This is based on the reply to Show Cause Notice dated 16^th May 2014 and submissions made during Personal Hearing Chaired by Sri M. Ramaprasad, Member (Non-Life), IRDA, on 30^th  June, 2014 at about 1630 hrs, at the office of Insurance Regulatory and Development Authority, 3^rd Floor, Parishrama Bhavanam, Basheerbagh, Hyderabad.

Show Cause Notice on observed deficiencies in the functioning of licensed TPA namely, Sri Gokulam Health Services TPA Pvt. Ltd.  (Sri Gokulam TPA / TPA) was issued and in deference to the licensed entity’s request to hear them on the charges for which they had also filed written submissions, the undersigned during the course of the personal hearing heard the submissions of the TPA company represented by Mr. R. Sampath Kumaran, Director  of Sri Gokulam TPA and Mr. K.S. Ravichandran, CS in Practice & Advisor.  On behalf of the Authority, Mr. M. Ramaprasad, Member (Non-Life), Mrs. Yegna Priya Bharath, Joint Director (Health), Mr. N.M. Behera, Deputy Director (Health Policy) and Mr. Bhaskar Khadakbhavi, Assistant Director (Health – TPA), were present in the personal hearing.

The submissions made by the TPA in their written replies to the Show Cause Notice issued by the Authority and also those made during the course of personal hearing were taken into account.

The findings on explanation offered by Sri Gokulam TPA to the issues raised in Show Cause Notice and the decisions are as follows;

1.   Charge No. 1:

Request for Change in Share Holding pattern:  Sri Gokulam Health Services TPA Pvt. Ltd. (Sri Gokulam TPA) vide letter dated 02-07-2013 had requested the Authority for approval of change in share holding pattern.  The Authority vide letter dated 02-09-2013 had raised certain queries. 

Till date Sri Gokulam TPA had not submitted the required documents to the Authority.  Thus, Sri Gokulam TPA failed to furnish the required document to the Authority within stipulated time. 

Violation of Reg. 25 (3) of IRDA (TPA – Health Services) Regulation, 2001.

2.   Charge No. 3:

The statement in letter dated 03-04-2014 of Sri Gokulam is in contradiction with their own statement in letter dated 21-02-2014, in the matter of change in share holding pattern.   It is evident that, Sri Gokulam TPA is time and again changing its statements as per their convenience.  The said act of the TPA Company is not a professional manner of dealing with regulatory compliance. 

Violation of Reg. Reg. 21 (1) to be read with Reg. 21 (2) (g) of IRDA (TPA – Health Services) Regulation, 2001.

Reply of Sri Gokulam TPA for Charge No. 1 & 3:

Sri Gokulam TPA submitted that w.e.f. 01-04-2014, the Companies Act, 2013 has come into force in a full-fledged manner and the relevant Rules thereto have also been notified. 

Decision for charge no. 1 & 3:

The licensed TPA is cautioned severely for such lackadaisical approach to their Regulatory Compliances.

3.   Charge No. 2:

Authority vide point no. 4 (c) of letter dated 01-04-2014, requested Sri Gokulam TPA to submit Auditors Certificate in the matter of Working Capital requirement of their Company with the instructions that, the Auditors certificate should be noted with the facts that, their company has withdrawn the request for change in share holding pattern.

Sri Gokulam TPA vide letter dated 03-04-2014 had submitted response to above mentioned Authority letter dated 01-04-2014, without proper notes from Auditors.

Violation of Reg. 25 (3) of IRDA (TPA – Health Services) Regulation, 2001.

4.   Charge No. 4:

It was noted from the records that Sri Gokulam TPA could not comply stipulated working capital norms right from FY 2008-09 till 2013-14 i.e. for the period of last six years.

Violation of Reg. 3 (4) of IRDA (TPA – Health Services) Regulation, 2001.

5.   Charge No. 5:

It is evident from the records that Sri Gokulam TPA had given wrong / misrepresenting statement in the Form TPA-5 (Quarterly) about working capital. 

Violation of Reg. 3 (7) of IRDA (TPA – Health Services) (First Amendment) Regulation 2013 to be read with Reg. 3 (4) of IRDA (TPA – Health Services) Regulation, 2001.

6.   Charge No. 6:

The point no. 4 of undertaking dated 30-05-2011 by Sri Gokulam TPA is reproduced as under; “That our Company will bring in sufficient working capital immediately on receipt of renewal of IRDA License”.

However, Sri Gokulam TPA had failed to comply with their own undertaking of bringing in sufficient working capital.  This is not a professional manner to deal with matters of regulatory compliance and can be concluded as wrong statement / misrepresentation based on which the renewal of TPA license no. 031 for the period from 24-03-2011 to 23-03-2014, was granted.

Violation of Reg. 21 (1) to be read with Reg. 21 (2) (g) of IRDA (TPA – Health Services) Regulation, 2001 and may attract provisions of Reg. 13 to be read with Reg. 14 (4) of IRDA (TPA – Health Services) Regulation, 2001.

Reply of Sri Gokulam TPA for Charge No. 2, 4, 5 & 6:

Sri Gokulam TPA has accepted the charges.

Decision for Charge Nos. 2, 4, 5 & 6) :

The TPA entity has been found not complying with the Working Capital requirement, in spite of the Authority’s directions.  Further, Sri Gokulam TPA had failed to comply with their own undertaking of bringing in sufficient working capital.  In view of various violations of the Regulation / guidelines / circulars referred to at charges nos. 2, 4, 5 & 6 above, the Authority in exercise of powers vested under Section 102 of the Insurance Act, 1938, imposes a penalty of Rs. 2,00,000/- (Rs. Two lakhs only) on M/s. Gokulam Health Services TPA Pvt. Ltd.  Any recurrence of regulatory deficiency will be viewed seriously.   

The penalty amount of Rs. 2,00,000/- (Rs. Two lakhs only), shall be remitted through NEFT/ RTGS (details for which will be communicated separately) within a period of 07 days from the date of receipt of this Order.   An intimation of remittance shall be sent to Ms. Yegna Priya Bharath, Joint Director (Health) at the Insurance Regulatory and Development Authority, 3rd Floor, Parisrama Bhavanam, Basheerbagh, Hyderabad 500 004.