IMPORTANT POINTS
• If any pre-existing condition was found in the normal medical check up, the policy would not have been issued by the company.
• Under Rule 18 the power is vested with the Ombudsman for granting the ex-gratia payment, it should be supported by reason.
• If it is made without any reason, the Ombudsman can exercise his discretionary power but it should be exercised with care, caution and circumspection, and in a judicious manner.

This writ petition is filed by the petitioner Insurance Company, challenging Ext.P11 award passed by the Insurance Ombudsman, Kochi in Complaint No.KOC-G- 044-1415-0003, directing the petitioner to pay an amount of Rs.1,00,000/- towards ex-gratia to the 1st respondent claimant, though the Ombudsman found that there was material suppression of facts, and therefore, the contract entered into by and between the petitioner and the 1st respondent is null and void. Brief Material facts for the disposal of the writ petition are as follows:

2. The 1st respondent had taken a Basic Floater Star Health Medi-claim Policy from the petitioner. The coverage of the policy was from 22.10.2012 to 21.10.2013 for an amount of Rs.3,00,000/-. Petitioner issued the policy to the 1st respondent based on Ext.P2 proposal submitted by the 1st respondent. The declaration contained in the proposal form clearly stipulated that, in case it is found that the statements or answers given by the insured are found incorrect or false, the company would be absolved from any liability. Therefore, the acceptance of the proposal is purely on the basis of the information submitted by the customer, after the company deems that the risks can be covered. It is also pointed out that, if the health condition is not satisfactory or enumerate high risk, the company will not issue a policy, and if the person is submitting incorrect information to mislead the insurer to issue a policy, the same is treated as fraud.

3. The 1st respondent raised a claim for medical benefit of Rs.2,11,608/-, which was repudiated by the company as per Ext.P6 order. Thereupon, 1st respondent has preferred a representation before the Grievance Cell of the petitioner company, which was also dismissed as per Ext.P8 order. It was thus accordingly 1st respondent approached the Insurance Ombudsman and secured the order for ex-gratia payment of Rs.1,00,000/-.

4. I have heard learned counsel for the petitioner and the learned counsel appearing for the 1st respondent, and perused the pleadings and the documents on record.

5. The case put forth by the 1st respondent is that, in January, 2013, he had suffered heart pain and was admitted to two hospitals, i.e., Upasana Hospital and for further investigations in NIMS Hospital. The admission was intimated to the petitioner company, according to the 1st respondent, the insurer has assured that the claim would be sanctioned soon. However, vide letter dated 29.08.2013, it was informed that the claim was repudiated.

6. The paramount contention advanced by the petitioner company before the Ombudsman was that the policy was issued based on the declarations given in the duly signed proposal form, subject to certain terms and conditions executed by and between the parties. The complainant was admitted to NIMS Hospital for treatment of IHD, T2DM, HTN from 29.01.2013 to 31.01.2013. The pre-authorization request received from the hospital on 29.01.2013, clearly revealed in the medical history column that 1st respondent was suffering from DM since one year. Since there was pre existing illness, the cashless benefit was denied. After treatment, the bills were submitted, which was repudiated. The discharge summary further reveals that the 1st respondent is a known case of T2DM and on treatment for Dyslipidemia. The risk factors recorded by the treating doctor include, T2DM, Dyslipidemia, Smoking etc. As part of the claims processing protocol, the company arranged investigation and collected records from the hospitals. The records from NIMS Hospital revealed that the 1st respondent was suffering from DM since 8 years. The records from Upasana Hospital revealed that 1st respondent was suffering from T2DM for last 8 years and HTN since 5 years. Therefore, according to the petitioner, these facts having not disclosed in the proposal form, amounts to material suppression of facts, and the contract entered into by and between the parties is ab initio void.

7. On the other hand,