Philamcare Health Systems Vs Ca Digest

FACTS:

In 1988, Ernani Trinos applied for a health care insurance under the Philamcare Health
Systems, Inc. He was asked if he was ever treated for high blood, heart trouble, diabetes,
cancer, liver disease, asthma, or peptic ulcer; he answered no. His application was
approved and it was effective for one year. His coverage was subsequently renewed twice
for one year each. While the coverage was still in force in 1990, Ernani suffered a heart
attack for which he was hospitalized. The cost of the hospitalization amounted to
P76,000.00. Julita Trinos, wife of Ernani, filed a claim before Philamcare for the latter to pay
the hospitalization cost. Philamcare refused to pay as it alleged that Ernani failed to disclose
the fact that he was diabetic, hypertensive, and asthmatic. Julita ended up paying the
hospital expenses. Ernani eventually died. In July 1990, Julita sued Philamcare for
damages. Philamcare alleged that the health coverage is not an insurance contract; that the
concealment made by Ernani voided the agreement.

 Ernani Trinos, deceased husband of Julita Trinos, applied for a health care coverage
with Philamcare Health Systems, Inc.
 He answered the standard application form: 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). - NO
 the application was approved for a period of one year from March 1, 1988 to March
1, 1989. Accordingly, he was issued Health Care Agreement No. P010194
 Under the agreement, respondent’s husband was entitled to avail of hospitalization
benefits, whether ordinary or emergency, listed therein. He was also entitled to
avail of "out-patient benefits" such as annual physical examinations, preventive
health care and other out-patient services.
 Upon the termination of the agreement, the same was extended for another year
from March 1, 1989 to March 1, 1990, then from March 1, 1990 to June 1, 1990.
The amount of coverage was increased to a maximum sum of P75,000.00 per
disability.
 During the period of his coverage, Ernani suffered a heart attack and was confined
at the Manila Medical Center (MMC) for 1 month beginning March 9, 1990.
 While her husband was in the hospital, Julina Trinos tried to claim the benefits
under the health care agreement.
 Philamcare denied her claim saying that the Health Care Agreement was void
for concealing Ernani’s medical history so she paid the hospitalization expenses
of P76,000.00 herself.
 Doctors at the MMC allegedly discovered at the time of Ernani’s confinement that he
was hypertensive, diabetic and asthmatic, contrary to his answer in the application
form.
 After being discharged from the MMC, he was attended by a physical therapist at
home.
 Later, he was admitted at the Chinese General Hospital.
 Due to financial difficulties, however, he was brought home again.
 April 13, 1990 morning: Ernani had fever and was feeling very weak
 He was brought to Chinese General Hospital where he died
 July 24, 1990: She brought action for damages against Philamcare Health Systems
Inc. and its president, Dr. Benito Reverente
 RTC: Philamcare and Dr. Benito Reverent to pay and reimburse P76k plus interest,
moral damages, exemplary damages, attorney's fees and cost of suit
 CA: affirmed the decision of RTC but deleted all awards for damages and absolved
Philamcare
 Philamcare brought an instant petition for review arguing that:
 health care agreement is not an insurance contract; hence the "incontestability
clause" under the Insurance Code does not apply.
 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 one-year thereafter
 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
 since Health Care Agreements are only for a period of one year, as compared to
insurance contracts which last longer; incontestability clause does not apply, as the
same requires an effectivity period of at least two years
 insurance company is governed by the Insurance Commission, but a Health
Maintenance Organization under the authority of the Department of Health
ISSUE:

1. W/N the health care agreement is a contract of insurance. - YES

2. W/N the spouse being "not" legal wife can claim - YES

HELD: Petition is DENIED. CA AFFIRMED.

1. YES.

P.D. 612 Insurance Code

Sec. 2 (1)
(1) A "contract of insurance" is an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or contingent
event.
Sec. 3
Sec. 3. Any contingent or unknown event, whether past or future, which may damnify a
person having an insurable interest, or create a liability against him, may be insured against,
subject to the provisions of this chapter.

The consent of the husband is not necessary for the validity of an insurance policy taken out
by a married woman on her life or that of her children.

Any minor of the age of eighteen years or more, may, notwithstanding such minority, contract
for life, health and accident insurance, with any insurance company duly authorized to do
business in the Philippines, provided the insurance is taken on his own life and the beneficiary
appointed is the minor's estate or the minor's father, mother, husband, wife, child, brother or
sister.
 The married woman or the minor herein allowed to take out an insurance policy may exercise
all the rights and privileges of an owner under a policy.

All rights, title and interest in the policy of insurance taken out by an original owner on the life
or health of a minor shall automatically vest in the minor upon the death of the original owner,
unless otherwise provided for in the policy.

 In the case at bar, the insurable interest of respondent's husband in obtaining the
health care agreement was his own health.
 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.
 The answer in response to the question relating to the medical history of the
applicant largely depends on opinion rather than fact, especially coming from
respondent's husband who was not a medical doctor.
 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.
 The fraudulent intent on the part of the insured must be established to warrant
rescission of the insurance contract.
 Concealment as a defense for the health care provider or insurer to avoid liability is
an affirmative defense and the duty to establish such defense by satisfactory and
convincing evidence rests upon the provider or insurer.
P.D. 612 Insurance Code
Sec. 27
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to
rescind a contract of insurance.
 cancellation of health care agreements as in insurance policies require the concurrence of the following
conditions: - none of these was made
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds
mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in the policy;
4. 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.
 When the terms of insurance contract contain limitations on liability, courts should
construe them in such a way as to preclude the insurer from non-compliance with
his obligation.
 Being a contract of adhesion, the terms of an insurance contract are to be construed
strictly against the party which prepared the contract - the insurer.
 (U)nder the title Claim procedures of expenses, the defendant Philamcare Health
Systems Inc. had twelve 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 periods having expired, the defense of
concealment or misrepresentation no longer lie.
2. YES.

P.D. 612 Insurance Code

Sec. 10
Sec. 10. Every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or support, or in whom he has a
pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money, respecting property or service,
of which death or illness might delay or prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him depends.

 not the legal wife (deceased was previously married to another woman who was still
alive)
 health care agreement is in the nature of a contract of indemnity.
 payment should be made to the party who incurred the expenses