Philhealth Insurance v.

Chinese General Hospital (2005)

DOCTRINE:
1. This Court will not hesitate, whenever necessary, to allow a liberal implementation of the rules and regulations of an
administrative agency in cases where their unjustifiably rigid enforcement will result in a deprivation of legal rights.
2. Under the doctrine of exhaustion of administrative remedies, an administrative decision must first be appealed to the
administrative superiors at the highest level before it may be elevated to a court of justice for review. This doctrine, however, is
a relative one and its flexibility is conditioned on the peculiar circumstances of a case. There are a number of instances when
the doctrine has been held to be inapplicable. Among the established exceptions are:

1) when the question raised is purely legal;

2) when the administrative body is in estoppel;

3) when the act complained of is patently illegal;

4) when there is urgent need for judicial intervention;

5) when the claim involved is small;

6) when irreparable damage will be suffered;

7) when there is no other plain, speedy and adequate remedy;

8) when strong public interest is involved;

9) when the subject of the controversy is private land;

10) in quo warranto proceedings.

FACTS

RA 7875 (An Act Instituting a National Health Insurance Program for All Filipinos and Establishing the Philippine Health
Insurance Corporation for the Purpose) was approved and signed into law
As a guiding principle, it invoked Section 11, Article XIII of the Constitution, which declares that the State shall adopt an integrated
and comprehensive approach to health development by making essential goods, health and other social services available to all
people at affordable cost
Prior to its enactment, Chinese General Hospital (CGH) had been an accredited health care provider under the Philippine Medical
Care Commission (PMCC).
o As defined by R.A. 7875, a health care provider refers to a health care institution, which is duly licensed and accredited
devoted primarily to the maintenance and operation of facilities for health promotion, prevention, diagnosis, treatment and
care of individuals suffering from illness, disease, injury, disability or deformity, or in need of obstetrical or other medical
and nursing care
As such, CGH filed its Medicare claims with the SSS, which, together with the GSIS, administered the Health Insurance fund of the
PMCC. CGH filed a claim from 1989 to 1992 with the SSS for P8 million, but its application for the payment of its claim with SSS
was overtaken by the passage of RA 7875, Section 51 and 52 of which provides that within 60 days from the promulgation of RA
7875, the PMCC shall cease to exist and thereafter, the administration of the Health Insurance Funds being administered by SSS
and GSIS shall be transferred to PHILHEALTH, within 60 days from its promulgation of the implementing rules and
regulations. The SSS and GSIS shall, however, continue to perform Medicare functions under contract with the Corporation until
such time that such functions are assumed by the Corporation xxx.
Being the successor of the PMCC, PHILHEALTH, in compliance with the mandate of R.A. 7875, promulgated the rules and
regulations implementing said act, Section 52 of which provides:
o SECTION 52. Fee for Service Guidelines on Claims Payment.
b. All claims for payment of services rendered shall be filed within sixty (60) calendar days from the date of
discharge of the patient. Otherwise, the claim shall be barred from payment except if the delay in the filing of
thee claim is due to natural calamities and other fortuitous events. If the claim is sent through mail, the date of
the mailing as stamped by the post office of origin shall be considered as the date of the filing.
Instead of giving due course to petitioners claims totaling to P8 million, only P1 million was paid to petitioner, representing its
claims from 1989 to 1992
Petitioner again filed its claims representing services rendered to its patients from 1998 to 1999, amounting to the unpaid amount
of P7 million. For being allegedly filed beyond the sixty (60) day period allowed by the implementing rules and regulations,
Section 52 thereof, petitioners claims were denied by the Claims Review Unit of Philhealth
When CGHs claim was denied with finality by PHILHEALTH, it filed a petition for review with the CA, which ordered PHILHEALTH
to pay CGH its claim on the ground of liberal application of the 60-day rule. It cited the policy of Section 11, Article 13 of the
 Constitution (state policy of the National health Program was to to adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services available to all people at affordable
cost.)

ISSUE:
W/N the CA properly allowed CGH to claim from PHILHEALTH despite the claims being filed outside of the 60-day period

HELD:

YES.

The state policy in creating a national health insurance program is to grant discounted medical coverage to all citizens, with priority to
the needs of the underprivileged, sick, elderly, disabled, women and children, and free medical care to paupers. The very same policy
was adopted in RA 7875. To assist the state in pursuing the aforementioned policy, health institutions were granted the privilege of
applying for accreditation as health care providers. Respondent Chinese General Hospital and Medical Center (CGH) was one of those
which received such accreditation.

Under the rules promulgated by the Philhealth Board pursuant to RA 7875, any claim for payment of services rendered (to a patient)
shall be filed within sixty (60) calendar days from the date of discharge of the patient. Otherwise, the claim is barred.

But before a claim is filed with petitioner Philhealth for services already rendered, an accredited health care provider like respondent
CGH is required to:

a. accomplish a Philhealth claim form;

b. accomplish an itemized list of the medicines administered to and medical supplies used by the patient concerned,
indicating therein the quality, unit, price and total price corresponding thereto;

c. require the patient concerned and his/her employer to accomplish and submit a Philhealth member/employer certification;

d. in case the patient gave birth, require her to submit a certified true copy of the childs birth certificate;

e. in case the patient died, require the immediate relatives to submit a certified true copy of the deceaseds death certificate;
and

f. in case a members dependent is hospitalized for which the member seeks coverage, require the member to submit proof
of relationship to the patient and to execute an affidavit of support.

Apart from the foregoing requirements which often necessitate securing documents from other government offices, and the fact that
most patients are unable to immediately accomplish and submit the required documents, an accredited health care provider like CGH
has to contend with an average of about a thousand members and/or dependents seeking medical treatment for various illnesses per
month. Under these circumstances, it is unreasonable to expect respondent CGH to comply 100% of the time with the prescribed 60-
day rule of Philhealth. Despite the prescribed standard procedures, respondent has no assurance of the members prompt submission
of the required documents. This factor is completely beyond its control. There will always be delay not attributable to respondent.

The unreasonably strict implementation of the 60-day rule, without regard to the causes of delay beyond respondents control, will be
counter-productive to the long-term effectiveness of the NHIP. Instead of placing a premium on participation in the Program, Philhealth
punishes an accredited health provider like CGH by refusing to pay its claims for services already rendered. Under these
circumstances, no accredited provider will gamble on honoring claims with delayed supporting papers no matter how meritorious
knowing that reimbursement from Philhealth will not be forthcoming.

This Court will not hesitate, whenever necessary, to allow a liberal implementation of the rules and regulations of an
administrative agency in cases where their unjustifiably rigid enforcement will result in a deprivation of legal rights. In this
case, respondent had already rendered the services for which it was filing its claims. Technicalities should not be allowed to
defeat respondents right to be reimbursed, specially since petitioners charter itself guarantees such reimbursement.

A careful reading of RA 7875 shows that the law itself does not provide for any specific period within which to file claims. We can safely
presume therefore that the period for filing was not per se the principal concern of the legislature. More important than mere
technicalities is the realization of the state policy to provide Philhealth members with the requisite medical care at the least possible
cost. Truly, nothing can be more disheartening than to see the Acts noble objective frustrated by the overly stringent application of
technical rules.

The fact is that it was not RA 7875 itself but Section 52 of its Implementing Rules and Regulations which established the 60-
day cut-off for the filing of claims.
While it is doctrinal in administrative law that the rules and regulations of administrative bodies interpreting the law they are entrusted to
enforce have the force of law, these issuances are by no means iron-clad norms. Administrative bodies themselves can and have in
fact bent the rules for reasons of public interest.

For instance, PHILHEALTH issued certain circulars which iteself recognized the necesity of extending the 60-day period because of
difficulties of members in completing the required documents, often due to circumstances beyond their control. Petitioner appeared to
be well aware of the problems encountered by its members in complying with the 60-day rule. Furthermore, implicit in the wording of
the circulars was the cognition of the fact that the fault was not always attributable to the health care providers like CGH but to the
members themselves.

Under the doctrine of exhaustion of administrative remedies, an administrative decision must first be appealed to the administrative
superiors at the highest level before it may be elevated to a court of justice for review. This doctrine, however, is a relative one and its
flexibility is conditioned on the peculiar circumstances of a case. There are a number of instances when the doctrine has been held to
be inapplicable. Among the established exceptions are:

1) when the question raised is purely legal;

2) when the administrative body is in estoppel;

3) when the act complained of is patently illegal;

4) when there is urgent need for judicial intervention;

5) when the claim involved is small;

6) when irreparable damage will be suffered;

7) when there is no other plain, speedy and adequate remedy;

8) when strong public interest is involved;

9) when the subject of the controversy is private land;

10) in quo warranto proceedings.

The instant case falls as one of the exceptions, concerning as it does public interest.