Introduction: The Insurance Regulatory and Development Authority of India (IRDAI) recently issued a final order in the matter of M/s Anmol Medicare TPA Ltd. The order is based on the company’s response to a Show Cause Notice (SCN) dated November 14, 2022, and the submissions made during a personal hearing held on July 18, 2023, at the IRDAI’s office in Hyderabad.
Background: IRDAI conducted an inspection of Anmol Medicare TPA Ltd. from December 15 to December 17, 2021. The inspection report was forwarded to the TPA on January 20, 2022, initiating a series of events leading to the final order. The TPA responded to the inspection report on February 4, 2022.
Show-Cause Notice (SCN), Reply, and Hearing: Upon reviewing the TPA’s responses, IRDAI issued an SCN on November 14, 2022. The TPA replied to the SCN on December 6, 2022. A personal hearing took place on July 18, 2023, with representatives from both the TPA and IRDAI present.
Charge, Gist of Submissions, and Decision: The primary charge against Anmol Medicare TPA Ltd. was a violation of the code of conduct under clause 2 (s), Schedule II, Regulation 23 of IRDAI (TPA-Health Services) Regulations, 2016. The charge involved the TPA granting loans to individuals not connected with its TPA business.
In response, the TPA provided explanations for each individual named in the observation:
- VIPUL P SHAH: Former employee, outstanding loan.
- JAY M SHAH: Not an employee, loan advanced, and later rectified.
- HEMALI A MEHTA: Advance for office premises deal, partially returned.
- SUKUMAR DOSHI: Payment for office premises deal, outstanding amount.
IRDAI’s decision involved imposing a penalty of Rs. 100,000 on Anmol Medicare TPA Ltd. for violating the code of conduct. The penalty was specifically applied to the loan granted to Jay M Shah. The TPA received a caution for inadequate record-keeping related to the other transactions and was advised to adhere to the specified code of conduct.
Conclusion: The final order underscores the importance of adherence to IRDAI regulations by entities operating in the insurance sector. Anmol Medicare TPA Ltd. has been penalized for violations, emphasizing the need for strict compliance with codes of conduct. The penalty amount, along with other compliance measures, must be addressed by the TPA within the stipulated timeframe.
Insurance and Regulatory and Development Authority of India
Ref: IRDAI/E&C/ORD/ONS/5/1/2024
Final Order
In the matter of M/s Anmol Medicare TPA Ltd.
[Based on reply to the Show Cause Notice (SCN) dated 14th November, 2022, and submissions made during personal hearing held at the office of the Insurance and Regulatory and Development Authority of India (Authority), Financial District, Nanakramguda, Hyderabad, on 18th July, 2023, taken by a Panel consisting of Member (Health) and Member (Non-Life).]
Background:
1. The Insurance Regulatory and Development Authority of India (Authority) carried out an inspection of M/s Anmol Medicare TPA Ltd. (TPA or Company) during the period from 15th December, 2021 to 17th December, 2021. The Authority forwarded a copy of the inspection report to the TPA on 20th January, 2022, seeking comments and the TPA’s comments were received vide their letter dated 4th February, 2022.
Show-Cause Notice(SCN), Reply and Hearing:
2. Upon examining the submissions made by the TPA, the Authority issued SCN to the TPA on 14th November, 2022, which was responded to by the TPA vide their letter dated 6th December, 2022. A personal hearing was given to the TPA and it was held at the office of the Authority on 18th July, 2023. Mr P. S. Kshatriya, CEO and Mr. Mukesh Suthar, Chief Accountant attended the hearing on behalf of the On behalf of the Authority, Mr. TV Rao, General Manager (Enforcement & Compliance [E&C]), Mr. Sanjay K Verma, Deputy General Manager (E&C.), Mr. Saket Gupta, Manager (E&C), and Mr. Viswanath V, Manager (E&C), were present during the hearing.
3. The submissions made by the TPA in their reply to the SCN and those made during the course of the hearing have been considered and accordingly the Authority’s decision on the charge is detailed below.
Charge, Gist of the submissions of the TPA and Decision of the Authority:
4. Charge
Violation of code of conduct issued under clause 2 (s), Schedule II Regulation 23 of IRDAI (TPA-Health Services) Regulations, 2016, which mandates the TPA to not lend or grant any loan to any other company, entity or individual not connected with its TPA business.
TPA has granted loan to individuals other than employees and even after being brought to its notice by its own Auditor, did not act upon the same – thus violating the code of conduct referred above.
5. Reply of the TPA:
With respect to four persons named in the observation, the TPA submitted as follows:
i) VIPUL P SHAH –
He was an employee of the company till 31/08/2019 and since then the loan of Rs. 100000/- advanced to him is outstanding. Subsequently he was transferred to the another company in the group as an employee due to promotion. Normally company settles the account and makes recovery of outstanding loans before relieving an employee but as this case was an exceptional one and the person has continued as an employee in the group, he was given some time to repay the loan.
ii) JAY M SHAH
During Personal Hearing, the TPA admitted that Mr. Jay M Shah was not their employee and in fact was a relative of a director of the WA at that time. Mr. Jay M Shah needed a loan of Rs. 1000000/- for his professional purpose for short term period and the company made payment to Dr. Jay M Shah on 06/06/2017. After 4-month Jay M Shah gave cheque in the name of TPA’s another group company instead of company’s name towards repayment of the said loan on 06/10/2017 but due to non-availability of the responsible person of Accounts team on the said day, the cheque was accepted and deposited. The transaction as rectified on 30th March, 2022.
iii) HEMALI A MEHTA – 0/S OF RS 155000/‑
This transaction pertains to an office premises adjoining to the registered office of the company. The company was willing to acquire the said premises. In 2017 Mrs. Hemali A. Mehta was approached in the matter of executing the deal with the owners of the premises. On her assurance she was given an advance of Rs. 700000/- for making part payment to one Mr. Sukumar Doshi and other co-owners of the said premises. But she could not get the deal finalized and her efforts were in vain. She therefore, returned Rs. 545000/- to the company in the same year 2017. Balance amount of Rs. 155000/- was outstanding. Ultimately the company was able to settle the deal and purchase the office premises on 31/05/2021.
iv) SUKUMAR DOSHI- 0/S OF Rs. 925000/‑
The transaction with Mr. Sukumar Doshi pertains to an office premises adjoining to the registered office of the company. The TPA paid Rs 600000/- on 06/02/2020 and Rs. 325000/- on 26/02/2021 to Mr. Sukumar Doshi one of the co-owners of the said premises. The sale deed was executed in favour of the company on 31/05/2021. Therefore, payments to Sukumar Doshi towards the sale consideration are shown as advances in the balance sheet as on 31/03/2021 of the TPA. There was no Sale Agreement executed between the TPA and Mr. Sukumar Doshi before making the payment.
6. Decision:
As admitted by the TPA itself, Mr. Jay M Shah was not an employee of the TPA; and still a loan of Rs. 10,000,00/- was advanced to him. It is pertinent to note that even the repayment by the said individual of the said loan money was made to the group company and not the TPA. The transaction was rectified in the books of the TPA only on 30th March 2022. Thus, in case of Mr. Jay M Shah, violation of clause 2 (s), Schedule II Regulation 23 of IRDAI (TPA-Health Services) Regulations, 2016 is established. It is important that an entity regulated by the Authority adheres to the Regulations, and especially such regulations which have a bearing on the financials of the entity: Therefore, in exercise of powers vested under Section 102 of the Insurance Act, 1938, the Authority imposes a penalty of Rs. 100000/- (Rs. One Lakh only) on M/s Anmol Medicare TPA Ltd.
With respect to other three persons mentioned in the charge, the TPA is cautioned for not maintaining the statement of accounts appropriately and not recording the payments wherever required thus failing to provide true and correct picture of their accounts and is advised to adhere to the code of conduct as mentioned under clause 2(s) Schedule II, Regulation 23 of IRDAI (TPA-Health Services) Regulations, 2016
7. Summary of Decision: The following is the summary of decision in this order:
| Brief Title of charge and the provisions violated | Decision |
| Charge: TPA has granted loan to individuals other than employees
Provision: clause 2 (s), Schedule II (Code of Conduct) Regulation 23 of IRDAI (TPA-Health Services) Regulations, 2016 |
Penalty of Rs. 100000/‑ |
8. The penalty amount of Rs. 100000/- levied under the Charge of this order, shall be remitted through NEFT/ RTGS (details for which will be communicated separately) within a period of 45 days from the date of receipt of this Order. An intimation of remittance shall be sent to Mr. T.V. Rao (GM– Enforcement & compliance Department) at the Insurance Regulatory and Development Authority of India, Sy 115/1, Road No. 2, Financial District, Nanakramguda, Gachibowli, Hyderabad-500032 or by email to enforcementirdai.ciov.in.
9. A copy of this order shall be placed before the Audit committee of the TPA and also in the ensuing Board meeting of the TPA and within 15 days of the said meeting, TPA shall submit a copy of the minutes of discussions, to the Authority.
10. If the TPA feels aggrieved by any of the decisions in this order, an appeal may be preferred to the Securities Appellate Tribunal, Mumbai, under Section 110 of the Insurance Act, 1938.
B.C. Patnaik
Member (Health)
Thomas Devasia
Member (Non-Life)
Place: Hyderabad
Date: 09.01.2024
