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MADHYA PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BHOPAL
Hon’ble Mr. Justice S.K. Dubey, President &
Mr. N.K. Vaidya, Member
ISHWAR CHANDRA GANGRADE & ORS.—Complainants
versus
NEW INDIA ASSURANCE CO. LTD. & ANR.—Opposite Parties
Original Case No. 40 of 1995—Decided on 13.8.1999
CONSUMER PROTECTION ACT, 1986 - OVERSEAS MEDICLAIM POLICY - DEFICIENCY IN SERVICE - EXTENSION OF POLICY - REPUDIATION OF CLAIM - LIMITATION - COMPENSATION - INTEREST.
Fact of the Case:
The complainant's mother, the insured, obtained an overseas mediclaim policy from the insurer for a period of 120 days. However, the insurer initially issued a policy for 60 days and later issued an extension endorsement for a further period of 60 days. The insured fell ill while in the USA and incurred medical expenses of 5,000 dollars. The insurer refused to pay the expenses beyond the initial 60-day period, claiming that the extension was not valid. The insured returned to India and died shortly thereafter. The complainants, the insured's legal representatives, filed a complaint with the Consumer Disputes Redressal Commission seeking reimbursement of the medical expenses and compensation for mental agony and loss of company.
Finding of the Court:
The Consumer Disputes Redressal Commission held that the insurer was liable to pay the medical expenses incurred by the insured in the USA. The Commission found that the insurer had unilaterally issued the policy for 60 days instead of 120 days and that the extension endorsement was issued to rectify this mistake. The Commission also found that the insurer had not repudiated the claim until after the insured's death and that the complaint was filed within the limitation period. The Commission awarded the complainants the amount of medical expenses incurred, compensation for mental agony and loss of company, and interest on the amount of medical expenses.
Issues: 1. Whether the insurer was liable to pay the medical expenses incurred by the insured in the USA? 2. Whether the extension endorsement was valid? 3. Whether the complaint was barred by limitation? 4. Whether the complainants were entitled to compensation for mental agony and loss of company?
Ratio Decidendi: 1. The insurer was liable to pay the medical expenses incurred by the insured in the USA because: a. The insurer had unilaterally issued the policy for 60 days instead of 120 days. b. The extension endorsement was issued to rectify this mistake. c. The insurer had not repudiated the claim until after the insured's death. d. The complaint was filed within the limitation period. 2. The extension endorsement was valid because: a. It was issued to rectify the insurer's mistake in issuing the policy for 60 days instead of 120 days. b. The insured did not object to the issuance of the extension endorsement. c. The terms of the policy allowed for an extension of coverage for 45 days for treatment of a covered illness. 3. The complaint was not barred by limitation because: a. The cause of action arose when the insurer repudiated the claim, which was after the insured's death. b. The complaint was filed within two years from the date of the repudiation. 4. The complainants were entitled to compensation for mental agony and loss of company because: a. The insurer's denial of the claim caused the insured great mental agony and physical pain. b. The insured was deprived of expert treatment due to the insurer's failure to meet the expenses incurred in treatment. c. The insured died shortly after returning to India.
Final Decision: The Consumer Disputes Redressal Commission allowed the complaint and directed the insurer to pay the complainants the amount of medical expenses incurred, compensation for mental agony and loss of company, and interest on the amount of medical expenses.
Mr. Justice S.K. Dubey, President—The complainant No. 1 is the husband, the complainant Nos. 2 to 4 are the sons and the complainant No. 5 is the daughter of the deceased Smt. Vimaldevi Gangrade (for short ‘insured’) who have filed this complaint under Section 17(a)(i) of the Consumer Protection Act, 1986 (for short the ‘Act’) to claim the amount of Rs. 20 lacs on account of deficiency in service by the opposite parties (for short the ‘insurer’) in not making the payment of 5,000/- dollars the expenses incurred in Houston Northwest Medical Center in terms of the Overseas Mediclaim Policy Annexure A-1 (for short the policy) as a consequence of that the insured could not continue her treatment and had to come back to India on 1.9.1991, who ultimately died on 10.10.1992.
2. The insured filled up the proposal form for obtaining policy on 10.6.1991 for a period of 120 days, i.e. for four months and paid the full premium of Rs. 2,921/- by crossed account payee’s cheque No. 222252 dated 10.6.1991 drawn on UCO Bank, Branch Anoop Nagar, Indore. The proposal form and the amount of premium was accepted by the opposite party (the ‘insurer’) of which a receipt No. 359337 was issued. The insured left India for USA on 15.6.1991 at 12.30 a.m. by the scheduled flight from Bombay Air Port on visitors visa. The complainants alleged that for the reasons unknown the policy initially was issued for 60 days on 11.6.1991 plan B for illness, accident covering the amount to the extent of US dollar 1 lac. Of this an extension (Annexure A-2) vide endorsement No. 1991/02 dated 27.6.1991 was made for covering the further period of 60 days. This extension was issued unilaterally when the insured was already in USA. The insured fell ill, therefore, was admitted in the hospital of Houston Northwest Medical Center on 12.8.1991 of which the expenses treatment was to be borne by the insurer. For that Mercury Insurance Service Ltd. (for short ‘Mercury’) who was acting as agent of the insurer was informed. The insured was detected malignancy and advised for operation. A bill of 500 dollars of investigation and hospitalisation charges of the insured for the period of 12th August to 17th August, 1991 was sent to Mercury by the hospital Authorities. The Mercury made the payment only of 434 dollars and the balance payment of 150 dollars and further expenses was not made by the Mercury on the ground that the insured’s illness occurred on 12th August before the expiry of the original insurance, therefore, the extension would not be valid for any expenses concerning the illnesses in future. As the insured was not in a position to bear the expenses, which mounted to 5,000 dollars after 13th August, 1991 the insured being helpless stayed outside hospital upto 1.9.1991 and lastly she left for India on 2.9.1991 struggling with life and death for want of proper treatment. The insured made correspondence alleging that when she filled the proposal for taking of the policy for 120 days and paid the full premium by cheque, the policy was given to her on the day when she was leaving for USA. Without the consent of the insured and without the fresh proposal the insurer could not have reduced the period and thereafter issued an extension by endorsement for further period of 60 days which would not have any effect on the coverage for 120 days. Therefore, the insured is entitled to be reimbursed for the medical expenses incurred in USA. The insurer did not pay the amount nor sent any reply till her death on 10.10.1992. After the death of the insured the complainants made correspondence and lastly sent a notice dated 5.8.1994 to claim the amount of 1 lac US dollar under the terms of the policy. The insurer through their Counsel for the first time sent the reply dated 15.10.1994 denying the liability stating therein that after 13th August, 1991 that is for the subsequent period to the expiry of the first policy the insured was not entitled to any amount in terms of the policy. There
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