PHILAMCARE HEALTH SYSTEMS, INC. V CA
(TRINOS)
379 SCRA 357; YNARES-SANTIAGO; March
18, 2002
NATURE
Petition for review of CA decision
FACTS
- Ernani TRINOS, deceased husband of
respondent Julita, applied for a health care coverage with Philamcare
Health Systems, Inc. In the standard application form, he answered no to
the question:
“Have you or any of your family
members ever consulted or been treated for high blood pressure, heart trouble,
diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give
details).”
- The application was approved for
period of one year; upon termination, it was extended for another
2 years. Amount of coverage was
increased to a maximum sum of P75T per disability.
- During this period, Ernani suffered
a HEART ATTACK and was confined at the Manila Medical Center (MMC) for one month.
While her husband was in the hospital, Julita tried to claim the
hospitalization benefits.
- Petitioner treated the Health
Care Agreement (HCA) as void since there was a concealment regarding
Ernani’s medical history. Doctors at the MMC allegedly discovered at the
time of his confinement, he was hypertensive, diabetic and asthmatic. Julita
then paid the hospitalization expenses herself, amounting to about P76T.
- After her husband died, Julita
instituted action for damages against Philamcare and its Pres. After trial,
the lower court ruled in her favor and ordered Philamcare to reimburse medical
and hospital coverage amounting to P76T plus interest, until fully paid; pay
moral damages of P10T; pay exemplary damages of P10T; atty’s fees of P20T.
- CA affirmed the decision of the
trial court but deleted all awards for damages and absolved petitioner
Reverente.
Petitioner’s Claims
(1) Agreement grants “living
benefits” such as medical check-ups and hospitalization which a member may
immediately enjoy so long as he is alive upon
effectivity of the agreement until its expiration.
(2) Only medical and hospitalization
benefits are given under the agreement without any indemnification,
unlike in an insurance contract where the insured is indemnified for his
loss.
(3) HCAs are only for a period of
one year; therefore, incontestability clause does not apply, as it
requires effectivity period of at
least 2 yrs.
(4) It is not an insurance company,
governed by Insurance Commission, but a Health Maintenance Organization under
the authority of DOH.
(5) Trinos concealed a material
fact in his application.
(6) Julita was not the legal wife since
at the time of their marriage, the deceased was previously married to another
woman who was still alive.*
ISSUES
1. WON a health care agreement is an
insurance contract (If so, “incontestability clause” under the Insurance Code
is applicable)
2. WON the HCA can be invalidated on
the basis of alleged concealment
HELD YES
Ratio Every person has an insurable interest
in the life and health of himself2. The health care agreement was in the nature
of non-life insurance, which is primarily a contract of indemnity. Once the
member incurs hospital, medical or any other expense arising from sickness,
injury or other stipulated contingent, the health care provider must pay for
the same to the extent agreed upon under the contract.
Reasoning
- A contract of insurance3 is an
agreement whereby one undertakes for a consideration to indemnify another
against loss, damage or liability arising from an unknown or contingent event.
- An insurance contract exists where
the following elements concur:
(a) The insured has an insurable interest;
(b) The insured is subject to a risk of
loss by the happening of the peril;
(c) The insurer assumes the risk;
(d) Such assumption of risk is part of a
general scheme to distribute actual losses among a large group of persons
bearing a similar risk; and
(e) In consideration of the insurer’s
promise, the insured pays a premium.
2. NO
Ratio Where matters of opinion or judgment
are called for, answers made in good faith and without intent to deceive will
not avoid a policy even though they are untrue; since in such case the insurer
is not justified in relying upon such statement, but is obligated to make
further inquiry.
Reasoning
- The fraudulent intent on the part of
the insured must be established to warrant rescission of the insurance
contract. The right to rescind should be exercised previous to the
commencement of an action on the contract. No rescission was made.
Besides, the cancellation of health care agreements as in insurance
policies requires:
(a) Prior notice of cancellation to
insured;
(b) Notice must be based on the occurrence
after effective date of the policy of one or more of the grounds mentioned;
(c) Must be in writing, mailed or
delivered to the insured at the address shown in the policy;
(d) Must state the grounds relied upon
provided in Section 64 of the Insurance Code and upon request of insured, to
furnish facts on which cancellation is based.
- These conditions have not been
met. When the terms of insurance contract contain limitations on liability,
courts should construe them in such a way as to preclude insurer from
non-compliance of obligation. Being a contract of adhesion, terms of an
insurance contract are to be construed strictly against the party which
prepared it – the insurer.
- Also, Philamcare had 12 months from
the date of issuance of the Agreement within which to contest the membership of
the patient if he had previous ailment of asthma, and six months from the
issuance
of the agreement if the patient was
sick of diabetes or hypertension.
* The health care agreement is in the nature
of a contract of indemnity. Hence, payment should be
made to the party who incurred the
expenses. It is clear that respondent paid all the hospital and medical bills;
thus, she is entitled to reimbursement.
Disposition Petition DENIED.
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