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IN THE HIGH COURT OF KERALA AT ERNAKULAM
BASANT BALAJI, J.
Kumud Mahendra Parekh – Appellant
Versus
The National Insurance Company Ltd – Respondent
WP(C) NO. 15628 OF 2021
Decided on : 17-07-2024
INSURANCE - MEDICAL INSURANCE POLICY - ACT SECTION LIST - The court discussed the principles of utmost good faith in insurance contracts, the definition of pre-existing diseases, and the obligations of the insurer to prove material suppression of facts. The court emphasized that the rejection of the claim based on the discharge summary was improper as it did not demonstrate treatment or symptoms within the 48 months prior to the policy issuance, thus influencing the decision to quash the rejection of the claim.
Fact of the Case:
The petitioner, aged 74, obtained a medical insurance policy for overseas travel, which was valid from September 25, 2019, to November 10, 2019. After falling ill abroad, she incurred medical expenses and filed a claim. The insurance company initially approved the claim but later rejected it, citing a pre-existing condition of bronchial asthma that the petitioner allegedly failed to disclose.
Finding of the Court:
The court found that the rejection of the claim was based on an improper interpretation of the policy's terms regarding pre-existing conditions. The discharge summary did not indicate that the petitioner had received treatment for asthma within the 48 months prior to the policy issuance, which is necessary to classify a condition as pre-existing under the policy's definition.
Issues: Whether the petitioner had a pre-existing condition that was not disclosed when obtaining the insurance policy, and whether the rejection of the claim was justified based on the evidence presented.
Ratio Decidendi: The court held that the insurance company failed to prove that the petitioner had a pre-existing condition as defined by the policy. The discharge summary alone was insufficient to deny the claim, as it did not demonstrate any treatment or symptoms within the relevant time frame. The principles of utmost good faith and the burden of proof regarding material facts were emphasized.
Final Decision: The court quashed the rejection of the claim and directed the insurance company to process and pay the claim amount upon the petitioner providing the necessary documents.
JUDGMENT :
THE HONOURABLE MR.JUSTICE BASANT BALAJI
The petitioner had availed a medical insurance policy to get insured in connection with an overseas journey to the United Kingdom and Dubai. The insurance policy was valid from 25.09.2019 to midnight of 10.11.2019. Ext.P1 is the policy issued, and as per the contract of the policy, an amount of 2,50,000 USD was covered towards accident (medical expenses), 25,000 USD towards personal accident, 1,000 USD towards loss of checked-in baggage, 100 USD for delay of checked-in Baggage, 250 USD towards loss of passport, 2,00,000 USD towards personal liability and 10,000 USD towards illness (medical expenses).
2. The petitioner was subjected to a medical examination, and a detailed investigation was conducted by a competent Doctor and Ext.P2 Medical Examination Report was produced before taking the policy. It is specifically noted that, there was no previous history of any operation or existing disability. When the petitioner was abroad, she fell ill due to fever and suffered difficulty to breath. An amount of Rs.1,77,894.57 (9007.32 AED) was spent for the treatment, and after returning, the petitioner has lodged a detailed representation and requested to extend the benefit of the health insurance policy as per Ext.P1. The 1st respondent company, after due verification and investigation, had approved the claim submitted by the petitioner as per Ext.P3 for AED 9007.32 less USD 100. Ext.P3 is an email sent to the petitioner asking to produce certain documents. Thereafter, Ext.P4 letter dated 23.1.2020 was issued rejecting the petitioner's claim on the grounds of pre-existing disease and related complications. The petitioner approached the Grievance Cell of the 1st respondent and filed a complaint, but the complaint was dismissed, against which the petitioner approached the 3rd respondent. The 3rd respondent, also vide Ext.P7, rejected the complaint on the ground that there is a reference regarding the history of bronchial asthma in the discharge summary and that the petitioner has not disclosed the same while taking the policy. The petitioner challenges Exts.P4 and P7 in this Writ Petition.
3. A counter affidavit is filed by 1st and 2nd respondents, in which it is contended that the petitioner was aged about 74 years and was hospitalised at Mediclinic City Hospital, Dubai, from 23.10.2019 to 25.10.2019, as she felt difficulty in breathing. It was diagnosed as an infective exacerbation of Asthma and Respiratory failure. In the discharge summary, it is specifically noted that the patient had a history of bronchial Asthma. Ext.R1(b) is the copy of the discharge summary dated 25.10.2019. The respondents have also produced Ext.R1(c) proposal form in which, for query nos.2 and 5, the petitioner has stated that she doesn't have any illness or disease up to the date of making the proposal or had an accident in the 12 months preceding the first day of insurance.
4. While submitting the proposal and obtaining the policy, the petitioner has suppressed vital facts regarding her existing disease and health conditions. The utmost good faith is required regarding the medical insurance policy, and the insurance contract in the instant case is void. The 1st respondent has no liability under the contract. The policy was obtained by suppressing existing diseases and ‘pre-existing diseases’ which have been specifically defined in the policy. The policy issued in this case is not a general health policy, and coverage is intended for use by the insured person in the event of a sudden illness or accident arising when the insured person is outside the territory of India. Ext.P2 certificate issued by the Doctor has no application, and the same cannot be considered as a conclusive proof regarding the pre-existing health condition of the insured. The parties are governed by the terms and conditions of the insurance contract, and the petitioner cannot wriggle from the terms and conditions.
5. A reply affidavit is filed by
AI
The court held that a claim cannot be denied based on a pre-existing condition unless there is evidence of treatment or symptoms within 48 months prior to the policy issuance.
Disclosure of pre-existing conditions is crucial for insurance claims; failure to disclose can lead to claim denial if conditions were treated or diagnosed within 48 months prior to policy inception.
Point of Law : No fault can be found with the repudiation and the order of Ombudsman affirming the said repudiation and disallowing the claim. [Para 13]
The court emphasized the duty of disclosure in insurance contracts, ruling that claims cannot be repudiated without sufficient medical evidence supporting pre-existing conditions.
Proof - The Appellants further asserted that the Respondent also had history of asthma but no evidence has been placed by them to substantiate the same.
Insurers cannot reject claims on trivial grounds or without substantial evidence of pre-existing conditions, as it violates the insured's fundamental rights and undermines the principles of good fait....
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