State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India vs Manjit Kaur on 5 September, 2018
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
First Appeal No. 151 of 2018
Date of Institution : 14.03.2018
Order Reserved on: 21.08.2018
Date of Decision : 05.09.2018
1. Life Insurance Corporation of India Branch office, Branch
Office Zira, through its Branch Manager.
2. Life Insurance Corporation of India, Divisional office 4-5
District Shopping Complex, Ranjit Avenue, Amritsar, Punjab,
through its Divisional Manager.
.....Appellants/Opposite Parties
Versus
Manjit Kaur Gujral aged 80 years widow of Satpal Singh Gujral,
resident of Kalgidhar Nagar, Ferozepur Road, Zira, District
Ferozepur, Punjab, 9884-21102.
....Respondent/Complainant
First Appeal against order dated
05.01.2018 passed by the District
Consumer Disputes Redressal Forum,
Ferozepur.
Quorum:-
Shri J. S. Klar, Presiding Judicial Member
Smt. Kiran Sibal, Member Present:-
For the appellants : Sh. Rajneesh Malhotra, Advocate For the respondent : Sh. Parminder Singh, Advocate ............................................ KIRAN SIBAL, MEMBER :-
Challenge in this appeal by appellants is to order dated 05.01.2018 passed by District Consumer Disputes Redressal F.A. No.151 of 2018 2 Forum, Ferozepur (in short the 'District Forum'), allowing the complaint of respondent of this appeal by directing appellants to pay Rs.5,000/- as consolidated compensation for mental agony, pain and harassment and District Forum further directed to pay Rs.21,915/- as expenses incurred on the treatment of deceased Satpal Singh Gujral along with @9% per annum from the date of repudiation of claim till its realisation. The appellants of this appeal are opposite parties (OPs) in the complaint before the District Forum and respondent of this appeal is complainant therein and they be referred as such hereinafter for the sake of convenience.
2. Brief facts as stated in the complaint are that the complainant filed the complaint U/s 12 of the Consumer Protection Act, 1986 (in short, "the Act") against the OPs. The husband of the complainant namely Satpal Singh Gujral was working as Assistant Manager of LIC of India and being employee of opposite parties, he was also insured with them and used to pay the premium regularly both during his service and after retirement. On 19.02.2016, the husband of the complainant suffered from CBD stone and he was admitted in Modern Hospital, Jalandhar; where he died on 24.02.2016 in the hospital and a sum of Rs.21,915/- was spent on his treatment and medicines. The complainant approached the opposite parties and requested them to pay the mediclaim expenses, but they put off the matter on one pretext or the other without submitting any reason. Pleading deficiency in service and unfair trade practice on the part of the opposite parties, it was prayed that the opposite parties be F.A. No.151 of 2018 3 directed to pay Rs.21,915/- along with interest from the date of death of husband of complainant till payment; to pay Rs.50,000/- as compensation for mental agony, pain and harassment and Rs.10,000/- as litigation expenses.
3. Upon notice, the opposite parties appeared and filed joint written reply to the complaint raising certain preliminary objections that the present complaint is bad for non-joinder of necessary parties. The insurer New India Assurance Company Ltd. and the TPA MD India Health care Services (TPA) Pvt. Ltd under the insurance policy in question are essential and necessary parties;
that a group mediclaim insurance policy No.12070034150400000003 dated 01.04.2015 covering the
northern Zone employees/retired employees of Life Insurance Corporation of India and their dependents for the period 01.04.2015 to 31.03.2016 had been issued by the insurer New India Assurance Company Limited. As per the said policy the insurer New India Assurance Company would provide cashless and re-imbursement facility through TPA (Third Party Administrator) MD India Healthcare Services (TPA) Pvt Ltd in the Northern Zone, the re-imbursement bills shall be submitted to the TPA or OS department of LIC of India after payment of hospital bills by the beneficiary/claimant. The mediclaim policy of the LIC employees is covered by insurer New India Assurance Company Limited through TPA MD India Healthcare Service TPA Pvt. Ltd and the role of LIC of India is only to forward the claim of the beneficiary/claimant to the TPA; Satpal F.A. No.151 of 2018 4 Singh Gujral was a retired employees and pensioner of LIC of India and the mediclaim of the said official was received at OS department of the Divisional Office, Amritsar, LIC of India for a sum of Rs.21,915/- and the same was forwarded to the TPA, MD India Healthcare Services (TPA) Pvt Ltd which was received on 29.04.2016 through their employee Satnam Singh under proper acknowledgement. The claim had been repudiated by the TPA and insurer vide letter dated 28.05.2016 on the ground that the patient was treated on OPD basis and as per policy terms OPD based treatment is not payable.
4. The complainant tendered her evidence as Ex.C-1 to Ex.C-14 and closed the evidence.
5. Opposite parties tendered his evidence as Ex. OPs/1 to Ex. OPs/6 and close the evidence.
Contentions of the Parties
6. We have heard the learned counsel for parties and have also gone through the record.
7. Learned counsel for the appellants contended that the District Forum has failed to appreciate the fact that complaint is liable to be dismissed on the ground of non-joinder of the necessary parties. The Group Mediclaim Insurance Policy No.12070034150400000003 dated 01.04.2015 covering the Northern Zone employees/retired employees of Life Insurance Corporation of India and their dependents for the period 01.04.2015 to 31.03.2016 had been F.A. No.151 of 2018 5 issued by the insurer New India Assurance Company Limited and the claim if any was to be paid by the said Company but the respondent has not impleaded New India Assurance Company Limited as a necessary party. District Forum has failed to take into consideration that the husband of the respondent namely Sh. Satpal Singh Gujral was a retired employees and pensioner of LIC of India and the mediclaim of the said official was received at OS Department of the Divisional Office, Amritsar, LIC of India for a sum of Rs.21,915/- and the same was forwarded to the TPA, MD India Healthcare Services (TPA) Pvt. Ltd which was received on 29.04.2016 through their employee Satnam Singh under proper acknowledgment. However, the said claim was repudiated by the TPA and insurer, vide letter dated 28.05.2016, on the premise that the patient was treated on OPD basis and as per policy terms, OPD based treatment is not payable. Since the claim of the complainant was repudiated by TPA, MD India Healthcare Services (TPA) Pvt. Ltd and not by the appellants, the order of the learned District Forum being factually wrong is liable to be set-aside. Learned District Forum failed to take into consideration that there was no privity of contract between the complainant and the appellants to pay the claim. The claim, if any, in respect of treatment of Sh. Satpal Singh Gujral was to be paid by New India Assurance Company Limited, which has not been made a party to the present complaint. The Hon'ble Supreme Court in the case titled as UII versus Harchand Rai Chandan Lal 2004(8) SCC 644 has held that the terms of the F.A. No.151 of 2018 6 policy shall govern the contract between the parties and cannot be overlooked. The claim is payable only if no condition of the policy has been violated by the policy holder. In this regard, the Hon'ble National Commission is very clear in the judgment titled as Iqbal Hussain Quazi Vs. New India Assurance Company Limited (2005) CPJ-95 (NC), in which it has been held as under:-
" Mere payment of premium to insurance company does not give relief based on "pay be back anyhow irrespective of conditions of policy" clear violation of policy conditions proved-No inference with order of State Commission required".
Averring on similar lines as in the appeal; the learned counsel prayed that the order of the District Forum be set aside, in view of the above grounds.
8. On the other hand, learned counsel for the respondent contended that husband of the complainant namely Satpal Singh Gujral was working as Assistant Manager of LIC of India and being employee of opposite parties, he was also insured with them and during the service of husband of complainant and after retirement, he used to pay the premium regularly. The complainant had approached the OPs and requested them to pay the mediclaim expenses incurred towards the treatment of Mr.Satpal Singh Gujral, but the OPs did not adhere to the request. In this manner, the OPs in fact have provided unfair trade practice and deficiency in service due to which complainant has suffered lot of pain, agony and harassment at the hands of OPs for which they are liable to F.A. No.151 of 2018 7 compensate the wife of the deceased; who is entitled to the mediclaim and compensation being employee of LIC of India and prayed for dismissal of the appeal.
Consideration of Contentions
9. Admittedly, husband of the complainant namely Satpal Singh Gujral was working as Assistant Manager of LIC of India and being employee of opposite parties, he was also insured with the OPs under the Group Mediclaim Insurance Master Policy No.12070034150400000003 dated 01.04.2015 as Annexure A-1 covering the Northern Zone employees of LIC for the policy period 01.04.2015 to 31.03.2016.
10. The main points of considerations and questions for adjudication before this Commission can be briefly stated as under:
a. whether the appellant i.e. Life Insurance Corporation of India (employer and insured) or New India Assurance Company Limited (insurer of LIC) is liable to pay the compensation awarded by the learned District Forum in respect of the mediclaim of Sh. Satpal Singh Gujral ?
b. whether the complaint was liable to be dismissed on the ground of mis-joinder of the necessary parties ?
c. Whether TPA MD India is competent to repudiate the claim of the complainant?F.A. No.151 of 2018 8
11. We would like to address all these issues raised before this Commission collectively for consideration.
12. A perusal of Annexure A-1 shows that it is a Group Mediclaim Insurance Master Policy No.12070034150400000003 dated 01.04.2015 for the policy period 01.04.2015 to 31.03.2016 for the Northern Zone staff of LIC including Group Insurance policy taken by LIC for their staff members. LIC is the insured in the instant case and New India Assurance Company Limited is the insurer. Under the Group Mediclaim policy; the staff pays a nominal amount from their salary to be covered for the benefits of the scheme taken by their employer i.e. LIC in the present case and any redressal of grievance is to be first addressed to the employer for any settlement. In the instant case also, it has been submitted that Satpal Singh Gujral was a retired employee and pensioner of LIC of India and the medi-claim of the said official was received at OS Department of the Divisional Office, Amritsar, LIC of India. Whenever any insurance policy is taken, it is an agreement of the insurer with the insured and the complainant's husband was not a party in the insurance contract and was not aware about the existence of TPA i.e. MD India Healthcare Services (TPA) Pvt. Ltd. Since there was no privity of contract between the complainant's husband and New India Assurance Company Limited it is not necessary that New India Assurance Company Ltd. needs to be impleaded as a necessary party. Being employee of LIC of India, it is natural that the claim for medical expenses, if any, would be F.A. No.151 of 2018 9 submitted to LIC itself. Even Annexure A-1 clearly states that name of the insured is Life Insurance Corporation of India, which is a group medi-claim policy for the said corporate on behalf of its employees. Accordingly, we are of the view that LIC, being the employer and insured in the above stated group policy, is liable to compensate towards the order passed by the learned District Forum and the complaint cannot be dismissed for alleged non-joinder of necessary parties. However, the OPs are at liberty to address their concerns and grievance to the appropriate authority in accordance with law.
13. So far as the repudiation of the claim of the complainant by TPA, MD India, vide letter Ex.OPs/4, is concerned, it is relevant to mention that TPA is acting like agents, which identify the Preferred Provider Network (PPN) list of hospitals, which offer cashless claim settlement. The same is done on behalf of the Insurance Company. The TPA rejects the claim, citing certain deficiencies and actually the insurance Company does not pay the amount.
14. Health Services to be provided by the TPA have been specified in IRDAI (Third Party Administrators-Health Services) Regulations, 2016, issued vide Notification F. No.IRDAI/REG/5/117/2016, Dated 14.3.2016 and the same reads as under:-
"Health services by TPA
3. (1) A TPA may render the following services to an insurer under an agreement in connection with health insurance business:
a. servicing of claims under health insurance policies by way of pre-authorization of cashless treatment or settlement of claims other than cashless claims or both, as per the F.A. No.151 of 2018 10 underlying terms and conditions of the respective policy and within the framework of the guidelines issued by the insurers for settlement of claims.
b. servicing of claims for Hospitalization cover, if any, under Personal Accident Policy and domestic travel policy. c. facilitating carrying out of pre-insurance medical examinations in connection with underwriting of health insurance policies:
Provided that a TPA can extend this service for life insurance policies also d. health services matters of foreign travel policies and health policies issued by Indian insurers covering medical treatment or hospitalization outside India e. servicing of health services matters of foreign travel policies issued by foreign insurers for policyholders who are travelling to India:
Provided that such services shall be restricted to the health services required to be attended to during the course of the visit or the stay of the policyholders in India. f. servicing of non-insurance healthcare schemes as mentioned in Regulation 22 (3) of these Regulations g. any other services as may be mentioned by the Authority. (2) While performing the services as indicated at Regulation 3 (1) of these regulations, a TPA shall not a. Directly make payment in respect of claims b. Reject or repudiate any of the claims directly c. Handle or service claims other than hospitalization cover under a personal accident policy F.A. No.151 of 2018 11 d. Procure or solicit insurance business directly or indirectly e. Offer any service directly to the policyholder or insured or to any other person unless such service is in accordance with the terms and conditions of the policy contract and the agreement entered into in terms of these regulations.
(3) A TPA can provide health services to more than one insurer. Similarly an insurer may engage more than one TPA for providing health services to its policyholders or claimants."
15. A perusal of Regulation 3(2) (b) of the above health services to be provided by TPA specifically reveals that while performing the services as indicated at Regulation 3(1) of these Regulations, a TPA shall not reject or repudiate any of the claims directly. In the present case; the claim has been repudiated and the cashless service was denied by TPA, vide letter, Ex.OPs/4, which is in violation of the above said Regulations of the IRDAI. The duties and responsibilities of the Insurance Companies and TPA were also discussed by the Hon'ble Bombay High Court, in Public Interest Litigation No.12 of 2011 (Gaurang Dinesh Damani vs. Union of India & Ors.) in order dated 13.08.2015. It is a common practice that the TPA gives daily targets to its staff for approving claims, where they sanction total money in a day and all the claims should not exceed particular limit. The hospital bills cannot be settled on the basis of targets fixed by the Insurance Companies. Otherwise, the TPAs has no authority to reject the claim. Such power lies, exclusively with the Insurance Companies. The TPA can only process the claim and forward the same to the Insurance Company F.A. No.151 of 2018 12 and the competent authority of the Insurance Company is to decide about the same.
16. Thus, we are of the opinion that the claim of the complainant was illegally and arbitrarily rejected by the TPA, against the aforesaid instructions of the IRDA. Since the Insurance Companies use the PPN or hospitals empanelled by the TPA and, resultantly, TPA ask the hospital to give commission on every claim, if they want to be enrolled in PPN. This has been observed by the regulators. Resultantly, the patients/consumers are over-charged by the hospitals, since they have to pay some commissions to TPAs to use the power on behalf of the Insurance Companies. They have no right to solicit business, like agents for the Insurance Companies. Their only job is to serve and process the claims. Accepting and rejecting the claims at their own by the TPAs is illegal, arbitrary, null & void and is not sustainable in the eyes of law.
17. In view of above reasoning, it is held that TPA had no right to repudiate the claim of the complainant. The competent authority of Insurance Company is only competent to pass orders, accepting or rejecting the insurance claim. Accordingly, the same yardstick would apply to the facts of the instant appeal also.
18. In view of the above discussion, there is no perversity and illegality in the above order of the District Forum. Accordingly, the present appeal is dismissed and the impugned order passed by the District Forum is affirmed and upheld.
F.A. No.151 of 2018 13
19. The appellants had deposited Rs.25,000/- at the time of filing of the appeal. This amount along with interest, if any, which accrued thereon be remitted by the Registry to the respondent/complainant after expiry of 45 days by way of cross cheque/demand draft, subject to stay order, if any.
20. Arguments in this appeal were heard on 21.08.2018 and the order was reserved. Certified copies of the order be communicated to the parties as per rules.
21. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(J. S. KLAR) PRESIDING JUDICIAL MEMBER (KIRAN SIBAL) MEMBER September 5th, 2018 SK/-