Voluntary medical and personal insurance

From the Resolution of the Plenum of the Supreme Court of the Russian Federation of 27.06.2013 N 20 “On the application by the courts of legislation on voluntary insurance of citizens’ property” they waited for the removal of the hottest disputes over all insurance products. Instead, the interpretation of the norms of Chapter 48 of the Civil Code has been reduced to solving the urgent problems of auto insurance , leaving without due attention other insurance products, to which citizens have already got used to. In particular, the Plenum of the Armed Forces of the Russian Federation did not touch on the sensitive issues of voluntary medical insurance and accident insurance.. The result of this neglect is that these types of insurance are no longer mutually beneficial and have lost their effectiveness as financial instruments for saving personal budget, becoming a good feeding trough for insurers. What problems the Supreme Court decided, and which ones left at the mercy of the judicial practice of freedom of contract, having played up to the insurers, we will try to find out.

Products are different, but the logic is one

Insurance of medical expenses for travelers, voluntary medical insurance and insurance against accidents by nature are different from each other: if the first two products are classified as property insurance , then the latter belongs to personal insurance. However, despite this difference, the insurance rules are written as if for a carbon copy and with the only end goal – to minimize the likelihood of recognizing a case as an insurance case.

Also, a personal acquaintance with the insurance rules of some insurers through the prism of the studied array of judicial practice of the Moscow City Court (hereinafter – the Moscow City Court) gives a very clear picture of the whole mechanism of these types of commercial insurance.

Note. Among them, but not limited to them: Appeal decisions of the Moscow City Court of April 22, 2015 in case N 33-14557; of November 12, 2014 in case N 33-44674 / 2014; from April 26, 2016 in case N 33-14990 / 2016; dated October 8, 2015 in case N 33-37010; of March 4, 2015 in case N 33-6467. Similar decisions are made by regional courts: for example, the Appeal ruling of the Sverdlovsk Regional Court of June 17, 2014 in case N 33-7344 / 2014.

Insurers use the principle of freedom of contract, indicating which cases are insured and which are not; the courts apply it very formally, which is the source of all problems.

As a rule, an insured event under a medical expenses insurance contract (including traveling ones) is the need to incur medical expenses caused by a sudden illness, first diagnosed during the term of the insurance contract. In the case of insuring medical expenses for travelers, a criterion of urgency and vital necessity is often added, implying that the insured will die without providing medical assistance. The traditional exception provides for chronic diseases, illnesses, or illnesses that already existed prior to the conclusion of an insurance contract, or other illnesses usually grouped by any sign (most often, of the cardiovascular system). Another underwater stone in voluntary medical insurance contracts is the obligation of the insured (beneficiary) to follow a very strict procedure for notifying an insured event and to follow the instructions regarding contacting specific medical institutions called the insurer or another company authorized by him (let’s call it an assistant). However, sometimes the instructions of such an assistant are simply unacceptable for the insured (as was recognized in the Appeal definition of the Moscow City Court of July 26, 2016 in case N 33-28220).

As for contracts of personal insurance (for example, mortgage insurance, insurance of borrowers), such contracts are usually concluded in the event of death from an accident or illness, the establishment of disability of the 1st or 2nd group from injury or illness, first diagnosed during the term of the insurance contract.

The courts of general jurisdiction, focusing on the practice of the Moscow City Court, consistently in insurance disputes arising from disputes of voluntary insurance, refer to the principle of freedom of contract, study insurance rules, insurance policy and … reject the claim on grounds that the insured himself agreed to the terms of insurance , set out in the rules, applications, the policy itself, although it could not do so.

The practice of insurers and courts of general jurisdiction, in our opinion, is subject to criticism in connection with the following.

First of allInsurance of medical expenses for travelers is by no means always voluntary. It is known that the EU states in the Visa Code, a number of other states in bilateral agreements with the Russian Federation provided for the need to conclude a medical expenses insurance contract with certain coverage for obtaining an entry visa (or just entry into its territory). It should be noted that the Civil Code does not limit only the Russian law and order source of the obligation to conclude a contract. It is logical that a citizen intending to cross the border of a foreign state is within its administrative jurisdiction, that is, the foreign legal order of the state (or union of states) of entry requires the conclusion of a medical expenses insurance contract with a fixed minimum coverage. As a result, insurance is not voluntary at all, although the citizen has no obligation to cross the border. There is such an analogy: a citizen has the right to own a car and participate in road traffic, but for this it is obliged to conclude an OSAGO contract.

SecondlyThe legality of excluding chronic diseases from the list of causes of insurance claims is questionable. Federal Law dated 08.15.1996 N 114-ФЗ (as amended on 07.06.2016, as amended on 10.20.2016) “On the procedure for leaving the Russian Federation and entering the Russian Federation” in Article 14 provides that payment to a citizen of the Russian Federation medical care (including medical evacuation on the territory of a foreign state and from a foreign state to the Russian Federation) and (or) payment for returning his body (remains) to the Russian Federation is carried out in accordance with the terms of the agreement medical services, voluntary insurance contract (insurance policy),

At the same time, subparagraph 1 of part 5 of the cited article draws attention, which imperatively establishes the minimum guarantee: insurance rules must provide for the obligation of the insurer to pay and (or) reimburse the costs of medical care in emergency and emergency forms provided to a citizen named in the voluntary agreement insurance (hereinafter the insured person), on the territory of a foreign state (including medical evacuation on the territory of a foreign state and from a foreign state tva to the Russian Federation) upon the occurrence of an insured event in connection with injury, poisoning, a sudden acute illness or exacerbation of a chronic illness, and (or) the return of the body (remains) to the Russian Federation.

Thus, the exacerbation of a chronic disease as a cause of an insured event does not necessarily exclude its recognition as occurring.

ThirdlyOften, the policyholder (beneficiary) or the insured person cannot influence the insurance conditions. This may occur in cases of corporate insurance of employees, programs of collective insurance of borrowers, etc. All decisions have already been made for them. Even if the insurer himself signs the insurance contract, he is deprived of the opportunity to hold pre-contractual disputes, bring the dispute regarding the terms of the insurance contract to court due to lack of time and money – the dispute may be deliberately prolonged by the insurer, and attorney fees are high. In addition, neither the claimant nor the representative may have sufficient competence in matters of medicine and law, with the result that they simply do not have the right questions to the called specialist. What is the prospect of such a dispute, even in the case of a similar lawsuit? The formal logic of insurance law is simple: since an insured event for any type of insurance is an essential condition by virtue of art. 942 of the Civil Code of the Russian Federation, the failure to reach agreement on it entails the recognition of the contract as not concluded. The insurer will simply stand on its terms of the contract, claiming non-contradiction with its law and the court can take its side. As a result, the condition will be simply pressed by the insurer. In the conditions of the obligation to conclude an insurance contract, such behavior of the insurer, and in the case of a cartel agreement – insurers, can be quite considered an abuse of the right with the possibility of applying the consequences of such unfair behavior. In addition, the practice of considering claims for resolving disputes regarding the conditions of a non-binding contract is more arbitration. Insurers – legal entities do not seek to argue with the insurer at least because of financial considerations: employers generally adhere to savings on insurance.

Finally, as we noted earlier, the definitions of insurance events for any of the named insurance products are often so narrow that the probability of recognizing a case as insurance claims tends to zero. In other words, the insurer can use in any contract such formulations that 90% of possible events are obviously not insurance (for example, due to the unfavorable environmental situation in the region that provokes congenital diseases). Formally, there are no grounds for recognizing the event as having occurred, since the insurer does not do anything to prevent the occurrence of the obligation to pay the insurance indemnity (for personal insurance contracts, to make insurance payments).

Insurance – a service for sober and honest

Another perennial problem that arose in insurance disputes was that insurers used the wording of clause 1 of Article 964 of the Civil Code of the Russian Federation, which allows the insurer to be released from the obligation to pay insurance indemnity in other cases than stipulated, that is, the effects of a nuclear explosion, radiation or radioactive infection; military actions, as well as maneuvers or other military activities; civil war, popular unrest of every kind or strikes. However, all the grounds invented by insurers were more subject to clause 1 of Article 963 of the Civil Code of the Russian Federation, according to paragraph 2 of which the law may provide for cases when an insurer is exempted from paying insurance indemnity under property insurance contracts when an insured event occurs because of gross negligence of the insured or beneficiary.

The situation changed, and the disputes were lifted when the aforementioned Resolution of the Plenum of the Supreme Court of the Russian Federation of June 27, 2013 No. 20 “On the application by courts of legislation on voluntary insurance of citizens’ property” was adopted. Clause 50 of this document, the insurer is exempt from the payment of insurance compensation, if the insured event occurred due to the insured (beneficiary) being in a state of intoxication. But this position was expressed in relation to auto insurance contracts and dealt with the risks of “damage from an accident”.

The courts decided to extend this position to other insurance products. Thus, the St. Petersburg City Court would be prepared to apply the position of the Plenum with respect to the mortgage insurance contract, but the expert examination did not reveal a causal link between alcohol use and the onset of the illness that caused the death of the borrower, indicated as an insured event (from the Appeal Definition of 17.02. 2015 in case N 33-2752).

The impossibility of a separate consideration of the effect of ethanol and carbon monoxide poisoning on the onset of acute respiratory failure, which resulted in the death of the insured under the personal insurance contract, was the basis for the death of the insured event (from the Appeal definition of the Omsk Regional Court of March 16, 2016 on Case N 33-1941 / 2016).

The courts consistently refuse to satisfy claims for the recovery of insurance compensation (insurance payment) when they establish the intentional concealment by the insured (insured) of diseases for which insurance contracts are concluded. In this regard, we recall that paragraph 3 of Article 944 of the Civil Code of the Russian Federation provides for the right of the insurer to declare the termination of the insurance contract when revealing the fact of hiding the circumstances essential for the calculation of the insurance premium (contributions), therefore it would be more correct to say not about exemption from payment protection. As an example, let us give the following situation: when concluding a loan agreement, the borrower wrote an application for insurance and its inclusion in the list of insured persons, which is part of the insurance agreement between the bank and the insurer. At the same time, in a statement, he personally indicated that he is not a disabled person of group 1 or 2, does not suffer from chronic diseases that require medical care on a regular basis, although it can be seen from a copy of the borrower’s medical history that he already considered himself at the time of signing the contract sick since the disease has developed up to this point. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). that he is not a disabled person of group 1 or 2, does not suffer from chronic diseases that require medical care on a regular basis, although it can be seen from a copy of the extract from the borrower’s medical history that at the time of the conclusion of the contract he already considered himself ill, since the disease had developed before of the moment. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). that he is not a disabled person of group 1 or 2, does not suffer from chronic diseases that require medical care on a regular basis, although it can be seen from a copy of the extract from the borrower’s medical history that at the time of the conclusion of the contract he already considered himself ill, since the disease had developed before of the moment. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). requiring medical care on a regular basis, although from a copy of the extract from the borrower’s medical history it can be seen that already at the time of the conclusion of the contract he already considered himself ill, since the disease had developed up to this point. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). requiring medical care on a regular basis, although from a copy of the extract from the borrower’s medical history it can be seen that already at the time of the conclusion of the contract he already considered himself ill, since the disease had developed up to this point. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). that already at the time of the conclusion of the contract he already considered himself ill, since the disease had developed up to this point. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005). that already at the time of the conclusion of the contract he already considered himself ill, since the disease had developed up to this point. Accordingly, he informed the insurer of knowingly false information about his state of health, thereby depriving the insurer of an opportunity to evaluate the insurance risk and determine the likelihood of an insured event when entering into a contract, therefore, there are grounds for refusing to pay insurance compensation in accordance with the requirements of the law and the terms of the contract (from the Appeal definition of the Moscow City Court of December 8, 2015 in case N 33-22005).

Meanwhile, in the practice of the Moscow City Court there is another practice. In the Appeals Decision of January 18, 2012, in case N 33-1199, the panel, responding to the arguments of the insurer’s complaint, argued that the presence of signs of a particular disease and treatment in medical institutions G. regarding their treatment and diagnosis cannot regarded as concealment of material information relevant to the transaction, and before the establishment of an appropriate diagnosis, the policyholder could not have known that he had a disease.

In the light of the above decision, let us point out the Appeal definition of the Supreme Court of the Republic of Tatarstan of June 19, 2014 in case N 33-8190 / 2014, in which the board concluded that only one that was made in accordance with the stipulated procedure can be considered a final diagnosis, standards. This conclusion is important in those disputes in which it is necessary to establish the time of detection of the disease regarding the date of the insurance contract. If the court fails to discern the principle of good faith in the actions of the policyholder, the insurance amount already paid out cannot be returned in accordance with art. 1109 of the Civil Code of the Russian Federation, by virtue of which they are not subject to return as unjust enrichment, in particular, compensation for harm caused to life or health in the absence of bad faith on the part of the victim and the counting error.

Evidence indicating that the policyholder (the insured person) is aware that he has a disease can be considered a fact of being at a dispensary or inpatient treatment, as reflected in his medical record.

The objection makes dispute

So, if the problem with the “self-exemption” of insurers from the payment of insurance compensation can be considered resolved through judicial interpretation, then problems with determining insurance claims remain. And this problem – the burden of the insured, confirmed by the courts.

Judicial practice recognizes property insurance contracts and personal insurance contracts by public contracts (Appeal definition of the Supreme Court of the Republic of Tatarstan dated December 21, 2015 in case N 33-19429 / 2015; Ruling of the Supreme Court of the Republic of Chuvashia dated July 13, 2015 in case 33-2858 15), which gives the policyholder grounds for applying the consequences of an unreasonable refusal to enter into an agreement in accordance with paragraph 2 of Article. 445 and para. 1 of Art. 446 of the Civil Code, that is, the transfer of the dispute about the conditions of the contract for consideration by the court.

On the other hand, the Supreme Court of the Russian Federation in paragraph 4 of the Review of Judicial Practice in Civil Cases Related to the Resolution of Disputes on the Performance of Credit Obligations, approved by the Presidium of the Supreme Court of the Russian Federation on May 22, 2013, concluded that credit agreements may provide for the borrower to insure his life and health as a way to ensure the fulfillment of obligations, in which case a bank may be indicated as a beneficiary. At the same time, in clause 4.1, another rule is formulated, which follows from the norm of clause 2 of Art. 16 of the Consumer Protection Act: the inclusion in the loan agreement of a condition on the obligation of the borrower to insure his life and health, which is actually a condition for obtaining a loan, indicates abuse of the freedom of contract. Thus, the signing of the loan agreement, in which it is provided to ensure its execution in case of death and illness of the insured, excluding such execution, shall be recognized by the borrower to assume the obligation to conclude such a contract. Evading his conclusion gives the right to apply the consequences of paragraph 1 of Art. 445 and para. 1 of Art. 446 of the Civil Code.

In both cases, persons obliged to conclude an insurance contract are not deprived of the right to object to its essential conditions – events for which it is planned to conclude an agreement. This may require the insurer to send the offer in advance, and not at the last moment, which happens in modern realities is difficult, but testifies to a developed culture of contractual relations, and from the insurer – fair conduct at the pretrial and judicial stages, which is the object of court attention.

Despite the previously mentioned difficulties caused by the lack of necessary knowledge in medicine, we believe that the problem of pre-contractual disputes is central and should be brought to the Supreme Court of the Russian Federation as an appeal in cassation, as this will allow to form the practice as a guideline in actions for both consumers and professional representatives.

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