1Mini Case -3Caring for the Needy in Difficult Times(5 marks)

Novartis, a leading global pharmaceutical brand, produces a number of health-related products and
has core businesses in pharmaceuticals, vaccines, consumer health, generics, eye care, and animal
health. Headquartered in Basel, Switzerland, Novartis employs nearly 115,000 people in over 140
countries worldwide to help save lives and improves the quality of life. The group is present in India
as Novartis India Limited and listed on Mumbai Stock Exchange. It has three wholly-owned
subsidiaries –Novartis Healthcare Private Limited, Sandoz Private Limited, and Chiron Behring
Vaccines Private Limited. The product list of the company also includes Lucentis® which is a
prescription medicine for the cure of age-related macular degeneration (AMD). Macular
degeneration affects aged people and results in loss of vision. Lucentis ® cures patients with diabetes
who are losing sight from diabetic macular edema or wet AMD. The medicine helps to prevent new
blood vessels from growing and helps the eye to heal itself to someextent. Novartis India has a tie up
with Oriental Insurance Company to provide insurance cover to patients suffering from AMD as the
cost of treatment is very high. Oriental Insurance a leading public sector undertaking that provides
insurance for life, Mediclaim etc.Rasula Begum Chaudhary, a resident of Kolkata, was suffering from
neovascular wet AMD and visual disorder, and required Lucentis ® treatment. She purchased
Oriental Insurance’s Mediclaim reimbursement policy through Novartis for one year witheffect from
September 25, 2008 to September 24, 2009 to cover her medical expenses. She purchased four
doses of Lucentis ® from Novartis and sought reimbursement from the insurer against her medical
reimbursement policy. Oriental Insurance reimbursed the cost of medicine for the first three doses
but declined to pay for the fourth one amounting to Rs. (Indian) 71,412 because the patient had
failed to go for monthly follow-up with the doctor. Rasula Begum was taken aback by this
development and took up the matter with Novartis, but the company declined her request to
intervene even though the policy was purchased through them. She expected care during the
difficult times and continuously followed up with both the companies but failed to get the declined
amount. Finally,when there were no options left, she filed a case against Novartis and Oriental
Insurance in Consumer Disputes Redressal Forum stating that it was a case of gross negligence,
unfair trade practice, and deficient service and demanded compensation for causing her
unnecessary mental agony and harassment. One September 28, 2012, the court directed Novartis
India and Oriental Insurance to reimburse a sum of Rs. (Indian) 71,412 to Rasula Begum for the cost
of fourth dose of the medicine with cost at 9% per annum from the date of repudiation till the date
of realization along with a further direction to pay compensation of Rs. (Indian) 65,000 for the
harassment and mental agony caused. The companies were also ordered to pay the litigation cost
amounting to Rs. (Indian) 10,000. As per the provisions laid down under Consumer Protection Act,
1986, the court also directed both the companies to pay Rs. (Indian) 2,00,000 to Rasula Begum as
punitive damages for carrying out unfair trade practices.

2However, Novartis didn’t agree with this verdict and challenged the order in the upper court. Once
again in the court Oriental Insurance maintained its earlier stand for rejecting Rasula Begum’s
compensation for the fourth dose. As per the company, she had failed to follow-up with the doctor
which was a pre-condition for the release of reimbursement for the fourth dose; hence, the
company was not at fault, and there was no deficiency in service on their part. In its defense
Novartis, stated that it has no role in claim settlement but admitting having tie-up insurer.After
hearing both the parties, on July 2013, the upper court also ruled in favor of Rasula Begum as she
managed to produce a valid and relevant doctor’s certificate related to the fourth dose of Lucentis ®.
Hence, the insurance company’s plea was rejected and the Consumer Disputes Redressal Forum’s
decision was upheld.

Questions:1.What are the ethical issues involved in this case?

2.Why did Rasula Begum meet with problems while settling her Mediclaim?

3.Is it justified, on the part of Oriental Insurance, to deny medical reimbursement to Rasula Begum?