Fortis subsidiary fined Rs 5 bn over failure to treat 25% patients for free

Special Committee directed Escort Heart Institute & Research Centre to pay Rs 5 bn to DGHS within a month for unwarranted profit allegedly made by non-compliance with the conditions of allotment deed

Fortis Healthcare on Tuesday said that its subsidiary Escort Heart Institute & Research Centre has been directed to deposit Rs 5 billion to Director General of Health Services within a month on account of unwarranted profit.

Fortis said that Escort Heart Institute & Research Centre (EHIRCL) had received an order dated June 9, 2016, from Directorate General of Health Services (DGHS) for the recovery of Rs 5 billion on account of unwarranted profit allegedly made by it by not complying with the conditions of allotment letter/lease deed.

Delhi Development Authority (DDA) had granted the land to the hospital on the condition that it would provide free treatment to 25 per cent of its patients. However, in 2005, the company contested that just 10 per cent of the seven acres of land was granted with this condition.

"A writ petition was filed by EHIRCL before Hon'ble High Court of Delhi challenging the order...subsequently Delhi High Court set aside the demand of Rs 5 billion and the matter was remanded to the Special Committee for hearing," Fortis said in a regulatory filing.

It further said, "EHIRCL has informed that the Office of the Special Committee vide order dated May 28, 2018, has directed it to deposit an amount of Rs 5 billion in the account of the Delhi Government in favour of Director General of Health Services within a month of receiving this order".

Fortis said EHIRCL is in the process of evaluating available legal recourse as may be advised in this regard.

At present, Fortis is in the process of inducting new investor to the company. There were five suitors in the race for Fortis Healthcare out of which only four made binding bids.

Besides Munjals-Burmans, Manipal-TPG and IHH Healthcare, KKR-backed Radiant Life Care had also put in a binding offer.

China's Fosun Healthcare made a bid but did not make a binding offer for the Fortis.