Redefining Service : The coverage of medical profession under
the Consumer Protection Act, 1986


By

Ashish Shukla
Lecturer - Business Law
School of Business
Lovely Professional University
Phagwara, Punjab
 


It is the duty of the government to provide the fundamental right to life and personal liberty guaranteed by Article 21 of the Constitution. Therefore, it is the duty of the state to provide to all citizens adequate and proper medical services. The COPRA, 1986 was enacted 'to provide for better protection of the interests of the consumers' the consumers of goods and services as defined under the Act. The Act has been marginally amended in 1991 and substantially in 1993 and 2001, with a view to making it more effective in bringing justice to the door steps of consumers. COPRA has always been a strong tool for consumers in fighting the menace of any service available to them. Medical Services, which is now one of the basic needs of consumers in their day to day life and consumers have been facing hardships in this area also.

There has been considerable debate as to whether medical service is within the scope of 'Services' as provided under the Act. The nucleus of the problem emanates from the negligence of duty by the doctor which is being caused by the omission to do something which a reasonable man ordinarily would perform, or doing of something which a prudent and reasonable man would not do. Whether the service rendered at a hospital/nursing home can be regarded as 'service' under Section 2(1)(o) of the Act. These questions have been considered by various High Courts as well as by the National Consumer Disputes Redressal Commission [hereinafter referred to as 'the National Commission'].

Definition

According to Consumer Protection act 1986 , Section 2(1)(0) "service" means service of any description which is made available to potential (users and includes the provision of ) facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service. With The Consumer Protection (Amendment) Act, 1993, The words "housing construction" in Section 2(1)(o) were inserted by the Act 50 of 1993. According to The Consumer Protection (Amendment) Act, 2002 , Section 2(1)(0) "Service" means service of any description which is made available to potential ( users and includes, but not limited to, the provision of) facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both , [housing construction] , entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

Judgements

By judgment dated December 15, 1989 in First Appeal No.2 of 1989 The National Commission has held that persons who avail themselves of the facility of medical treatment in Government hospitals are not "consumers" and the said facility offered in the Government hospitals cannot be regarded as service "hired" for "consideration". It has been held that the payment of direct or indirect taxes by the public does not constitute "constitute "consideration" paid for hiring the services rendered in the Government hospitals.

By judgment dated April 21, 1992 in First Appeal Nos. 48 and 94 of 1991, the National Commission has held that the activity of providing medical assistance for payment carried on by hospitals and members of the medical profession falls within the scope of the expression `service' as defined in Section 2(1)(o) of the Act.

By judgment dated May 3, 1993, the National Commission has held that since the treatment that was given to the complainant's deceased husband in the nursing home belonging to the opposite party was totally free of any charge, it did not constitute `service' as defined under the Act and the complainant was not entitled to seek any relief under the Act.

Justice V Bala Krishna Eradi, President, NCDRC, on April 21, 1992, delivered a landmark judgment in Cosmopolitan Hospital and Anr. v. Vasantha P. Nair, where it was held that the activity of providing medical services for payment carried on by the hospital and members of the medical profession, falls within the scope of the expression 'service' as defined in Section 2(1)(o) of The consumer protection act and in the event of any deficiency in the performance of such service, the aggrieved party could invoke the remedies provided under the Act by filing a complaint before the consumer forum having jurisdiction. A patient who pays up for the treatment, or promises to do so with a consideration can seek redressal in a consumer court.

In Dr. A.S. Chandra v. Union of India, (1992) , Andhra Pradesh High Court has held that service rendered for consideration by private medical practitioners, private hospitals and nursing homes must be construed as 'service' for the purpose of Section 2(1)(d) of the Act and the persons availing such services are 'consumers' within the meaning of Section 2(1)(d) of the Act.

In Dr.C.S. Subramanian v. Kumarasamy & Anr., (1994) Madras High Court has been held that the services rendered to a patient by a medical practitioner or by a hospital by way of diagnosis and treatment, both medicinal and surgical, would not come within the definition of 'service' under Section 2(1)(o) of the Act and a patient who undergoes treatment under a medical practitioner or a hospital by way of diagnosis and treatment, both medical and surgical, cannot be considered to be a `consumer' within the meaning of Section 2(1)(d) of the Act; but the medical practitioners or hospitals undertaking and providing paramedical services of all kinds and categories would fall within the definition of `service' and a person availing of such service would be a `consumer' within the meaning of the Act.

Now all the queries related to the Coverage of medical services under the definition of "service" and applicability of the consumer protection act over medical profession has been settled by the landmark judgment of the Supreme Court in the case of Indian Medical Association vs. VP Shantha & others.

Indian Medical Association vs. VP Shantha & others., 1995

In this case Supreme court decided the coverage and applicability of the consumer protection act over medical service. In this Case Supreme Court observed the definition of "service" in Section 2(1)(o) of the Act can be split up into three parts :-

A. Main part
B. Inclusionary part
C. Exclusionary part

The main part is explanatory in nature and defines service of any description which is made available to the potential users. The inclusionary part expressly includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical of other energy, board or lodging or both housing construction, entertainment, amusement or the purveying of news or other information. The exclusionary part excludes rendering of any service free of charge or under a contract of personal service.

Main part

After pointing out that the said definition is in three parts, the Supreme Court has observed , "The main clause itself is very wide. It applies to any service made available to potential users. The words `any ' and `potential' are significant. Both are of wide amplitude. The use of the word `any' in the context it has been used in clause 2(1)(o) indicates that it has been used in wider sense extending from one to all. The other word `potential' is again very wide. In other words service which is not only extended to actual users but those who are capable of using it are covered in the definition. The clause is thus very wide and extends to any or all actual or potential users."

Inclusionary part

Referring to the inclusive part of the definition Supreme Court said , "The inclusive clause portrayed wide scope of the services because any service except when it is free of charge or under a constraint of personal service is included in inclusive clause." In the case of Indian Medical Association vs. VP Shantha & others , the inclusive part of the definition of "service" is not applicable and Supreme court dealt with the questions in the light of the main part and the exclusionary part of the definition of "service ". The exclusionary part will require consideration only if it is found that in the matter of consultation, diagnosis and treatment a medical practitioner or a hospital/nursing home renders a service falling within the main part of the definition contained in Section 2(1) (o) of the Act. We have, therefore, to determine whether medical practitioners and hospitals/nursing homes can be regarded as rendering a "service" as contemplated in the main part of Section 2(1)(o)." This determination has to be made in the light of the aforementioned observations in the case of Lucknow Development Authority vs. M.K. Gupta , 1994. The definition of `service' as contained in Section 2(1)(o) of the Act has been interpreted by this Court in Lucknow Development Authority v. M.K. Gupta, 1994.

Exclusionary part

Referring to the exclusionary part of the definition , The exclusionary part excludes from the main part service rendered (i) free of charge; or (ii) under a contract of personal service.

(i) Medical Service : Free of Charge

The other part of exclusionary clause relates to services rendered "free of charge". The medical practitioners, Government hospitals/nursing homes and private hospitals/nursing homes (hereinafter called "doctors and hospitals") broadly fall in three categories :-

i) Where services are rendered free of charge to everybody availing the said services.
ii) Where charges are required to be paid by everybody availing the services
iii) Where charges are required to be paid by persons availing services but certain categories of persons who cannot afford to pay are rendered service free of charges.

Doctors and hospitals who render service without any charge whatsoever to every person availing the service would not fall within the ambit of "service" under Section 2(1) (o) of the Act. The payment of a token amount for registration purposes only would not alter the position in respect of such doctors and hospitals. So far as the second category is concerned, since the service is rendered on payment basis to all the persons they would clearly fall within the ambit of Section 2(1) (o) of the Act. The third category of doctors and hospitals do provide free service to some of the patients belonging to the poor class but the bulk of the service is rendered to the patients on payment basis. The expenses incurred for providing free service are met out of the income from the service rendered to the paying patients. The service rendered by such doctors and hospitals to paying patients undoubtedly fall within the ambit of Section 2(1) (o) of the Act.

There is a question whether the service rendered to patients fee of charge by the doctors and hospitals in category (iii) is excluded by virtue of the exclusionary clause in Section 2(1) (o) of the Act. In this context it is necessary to understand this fact that the Act has been enacted "to provide for the protection of the interests of "consumers" in the background of the guidelines contained in the Consumer Protection Resolution passed by the U.N. General Assembly on April 9,1985. These guidelines refer to "achieving or maintaining adequate protection for their population as consumers" and "encouraging high levels of ethical conduct for those engaged in the protection and distribution of goods and services to the consumers". The protection that is envisaged by the Act is, therefore, protection for consumers as a class. The word "users" (in plural), in the phrase `potential users' in Section 2(1)(o) of the Act also gives an indication that consumers as a class are considered. The definition of `complainant' contained in Section 2(b) of the Act which says that complaint can be filed by any recognised consumer association where there are numerous consumers, having the same interest, on behalf of or for the benefit of all consumers so interested, also lend support to the view that the Act seeks to protect the interests of consumers as a class but if category (iii) is excluded by virtue of the exclusionary clause in Section 2(1) (o) of the Act , higher standard and of better quality of services would be received by only those persons who are in a position to pay for such service while the standard and quality of such service would be inferior for person who cannot afford to pay for such service and who avail the service without payment. Such a consequence would defeat the object of the Act therefore It is difficult to conceive that the legislature intended to achieve such a result. Concluding , All persons who avail the services by doctors and hospitals in category (iii), are required to be treated on the same footing irrespective of the fact that some of them pay for the service and others avail the same free of charge. The Government hospitals may not be commercial in that sense but on the overall consideration of the objectives and the scheme of the Act it would not be possible to treat the Government hospitals differently. The persons belonging to "poor class" who are provided services free of charge are the beneficiaries of the service which is hired or availed of by the "paying class", therefore the service rendered by the doctors and hospitals falling in category (iii) irrespective of the fact that part of the service is rendered free of charge, would nevertheless fall within the ambit of the expression "service" as defined in Section 2(1) (o) of the Act. The persons who are rendered free service are the "beneficiaries" and as such come within the definition of "consumer" under Section 2(1) (d) of the Act. In respect of the hospitals/nursing homes (Government and non-Government) falling in category (i), i.e., where services are rendered free of charge to everybody availing the services.

(ii) Medical service: A contract for personal service

In this case , It has been contended that the relationship between a medical practitioner and the patient is of trust and confidence and, therefore, it is in the nature of a contract of personal service and the service rendered by the medical practitioner to the patient is not `service' under Section 2(1)(o) of the Act but This contention ignores the well recognised distinction between a `contract of service' and a `contract for services'.

In the case of Dharangadhara Chemical Works Ltd. v. State of Saurashtra, 1957, It was held that A `contract for services' implies a contract whereby one party undertakes to render services e.g. professional or technical services, to or for another in the performance of which he is not subject to detailed direction and control but exercises professional or technical skill and uses his own knowledge and discretion. While A `contract of service' implies relationship of master and servant and involves an obligation to obey orders in the work to be performed and as to its mode and manner of performance therefore an employer cannot be regarded as a consumer in respect of the services rendered by his employee in pursuance of a contract of employment. By affixing the adjective `personal' to the word "service" the nature of the contracts which are excluded is not altered. The expression "contract of personal service" in the exclusionary part of Section 2(1)(o) must, therefore, be construed as excluding the services rendered by an employee to his employer under the contract of personal service from the ambit of the expression "service". It is the fact that the relationship between a medical practitioner and a patient carries within it certain degree of mutual confidence and trust and, therefore, the services rendered by the medical practitioner can be regarded as services of personal nature but since there is no relationship of master and servant between the doctor and the patient the contract between the medical practitioner and his patient cannot be treated as a contract of personal service but is a contract for services and the service rendered by the medical practitioner to his patient under such a contract is not covered by the exclusionary part of the definition of `service' contained in Section 2(1)(o) of the Act . There can be a contract of personal service if there is relationship of master and servant between a doctor and the person availing his services and in that event the services rendered by the doctor to his employer would be excluded from the purview of the expression `service' under Section 2(1)(o) of the Act by virtue of the exclusionary clause in the said definition.

Medical Officer

It has been urged that even though the service rendered at the hospital, being free of charge, does not fall within the ambit of Section 2(1) (o) since it is rendered by a medical officer employed in the hospital who is not rendering the service free of charge because the said medical officer receives salary for employment in the hospital so medical officer must be covered in the ambit of Section 2(1) (o) of the act. In our opinion, this is not justified contention because the medical officer who is employed in the hospital renders the service on behalf of the hospital administration and if the service, as rendered by the hospital, does not fall within the ambit of Section 2(1) (o), being free of charge, the same service cannot be treated as service under Section 2(1) (o) for the reason that it has been rendered by a medical officer in the hospital who receives salary for employment in the hospital. There is no direct nexus between the payment of the salary to the medical officer by the hospital administration and the person to whom service is rendered. The salary that is paid by the hospital administration to the employee medical officer cannot be regarded as payment made on behalf of the person availing the service or for his benefit so as to make the person availing the service a "consumer" under Section 2(1) (d) in respect of the service rendered to him. Therefore the service rendered by the employee medical officer to such a person would, therefore, continue to be service rendered free of charge and would be outside the purview of Section 2(1)(o).

* Profession vs Occupation

It has been contended that in law there is a distinction between a profession and an occupation and that while a person engaged in an occupation renders service which falls within the ambit of Section 2(1)(o) the service rendered by a person belonging to a profession does not fall within the ambit of the said provision and, therefore, medical practitioners who belong to the medical profession are not covered by the provisions of the Act. It has been urged that medical practitioners are governed by the provisions of the Indian Medical Council Act, 1956 and regulates their conduct as members of the medical profession and provides for disciplinary action by the Medical Council of India and/or State Medical Councils against a person for professional misconduct. We are, therefore, unable to subscribe to the view that merely because medical practitioners belong to the medical profession they are outside the purview of the provisions of the Act.

Conclusions:

(1) Service rendered to a patient by a medical practitioner (except where the doctor renders service free of charge to every patient or under a contract of personal service), by way of consultation, diagnosis and treatment, both medicinal and surgical, would fall within the ambit of 'service' as defined in Section 2(1) (o) of the Act.

(2) The fact that medical practitioners belong to the medical profession and are subject to the disciplinary control of the Medical Council of India constituted under the provisions of the Indian Medical Council Act would not exclude the services rendered by them from the ambit of the Act.

(3) A 'contract of personal service' has to be distinguished from a 'contract for personal services'. In the absence of a relationship of master and servant between the patient and medical practitioner, the service rendered by a medical practitioner to the patient cannot be regarded as service rendered under a 'contract of personal service'. Such service is service rendered under a `contract for personal services' and is not covered by exclusionary clause of the definition of 'service' contained in Section 2(1) (o) of the Act.

(4) The expression 'contract of personal service' in Section 2(1) (o) of the Act cannot be confined to contracts for employment of domestic servants only and the said expression would include the employment of a medical officer for the purpose of rendering medical service to the employer. The service rendered by a medical officer to his employer under the contract of employment would be outside the purview of 'service' as defined in Section 2(1) (o) of the Act.

(5) Service rendered free of charge by a medical practitioner attached to a hospital/Nursing home or a medical officer employed in a hospital/Nursing home where such services are rendered free of charge to everybody, would not be "service" as defined in Section 2(1) (o) of the Act. The payment of a token amount for registration purpose only at the hospital/nursing home would not alter the position.

(6) Service rendered at a non-Government hospital/Nursing home where no charge whatsoever is made from any person availing the service and all patients (rich and poor) are given free service - is outside the purview of the expression 'service' as defined in Section 2(1) (o) of the Act. The payment of a token amount for registration purpose only at the hospital/Nursing home would not alter the position.

(7) Service rendered at a non-Government hospital/Nursing home where charges are required to be paid by the persons availing such services falls within the purview of the expression 'service' as defined in Section 2(1)(o) of the Act.

(8) Service rendered at a non-Government hospital/Nursing home where charges are required to be paid by persons who are in a position to pay and persons who cannot afford to pay are rendered service free of charge would fall within the ambit of the expression 'service' as defined in Section 2(1) (o) of the Act irrespective of the fact that the service is rendered free of charge to persons who are not in a position to pay for such services.

Free service, would also be "service" and the recipient a "consumer" under the Act.

(9) Service rendered at a Government hospital/health centre/dispensary where no charge whatsoever is made from any person availing the services and all patients (rich and poor) are given free service - is outside the purview of the expression 'service' as defined in Section 2(1) (o) of the Act. The payment of a token amount for registration purpose only at the hospital/nursing home would not alter the position.

(10) Service rendered at a Government hospital/health centre/dispensary where services are rendered on payment of charges and also rendered free of charge to other persons availing such services would fall within the ambit of the expression 'service' as defined in Section 2(1) (o) of the Act irrespective of the fact that the service is rendered free of charge to persons who do not pay for such service. Free service would also be "service" and the recipient a "consumer" under the Act.

(11) Service rendered by a medical practitioner or hospital/nursing home cannot be regarded as service rendered free of charge, if the person availing the service has taken an insurance policy for medical care where under the charges for consultation, diagnosis and medical treatment are borne by the insurance company and such service would fall within the ambit of 'service' as defined in Section 2(1) (o) of the Act.

(12) Similarly, where, as a part of the conditions of service, the employer bears the expenses of medical treatment of an employee and his family members dependent on him, the service rendered to such an employee and his family members by a medical practitioner or a hospital/nursing home would not be free of charge and would constitute 'service' under Section 2(1) (o) of the Act.
 


Ashish Shukla
Lecturer - Business Law
School of Business
Lovely Professional University
Phagwara, Punjab
 

Source: E-mail April 7, 2014

          

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