(MENAFN- IANS) Srinagar, Sept 7 (IANS) Jammu & Kashmir State health Agency (SHA) has initiated contempt proceedings against an insurance company for endangering healthcare in the Union Territory by non-compliance of court orders.
SHA has initiated contempt proceedings against IFFCO-Tokio general insurance company for endangering healthcare in the UT by violating the orders of the High Court of Jammu & Kashmir and Ladakh.
SHA said that the insurance company has violated its contractual obligations under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) and SEHAT schemes, thereby putting the healthcare of millions of residents at risk.
The dispute is owing to a three-year-old contract awarded to IFFCO-Tokio on March 10, 2022.
The contract started on March 15, 2022, and was to be effective till March 14, 2025.
Under the contract obligation, the general insurance company was to provide health insurance coverage under the Ayushman Bharat PM-JAY and SEHAT schemes. These schemes ensure affordable healthcare access for eligible families in J&K.
In breach of the contract, on November 1, 2023, IFFCO-Tokio announced premature termination of the contract by March 2024.
This created panic and alarm regarding the continuity of healthcare services in J&K.
SHA approached the court for intervention and on August 28, the High Court ruled that IFFCO-Tokio must continue fulfilling its contractual responsibilities until the dispute is resolved through arbitration.
High Court said that the insurer's refusal to continue its services could not be allowed without valid cause. The court held that the termination of the contract would result in irreparable damage to the healthcare system and to 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 order, IFFCO-Tokio reportedly failed to comply by refusing to resume services under the health insurance schemes.
Against this non-compliance, SHA has initiated contempt proceedings arguing that the company's actions constitute a wilful disobedience of the court order.
SHA also said that IFFCO-Tokio has even failed to maintain electronic records of policy holders' claims as required by the regulations and has not adhered to the contract's terms for processing claims.
In its action against the insurance company, SHA has 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.
SHA has asked IRDAI to take strict action against IFFCO-Tokio for its default in fulfilling contractual obligations and jeopardising the healthcare services in J&K.
Through with its alleged refusal to fulfil its obligations under the AB PM-JAY and SEHAT schemes, the insurance company has pushed the healthcare system to the brink of a collapse, SHA said.
The agency has further said that by its refusal to comply with the High Court's pronouncement, this insurance company could set a dangerous precedent that might compromise the sanctity of the health insurance scheme in the entire country.
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