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2015 Supreme(Bom) 1238
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MOHIT S. SHAH & A.K. MENON, JJ.
Gaurang Dinesh Damani - Petitioner
Versus
Union of India & Ors. - Respondents
PUBLIC INTEREST LITIGATION NO.12 OF 2011 WITH CHAMBER SUMMONS NO.126 OF 2014 WITH CHAMBER SUMMONS (ST)NO.54 OF 2014
Decided On : 13.8.2015
Advocate Appeared:
Mr. Gaurang Dinesh Damani, Petitioner-in-person.
Mr. Rui Rodrigues a/w Rajinder Kumar & D. P. Singh for Respondent No.1-UOI.
Mr. Beny Chatterji, Senior Advocate, with Nishita Lamba i/b. Daya Gupta for Respondent No.2-IRDA.
Mr. Yogesh Naidu a/w Asim Vidhyarthi & Ms. Veena Shankar i/b. A.S. Vidhyarthi for Respondent No.5.
Mr. Nalin Majithia i/b. Habiya Kanthawala for Respondent No.31.
Dr. Birendra Saraf a/w Rajat Pradhan i/b. Phoenix Legal ATPA for Respondent No.33.
The central legal point established in the judgment is the duty of IRDA to regulate and ensure the protection of policy holders' interests, including the settlement of insurance claims and the promotion of orderly growth of the insurance business.
Headnote:
PIL - Insurance Regulations - IRDA Act 1999, Insurance Act 1938 - Section 14, 26, 114A - Health Insurance Regulations, 2013 - Protection of policy holders' interests, settlement of insurance claims, surrender value of policy, and other terms and conditions of contracts of insurance.
Fact of the Case:
The petitioner filed a PIL seeking various reliefs related to insurance regulations and the functioning of the Insurance Regulatory and Development Authority (IRDA). The court considered the suggestions made during the hearing and highlighted the main features of the Health Insurance Regulations, 2013.
Finding of the Court:
The court emphasized the need for protection of policy holders' interests and the settlement of insurance claims. It directed the petitioner to make representations to IRDA, and IRDA to circulate the representations to insurance companies and stakeholders for their comments and suggestions.
Issues: The issues included discrepancies in average payments for reimbursement claims, grievances about the discontinuance of cashless facility, and the need for disclosure of claims ratio and severity. The court also addressed the non-issuance of detailed guidelines by insurers to Third Party Administrators (TPAs).
Ratio Decidendi: The court emphasized the duty of IRDA to regulate and ensure the protection of policy holders' interests, and directed IRDA to take proactive steps in promoting orderly growth of the insurance business and protecting the interests of policy holders.
Final Decision: The PIL was disposed of with the court appreciating the contributions of the parties involved.
In this PIL filed in January 2011, the petitioner had prayed for various reliefs including direction to the Union of India, Ministry of Health and Family Welfare to make clearer rules to ensure that the consumers get their claims settled as promised in their respective insurance policy documents and to restrict the powers of Third Party Administrators (TPA) and to debar them from processing claims. The petitioner had also prayed for restoration of the cashless facility as it was causing prejudice to the holders of the mediclaim policies. The petitioner had also prayed for various other reliefs. The petitioner had also made out other grievances in the PIL against functioning of respondent no.2 - Insurance Regulatory Development Authority (IRDA).
2. Under the Insurance Regulatory and Development Authority Act, 1999 particularly under section 14 of the said Act provides that the authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business. Without prejudice to the generality of the said provisions, sub-section (2) of section 14 provides that the powers and functions of IRDA shall include “protection of the interests of the policy holders in various matters including settlement of insurance claims, surrender value of policy and other terms and conditions of contracts of insurance.
3. In exercise of the powers conferred by section 14 and 26 of the IRDA Act 1999 read with section 114A of the Insurance Act, 1938, IRDA, in consultation with the Insurance Advisory Committee has made a IRDA (Third Party Administrators – Health Services) Regulations, 2001. Chapter IV thereof in section 21 lays down the code of conduct for Third Party Administrator. During the pendency of the PIL, the petitioner had made a grievance about non-framing of the Health Insurance Regulations of IRDA. Thereafter on 16 February 2013, IRDA has, in exercise of the powers conferred under section 114A of the Insurance Act 1938 and section 14 read with section 26 of the IRDA Act, 1999 made the IRDA (Health Insurance) Regulations, 2013. Regulation 8 thereof provides for protection of policy holders' interests and contains provisions regarding settlement/rejection of claim by insurers.
4. The PIL was heard on various dates and after taking into consideration the suggestions made at the hearing of this PIL, we find that some of the main features of the Health Insurance Regulations, 2013 are as under:-
“Average claim size for the same ailment category, for Cashless v/s Reimbursement:
As per Annexure-3 and earlier statistical reports of IIB, there is a serious discrepancy in average payments offered to the reimbursement claims. Also, as per IDA's annual report (page 45), the claims rejected number at an astronomical 6.26 lakhs(in 2012-13 it was 5.15 lakhs). In my opinion, this is because of the manner in which individual (non-group and non-cashless) claims are settled.
Petitioner's suggestions are as under:-
1- IRDA can make Insurance companies compulsorily set aside a certain % of their annual profits, for consumer education (regarding new Health Insurance Regulations (HIR); benefits of cashless claims, etc.)
2- Implement in true spirit, the “Key Information Sheet”, as per 8(b) of the HIR, 2013. I have re-attached a sample for ready reference.
3- Making the policy document as transparent as possible. For eg. Claim HH751505251 of Policy 260402/48/13/8500000719, says professional charges are restricted, at 25% of sum assured. Such clauses do not appear in the policy document, but are used to 'settle' claims. In any case, this is totally arbitrary and unfair to the consumer.
4- IRDA can make Insurance companies deal with only those hospitals which prominently display their rates for all consumers to see and understand.
5- Re-consider the suggestion of declaring ailment-wise package rates in the policy document. The package amounts can be different for different policies like Silver, Gold and Platinum. Also, each In
