Banking Board of Ecuador

RESOLUTION No. JB-2015-3320

THE BANKING BOARD

CONSIDERING:

THAT according to the last paragraph of the Third Transitional Provision of the Organic Code of Monetary and Financial Law, published in the Official Register Second Supplement No. 332, of September 12, 2014, the Banking Board will continue to act until it resolves all appeals it was hearing on the date of entry into force of that Code, for a period of one hundred and eighty days;

THAT on February 1, 2009, a health and life insurance policy for the employees of the aforementioned company was signed between Panamerican Life Insurance Company – Ecuador Branch and the President of the company SINETCOM S.A. On July 1, 2012, Mr. Juan Francisco Chafla Altamirano was included in said policy;

THAT Mr. Juan Francisco Chafla Altamirano filed two claims for medical expenses with the insurer; the first was formalized on March 1, 2013, and the second on July 24, 2013; that is, on those dates the insured presented the documentation required by the policy in question;

THAT Panamerican Life Insurance Company – Ecuador Branch, through letter No. PAN-B2013-0096 of May 22, 2013, which according to the insured was notified to him on May 30 of the same month and year, proceeded to object to the first claim, due to a supposed pre-existing condition considered as an exclusion in the policy; and, for the second claim, there was no denial of payment or indemnification whatsoever by the insurer.

THAT through communication entered into the Superintendence on November 13, 2013, Mr. Juan Francisco Chafla Altamirano filed an administrative complaint against Panamerican Life Insurance Company – Ecuador Branch, in the following terms:

"(...) on January 10, 2013, by order of my treating physician, Dr. Hernán Lupera, I underwent an operation to extract a tissue sample due to the presence of an abnormal inflammation in the left inguinal lymph nodes. The sample would serve to perform a biopsy and try to determine the cause of the inflammation.

After obtaining the sample and after several exhaustive examinations, it was determined that the lymph node inflammation was due to an infectious process caused by strains of Epstein Barr Cytomegalovirus (...)

I proceeded to file the respective claim for reimbursement of expenses with the private insurer Panamerican Life, to which I have been affiliated since July 1, 2012, and I received a letter on May 30, 2013 (...), from this insurer (...) in which I was informed that the reimbursement request is not covered as it is considered a pre-existing condition.

As a background, in 2012 I had a similar lymph node inflammation to the one mentioned above, but all tests performed were negative. In contrast, the current report from the treating physician Dr. Lupera (...) clearly indicates that the current process responds to a viral process, for which the pre-existing condition does not apply in this case.

Four months later, on May 2, 2013, I underwent a new surgical intervention to extract a sample of some inflamed lymph nodes, this time in the left cervical region. After the required biopsy, the final diagnosis issued by Dr. Hernán Lupera was 'Reactive follicular hyperplasia'

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Resolution No. JB-2015-3320

(...)

Since the pre-existing condition does not apply in either of the two cases, I formally file the complaint with the Superintendence of Banks and Insurance so that I am reimbursed for the values of all expenses included in the two surgical interventions I underwent in 2013 and which should have been covered by... Panamerican Life when the corresponding claim was made.

The first surgical intervention on January 10, 2013 amounts to USD 3,758.58 and the one on May 2, 2013 amounts to USD 2,063.04.

I attach all invoices, tests, and medical reports that corroborate what is stated in this letter";

THAT through Resolution No. SBS-DNAE-2014-292 of April 2, 2014, Engineer Carolina Pesántez Benítez, National Director of User Attention and Education, in resolving the administrative complaint mentioned in the preceding paragraph, pointed out that the insurance company proceeded to object to or deny the two claims after the forty-five days established in Article 42 of the General Insurance Law, and ordered Panamerican Life Insurance Company – Ecuador Branch to pay "Mr. Juan Francisco Chafla Altamirano, for the first claim USD 3,758.58, less the deductibles provided in the policy, plus interest from April 16, 2013, the day following the expiration of the forty-five days established in Article 42 of the General Insurance Law; and, for the second claim USD 2,063.04, less the deductibles provided in the policy, plus interest from September 1, 2013, the day following the expiration of the forty-five days established in the aforementioned legal norm";

THAT through communications entered into the Superintendence on April 14 and April 28, 2014, Engineer Carlos Chiriboga Moncayo, General Attorney and Legal Representative of Panamerican Life Insurance Company – Ecuador Branch, with the professional sponsorship of lawyer María Patricia Ponce Arteta, filed an appeal against the administrative act contained in Resolution No. SBS-DNAE-2014-292 of April 2, 2014;

THAT the appellant based his appeal on the fact that the medical expense policy subject of the present case excludes pre-existing conditions and that Mr. Juan Francisco Chafla Altamirano expressly acknowledged the existence of "ADENOPATHIES" prior to the contracting of the medical expense insurance, which is why coverage was denied;

THAT said appeal was accepted for processing by the National Intendancy of the Private Insurance System through Resolution No. SBS-INSP-2014-112 of May 23, 2014.

THAT the first five paragraphs of Article 42 of the General Insurance Law provide:

"ARTICLE 42.- Every insurance company is obligated to pay the contracted insurance or the corresponding part of the duly proven loss, as the case may be, within forty-five days following the day on which the insured or beneficiary presents in writing the corresponding claim accompanied by the documents that, according to the policy, are necessary, unless the insurance company formulates justified objections to such claim, which must be immediately brought to the knowledge of the Superintendent of Banks."

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Banking Board of Ecuador

Resolution No. JB-2015-3320

If the insured or beneficiary agrees to the objections, the insurance entity will immediately pay the agreed indemnity.

If in this case or in the case where the forty-five day period established in the first paragraph expires, the insurance company does not make the payment, the insured or beneficiary will bring this fact to the knowledge of the Superintendent of Banks, who, upon verifying this situation, will order payment within a period not exceeding fifteen days, along with interest calculated from the forty-five days previously indicated, at the maximum conventional rate fixed according to law. If payment is not made within the granted period, it will order the forced liquidation of the insurance company.

If the insurance company formulates objections to the claim and no agreement is reached with the insured or beneficiary, the Superintendence of Banks will verify the existence of the grounds for such objections and, if none are found, will order payment; otherwise, it will reject it.

The insured or beneficiary may resort to summary verbal trial before competent judges or submit to commercial arbitration or mediation, as the case may be."

THAT the Legislation on the Insurance Contract, issued by Supreme Decree No. 1147, published in Official Register No. 123 of December 7, 1963, which forms part of the Commercial Code, in its Article 22, provides:

"Art. 22.- It is incumbent upon the insured to prove the occurrence of the event, which is presumed to have been caused by fortuitous event, unless proven otherwise. Likewise, it is incumbent upon the insured to prove the amount of the indemnity due from the insurer. It is incumbent upon the insurer, in both cases, to demonstrate the facts or circumstances excluding its liability";

THAT according to the aforementioned Article 42 of the General Insurance Law, once the forty-five days following the day on which the insured or beneficiary presents in writing the corresponding claim accompanied by the documents that, according to the policy, are necessary to formalize the claim have passed, without the insurance company having made the payment of the claimed insurance, the insured may go to the Superintendence of Banks and Insurance, the control organism that by legal mandate has the obligation to, if applicable, order payment along with interest calculated from the forty-five days previously indicated, at the maximum conventional rate fixed according to law;

THAT in the present case, as recorded in Resolution No. SBS-DNAE-2014-292 of April 2, 2014, Mr. Juan Francisco Chafla Altamirano filed two claims for medical expenses with the insurer; the first was formalized on March 1, 2013, and the second on July 17, 2013, while Panamerican Life Insurance Company – Ecuador Branch proceeded to object to the first claim on May 30, 2013, due to a supposed pre-existing condition considered as an exclusion in the policy; and, for the second claim, there was no denial of payment or indemnification whatsoever by the insurer, as stated by the National Director of User Attention and Education in the eighth consideration of the appealed resolution, whose text says:

"THAT (...) the objection by the insurer regarding the first claim was presented on May 30, 2013, and for the second claim no document is attached notifying Mr. Juan Francisco Chafla Altamirano of the objection, simply in the letter of December 17, 2013, it is indicated that the company sends separate communications on May 30 and July 17 denying the

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Resolution No. JB-2015-3320

coverage. From the above, it is established that the objection was presented outside the forty-five day period provided for in Article 42 of the General Insurance Law (...)";

THAT once the documentation forming part of the file of the present case is reviewed, it can be observed that the first claim was indeed formalized on March 1, 2013, but the second claim is recorded as received by the insurer not on July 17, 2013, but on July 24 of the same month and year;

THAT therefore, for the first claim presented by the insured with the insurance company, the forty-five day period provided for in Article 42 of the General Insurance Law expired on April 15, 2013, while for the second claim it expired on September 7 of that same year; therefore, the Superintendence, in application of the provisions of the aforementioned legal norm, should have ordered the insurer to pay the insured the claimed values with the respective interest counted from April 16, 2013, in the first case, and from September 8 of that same year, in the second case;

THAT furthermore, Mr. Juan Francisco Chafla Altamirano has complied with the provisions of the aforementioned Article 22 of the Legislation on the Insurance Contract, issued by Supreme Decree No. 1147, as he demonstrated the occurrence of the event with the proper quantification thereof, through the invoices, tests, and medical reports sent within the claim presented to the insurer;

THAT it is necessary to indicate that the appellant, as the only argument within his appeal, stated that the medical expense policy subject of the present case excludes pre-existing conditions; however, he does not refute the ground on which the appealed administrative act was issued, which was the failure by the insurer to pay or object to the claim within the forty-five day period provided for in Article 42 of the General Insurance Law;

THAT in the appealed resolution, the National Director of User Attention and Education did not analyze the issue of "pre-existence", by virtue of the fact that by legal mandate when it is demonstrated that the denial of payment was untimely, the Superintendence of Banks and Insurance must order payment without entering into an analysis of the insurer's untimely grounds;

THAT therefore, in the appeal, the insurance company should have presented arguments tending to disprove the grounds on which the appealed administrative act was issued; however, it did not do so, as in this instance it again presented the justification for the denial of payment which was untimely; for this reason, the Banking Board should not take it into account;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0056 of January 22, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the General Attorney and Legal Representative of Panamerican Life Insurance Company – Ecuador Branch; and,

In exercise of its legal powers,

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal filed by the General Attorney and Legal Representative of Panamerican Life Insurance Company – Ecuador Branch; PARTIALLY CONFIRM the administrative act contained in Resolution No. SBS-DNAE-2014-292 of April 2, 2014; and, consequently ORDER that Panamerican Life Insurance Company – Ecuador Branch pay Mr. Juan

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Banking Board of Ecuador

Resolution No. JB-2015-3320

Francisco Chafla Altamirano, for the first claim, USD 3,758.58, less the deductibles provided in the policy, plus interest from April 16, 2013, the day following the expiration of the forty-five days established in Article 42 of the General Insurance Law; and, for the second claim, USD 2,063.04, less the deductibles provided in the policy, plus interest from September 8, 2013, the day following the expiration of the forty-five day period established in the aforementioned legal norm.

ARTICLE 2.- ORDER that the insurance company comply with what is established in the previous article within a period of fifteen days, under legal penalty. If it does not do so, it will be subject to the provisions of letter a) of Article 55 of the General Insurance Law.

NOTIFY.- Given at the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the twenty-fifth of March of two thousand fifteen.

Econ. Rodrigo Landeta Parra
GENERAL INTENDANT (S)
PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on the twenty-fifth of March of two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD