MEDICLAIM POLICY AND INTERPRETATION OF EXCLUSION CLAUSE

National commission has recently decided two cases on insurance wherein question before the commission was to decide whether the case falls under pre-existing disease and concealment of material facts at the time of taking policy. In both the cases facts are different and order of the commission also not the same. In the matter of Life Insurance Corporation of India v/s Fathima @Anthonimal &others case, commission observed that deceased Vidal Sagayanandin obtained two insurance policies issued on 28.9.95 and 28.9.96, both for sum assured one lac. He died on18.7.98 and a claim against policies was raised by his wife Fathima which was rejected on the plea of concealment of facts following doctors notes dated. 931.10.91 at hospital Tenon at Paris as hereunder-

‘ he was hospitalized in august 1991 for pain in the epigastrium.He had already similar pain in July 1990 and in June 1991.Alcohal consumption was the probable cause of pancreaties as he continued to drink until few months 5 to 6 pegs per day and minimum I liter of wine every day’

On the basis of this report, commission made the observation that material facts were not revealed to the insurance company before taking policies .Hence rejection of claim was found justified

This order was passed on 27.1.2016. In the above matter of Life Insurance corporation of India v/s Fathima @anthonimal &others 11(2016) CPJ 49 NC.

 But the same commission had different view in the matter of United India Insurance Co. Ltd versus Milli Dutta & others 11(20160CPJ 244 NC decided on 8.9.2015 wherein commission found exclusion clause not applicable because there was no evidence that complainant was having problem in her knee before 48 months of knee replacement .Problem was detected only after ex-ray and after taking first mediclaim policy .Hence insurance company was deficient in services for rejecting the claim

   Material fact is not defined in the Act and, therefore, it has been understood and explained by the Courts in general terms In the matter of Life Insurance Corporation of India vs. Smt.G.M.Channabasamma (1991) (1) SCC 357 , the court held that  fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non- disclosure of the facts which the party privately knows.

On the other hand Supreme court in the matter of P.C. Chacko and others V/S Chairman LIC Of India also observed

‘Misstatement by itself is not material for repudiation of the policy unless the same is material in nature …proposal can be repudiated if a fraudulent act is discovered

In this connection we may notice the decision of this Court in Mithoolal Nayak Vs. Life Insurance Corporation of India (AIR 1962 SC 814), and further followed by number of Supreme court judjemet recently in civil appeal no. 4186-87/1988 Life insurance corporation of India v/s Smt. Asha Goyal and others 111 (2012) CPJ 5 SC in which the position of law was stated that three conditions must fulfil for application of exclusion clause and for bringing the case under pre-existing disease. Second part of Section 45 is:

(a) The statement must be on a material matter or must suppress facts which were material to disclose;

(b) The suppression must be fraudulently made by the policy holder; and

(c) The policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.

Mulla's Indian Contract and Specific Relief Acts `any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact

Most of the people are totally unaware of the symptoms of the disease they suffer till it is diagnosed and some medicines referred to be taken. Under such situations, they cannot be held liable as held by Supreme Court in number of cases earlier also.

The insurance companies are repudiating even genuine mediclaims taking advantage of their exclusion clause. In yet another recent case New India Insurance Company V Anand Gourana reported in CTJ 2010 the Madhya Pradesh State Commission rejected the plea of insurance company that the charges incurred at hospital or nursing home primarily for diagnosis, X-ray or laboratory examination are not reimbursable.

 In the recent past, insurance companies short listed some of the hospitals from their panel and objected to their prescribing a number of laboratory tests, and recommending costly treatments and operations which insurance companies thought could be avoided. Subsequently insurance companies stopped cashless facilities in some of these private hospitals. But there was sharp retaliation to such move, and courts through various judgments warned the insurance companies not to step into the shoe of doctors.

Shamim Khan V New India insurance company, Maharashtra State Consumer Dispute Redressed Commission,2000.

Shamim Khan, the plaintiff who was working as a school teacher in Saudi Arabia suffered unbearable stomach pain when he visited India in July 2000, which led to severe bleeding. Khan was admitted to Bombay hospital where emergency surgery was conducted. Claim for total expenditure of Rs 41,158 was rejected on the plea that there was no emergency to undergo operation. Doctor’s certificate was then produced to prove the emergency in the case. Maharashtra State Consumer Dispute Redressed Commission has shown insurance firms their place, directing that it is the doctor and not the insurer who can decide whether a case requires emergency medical attention or not. It is further stated that “insurance company’s officers are not experts who can decide whether a particular case is of medical emergency or not.”

Hence the final note for deciding the pre-existing disease or concealment of facts or exclusion clause stands now on the above said three parameters as relied by the apex court, the Supreme Court in various cases including recent cases referred above.

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Dr Prem Lata 

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