In a significant ruling that reinforces consumer rights in health insurance, the District Consumer Disputes Redressal Commission (Additional) in Ahmedabad has directed The Oriental Insurance Company Limited to pay the insured sum of Rs 5 lakh with interest for wrongfully repudiating a medical claim. The commission found the insurer guilty of 'deficiency in service' for illegally rejecting the claim on the grounds of an alleged pre-existing disease.
Case Details and Commission's Ruling
The case was filed by the Consumer Education and Research Centre (CERC), a non-profit organisation, on behalf of the wife of the insured person on December 24. The complaint pertained to the hospitalisation of the complainant's husband for palpitation treatment in a private hospital in 2018 and subsequent ailments from 2019.
The Commission has ordered the insurer to pay the full sum insured of Rs 5 lakh with 7% annual interest from the date of the claim repudiation. Additionally, the insurer must pay compensation and cover the litigation costs incurred by the complainant. The Commission also dismissed the insurance company's objection regarding the complaint being time-barred. It held that the complaint was filed within the permissible period, considering the Supreme Court's suo motu orders that extended limitation deadlines during the Covid-19 pandemic.
Failure to Prove Suppression of Facts
A central point in the Commission's order was the insurer's failure to substantiate its allegation of material fact suppression. The company had denied the claim, citing hypertension as a pre-existing condition that was not disclosed. However, the Commission observed that the insurer could not prove this suppression.
Relying on medical records and a certificate from the treating doctor, the Commission noted that a mere mention of hypertension—often a lifestyle disease—without establishing a direct link to the cause of hospitalisation cannot justify claim repudiation. "The judgment reinforces that insurers must strictly prove non-disclosure of pre-existing diseases and cannot repudiate claims mechanically, thereby strengthening consumer protection in health insurance matters," said Anusha Iyer, Deputy General Manager of CERC.
The order specifically referenced the treating doctor's certificate, which stated, "No history of D M, HTN since 2014 and Underlying Cause of present ailment: Not known." The Commission highlighted that the insurance company neither sought an explanation from the treating doctor nor presented any contrary expert medical opinion on record.
Broader Implications for Health Insurance
The Commission also considered a relevant precedent from the National Commission in the case of Bajaj Allianz General Insurance Co. Limited Vs. Valsa Jose (2012), which stated that "Hypertension is usually a lifestyle disease and easily controlled with conservative medicine."
Furthermore, the order pointed out that the insured was 75 years old at the time of policy purchase, yet the insurer did not produce any records of a mandatory medical examination. The lack of such cogent facts led the Commission to reject the insurer's contentions.
This ruling serves as a crucial reminder to insurance companies about the need for thorough investigation and concrete evidence before repudiating claims based on pre-existing conditions. It underscores the principle that claim rejections cannot be arbitrary and must be backed by irrefutable proof of material non-disclosure by the policyholder.
