High court reprimands National Insurance Co

The Punjab and Haryana High Court on Friday reprimanded National Insurance Company Ltd (NICL) for attempting to back out of its contractual obligation of providing medical reimbursement to over 800,000 beneficiaries of the Bhai Ghanya Sehat Sewa Scheme under the aegis of Bhai Ghanya Trust. The trust is a nodal agency set up by the Punjab government for implementing the healthcare scheme for the poor strata of society.

The court also directed NICL to ensure that there is no disruptions in the medical reimbursement services and adjourned the matter to May 27, 2009 as the counsel for NICL sought time. The trust had filed a civil writ petition, which was taken up for hearing today.

Legal adviser of the trust Gagan Anand confirmed the development.

According to the petition, the trust conducted a bidding process for selecting an insurance company for providing health insurance cover. The insurance company has to select a third party administrator for providing the service.

NICL quoted the insurance premium of Rs 1,291 per main member, emerging as the lowest bidder, and the trust signed a detailed service level agreement with it. NICL was to carry out the enrollment exercise and incidental activities, including verification of age, etc of the persons intending to become beneficiaries.

The trust has paid Rs 24 crore as premium to NICL. On the other hand, NICL has already faced mediclaim reimbursement up to Rs 20 crore.The group mediclaim policy is valid till September 2009. Fearing heavy losses, NICL issued a termination notice dated April 8, 2009, to the trust, the petition said.

Prior to issuance of the termination notice, NICL had also issued a demand notice calling upon the trust to pay premium over and the amount earlier agreed at the time of execution of the service level agreement.In this regard, the trust pleaded it had paid the premium as per the contractual obligation and the rate quoted by NICL during the bidding process.