Employees' Compensation Act does not treat medical expenses as compensation component, rules Karnataka HC

Bengaluru: The Karnataka High Court has said that the Employees' Compensation (EC) Act does not treat medical expenses as a component of 'compensation' payable under Section 4 and, hence, reimbursement of medical expenses is not a statutory liability imposed on the insurer.

Justice K Manmadha Rao said this while modifying the award passed to a labourer, who lost both his hands at a factory in Ranebennur.

The labourer, Bettappa, was employed at a factory and on October 31, 2013, both his hands were crushed while working on the cotton baling machine and the hands had to be amputated. He spent more than Rs five lakh on treatment and filed a claim petition seeking compensation of Rs 30 lakh.

On December 28, 2017, the Commissioner (under the EC Act), Ranebennur, awarded Rs 16,69,414 with 12% interest to Bettappa, payable by the insurance company. Challenging this order, the insurance company contended that the policy was purely an indemnity contract, under which the primary statutory liability to pay compensation rests upon the employer. The court was informed that the policy expressly excluded liability for medical expenses and interest.

Justice Manmadha Rao noted that the insurance policy placed on record excluded liability towards payment of interest under Section 4-A of the EC Act. The court further noted that no additional premium was paid to cover such a liability. Where the insurance policy specifically excludes liability towards medical expenses incurred for treatment of injuries sustained by an employee, and no premium is paid for such coverage, the insurer cannot be fastened with liability contrary to the terms of the contract, the court said.

However, the court retained the order of the commissioner in regard to the calculation of wages for determining the compensation and directed that the claimant was entitled to Rs 8,56,752 as compensation, to be paid by the insurance company.