Supreme Court holds insurance company liable for medical negligence compensation

The Supreme Court of India, in a recent judgment in Nagarmal Modi Sewa Sadan v. Prem Prakash Rajagaria & Ors., has held that an insurance company is liable to reimburse compensation to the extent agreed under the policy when the doctors in whose name the policy had been issued were held to be negligent by the National Consumer Disputes Redressal Commission (NCDRC).

The case involved the death of a patient due to alleged medical negligence on the part of the appellant-hospital and the doctors who were working under it. The NCDRC had held the appellant-hospital and the doctors as negligent and ordered payment of compensation in a specific manner against the respondents before it.

The appellant-hospital had appealed against the NCDRC judgment before the Supreme Court, challenging the finding of negligence against the doctors. However, the Supreme Court found no other material available on record to arrive at a different conclusion and dismissed the appeal.

The Court clarified that the insurance company, which had issued the policy in favour of the doctors, would have to reimburse compensation to the extent of the liability under the policy as the doctors were also arrayed as respondents in the NCDRC and held to be negligent.

The Court modified the NCDRC's order to hold the insurance company liable to the extent agreed under the policy, and the appellant-hospital jointly and severally liable with other respondents for the remaining compensation. The Court ordered the release of the amount in deposit before it to respondent No.1 with accrued interest and directed the appellant-hospital and the insurance company to pay the balance of the amount payable as per the judgment in terms of their respective liability within four weeks.

In conclusion, the judgment clarifies the liability of an insurance company when a policy is issued in favour of doctors who are held to be negligent in a medical malpractice case. It also highlights the importance of ensuring proper medical care and taking responsibility for any negligence, as well as the need for insurance coverage to protect against such events.

Nagarmal Modi Sewa Sadan v. Prem Prakash Rajagaria & Ors.