Rejecting the Life Insurance Corporation of India's (LIC's) contention that there was a material suppression of the health condition in the proposal form by the deceased life assured (DLA), the national consumer disputes redressal commission (NCDRC) directed the insurer to pay a Rs4 lakh death claim with 9% interest to the wife of the DLA.
Setting aside the order passed by the West Bengal state consumer disputes redressal commission, NCDRC upheld the order passed by the North 24 Pargana district consumer disputes redressal forum.
In the order, the bench of Binoy Kumar (presiding member) and justice Sudip Ahluwalia (member) says, "...it would not be fair to conclude that there was any wilful suppression of material information or false declaration regarding the insured's health, which could justify repudiation of the insurance claim following his death. Consequently, this Commission is of the view that the state commission erred in setting aside the well-reasoned order of the district forum, which had gone in favour of the complainant."
Kolkata-based Sarbani Chatterjee, the widow of Prasanta Chatterjee, had filed the appeal against the order passed by the state commission, rejecting her claim for the death of her husband.
On 20 December 2011, Mr Chatterjee bought a life insurance policy worth Rs4 lakh from LIC. However, he died on 29 February 2012 due to sudden cardio-respiratory failure. His wife filed a death claim with LIC and submitted all necessary documents asked by the insurer. However, the claim was rejected by LIC, while asking her to appear and make representations before its zonal office claims review committee and central office review committee in Mumbai. However, no decision was communicated to her. Ms Chatterjee then filed a complaint before the district forum, seeking an insurance sum assured of Rs4 lakh with an interest of 18%pa (per annum).
Appearing before the district forum, LIC contended that it was not mandatory to settle the claim in favour of Ms Chatterjee if the claim was shrouded by suppression of material facts to defraud the insurer. It further submitted that because the policy had run for less than three years, it qualified as an early claim, and the claim was referred to the claim review committee.
"During the claim review process, it was found that the DLA was a patient of morbid obesity, somnolence, obstructive sleep apnoea for about a year, as per the prescription of Dr NB Debnath dated 30 July 2008. However, in the proposal form dated 20 December 2011, the deceased life assured had answered a health question in the negative, thus misdirecting LIC and suppressing material facts regarding his health," the insurer contended.
In its order, the district forum observed, "The diagnosis of alleged Dr Debnath, i.e., obesity, somnolence, obstructive sleep apnea do not connect the question i.e. pertaining to the liver, stomach, heart, lungs, kidney, brain or nervous system... It is a fact that from annexure 'n', it appears that there was no such illness of Ms Chatterjee's husband, which has been asked in para 9(iv) of the written version of LIC. So, the question of concealment of pre-ailment disease does not arise…."
"These are the obstructive sleep apnea, chest, there are generally suffered by the patient of 70 years more or less silently. LIC failed to prove that those diseases were pre-existing in this case. It was just a hypothetical presumption of the insurer to repudiate the claim of the complainant..," the district forum says while directing LIC to pay the claim amount to Ms Chatterjee.
Aggrieved by the order, LIC filed an appeal before the state commission. While setting aside the order passed by the district forum, it says, "The answers to the question vide item no9 (i), 9(iv) and 9(v) and 9(ix) in the proposal form are clearly aimed at suppressing the material information which is otherwise provided in the prescription. In that position, the policy was to be rendered void as per terms of the policy, the insurance company cannot, therefore, be held responsible for any negligence or deficiency in service in repudiating the claim of Ms Chatterjee."
Ms Chatterjee then approached NCDRC, highlighting that the state commission failed to appreciate the fact that the medical report of good health of Mr Chatterjee dated 20 November 2012 was prepared by the medical examiner of LIC itself after completing the requisite examinations and tests before issuing the insurance policy.
During the hearing, she argued that the integrity of the prescription report (of Dr Debnath) was not prima facie proved before the forum and the insurer failed to produce any other relevant evidence or documents supporting the prescription. "The report of a single page is the sole document which has been produced before the forum by LIC, on the basis of which the claim has been rejected. Dr Chitra Ranjan Das, who examined Mr Chatterjee and prepared the medical attendant's certificate on 23 April 2012, has replied that the illness of the deceased was of a very short period," Ms Chatterjee submitted.
After hearing both sides and perusing documents available on record, NCDRC observed that the district forum did not place much reliance on the prescription slip of Dr Debnath, who had examined Mr Chatterjee on 30 July 2008, and, therefore, was of the view that he had not made any material suppression about the condition of his health in his proposal form towards purchasing the policy in 2011. The state commission was, however, of the view that since the insured suffered from morbid obesity, somnolence and obstructive sleep apnoea, his failure to mention those in the proposal form was a suppression of material information, the bench noted.
However, it says, "the state commission ignored the fact that the prescription relied upon by the insurer company in defending its repudiation of the insurance claim was issued by the concerned physician as far back on 30 July 2008, whereas the policy was purchased by the Insured in February 2011. Neither of the three maladies which were noted in the prescription were specifically required to be disclosed in the proposal form (annexure-A8) and there is nothing on record to show that as a consequence of such prescription, the insured was actually required to undergo any specific treatment for more than a week, which was the required clause in Item 9(i) pertaining to his personal history. Only some more tests were prescribed by the physician and the insured was advised not to drive any vehicle such as a car or cycle."
"The insurance company did not produce any more medical evidence to show that any further treatment was administered to the deceased as a consequence of such prescription. Moreover, the deceased had described his health condition as 'good', which was in relation to the period immediately preceding one year before submitting his proposal form. But by that time, more than two and a half years had already passed after the prescription in question had been issued. On top of that, the proposal form itself goes to show that it was counter-signed by Dr AK Ray Chaudhari, the authorised medical officer, on behalf of LIC itself. In such circumstances, it would not be fair to conclude that there was any wilful suppression of material information or false declaration regarding Mr Chatterjee's health, which could justify repudiation of the insurance claim following his death," NCDRC says.
While setting aside the order passed by the state commission, NCDRC directed LIC to pay Ms Chatterjee the Rs4 lakh claim with an interest of 9% from the date of death of her husband.
(Revision Petition No2195 of 2017 Date: 18 May 2023)