Hospital
Cannot Claim To Be Indemnified By Insurer Under Insurance Policies Obtained By
Doctors To Cover Claims Of Professional Negligence: Supreme Court
The hospital could not
claim to be indemnified by the insurance company under insurance policies which
were not obtained by the hospital but by the doctors to cover claims of
professional negligence against themselves.
The bench of Justices
DY Chandrachud and AS Bopanna
Facts
·
Appeals against a
judgment of the National Consumer Disputes Redressal Commission of February,
2014.
·
The appellant was a
charitable hospital registered under the Bombay Public Trust Act 1961.
·
Between June 21 and 23,
2000, the appellant conducted an eye camp where cataract surgeries were
performed on 112 patients. The patients complained of negligence in the
performance of the surgeries by the use of non-sterilized appliances,
contaminated medicines and lenses of an inferior quality resulting in eye
infections and loss of vision. The state government appointed a Committee to
enquire into the causes which led, inter alia, to several patients having lost
their eye-sight.
·
Meanwhile, twenty-four
complaints were filed by a consumer organization, Jagrut Nagrik Trust. The
consumer complaints were instituted against the hospital and the insurance
company.
·
Policies were obtained
by the doctors from the insurer to cover claims of professional negligence. The
doctors were not parties to the proceedings before the District Consumer
Disputes Redressal Forum, Vadodara, though affidavits were filed by them
. The
District Forum by its order of February, 2010 awarded an amount of Rs
1,70,000 as compensation to each of the twenty-four complainants together with
a refund of registration fees (Rs 250), compensation for mental agony (Rs
3000), costs (Rs 1500) and interest at the rate of 9% per annum. The District
Forum further rejected the argument of the insurer that no liability
could accrue to it as the doctors (who had taken the insurance policy) had not
been made parties to the proceedings and in any case, were not negligent. The
Forum held that according to the report of the Expert Committee, negligence of
the doctors and the staff of the appellant hospital had been established. Thus,
the District Forum held that the liability of both the hospital and the insurer
would be joint and several, but the award would be enforced only against the
insurer.
The award
was not challenged by the hospital.
·
The insurance co. filed appeals against the order of
the District Forum before the State Consumer Disputes Redressal Commission,
Gujarat. By its judgment of November, 2012, the State Commission dismissed the
appeals.
·
A revision was filed
before the NCDRC by the insurer. The NCDRC by its impugned order of
February, 2014, set aside the orders of the consumer fora holding the insurer
liable. It, however, clarified that this would not affect the direction
fastening liability on the hospital. In arriving at this conclusion, the
NCDRC noted that the liability has been fastened on the hospital on the
basis of six professional indemnity policies obtained by the doctors, though
their business addresses were shown to be Vaduwala Eye Hospital. The NCDRC
held that this fact could not by itself fasten the liability on the insurer,
particularly in the absence of any specific allegation of negligence against
any of the doctors.
·
The bench observed,
"From the record, it emerges that the insurance policies were obtained by
the doctors. These were professional indemnity insurance policies which would
cover a claim for professional negligence which was made against the doctors.
Admittedly, the finding of negligence, as it appears from the order of the
State Commission, is specifically against the hospital. The finding is that the
hospital and its staff were negligent in the conduct of the cataract surgeries.
The specific finding is that the equipment which was used were not properly
sterilized, the staff was not properly trained and the medicines which were
administered were not of the requisite quality and were contaminated. In this
backdrop, the issue is whether the hospital could have claimed to be
indemnified by the insurer. The hospital was not the beneficiary of the
insurance policies which were obtained by the doctors to cover the discharge of
their own professional obligations. There was a manifest error on the part of
the District Forum as well as the State Commission. The NCDRC had a valid basis
to exercise its revisional jurisdiction."
The bench proceeded to hold, "In this backdrop,
and for the above reasons, no fault can be found with the ultimate findings of
the NCDRC. While it is true that the NCDRC has interfered in the exercise of
its revisional jurisdiction, it was justified in doing so since a joint and
several liability could not have been fastened on the insurer under insurance
policies which were not obtained by the hospital. The submission of the
hospital that it was the beneficiary of those insurance policies does not evidently
have any basis."
"In the circumstances, we see no reason to entertain the
appeals. However, all that needs to be clarified is that the dismissal of the
appeals shall not come in the way of the appellant working out its equities or
rights in law by adopting suitable proceedings against any other persons, who
according to them may also be negligent in the discharge of their duties, on
which this Court makes no observation or finding of fact whatsoever ”
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