East Godavari District Commission Holds Aditya Birla Health Insurance Co. Liable For Wrongful Repudiation Of Valid Claim

Brief Facts:

The Complainant obtained a health insurance policy from Aditya Birla Health Insurance Co. Ltd. (“Insurance Company”) for Rs.10,00,000/- covering himself and his wife. Before obtaining the policy, the Complainant had informed the Insurance Company about his diabetes, for which they collected a premium of Rs. 41,229/- with 20% loading.

Subsequently, the Complainant continued the policy for the 2nd year by paying a premium of Rs. 41,229/-. For the 3rd year, he paid a premium of Rs. 41,229/-. For the 4th year, he paid a premium of Rs. 45,262/-. For the 5th year, he paid a premium of Rs. 48,276/-. Each time, the Insurance Company noted the pre-existing disease in the policy schedules.

During the subsistence of the policy, the Complainant suddenly fell ill and was immediately admitted to Ayush Hospital, Eluru, followed by ANU Hospital, Vijayawada, Varma Hospital, Bhimavaram, and Ashok Kidney Centre, Bhimavaram. He incurred Rs. 1,00,888/- towards medical expenses, besides other miscellaneous expenses. The Complainant subsequently sent all necessary bills and relevant medical sheets to the Insurance Company for reimbursement. However, the Insurance Company rejected the claim through an email without providing any reason.

The Complainant then issued a legal notice to the CEO of the Insurance Company. The CEO replied to the notice with false allegations against the Complainant. Despite several requests made by the Complainant, the CEO finally repudiated the claim through email. Feeling aggrieved, the Complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission, East Godavari, Andhra Pradesh (“District Commission”).

The Insurance Company contended that the complaint was filed with false allegations to extort money and damage its reputation. It issued the policy based on the declarations in the proposal form, adhering to the principle of utmost good faith. However, the Complainant did not disclose his hypertension, violating Section 45 of the Insurance Act, of 1938. Consequently, the claim was rejected due to non-disclosure of material information. Further, the Complainant had not exhausted his rights to submit a cashless claim for reimbursement.

Observations by the Commission:

The District Commission observed that the Complainant had obtained the Active Assure-Diamond plan from the Insurance Company in 2018 and had been consistently paying the premiums. The Complainant had disclosed his health conditions, including diabetes, high blood pressure, high cholesterol, and anaemia, in the proposal form. In February 2023, while the policy was in effect, the Complainant was hospitalized and incurred medical expenses amounting to Rs. 1,00,888/-. He submitted a claim form on 25-02-2023, but the Insurance Company rejected the preauthorization request on the same day, citing that the claim had been withdrawn by the insured.

The District Commission noted that the Insurance Company did not mention the rejection of the claim due to a pre-existing disease in their documents. Instead, it later stated that the claim was rejected because the Complainant did not disclose his hypertension. However, the Insurance Company also indicated that the Complainant could still submit the claim for reimbursement. This inconsistency suggested that the Insurance Company was ready to pay the claim amount, contradicting its earlier stance.

The District Commission held that the Complainant had acted in good faith by disclosing his health conditions, and the Insurance Company had issued the policy, accordingly, including a 20% extra charge for the Complainant's health condition. The Insurance Company failed to provide convincing evidence that the Complainant suppressed any pre-existing disease. The District Commission found that the Insurance Company had exhibited a deficiency in service by not reimbursing the Complainant's claim when the policy was in effect and all necessary documents had been submitted.

As a result, the District Commission directed the Insurance Company to pay Rs. 1,00,888/- with interest at 6% from the date of the complaint until realization and an additional Rs. 10,000/- towards costs.

Case Title: Alluri Venkata Rama Raju vs Aditya Birla Capital and Anr.

Case No.: CC No. 67/2023

Advocate for the Complainant: Sri D.S.V. Manikyala Rao

Advocate for the Opposite Party: Sri Gorrela Sathish Kumar

Date of Pronouncement: 25.07.2024