Violation of HC orders, contractual obligations under SEHAT scheme
*Urges IRDAI to take exemplary action against insurer
Govind Sharma
JAMMU, Sept 6: The State Health Agency (SHA) of Jammu and Kashmir has initiated contempt proceedings against IFFCO Tokio General Insurance Company Limited for failing to comply with the directives of the Jammu and Kashmir High Court. The insurance company has allegedly violated its contractual obligations under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) and SEHAT schemes, putting millions of residents’ healthcare at risk.
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The dispute is traced back to a three-year contract awarded to IFFCO Tokio on March 10, 2022. The contract, which commenced on March 15, 2022, and was set to continue until March 14, 2025, required the company to provide health insurance coverage under the AB PM-JAY and SEHAT schemes. These schemes are critical to ensuring affordable healthcare access for eligible families in Jammu and Kashmir. However, on November 1, 2023, IFFCO Tokio announced its intention to prematurely terminate the contract by March 2024, raising alarms about the continuation of healthcare services for the residents of the Union Territory.
In response to this sudden decision, the SHA sought judicial intervention, and on August 28, 2024, the J&K High Court ruled that IFFCO Tokio must continue fulfilling its contractual responsibilities until the dispute is resolved through arbitration. The court underscored the public nature of the contract and the essential healthcare services it provides, deeming the insurance company’s unilateral withdrawal as unjustified and potentially harmful to the public.
The High Court’s judgment clearly stated that the insurer’s refusal to continue its services could not be allowed without valid cause. The court emphasized that the termination of the contract would result in irreparable damage to the healthcare system and the beneficiaries of the scheme. The ruling also invoked Clause 41.4 of the contract, which requires both parties to continue performing their duties while any dispute is pending resolution through arbitration.
Despite the High Court’s order, IFFCO Tokio has reportedly failed to comply, refusing to resume services under the health schemes. According to the SHA, this non-compliance has put the healthcare needs of millions of Jammu and Kashmir residents at risk. The insurance company has allegedly not settled a single claim for the policy period starting from March 15, 2024, until now, further aggravating the situation. As a result, the SHA has initiated contempt proceedings, arguing that the company’s actions constitute a willful disobedience of the court’s orders.
In its communication to Insurance Regulatory and Development Authority of India (IRDAI) dated 06-09-2024, the SHA has also highlighted several violations of regulatory provisions by IFFCO Tokio. The agency cited Section 27 of the IRDAI (Health Insurance) Regulations, 2016, which mandates insurers to settle or reject claims within 30 days of receiving the necessary documents. Furthermore, the SHA pointed out that IFFCO Tokio has failed to maintain electronic records of policyholders’ claims, as required by the regulations, and has not adhered to the contract’s terms for processing claims. These failures, according to the SHA, violate the fundamental conditions of the contract and undermine the entire insurance process.
The SHA also referred to Section 3(4)(d) of the Insurance Act, 1938, which empowers the Insurance Regulatory and Development Authority of India (IRDAI) to suspend or cancel an insurer’s registration if it fails to comply with legal requirements. The agency has called upon IRDAI to take strict action against IFFCO Tokio for its default in fulfilling contractual obligations and jeopardizing the healthcare services in J&K.
In addition to the contempt proceedings, the SHA has expressed grave concerns about the broader implications of IFFCO Tokio’s actions. The agency warned that the company’s failure to comply with court orders and regulatory requirements could severely damage the healthcare system in Jammu and Kashmir and undermine public trust in the health insurance sector nationwide. By allegedly refusing to fulfill its obligations under the AB PM-JAY and SEHAT schemes, IFFCO Tokio has put the healthcare system on the brink of collapse, according to the SHA.
The SHA has urged IRDAI to take swift and exemplary action against IFFCO Tokio to prevent further deterioration of healthcare services in Jammu and Kashmir. The agency argues that unless strict regulatory measures are taken, the insurance company’s actions could set a dangerous precedent that might compromise the sanctity of the entire health insurance sector in India.
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