Delhi State Commission Holds Oriental Insurance Co. Liable For Wrongful Repudiation Of Valid Medical Claims

Brief Facts:

The Complainant availed medical insurance for himself and his wife from Oriental Insurance Co. Ltd. (“Insurance Company”) for one year, which was later extended. During the subsistence of the policy, he suffered from constipation and swelling in both limbs. Therefore, he was admitted to Shri Balaji Action Medical Institute (“Hospital 1”) and was diagnosed of 'Septicemia Hyponatremia'. He remained admitted for 8 days and incurred a charge of Rs. 1,70,038/-. After a few days, the Complainant was again admitted in Jaipur Golden Hospital (“Hospital 2”) and was diagnosed of 'Duodnal Mucosa Denudation' with other medical conditions. He was again discharged after 8 days and incurred a cost of Rs. 1,07,246/-. On both the occasions, the Complainant requested the Insurance Company for a cashless treatment, which was denied. After getting discharged, he filed for reimbursement. However, both the claims were repudiated.

Upon inquiring further, the Insurance Company finally approved a sum of Rs. 92,814 as against the second treatment. However, despite several requests, it failed to pay the balance amount. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, North Delhi (“District Commission”).

The Insurance Company contended that the Complainant availed the insurance policy on 25^th May 2012, for one year and then renewed it for another year (ending on 24^th May 2014). He was an 81-year-old individual who was hospitalized twice for different ailments. As per the exclusion clauses 4.1 and 4.2 of the policy, compensation of such ailments was to be given only after they are suffered continuously for two years. However, the Complainant's first claim fell in the 2^nd year of the policy period and hence, excluded. Further, the first claim was also repudiated completely because the Complainant's ailment was a result of a pre-existing disease.

The District Commission held that the Insurance Company failed to properly supply the terms and conditions of the policy properly to the Complainant at the time of availing it. Further, it failed to establish why it only approved a sum of Rs. 92,814/- and failed to approve the remaining amount. Therefore, it was held liable for deficiency in service and was directed to pay the balance sum of Rs. 1,84,470/- with 6% interest, along with Rs. 10,000/- compensation for mental agony. Aggrieved by the decision of the District Commission, the Insurance Company filed an appeal before the State Consumer Disputes Redressal Commission, Delhi (“State Commission”).

Observations of the State Commission:

The State Commission referred to Pradeep Kumar Garg vs National Insurance Co. Ltd. [First Appeal No. 482 of 2005], wherein it was held that concealment of the pre-existing disease would only be considered if the policy holder conceals his hospitalization/operation in the 'near proximity' of obtaining the policy.

It was further observed that it is the duty of the Insurance Company to assess the individual fully before issuing the insurance policy and check whether he was suffering from a pre-existing disease. The Insurance Company failed to provide evidence before the State Commission that it conducted any medical test or examination before issuing the insurance policy in favour of the Complainant.

Additionally, the State Commission observed that the first claim of the Complainant was repudiated on the basis of an exclusion clause. However, that exclusion clause was not provided to the Complainant at the time of the issuance of the policy. Therefore, it was held to be not applicable. As a result, the order of the District Commission was upheld by the State Commission, and the Insurance Company's appeal was dismissed.

Case Title: M/s Oriental Insurance Co. Ltd. vs Mrs. Kaushalya Devi Bansal

Case No.: First Appeal No. 608/2017

Advocates for the Appellant (Insurance Company): Mr Brijesh Kumar Sharma and Mr Siddharth Sulani

Advocates for the Respondent (Original Complainant): Mr Amit Kumar Maihan