Madhya Pradesh High Court
Jash Hospital Research Center ... vs Deen Dayal Swasthya Suraksha ... on 7 November, 2023
Author: Sushrut Arvind Dharmadhikari
1
IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE PRAKASH CHANDRA GUPTA
ON THE 7th NOVEMBER, 2023
WRIT PETITION No. 6430 of 2021
BETWEEN:-
JASH HOSPITAL RESEARCH CENTER,
SUBSIDIARY OF ANUPARNA HEALTH
CARE PVT. LTD., THROUGH DR.
APOORV SHARMA DIRECTOR,
ADDRESS - JASH HOSPITAL, CITY
CENTER, NEAR GANDHI PARK
SHUJALPUR (MADHYA PRADESH)
.....PETITIONER
(SHRI AMIT AGRAWAL, SENIOR ADVOCATE ASSISTED BY SHRI RUSHIL
SHUKLA, COUNSEL FOR THE PETITIONER).
AND
DEEN DAYAL SWASTHYA SURAKSHA
PARISHAD 'NIRAMAYAM',
AYUSHMAN BHARAT, ADDRESS - 1ST
1.
FLOOR, IEC BUREAU BUILDING, J.P.
HOSPITAL PREMISES, BHOPAL
(MADHYA PRADESH)
CEO, STATE OF M.P. HEALTH
AGENCY, AYUSHMAN BHARAT
NIRAMAYAM M.P., 1ST FLOOR IEC
2.
BUREAU BUILDING, J.P. HOSPITAL
PREMISES, BHOPAL (MADHYA
PRADESH)
STATE OF M.P. THR. PRINCIPAL
SECRETARY, PUBLIC HEALTH AND
3. FAMILY WELFARE DEPARTMENT,
STATE OF M.P., VALLABH BHAWAN
BHOPAL (MADHYA PRADESH)
.....RESPONDENTS
(SHRI ROMESH DAVE, COUNSEL FOR RESPONDENT NO. 1 AND 2.
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2
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Reserved on : 19.04.2023
Pronounced on : 07.11.2023
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This petition coming on for hearing this day, Justice Sushrut Arvind
Dharmadhikari passed the following:
ORDER
Heard finally with the consent of both the parties.
2. This petition under Article 226 of the Constitution of India has
been filed challenging the order dated 23.12.2020 (Annexure P/1) by the
respondent No.2 by which the petitioner hospital has been de-empanelled,
blacklisted and debarred for a period of two years from ''Ayushman Bharat
Scheme'' alleging violation of various clauses of the Memorandum of
Understanding (MoU) and a penalty of Rs. 44,163/- has been imposed; order
dated 27.01.2021 (Annexure P/2) passed by respondent No.2 whereby penalty
of Rs. 3,01,28,500/- has been imposed; and thirdly order dated 10.03.2021
(Annexure P/3) passed by respondent No.2 directing respondent No.4/Chief
Medical and Health Officer (CMHO), Shajapur to lodge FIR against all the
Directors of the petitioner hospital, doctors and paramedics who conducted the
treatment procedures.
3. Brief facts of the case are that the petitioner hospital ''Jash
Hospital Research Centre'' is a reputed medical care centre situated in a rural
area catering to a large population of three big districts namely Rajgarh,
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Shajapur and Sehore with a total population of 43.70 lakhs.
4. All the respondents are ''State'' within the meaning of Article 12 of
the Constitution of India, therefore, amenable to the writ jurisdiction of this
Court.
5. The Government of India has framed a health scheme known as
'Ayushman Bharat' and the said scheme is implemented in the State of Madhya
Pradesh by the respondent no. 2/State Health Agency (SHA) through a society
known as Deen Dayal Swasthya Suraksha Parishad "Niramayam". The basic
aim of the scheme is to provide health protection cover to poor and vulnerable
families against financial risk arising out of catastrophic health episodes. The
health care services are to be provided to its beneficiaries through a network of
public and private health care providers. In view of the aforesaid, the private
hospitals get empanelled under the program.
6. The respondent No.1 is a Society registered under the Madhya
Pradesh Registrikaran Adhiniyam, 1973 for implementation of the Ayushman
Bharat - Madhya Pradesh (Niramayam) scheme. The Society was registered
on 07.06.2018. The respondent No.1 Society executes its work in the State as
the State Health Agency (SHA). This Society for implementation of the
scheme was formed as under :
(a) Advisory Council
(b) Governing Council
(c) Executive Council
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7. Though, the Deen Dayal Swasthya Suraksha Parishad
'Niramayam'' is a registered Society, it is owned, controlled and administered
by the Public Health and Family Welfare Department of Government of M.P.,
therefore, respondent No.1 is 'State' within the meaning of Article 12 of the
Constitution of India. Respondent No.2 is the Chief Executive Officer (CEO)
of the State Health Agency in the State of Madhya Pradesh constituted to
implement the scheme. The respondent No.3 is the Principal Secretary and
Chairperson of the executive committee of the respondent No.1 Society. The
respondent No.4 is the Chief Medical and Health Officer to whom the
impugned order dated 10.03.2021 (Annexure P/3) has been addressed by the
respondent No.2 directing to lodge FIR.
8. The petitioner hospital had applied for empanelment under the
Ayushman Bharat Yojna ''Niramayam'' MP on 19.06.2019 through online
mode. The said application was verified and other formalities as provided in
the Guidelines of SHA and NHA were fulfilled, therefore, respondents
empanelled the petitioner hospital under the Ayushman Bharat Yojna
''Niramayam'' vide order No. SHA/AB/2019/523 dated 27.12.2019. In view of
the aforesaid, Memorandum of Understanding (MoU) was executed between
the petitioner hospital and respondent No.1 Society on 02.01.2020 (Annexure
P/4) as a service provider for cashless health facility for select surgical and
medical packages under the aforesaid scheme. The petitioner hospital
successfully provided the medical facilities to the beneficiaries under the
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aforesaid scheme since 2020 to the utmost satisfaction of the respondent no.1.
The petitioner hospital complied with the necessary guidelines and submitted
daily treatment sheets and reports to the Panel Processing Doctors (PPD)
including the intra-operative, post operative scars in cases of surgical patients
and on-bed photograph of medical patients and on the said basis the panel
processing doctors allows further treatment as per the requirement. Detailed
discharge summaries of the patients were also submitted from time to time.
Investigation reports, operative notes and clinical/operative photographs of the
patients were also submitted from time to time. Thereafter, the claims are
forwarded for clearance to the SHA. Again there is a verification by the claim
processing doctors. Thereafter, finally the claim is forwarded to the accounts
department and then to the Bank for payment. The petitioner hospital has
followed the above process without any fault or delay and had treated all the
patients after due approval at all stages. There were no complaints in respect
of the services provided by the petitioner.
9. The respondent No. 1 without following the procedures/steps
provided in the guidelines and even without issuing any show causes notice as
provided in the guidelines, issued a temporary suspension order dated
06.10.2020 against the petitioner hospital suspending all packages under the
specialty S4 (Gynecology and Obstetrics) and M2 (General Medicine),
cessation of all due payments to the petitioner hospital. No opportunity of
hearing was granted which is in complete violation of principles of natural
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justice.
10. Learned Senior Counsel appearing for the petitioner hospital
submitted that the action taken by the respondents is contrary to the terms of
the MoU, arbitrary and in utter breach of principles of natural justice in as
much as the order of de-empanelment has been issued without affording any
opportunity of hearing to the petitioner hospital. The petitioner was not aware
of any reason for suspension/de-empanelment/blacklisting. The temporary
suspension order was issued only on the ground that the SHA follows a zero-
tolerance policy towards frauds and abuse under AB-PMJAY. The petitioner
hospital has been identified as an outlier hospital by the National Health
Authority-Anti Fraud Unit in context of over-use of certain packages and
specialties. Therefore, it warrants the SHA to conduct a detailed investigation
and prevent further abuse during the period of investigation. The order of de-
empanelment/black listing has been passed on the basis of the Minutes of the
Meeting dated 10.11.2020 (Annexure R/2) which is a report submitted by the
team of Doctors of the Anti-Fraud Committee (AFC) without even providing
copy of the aforesaid report. It is further submitted that under the Standard
Operating Procedure (SOP) for de-empanelment, any action for suspension of
hospital can be initiated by the SHA based on the recommendations of the
State Empanelment Committee (SEC). In the instant case, the order of
suspension / black listing / de-empanelment has been passed without any
recommendation of the SEC which renders the same patently without authority
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and jurisdiction.
11. It is submitted that the constitution of the SEC is laid down in the
State Empanelment Criteria for private hospitals issued by the respondent no.1
as under :-
i. CEO, State Health Agency - Chairperson
ii. Medical Officer, Clinical Establishment Regulation Act - Members
iii. Two State Government officials nominated by the Department - Members
12. The Standard Operating Procedure (SOP) for de-empanelment of
service providers stipulates that any action for suspension of hospital can be
initiated by the SHA based on the recommendations of the SEC. The relevant
Clauses of SOP are reproduced hereunder :
4.3.1 De-empanelment proceedings may be initiated by the State Health
Agency only after following principles of natural justice. The
recommendation from SHA shall be sent to SEC for taking final
action against theProvider.
4.3.2 Issuing show-cause notice to the Provider : Based on the report, if the
SHA feels that there are clear grounds of Provider indulging in any
malpractices or non-compliance with the MoU or SHA guidelines, a
show cause notice shall be ssued to the hospital. SHA in the notice
shall clearly indicate the grounds for the show cause to the Provider.
Provider will need to respond to the notice within the time limit as
mentioned in the show cause notice.
4.3.3 The reply to the show cause notice and the SHA report on the same
shall be put before SEC for consideration. In case the reply to the
show-cause notice aforementioned is found satisfactory, the Provider
shall be removed from the "watch-List" and de-empanelment
proceedings will be discontinued.
4.3.4 In case the reply filed for show cause notice aforementioned is found
unsatisfactory, suspension proceedings may be initiated by State
Health Agency based on the recommendations of SEC.
4.3.6 In case SEC deems it appropriate, Service Provider may be de-
empanelled for violations of conditions of MoU.
4.4 At all times Providers shall be given due opportunity to be heard and
submit detailed representation to the SHA. The representation shall
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be duly examined by the SHA and its recommendation shall be
forwarded to the SEC for consideration. The SEC may pass
appropriate order based on the recommendations of the SHA.
13. Learned Senior Counsel for the petitioner submitted that in the
present case, it is evident that the order of de-empanelment dated 23.12.2020
(Annexure P/1) as also the impugned orders have been passed by the
respondents without placing the matter before the SEC which renders the
aforesaid orders patently illegal and without jurisdiction. Moreover, the SEC
cannot authorize the CEO of the State Health Agency to take action against the
petitioner hospital. No such mechanism is provided under the MoU regarding
de-empanelment, black listing and imposition of penalty by the delegating
powers by the SEC to some other authority.
14. Learned Senior Counsel further submitted that the impugned
action has been initiated in a haste manner on the basis of the purported
enquiry report drawn by the Anti-Fraud Committee. The impugned orders have
been passed by the respondents by giving a complete go-bye to the procedures
prescribed in the SOP which clearly indicates the malafides and pre-
determination to de-empanel and to take adverse action against the petitioner
hospital.
15. Learned Senior counsel for the petitioner has placed reliance on
the judgment passed by the Apex Court in case of Ravi Yashwant Bhoir vs.
District Collector reported in AIR 2012 SC 1339 wherein it was held as
under :
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"22. The Constitution Bench of this Court in
G.Sadanandan v. State of Kerala & Anr., AUR 1966
SC 1925, held that if all the safeguards provided
under the statute are not observed, an order having
serious consequences is passed without proper
application of mind, having a casual approach to
the matter, the same can be characterized as having
been passed mala-fide, and thus, is liable to be
quashed."
16. The order of de-empanelment (Annexure P/1), besides being without
jurisdiction, is also bad-in-law on account of the same having been passed in
glaring breach of principles of natural justice and without affording any
opportunity of hearing to the petitioner. In similar fact and situation, the
Coordinate Bench of this Court at Principal Seat in W.P.No. 9134 of 2023
has been pleased to quash the order of de-empanelment on the ground of
breach of principles of natural justice.
17. In the circumstances, learned counsel for the petitioner submitted
that the impugned orders Annexures P/1, P/2 and P/3 deserves to be set aside
and the respondents be directed to regularize the payments outstanding to the
petitioner hospital and to restore the empanelment and permit the petitioner
hospital to treat the patients under the "Ayushman Bharat" Scheme.
18. Per contra, learned counsel for the respondents vehemently
opposed the prayer and submitted that the petitioner has an effective and
alternate remedy to file an appeal before the appellate authority, but without
availing the same, the petitioner has approached this Court. It is further
submitted that the petitioner hospital has been de-empanelled from the
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''Ayushman Bharat'' scheme since unsatisfactory response came from the
petitioner's side to the show-cause notice. Moreover, the impugned order of
de-empanelment for two years was issued on 23.12.2020, therefore, since the
period is over, this writ petition does not survive. Learned counsel for the
respondent further argued that the dispute is arbitrable. The National Health
Agency (NHA) guidelines dated June, 2020 lays down in Definition Clause 4
that de-empanelment amounts to termination, therefore, according to Clause
17.3 of the MoU (Annexure P/4), the dispute being arbitrable, therefore, the
writ petition is not maintainable. Learned counsel also submitted that as per
Clause 16.5 and 16.6 of the MoU, the SHA has jurisdiction to pass the order as
per steps provided in the NHA guidelines. Therefore, the impugned order is
within jurisdiction. On the aforesaid grounds, the writ petition deserves to be
dismissed.
19. In the rejoinder, learned Senior Counsel for the petitioner
submitted that so far as alternative remedy is concerned, under the description
of National Scheme ''Ayushman Bharat Niramayam M.P.'', it is clearly
mentioned that the Government of India in its Central Finance Budget, 2018
announced the scheme ''Ayushman Bharat'' for establishing 1 lakh health and
wellness centres for the benefit of 10 crore families giving each family a
medical insurance cover of Rs. 5 lakhs. The Government of India provided
60% budget and the State of M.P. has to provide 40% budget for implementing
the scheme. Even the State Health Agency (SHA) is owned, controlled and
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administered by Family Health and Family Welfare Department of
Government of M.P. Therefore, it is discharging public functions and as such,
brings it within the definition of 'State' under Article 12 of the Constitution of
India. Learned Senior Counsel relied on the Apex Court Judgment in the case
of Gas Authority of India Limited vs. Indian Petrochemicals Corporation
Limited and Ors., (2023) 3 SCC 629 wherein it is held that, where there is a
clear public element involved in the dealings between the parties, writ
jurisdiction can be exercised when the State, even in its contractual dealings,
fails to exercise a degree of fairness or practices any discrimination. In the
present case, there is a clear violation of the principles of nature justice and the
impugned orders having been passed without jurisdiction, the writ petition is
maintainable.
20. Learned Senior Counsel further submits that so far as non survival
of writ petition is concerned, the submission is misconceived as the impugned
order not only de-empanelled but also blacklisted the petitioner hospital,
therefore, the stigma suffered by the petitioner without proper show-cause
notice is required to be adjudicated so as to wash out the 'stigmatic status' and
once the stigma is removed, it shall pave the path of the petitioner to sue the
respondents for damages.
21. So far as the arbitrability of the dispute is concerned, the
petitioner has challenged the impugned order on the ground that the same is
wholly without jurisdiction having been passed by the CEO of the SHA
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contrary to Clauses 19.2, 19.3 and 19.7 of the MoU, therefore, the writ petition
is competent as held by the Division Bench of this Court in the case of Alok
Kumar Choubey vs. State of M.P. & Ors., (2021) 1 MPLJ 348 and
Kanhaiyalal and Co. vs. Indian Oil Corporation Ltd. & Anr., W.A.No. 1326
of 2022. In view of the aforesaid, the writ petition deserves to be allowed.
22. Heard learned counsel for the parties. Perused the record.
23. The following questions crop up for consideration in this case :
(i) Whether the rules of natural justice were followed while
passing the order of de-empanelment/black listed ?
(ii) Whether the recommendations from the SHA were sent to
SEC for taking final action against the petitioner hospital ?
(iii) Whether there was any approval of the SEC to de-empanel
the petitioner hospital ?
(iv) Whether the CEO was competent enough to pass the de-
empanelment order.
24. On perusal of the preliminary show-cause notice dated 09.10.2020
(Annexure P/11), it is seen that the same has been issued by the Executive
Officer, Ayushman Bharat 'Niramayam' MP, Bhopal intimating the petitioner
regarding the discrepancies found at the petitioner hospital. However, the said
preliminary show-cause notice along with the recommendations from SHA do
not appear to have been sent to the SEC for taking final action against the
petitioner hospital. Moreover, there are no documents to indicate that reply to
the show-cause notice and SHA report were put up before the SEC for
consideration. There are no documents to show that the SEC had granted
permission to initiate action against the petitioner hospital. The respondents
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are unable to point out the fact as to whether the SEC had granted permission
to de-empanel the petitioner hospital. The respondents No.1 and 2 relying
upon their investigation and expert committee opinion, themselves decided to
issue notice and pass the impugned orders. These facts, undisputedly reveal
that the entire investigation, expert committee opinion and eventually
adjudication was done by respondents No.1 and 2 completely throwing Clause
17.3 to oblivion. If the clause applies, it necessarily and equally applies to
both the parties. If the respondents No. 1 and 2 in accordance with their
investigation and opinion of the expert committee came to a conclusion that
the petitioner is guilty of fraud, cheating, breach of MoU and breach of
guidelines issued by the SHA, then an independent sole Arbitrator was the only
independent body which could have decided the entire issue of levy of penalty
etc. However, respondents No. 1 and 2 clearly became ''judges in their own
cause'' which cannot be countenanced in view of the authoritative
pronouncement in the Full Bench judgment of the Allahabad High Court in
Yar Muhammad vs. Lakshmi Das, AIR 1959 All 1; Delhi Financial Corpn.
vs. Rajiv Anand (2004) 11 SCC 625 and Crawford Bayley & Co. & Union of
India, (2006) 6 SCC 25.
25. It is an undisputed fact that during the entire proceedings, the
CEO, SHA (respondent No.2) was involved in the entire procedure of
investigation and then claims to have adjudicated it under authorization from
SEC i.e. executive council as per its minutes (Annexure R/4). Thus, the
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involvement and participation by the CEO (respondent No.2) in the entire
process clearly shows that the CEO himself had done some act and had taken
decision in the matter to refer the trigger alert for investigation by the AFC. In
these circumstances, obviously, respondent no.2 cannot be said to be an
''independent and unbiased person'' capable of taking an unbiased decision in
the matter. Instead, the respondent No. 2 being a party to the MoU, was an
adversarial party to the petitioner, therefore, required to invoke arbitration
clause, if permissible in law, to decide the issue of levy of penalty only for the
alleged breaches attributable to the petitioner hospital.
26. The impugned order in so far as they levy penalty on the
petitioner alleging acts of fraud, cheating, conspiracy along with breach of
MoU is clearly beyond the powers of respondent No.2. The adjudications
regarding breach of the MoU and its terms clearly falls within the purview of
Clause17.3 of the MoU and an independent agency could have been in a better
position to decide the question of breach and respective rights and obligations
of the parties. However, being in a dominant position, respondent No.2 has
proceeded to decide this issue without jurisdiction rather contrary to Clause
19.1 to 19.7 of MoU by becoming a Judge in his own cause in derogation to
the maxim ''nemo judex in causa sua'' (no one should be a judge in his own
cause). The aforesaid principle is accepted by the Apex Court in case of
Ashok Kumar Yadav & Ors. vs. State of Haryana, (1985) 4 SCC 417.
27. From perusal of the impugned orders, it is seen that the same have
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been passed by an incompetent authority which is absolutely without
jurisdiction. Admittedly, from perusal of the record, it is seen that due
opportunity of hearing has not been provided to the petitioner at all times as
per the SOP.
28. In view of the aforesaid, the orders impugned dated 23.12.2020
(Annexure P/1), 27.01.2021 (Annexure P/2) and 10.03.2021 (Annexure P/3)
passed by respondent No.2 deserves to be and are hereby set aside. The
petition is allowed and the respondents are directed to -
(1) Regularize the empanelment of the petitioner hospital under the
''Ayushman Bharat'' scheme.
(2) Make the payment of the outstanding dues for the treatment
extended to the patients prior to the de-empanelment.
(3) However, the respondents would be at liberty to initiate action in
accordance with law, if so advised.
29. Accordingly, the writ petition stands allowed and disposed of.
No order as to cost.
(S. A. DHARMADHIKARI) (PRAKASH CHANDRA GUPTA)
JUDGE JUDGE
vidya
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