Mr. Lee sprained his left knee while playing volleyball last month. The resulting pain left him unable to stand and, as a result, he was admitted to Queen Elizabeth Hospital (QEH) where he was diagnosed with an Anterior Cruciate Ligament tear and underwent an operation. After 5 days at QEH, he was transferred to Kowloon Hospital (KH) for 10 days of recuperation.

Mr. Lee then submitted a claim form for hospital cash benefit to his insurer after being discharged from KH. However, his insurance company only paid hospital cash benefit for his 5 day hospitalisation in QEH and rejected his application for the 10 day hospitalisation in KH on the grounds that KH does not fall under the definition of “Hospital” in Mr. Lee’s hospital cash insurance policy.

Medical insurance plans either reimburse hospitalisation and surgical expenses or pay a daily cash benefit which helps to reduce the financial burden of the insured person during his hospital confinement period. In these insurance contracts, “Hospital” is usually defined as an establishment recognised, constituted and legally licensed as such under the laws of the country in which it is situated to provide care and treatment to sick and injured persons as paying bed patients, and which:

1. has facilities for diagnosis and major operations; and
2. provides 24 hours nursing services by licensed registered nurses; and
3. is under the supervision of one or more Physicians; and
4. is not primarily a clinic, or an institution for extended care, or a place for recovering alcoholics or drug addicts, or a nursing/rest/convalescent home, or rehabilitation centre, or home for the aged, or hydro-clinic or similar establishment

In Mr. Lee’s case, despite the fact that KH is called a “Hospital”, its true purpose is to primarily provide extended-care services to convalescent patients. And, particularly in Mr. Lee’s case, his stay at KH was essentially for recuperation, not even therapy. Therefore, it did not fall under the definition of “Hospital” in the insurance contract, resulting in the insurance company declining Mr. Lee’s claim for hospital cash benefit.

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