Case Title: The Manager, TATA AIG General Insurance Co Ltd v. Kathamuthu and another
Summary
The Madras High Court has ruled that compensation for medical expenses is a reimbursement, and the insurance company is prohibited from reclaiming the same expense under the Motor Vehicles Act once awarded to the victim of a road accident. The Motor Accident Tribunal must deduct the amount paid directly to the hospital by the insurance company under a medical policy coverage when calculating the compensation for the injured. The court ruled that the original petitioner’s unpaid balance to the hospital is ineligible for compensation in a claim under the Motor Vehicles Act. The court subtracted the amount already paid by the insurance company and ordered the appellant company to deposit the remaining balance, along with compensation for disability, pain and suffering, permanent disability, loss of income, and other expenses, along with an annual interest rate of 7.5%, within eight weeks.
About the case
The Madras High Court has determined that the compensation for medical expenses is a matter of reimbursement. Consequently, the insurance company is prohibited from reclaiming the same expense under the Motor Vehicles Act once it has been awarded to the victim of a road accident.
Thus, the Motor Accident Tribunal shall deduct the amount paid directly to the hospital by the insurance company under a medical policy coverage when calculating the compensation for the injured, as determined by the bench of Justice Teeka Raman.
The order was issued in response to an appeal filed by TATA AIG General Insurance Co Ltd, an insurance company, against an order issued by the Motor Accident Claims Tribunal, Karur, which awarded Rs. 9,08,954 in medical expenses.
The appellant contended that the tribunal had made an error by failing to consider the sum of Rs.4,00,000/- that the insurance company had reinvested in the injured under the medi-claim policy. Therefore, the petitioner contended that the hospital had already received the sum, and it could not be awarded again, as it would constitute double compensation.
The appellant relied on the Madras High Court’s ruling in Cholamandalam MS General Insurance Co. Ltd v. A Saravanan 2012 (1) TNMAC 606, in which the court made the following observation:
“…the policyholder is entitled to receive the full premium upon maturity or the heirs are entitled to receive it in the event of his death under the LIC policy.” The injury sustained in the accident does not affect the payment under the life insurance policy. Conversely, the claimant is responsible for the amount when they suffer injuries in an accident, as per the medi-claim policy. Consequently, compensation for the injuries he sustained under the category of “medical treatment” is not permissible.
In contrast, the respondents cited the court’s ruling in National Insurance Co. Ltd v. C Ramesh Babu [2013 (2) TNMAC 636] and contended that a medi-claim policy is not deductible and cannot be retrieved in a claim for compensation under the Motor Vehicles Act.
The appellants’ arguments were sustained by the court. The court also considered the judgment of the Apex Court in United India Insurance Co. Ltd v. Mrs. Patricia Jean Mahajan, which was as follows:
“24…. it is evident that the deductions are permissible from the compensation amount in the event that the Claimant receives the benefit as a result of injuries that he would not have been entitled to otherwise.” It excludes instances in which the payment is not contingent upon an injury sustained as a result of a catastrophe.
The court noted that the original petitioner’s unpaid balance to the hospital is ineligible for compensation in a claim under the Motor Vehicles Act. Consequently, the court subtracted the amount that had already been paid by the insurance company and ordered the appellant company to deposit the remaining balance, as well as compensation for disability, pain and suffering, permanent disability, loss of income, and other expenses, along with an annual interest rate of 7.5%, within eight weeks. The court directed the tribunal to refund the excess award amount to the company with proportionate interest if the entire amount had already been deposited by the company.
