G.R. No. 169737 ; February 12, 2008
BLUE CROSS HEALTH CARE, INC., petitioner, vs. NEOMI and DANILO OLIVARES, respondents.

FACTS

Respondent Neomi Olivares secured a health care agreement from petitioner Blue Cross Health Care, Inc., effective October 16, 2002. The agreement excluded coverage for ailments due to “pre-existing conditions,” defined as disabilities existing before the membership’s commencement. On November 30, 2002, Neomi suffered a stroke and was hospitalized at an accredited facility, incurring expenses of P34,217.20. Blue Cross refused to issue the necessary authorization letter or pay the claim, insisting on a certification from her attending physician that the stroke was not caused by a pre-existing condition.
Neomi invoked patient-physician confidentiality, preventing her doctor from releasing the medical report to Blue Cross. Consequently, the Olivares spouses settled the bill themselves and filed a collection case. The Metropolitan Trial Court (MeTC) dismissed the complaint, ruling that Neomi’s own act of withholding the certification barred her claim. On appeal, the Regional Trial Court (RTC) reversed the MeTC, holding that the burden was on Blue Cross to prove the stroke was a pre-existing condition, which it failed to do. The Court of Appeals affirmed the RTC’s decision.

ISSUE

The primary issue is whether Blue Cross validly denied the claim by proving that Neomi’s stroke was caused by a pre-existing condition excluded from coverage.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic centers on the burden of proof in insurance contracts. Exceptions to coverage, such as the “pre-existing condition” clause, are considered affirmative defenses. The burden rests on the insurer to prove the applicability of such an exclusion. Blue Cross failed to discharge this burden. It merely presumed the stroke was pre-existing without presenting substantial evidence, such as medical records or expert testimony, to establish that the disability existed prior to the agreement’s effectivity.
The Court emphasized that insurance contracts are contracts of adhesion, and ambiguities are construed strictly against the insurer. Blue Cross’s refusal to pay, based merely on its own perception and without concrete proof of the exclusion, constituted bad faith. This justified the award of moral and exemplary damages and attorney’s fees to the respondents, who suffered mental anguish and were compelled to litigate. The findings of the RTC and CA on these factual matters are binding and conclusive.