The importance of notifying the claim within the time limits provided for in the policy is particularly relevant when the delay has the effect of increasing the risk and therefore the amount of the claim.
If in some circumstances the delay is justified and is not based on malice, the delay does not in itself constitute a sufficient cause for the exclusion of cover.
In the case at hand, it is questioned whether the collective contract between the Association of Civil Engineers and the Royal Automobile Club of Catalonia (RACC) is an insurance contract or simply a service subject to the fulfilment of a series of stipulations.
Another aspect considered by the judgement is the consequences of non-compliance with the contractual period of 7 days to request reimbursement.
The plaintiff had signed a collective contract between the Association of Civil Engineers and the RACC. The benefits offered by this contract were assistance and a cover of 30,000 Euros for medical, surgical, pharmaceutical and hospitalization expenses abroad. Health care must be requested within 7 days of the occurrence of the claim, except in cases of force majeure.
The claimant was on a trip to Boston and had to be admitted to hospital as a result of a septic condition. This admission and its cost of 31,586 was claimed by the insured from the RACC and the response was a rejection on the grounds that the expenses had not been notified within the stipulated period.
The plaintiff filed an ordinary lawsuit against the Real Automóvil Club de Catalunya in requiring a judgement to be handed down in the following terms: “whereby, upholding the claim in its entirety, it is declared that the RACC has breached its obligation to pay the hospital expenses caused as a result of my client’s admission to the MGH during a trip to Boston; and the RACC is ordered to pay the invoice issued by the MGH for the amount of $31. 586.31 dollars; or, in the alternative, and if the Court considers it more appropriate, order RACC to pay my client the sum of $31,586.31 dollars (thirty-one thousand five hundred and eighty-six dollars and thirty-one cents), which the latter will in turn pay to MGH in payment of the bill for the medical services rendered”.
The first instance ruling sentenced the RACC for failing to fulfil its obligation to pay the hospital expenses incurred as a result of the claimant’s admission to the MGH and, consequently, the RACC aw ordered to pay the invoice issued by the MGH, up to a limit of 30,000 €, and without imposing costs on either party.
The judgment was appealed by the representation of Real Automóvil Club de Catalunya Seguros and contested by the plaintiff’s representation. The appeal was upheld.
Finally, the plaintiff filed an extraordinary appeal for breach of procedure and a cassation appeal, both before the Spanish Supreme Court.
The grounds of the extraordinary appeal for procedural infringement were:
“First. – Under article 469.1, numbers 3 and 4 of the Civil Procedure Law (LEC), the infringement of article 218.1 of the LEC in relation to article 10 of the same law is alleged: undue alteration of the legal-procedural relationship:
The judgment considers RACC to be the defendant-appellant, when in fact the only entity with passive standing that has appeared in the proceedings as a defendant has been RACC Seguros. This leads to a violation of Article 24 of the EC due to lack of defense juston the basis of this undue alteration of the parties in the proceedings.
Second: Error in the assessment of the evidence.
Third.- Infringement of the principle of party disposition.
The Supreme Court resolved the appeal as follows:
Faced with the claimant’s allegation of the existence of an insurance contract, the Supreme Court points out that the question of whether travel assistance insurance exists or not, lacks specific regulation of this type of contract, although it recognizes it as a branch of insurance and consequently the Insurance Contract Law is applicable to it. Article 2 of the Insurance Contract Law provides that “[…]the different types of insurance, in the absence of applicable law, shall be governed by this law“, all of which recognizing the clauses that are most beneficial for the insured party.
In short, contracts are what they are and not what the parties call them. This is a criterion established by jurisprudence.
In this case, there is a company of the same group that undertakes to pay medical expenses up to a limit, which implies the existence of insurance in the terms of article 1 of the Spanish Insurance Contract Law.
On the other hand, nobody can go against one’s own acts, and the insurer applied an exclusion of coverage in order not to pay, which implies the recognition of the existence of insurance.
It is clear that the factual event to trigger the coverage has occurred and a delay in communication does not justify the refusal to pay the contracted coverage.
The delay can justify an aggravation of the risk and by virtue of this article 16 of the Insurance Contract Law can be applied, especially in the case of fraud or fault, giving rise to an eventual claim by the insurer for damages, but in this case the delay in the notification is more than justified by the seriousness of the situation and has not caused damage to the insurer. For all these reasons, the judgement considers that the appeal must be upheld.
The collective contract subscribed by the College of Civil Engineers with the RACC, which offers coverage for medical care abroad, meets all the requirements foreseen in article 1 of the Spanish Insurance Contract Law to be considered an insurance rather than a mere benefit, as there is a commitment of an insurer of the same group to cover the claim in the event of the insured risk, which in this case is none other than the existence of medical expenses for the insured person’s admission in a hospital abroad.
Regarding the delay in the notification, there being no bad faith or fault and not having caused an aggravation of the risk for the insurer, it is more than justified by the serious situation in which the injured party found himself.
PS. – The judgment is available here.
José Garzón García