Blue Cross Health Care, Inc. vs. Olivares

A health care provider cannot invoke the disputable presumption of suppressed evidence to prove a pre-existing condition exclusion where the withholding of medical records is an exercise of physician-patient privilege, as the burden to prove the exclusion remains strictly on the provider.

Respondent Neomi Olivares obtained a health care program from petitioner Blue Cross Health Care, Inc. for the period October 16, 2002 to October 15, 2003. The agreement contained a clause excluding coverage for ailments due to "pre-existing conditions" manifesting within the first year. On November 30, 2002, Neomi suffered a stroke and was hospitalized. Petitioner refused to issue a letter of authorization for her medical bills, demanding a certification from her attending physician that the stroke was not due to a pre-existing condition. Neomi invoked physician-patient confidentiality, preventing the doctor from releasing her medical information. Petitioner continued to refuse payment, prompting respondents to pay the bills and file suit.

• Health Care Agreement: Respondent Neomi Olivares applied for a health care program with petitioner, paying P11,117 for coverage (Oct. 16, 2002 to Oct. 15, 2003) plus P1,000 for limitless consultations. Approved on Oct. 22, 2002, the agreement excluded "pre-existing conditions," defined as disabilities existing before commencement whose natural history can be clinically determined, including cardiovascular diseases if occurring within the first year of coverage.
• Hospitalization and Denial of Claim: On Nov. 30, 2002, 38 days into coverage, Neomi suffered a stroke and was confined at Medical City. Bills amounted to P34,217.20. She requested a letter of authorization from petitioner's representative. Petitioner refused and suspended payment, demanding a certification from her attending physician (Dr. Saniel) that the stroke was not caused by a pre-existing condition.
• Invocation of Privilege and Filing of Suit: Neomi was discharged on Dec. 3, 2002. After paying the bills out of pocket on Dec. 5, 2002, she demanded payment from petitioner. When refused, respondents filed a complaint for collection of sum of money in the MeTC on Jan. 8, 2003. In a letter dated Feb. 14, 2003, Dr. Saniel informed petitioner that Neomi had invoked physician-patient confidentiality and instructed him not to release her medical information without her approval.

• Pre-existing Condition Exclusion: Petitioner argued that respondent's stroke was excluded from coverage due to a pre-existing condition, noting it occurred only 38 days after effectivity.
• Suppressed Evidence: Petitioner contended that respondents prevented Dr. Saniel from submitting his report; thus, the disputable presumption that evidence willfully suppressed would be adverse if produced should apply in its favor.
• Absence of Bad Faith: Petitioner maintained it should not be liable for moral and exemplary damages and attorney's fees because it acted in good faith by waiting for the doctor's report and had reasonable ground to believe the stroke was pre-existing.

• Burden of Proof: Respondent countered that the burden was on petitioner to prove the pre-existing condition exclusion, which it failed to discharge.

• Exclusion from Coverage: Whether petitioner was able to prove that respondent Neomi's stroke was caused by a pre-existing condition and therefore excluded from coverage.
• Damages: Whether petitioner was liable for moral and exemplary damages and attorney's fees.

• Exclusion from Coverage: The claim of exclusion was not substantiated. Health care agreements are in the nature of non-life insurance and contracts of adhesion; limitations on liability must be construed strictly against the insurer. The burden to prove the pre-existing condition rested on petitioner. The disputable presumption of suppressed evidence did not apply because the suppression was an exercise of a privilege (physician-patient confidentiality). Petitioner could not passively wait for the doctor's report but should have made its own assessment to meet the strict standard required by jurisprudence.
• Damages: Liability for damages was affirmed. The lower courts' finding of bad faith was a factual matter binding on the Supreme Court. Petitioner's refusal to pay was based merely on its own perception that a stroke is a pre-existing condition, which constitutes bad faith, justifying the award of moral and exemplary damages and attorney's fees.

• Nature of Health Care Agreements — A health care agreement is in the nature of a non-life insurance. As contracts of adhesion, their terms must be interpreted and enforced stringently against the insurer or health care provider that prepared the contract. Limitations on liability must be construed strictly against the insurer and scrutinized with "extreme jealousy" and "care."
• Disputable Presumption of Suppressed Evidence — Under Section 3(e), Rule 131 of the Rules of Court, the presumption that evidence willfully suppressed would be adverse if produced does not apply if: (a) the evidence is at the disposal of both parties; (b) the suppression was not willful; (c) it is merely corroborative or cumulative; or (d) the suppression is an exercise of a privilege.

• "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. Accordingly, they should be scrutinized by the courts with 'extreme jealousy' and 'care' and with a 'jaundiced eye.'"
• "The refusal of petitioner to pay respondent Neomi's bills smacks of bad faith, as its refusal [was] merely based on its own perception that a stroke is a pre-existing condition."

• Philamcare Health Systems, Inc. v. CA, 429 Phil. 82 (2002) — Followed. Established that a health care agreement is in the nature of a non-life insurance and a contract of adhesion, the terms of which must be interpreted and enforced stringently against the insurer.
• People v. Andal, 344 Phil. 889 (1997) — Cited for the exceptions to the disputable presumption of suppressed evidence, specifically that it does not apply if the suppression is an exercise of a privilege.
• DBP Pool of Accredited Insurance Companies v. Radio Mindanao Network, Inc., G.R. No. 147039 (2006) — Cited for the principle that limitations of liability in insurance contracts should be scrutinized with "extreme jealousy" and "care."

• Section 3(e), Rule 131, Rules of Court — Defines disputable presumptions, specifically that evidence willfully suppressed would be adverse if produced. Applied to rule that the presumption does not apply when the suppression is an exercise of a privilege (physician-patient confidentiality).

Reynato S. Puno (CJ), Angelina Sandoval-Gutierrez, Adolfo S. Azcuna, Teresita J. Leonardo-De Castro