BLUE CROSS HEALTH CARE, INC. v.

OLIVARES (2008)
FACTS
 Neomi Olivares applied for a health care program with Blue Cross, Inc., a health
maintenance firm. For the period October 16, 2002 to October 15, 2003 she paid
the amount of Php 11,117 as well as the additional service of limitless
consultations for an additional amount of Php 1000. In the health care agreement,
ailments due to “pre-existing conditions” were excluded from the coverage.
 38 days from the effectivity of her health insurance, Neomi suffered a stroke and
was admitted at the Medical City, which was one of the hospitals accredited by the
petitioner and underwent several laboratory tests during her confinement; she
incurred hospital expenses amounting to P34,217.20.
 She requested from Blue Cross at Medical City to settle her medical bills, but the
company refused and suspended payment pending the submission of a
certification from her attending physician that the stroke she suffered was not
caused by a pre-existing condition.
 Two days following her discharge from the hospital, Blue Cross still refused to
settle her accounts. Thus she and her husband, Danilo Olivares, were constrained
to settle the bill.
 They thereafter filed a complaint for collection of sum of money against Blue Cross
in the MeTC. In its answer, petitioner maintained that it had not yet denied
respondents' claim as it was still awaiting Dr. Saniel's report. However, Dr. Saniel
later sent a letter clarifying that Neomi was invoking patient-physician
confidentiality and renounced her relationship with the petitioner.
 MeTC dismissed the complaint for a lack of cause of action. It held that Blue Cross
Health cannot be faulted from suspending payment of her claim, especially since
it was Neomi herself who invoked patient-physician confidentiality, until it can be
shown from the findings made by her attending physician that the stroke she
suffered was not due to pre-existing conditions so she could demand entitlement
to the benefits of her policy.
 On appeal, the RTC reversed the ruling of the MeTC and ordered Blue Cross to
pay the respondents. They held that it was the burden of Blue Cross to prove that
the stroke of Neomi was excluded from the coverage of the health care program
for being caused by a pre-existing condition. The RTC rules that was not able to
discharge that burden. Court of Appeals upheld RTC ruling.
ISSUES
1. Whether or not Blue Cross was able to prove that Neomi's stroke was caused by a
preexisting condition and therefore was excluded from the coverage of the health care
agreement.
2. Whether or not it was liable for moral and exemplary damages as well as attorney’s
fees.
RULING
1. No, Blue Cross was not able to prove that the stroke was caused by a pre-existing
condition.
 Under this provision of the health care agreement, a pre-existing condition refers
to a disability which existed before the commencement of the agreement, whose
natural history may be clinically determined, whether or not they were aware of
such an illness or condition. They are excluded from its coverage if they become
manifest within one year from its effectivity, meaning that the insurer in this case
is not liable for pre-existing conditions if they occur within one year from the time
the agreement takes effect
 Petitioners argue that Neomi’s act of invoking patient-client confidentiality follows
the presumption that a willful suppression of evidence would be adverse if
produced, should it apply in its favor.
 But the court finds for the respondents. In Philamcare Health Systems, Inc. v. CA,
we were reminded of the established rule in insurance contracts that when their
terms contain limitations on liability, they should be construed strictly against the
insurer. These are contracts of adhesion, the terms of which must be interpreted
and enforced stringently against the insurer who prepared the contract. This
doctrine is equally applicable to health care agreements.
 Blue Cross never presented any evidence to prove that Neomi's stroke was due to
a preexisting condition. It merely speculated that Dr. Saniel's report would be
adverse to Neomi, based on her invocation of the doctor-patient privilege. Here,
respondents' refusal to present or allow the presentation of Dr. Saniel's report was
justified. It was privileged communication between physician and patient. Thus, the
presumption that evidence wilfully suppressed would be adverse if produced as
dictated by Section 3 (e), Rule 131 of the Rules of Court, does not apply.
 Limitations of liability on the part of the insurer or health care provider must be
construed in such a way as to preclude it from evading its obligations. Given that
Blue Cross had the burden of proving exception to liability, it should have made its
own assessment of whether Neomi had a pre-existing condition when it failed to
obtain the attending physician's report.
 The mere reliance on a disputable presumption does not meet the strict standard
required under our jurisprudence.
2. Yes, moral and exemplary damages, as well as attorney’s fees, are demandable.
 The petitioner argues that it should not be held liable for for moral and exemplary
damages as it did not act in bad faith in denying the respondent’s claim, even
waiting patiently for Dr. Saniel’s report (in good faith). It asserted that based on
general medical findings, it had good reason to believe that the stroke was due to
a pre-existing condition, given that it occurred only 38 days after the execution of
the contract.
 The court does not agree. The respondents have sufficiently shown that they were
made to engage in a dispute over a legitimate claim while Neomi was still
experiencing the effects of the stroke, being forced to pay for her medical bills both
during and after her hospitalization despite supposed coverage by the health care
agreement, and the anguish, shock, serious anxiety, and great stress over the
dispute. The couple had to engage the services of a counsel for Php 20,000, which
is noted above. Finally, the refusal of the petitioner to pay reeks of bad faith as it
is hinged merely on the perception that the stroke was a pre-existing condition.