A consumer disputes redressal commission in Bengaluru has strongly reprimanded an insurance company for using a hospital's procedural delay as a flimsy excuse to deny a genuine medical claim. The Bangalore Urban II additional district consumer disputes redressal commission directed Aditya Birla Health Insurance Company to pay a claim of Rs 2.6 lakh along with interest and compensation for causing mental agony to the policyholder.
The Case of the Denied Cashless Claim
The incident traces back to July 4, 2023, when 28-year-old Pavan, a resident of Judicial Layout in north Bengaluru, was admitted to KK Hospital in Yelahanka following a road accident. He was treated for a facial fracture. His mother, 51-year-old Latha K, was the primary insured under the company's 'Group Activ Health' policy which had a sum insured of Rs 5 lakh.
Despite having an active policy, the family's request for a cashless treatment facility was denied by the insurer. The reason cited was that KK Hospital had not informed the insurance company about the admission in time. Consequently, Latha, a widow with two children, was forced to pay the hospital bill of over Rs 2.6 lakh from her own pocket. She later stated she had to borrow money to clear the dues.
A Long Battle for Reimbursement
After settling the bill, Latha filed a reimbursement claim with Aditya Birla Health Insurance on July 17, 2023. The insurer initially raised queries related to hospital tariffs and later formally rejected the claim on September 14, 2023, citing "bill pendency." KK Hospital subsequently admitted to its delay in notifying the insurer.
Despite Latha's persistent efforts through visits, calls, emails, and even submitting a fresh letter from the hospital confirming full payment, the insurance firm did not process the reimbursement. Facing repeated rejections and financial strain, Latha filed a formal consumer complaint in March 2024, alleging deficiency in service and unfair trade practices.
The Commission's Verdict and Rationale
During the proceedings, the insurance firm defended its stance, arguing that policy benefits were governed strictly by terms and conditions. It maintained that the cashless request was denied solely due to late intimation from the hospital and that the subsequent reimbursement claim was rejected after finding a mismatch in the hospital tariff.
KK Hospital argued it was not a necessary party to the complaint, as the insurance contract was solely between the complainant and Aditya Birla. The hospital stated its role was limited to providing treatment to Pavan, who underwent surgery on July 7 and was discharged on July 8, 2023.
After reviewing all documents, the commission bench, comprising President Vijaykumar M Pawale and Member Anuradha V, found the insurer's actions unjust. The commission noted there was no dispute over the existence of the valid policy covering Pavan. It observed that the family had incurred a genuine medical expense, yet the insurer repeatedly denied the claim.
"There is a deficiency in service as OPs (opposite parties) have not settled the genuine claim without valid reasons," the commission stated. It held that the insurer had unfairly delayed the settlement.
The Final Order and Relief
In its order passed in November, the commission directed Aditya Birla Health Insurance to:
- Pay the principal claim amount of Rs 2,60,000.
- Pay an interest of 6% per annum on this amount from September 19, 2023, until the date of full payment.
- Pay Rs 20,000 as compensation for the mental agony and trauma caused to the complainant.
- Pay an additional Rs 5,000 towards the cost of litigation.
The complaint against KK Hospital was dismissed. This ruling underscores the responsibility of insurance companies to act in good faith and not use minor procedural lapses by third parties to avoid settling legitimate claims, especially those involving urgent medical care.
