In a significant ruling that reinforces consumer rights in medical insurance, the Ernakulam District Consumer Disputes Redressal Commission has held insurance companies accountable for wrongfully denying claims for emergency treatment following road accidents. The commission declared that rejecting a claim on grounds of the treatment being "non-emergency" constitutes both unfair trade practice and a deficiency in service.
The Case: A Denied Claim for Emergency Treatment
The order was passed on a complaint filed by K M Muhiyudheen, a resident of Pallari Mangalam in Ernakulam. He had taken legal action against Oriental Insurance Company and Medisep, the state's medical insurance scheme for government employees and pensioners.
The dispute originated from a road accident in January 2023. Muhiyudheen sustained severe injuries to his left leg after a collision with a jeep. Given the urgency of his condition, he was immediately admitted to the nearest medical facility, Kolenchery Medical College, for emergency treatment.
Later, he sought reimbursement for his medical expenses, which totaled Rs 94,276, from Oriental Insurance Company. The insurer, however, flatly denied his claim. Their primary argument was that the hospital where he received treatment was not on their list of empanelled hospitals.
The Insurer's Defence and the Commission's Scrutiny
Oriental Insurance contended that reimbursement for treatment at a non-empanelled hospital was only permissible if the situation was deemed a genuine emergency. They argued that Muhiyudheen's treatment did not qualify as an emergency under their policy terms. Additionally, the company claimed the complaint was not maintainable as the consumer had not first exhausted the internal grievance redressal mechanism provided by Medisep.
The consumer commission thoroughly examined these arguments and found them lacking. The bench referred to a crucial Memorandum of Understanding (MoU) signed between the Kerala state finance department and the insurance company on June 27, 2022.
This MoU explicitly classifies conditions like stroke, heart attack, and road accidents as emergencies that are eligible for reimbursement even at non-empanelled hospitals. Given that Muhiyudheen's injuries were from a road accident, his case fell squarely within this definition.
A Landmark Ruling in Favor of the Consumer
The commission also invoked a fundamental principle established by the Supreme Court of India. It cited the legal doctrine that any ambiguity in the terms and conditions of an insurance policy must be interpreted in favor of the policyholder, not the insurer.
Furthermore, the commission dismissed the insurer's technical objection regarding the Medisep grievance cell. It clarified that the remedies available under the Consumer Protection Act are additional to other legal avenues and do not require the consumer to first approach internal company mechanisms. This upholds the direct access of consumers to redressal forums.
Finding the denial of the claim to be wrongful, the commission held both Oriental Insurance Company and Medisep guilty of deficiency in service and engaging in an unfair trade practice.
The Final Directive and Penalty
The consumer court issued a direct order to the insurance entities. They were directed to:
- Refund the full treatment cost of Rs 94,276 to the complainant.
- Pay an interest of 9% per annum on this amount from the date of the claim denial until the actual payment is made.
- Pay Rs 20,000 as compensation for the mental agony and hardship caused to Muhiyudheen.
- Pay an additional Rs 5,000 to cover the costs of the litigation.
The commission mandated that this total amount must be paid within 45 days from the date of receiving the order. This ruling sets a clear precedent for how insurance claims for emergency accident treatment should be handled, prioritizing patient care over technicalities.
