Bangalore District Commission Holds HDFC Ergo Health Insurance Co Liable For Wrongful Repudiation Of Claim Based On Unsubstantiated Pre-Existing Disease

Brief Facts:

The Complainant, a customer of Axis Bank (“Bank”), procured a health policy from HDFC Ergo Health Insurance at the bank's suggestion. The Complainant previously held health insurance with New India Assurance Company Ltd. until October 2019, after which he switched to a Health Wallet Family Floater policy with HDFC Ergo Health Insurance (“Insurance Company”). Following hospitalizations in January and February 2020 at Apollo Hospital, Bengaluru, the Complainant filed a claim with the Insurance Company for medical expenses totalling Rs. 5,90,217/-, which was rejected stating non-disclosure of pre-existing diabetes mellitus.

The Complainant argued that he did not withhold any relevant medical information. They argued that they trusted the Insurance Company's assurance that no pre-medical check-up was needed before obtaining the policy. Feeling aggrieved, the Complainant filed a consumer complaint in the Additional District Consumer Disputes Redressal Commission-III, Urban Bangalore (“District Commission”) against the Insurance Company and the Bank.

The Insurance Company contended that the Complainant provided a declaration of good health which led to the issuance of the policy without verification of medical history. Upon registering the claim, it was discovered that the Complainant had diabetes mellitus since 2016 and L4-5 disc prolapse since 2007, conditions which were not disclosed in the proposal form. It maintained that this non-disclosure justified the rejection of the claim and subsequent termination of the policy.

Additionally, the Bank argued that as a scheduled bank, it merely facilitated the policy purchase and should not be held liable under Section 230 of the Indian Contract Act, which limits its liability unless specific circumstances apply.

Observations by the District Commission:

The District Commission noted that the Insurance Company failed to substantiate its claim with documents proving prior hospitalizations or treatments for heart disease. Therefore, it held that the discharge summary provided by the Complainant did not sufficiently establish the alleged medical history. Therefore, the District Commission held that the Insurance Company didn't prove that the Complainant suppressed any pre-existing diseases as alleged. The District Commission held the Insurance Company liable for deficiency in services.

Upon review of medical bills and documents submitted as evidence, the District Commission held that medical expenses amounting to Rs. 5,99,272/- were indeed incurred by the Complainant. Therefore, the District Commission directed the Insurance Company to pay Rs. 5,99,272/- to the Complainant. The Insurance Company was also directed to pay a compensation of Rs.20,000/- towards mental agony to the Complainant along with Rs. 10,000/- towards litigation costs.

Case Title: B.S. Sathya Kumar and Ors. vs HDFC Ergo Health Insurance Ltd and Ors.

Case Number: 41/2022

Date of Pronouncement: 23.05.2024