. VANKAT NAIDU v. LIFE INSURANCE CORPORATION OF INDIA & ANR.) in which in paras 6 and 7 it has been held as under:-

6. We have heard learned counsel for the parties and carefully perused the record. In our view, the finding recorded by the District Forum and the State Commission that the respondents had failed to prove that the deceased has suppressed information relating to his illness was based on correct appreciation of the oral and documentary evidence produced by the parties and the National Commission committed serious illegality by upsetting the said findings on a wholly unfounded assumption that the deceased has suppressed information relating to hospitalization and treatment.

7. Since the respondents had come out with the case that the deceased did not disclose correct facts relating to his illness, it was for them to produce cogent evidence to prove the allegation. However, as found by the District Forum and the State Commission, the respondents did not produce any tangible evidence to prove that the deceased had withheld information about his hospitalization and treatment. Therefore, the National Commission was not justified in interfering with the concurrent finding recorded by the District Forum and the State Commission by making a wild guesswork that the deceased had suppressed the facts relating to his illness."

18. Section 19 of the General Insurance Business Nationalization Act,1972 states that it shall be the duty of every Insurance Company to carry on general insurance business so as to develop it to the best advantage of the community. The denial of medical expenses reimbursement is utterly arbitrary on the ground that disease in question was pre-existing disease. It is mere an excuse to escape liability and is not bona fide intention of the insurance company. Fairness and non-arbitrariness are considered as two immutable pillars supporting the equity principle, an unshakable threshold of State and public behavior. Any policy in the realm of insurance company should be informed, fair and non-arbitrary. When the insurance policy has exclusions/conditions to repudiate the claim or limit the liability, the same must be specifically brought to the notice of the insured and are required to be got signed to show that such exclusions and conditions have been brought to his/her notice.

19. In view of the above discussion, we do not find any merit in the present appeal and the same is dismissed.

20. The sum of Rs.25,000/- deposited at the time of filing of the appeal along with interest which has accrued thereon, if any, shall be remitted by the registry to the respondent/complainant by way of a crossed cheque/demand draft after the expiry of 45 days of the sending of certified copy of the order to them.

21. The appeal could not be decided within the statutory period due to heavy pendency of court cases.

(JUSTICE PARAMJEET SINGH DHALIWAL) PRESIDENT (HARCHARAN SINGH GURAM) MEMBER March 16, 2017 Bansal