J&K HC orders continuation of benefits under Ayushman Bharat Yojana amid dispute

Srinagar  : The J&K High Court has intervened after all private hospitals in the union territory decided to refuse patients under the national health insurance programme, Ayushman Bharat Yojana, from September 1.

Private hospitals in J&K jointly decided to refuse patient admissions from September 1 claiming that multiple crores of outstanding under this programme had not been paid by IFFCO TOKIO general insurance company to them resulting in huge financial implications for these hospitals.

The high court has now directed IFFCO TOKIO general insurance company to continue with the existing arrangement as per the terms and conditions of the contract agreement regarding Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana-SEHAT (AB-PMJAY-SEHAT) pending resolution of dispute with the UT government by the arbitrator.

The direction has been passed in a petition filed by the Government of J&K wherein it was submitted that the government launched Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana-SEHAT to provide free of cost Universal Health Coverage to all its residents, including the serving and retired employees and their families.

The scheme is intended to provide the same benefits that were available under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), a Government of India scheme, that provides annual health insurance cover of Rs 5 lakh per family on a floater and cashless basis through an established network of health care providers.

The scheme was introduced with the objective of reducing catastrophic health expenditure and improving access to quality health care of the domiciles of the UT of J&K. The eligible beneficiary families under this scheme are to be provided with health coverage through a network of Empanelled Health Care Providers (EHCPs). The government decided to implement the scheme to provide health insurance to defined categories of families eligible in the UT of Jammu and Kashmir. As a result, the bidding process was commenced by the government, through State Health Agency (SHA) by issuing the tender document and the respondent company emerged as the successful bidder.

Consequently, a contract for a maximum period of three years came to be executed between the parties on March 10, 2022. Since the beneficiary families are to be provided health coverage through a network of EHCPs, a separate Tripartite Agreement also came to be executed between the parties and EHCPs in terms of Clause 6 of the contract.

The contract between the parties is to subsist till March 14, 2025, but the respondent vide its letter dated November 1, 2023, served a notice that it was not interested in further renewal of the contract after the expiry of the policy period ending March 14, 2024. In response to the communication of the respondent, the Chief Executive Officer, SHA, vide communication dated November 3, 2023, requested the respondent to continue as per the MoU signed between the parties. However, the respondent-Insurance company vide communication dated November 16, 2023, reiterated that it has decided not to accord consent for renewal of the contract beyond March 14, 2024, and will not issue any new policy cover beyond the existing policy cover period and requested that SHA had enough time to make arrangement so that beneficiaries may not suffer.

The CEO, SHA vide communication dated December 7, 2023, again requested the Vice-President of the respondent company to reconsider its decision, however, the respondent vide communication dated December 13, 2023, informed the CEO that it stands by its decision not to continue. Again the petitioner through the CEO, SHA vide letter dated December 28, 2023, requested the Vice President of the respondent company to adhere to the terms and conditions of the contract in letter and spirit. However, it was conveyed by the General Manager of the respondent company, vide its communication dated January 3, 2024, that the company was only invoking Clause 9.1 (c) of the Insurance contract.

Ultimately, the SHA, by invocation of Clause 41.3 of the contract, vide communication No. SHA/ABPM-JAY/2023-24/5334 dated January 19, 2024, served a notice upon the respondent for reference of the dispute to the Arbitral Tribunal with a request to nominate an Arbitrator on its behalf. It was submitted by the government that in terms of Clause 9 of the contract, the company cannot turn around and wriggle out of the contract for the third-year extension and plunge the people of UT into risk and uncertainty.

After hearing counsels for the UT, Justice Rajesh Sekhri observed, “On overall conspectus of the case, what comes to the fore is that contract between the parties is not in its nature determinable but hedged upon the occurrence of exigencies and eventualities enumerated therein. Therefore, the Specific Relief Act is not applicable to the present case. Functions of all Insurance Companies, public and private, are regulated under the Insurance Act and the Regulations framed thereunder. Therefore, an insurance contract is subservient to the statutory provisions of the Insurance Act and must be interpreted and construed having regard to larger public policy and public interest, particularly, when it intends to provide service of health care to the citizens.”

“The petitioner has succeeded to make out a prima facie case for the grant of interim measures in terms of Section 9 of the Arbitration Act and since contract between the parties is service of insurance, balance of convenience favours the grant of injunction. The damages, which may be suffered by the State Health Agency, in general, and the beneficiaries of the scheme, in particular, on account of alleged breach of contract by the insurer, may not be compensated at a future point of time in terms of money or otherwise”, High Court said.

While allowing the petition, the High Court temporarily directed the respondent company to continue with the existing arrangement as per the terms and conditions of the contract agreement pending the resolution of the dispute by the arbitrator.