Bombay High Court
Gaurang Dinesh Damani vs Union Of India And 33 Ors on 13 August, 2015
Author: A. K. Menon
Bench: Mohit S. Shah, A. K. Menon
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sbw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
PUBLIC INTEREST LITIGATION NO.12 OF 2011
WITH
CHAMBER SUMMONS NO.126 OF 2014
WITH
CHAMBER SUMMONS (ST)NO.54 OF 2014
Gaurang Dinesh Damani ..Petitioner
Versus
Union of India & Ors. ig ..Respondents
...........
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.
...........
CORAM: MOHIT S. SHAH, C.J. &
A. K. MENON, J.
DATE : 13 AUGUST 2015.
ORAL ORDER
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 1/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *2* 907.pil-12.11.doc 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 re-insurance 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) 2/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *3* 907.pil-12.11.doc 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 3/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *4* 907.pil-12.11.doc (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 Insurance Company can be free to choose their own slabs. This is not in any way a communist approach. It will remove all ambiguity and in fact, in the long term work in favour of the Insurers."
5. One of the major grievances was about discontinuance of cashless facility by the hospitals and clinics. In view of the suggestions made at the hearing of this PIL, the insurance companies have provided for cashless facility at about 250 hospitals/clinics in Mumbai under the PPN (Preferred Provider Network) facility. The petitioner appearing in person submits that there are in all about 3000 hospitals/public clinics in the City of Mumbai and that, therefore, more and more hospitals and clinics ought to be brought 4/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *5* 907.pil-12.11.doc under this PPN facility.
6. Therefore, it would be for the IRDA and insurance companies to make an endeavor to bring more hospitals and clinics under the PPN so as to give the consumer an option of availing cashless facility or to go in for reimbursement.
7. While IRDA is supposed to look into the grievance of the consumers, IRDA must also look into the grievances of hospitals and clinics which may be facing any difficulties in the matter of processing of their claims under PPN by the Third Party Administrators or the insurance companies.
8. The petitioner has other grievances at the hearing, some of which are as under:-
(i) Overall claims ratio for the years 2013-2014 and 2014-15 (interim, if entire year is not available) needs to be disclosed;
(ii) Cashless v/s non-cashless (reimbursement) ratio of claims passed needs to be disclosed;
(iii) Claim severity(cashless claim amount per claim v/s equivalent non-cashless amount per claim)for the same ailment needs to be disclosed.
9. The petitioner has also submitted that regulation 8 (b) requires IRDA to see that every insured shall be provided with a Key 5/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *6* 907.pil-12.11.doc Information Sheet setting out in simple language briefly but clearly all the important features of the policy, its claim limits, disallowances. Although the IRDA is supposed to prescribe such document, the petitioner himself has prepared a draft.
10. The petitioner shall make a representation to IRDA highlighting on above issues and such other and further issues as may be looked into by IRDA along with copy of the draft Key Information Sheet prepared by the petitioner. Such representation shall be made within three weeks from today along with an authenticated copy of this order.
11. Upon receipt of the representation, IRDA shall circulate such representation to all insurance companies and all other stake holders in the insurance business inviting their suggestion/comments. Thereafter IRDA shall consider issuance of appropriate instructions/guidelines/modification of amendment of the Health Insurance Regulations, 2013 and Third Party Administrator Regulation of 2001 as IRDA may consider appropriate, keeping in mind its duties under section 14A of the IRDA Act.
12. In order to ensure that this is done, IRDA shall circulate the petitioner's representation to the insurance companies and other stake holders within 2 months from the date of receipt of the representation and inviting the comments and suggestions of the stake holders within 2 months thereafter. The IRDA shall thereafter 6/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *7* 907.pil-12.11.doc take a decision on the petitioner's representation as well as counter suggestions of the stake holders within 4 months thereafter.
13. We may indicate that in the order dated 2 August 2013 this Court had directed IRDA to issue instructions to all insurers to provide detailed guidelines to the TPA for claims assessment and admission, as indicated in the Regulation 12(b) for all health insurance policies. It was also indicated that such guidelines should also include the packages for various ailments, so that the insurer, the TPA and the insured would know how much claim would be reimbursed for a particular ailment. Of course, it was also observed that the insurer can also prescribe different slabs depending upon categories of hospitals/clinics where treatment is obtained, or a percentage of the sum for which the claimant is insured, whichever is higher. We had further observed that such guidelines shall also be placed on the website of the concerned insurance company. We are informed that the IRDA has still not issued such instructions in compliance with the above directions dated 2 August 2013.
14. Mr. Chatterji, learned Senior Counsel for the IRDA submits that issuance of detailed guidelines by the insurers to TPAs would depend upon various factual and policy inputs and that, therefore, the IRDA has not so far issued such instructions.
15. This issue will be considered after the petitioner, the insurance companies and TPA and other stake holders make 7/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 ::: *8* 907.pil-12.11.doc representations and after considering their views and suggestions and counter suggestions. On the above issue also the petitioner shall make a representation within two months from today.
16. We hope that IRDA will play the pro-active role that the Parliament expected it to, as is apparent from the provisions of section 14 of the IRDA Act 1999 since it is supposed promote orderly growth of the insurance and re-insurance business and also protect the interests of the policy holders in various matters including settlement of insurance claims and surrender value of policies and other terms and conditions of contracts of insurance.
17. During the pendency of the PIL, IRDA (Health Insurance) Regulations, 2013 were issued which shows that IRDA has taken up seriously the issue of protection of the policy holders and has made a beginning in this direction and will continue to do so. We appreciate this positive step which IRDA has taken.
18. The PIL is, accordingly, disposed of in terms of the above observations and directions.
19. The Court would like to place on record its appreciation for the contributions made by Mr. Gaurang Damani, petitioner, appearing in person, Mr. Beni Chatterji, learned Senior Counsel for IRDA, Mr. Yogesh Naidu, learned counsel for the GIC and Dr. Birendra Saraf, learned counsel for the TPA.
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20. Chamber Summons are disposed of in the above terms.
CHIEF JUSTICE (A. K. MENON, J.) wadhwa 9/9 ::: Uploaded on - 20/08/2015 ::: Downloaded on - 10/09/2015 20:02:33 :::