The Tainan Branch of the Taiwan High Court rendered the 104-Pao-Xian-Shang-Yi-3 Civil Decision of January 19, 2016 (hereinafter, the “Decision”), holding that to avoid moral hazards, an insurer should be allowed to exclude hospitalization not for treatment purposes or to determine such hospitalization is not necessary by substantiating that the hospitalization decision of the diagnosing physician does not meet general medical practices.
According to the facts underlying this Decision, the Appellant asserted as follows. The Appellant had obtained an insurance policy from the Appellee with an insurance rider on hospitalization health insurance (hereinafter, the “Rider at Issue”). It was agreed that an insurance benefit of NT$3,000 would be paid each day in case of hospitalization. The Appellant’s lumbar spine was injured during an accident. After a surgical operation performed on the his lumbar spine in Sinlau Hospital, the Appellant suffered from nerve pain and his diagnosing physician believed that hospitalization was necessary. Until October 11, 2012, he had been hospitalized 11 times for a total of 233 days of hospital stay for treatment. Therefore, the he claimed insurance benefits for his hospitalization. However, he only received insurance benefits for 22 days with the rest of the days rejected. Therefore, he filed this lawsuit to seek insurance indemnification.
According to the Decision, since insurance is an aleatory contract with maximum good faith, the parties are expected to enter into an insurance contract in good faith to avoid moral hazards. Although the “necessity of hospitalization as diagnosed by a physician” under the Rider at Issue and the finding of “necessity” by the actual diagnosing physician should be respected, still medical ethics should be followed and experiential or theoretical rules should not be violated so as to reflect the objectives of an insurance contract, which is characterized by maximum good faith. Therefore, an insurer should be allowed to exclude hospitalization not for treatment purposes or to determine such hospitalization is not necessary by substantiating that the hospitalization decision of the diagnosing physician does not meet general medical practices.
It was found in this Decision after relevant evidence such as examination was considered that a total of 92 days of the hospital stay of Appellant Hsiang-yuan Lin was necessary for hospitalization treatment and insurance indemnification may be claimed with the rest not claimable. This Decision was thus rendered partially in favor of the Appellant.