No Proof Of Pre-Existing Disease, Kangra District Commission Holds Star Health And Allied Insurance Co Liable For Wrongful Repudiation

Brief Facts:

The Complainant purchased a Family Health Optima Insurance policy from Star Health and Allied Insurance Co. (“Insurance Company”), covering his wife and his son for Rs. 5,00,000/-. The policy's premium amounted to Rs. 11,506/-, which the Complainant paid regularly. On November 5, 2016, his wife visited Chauhan Dental Care & Cure Clinic in Kangra due to pain along the left side of her lower jaw, where she underwent a root canal treatment (RCT). In October 2020, she experienced severe pain in the same area, but the previously effective medication failed to provide relief. The pain recurred which prompted the family to visit PGI, Chandigarh. There, doctors recommended medication and conducted an MRI scan, which indicated a neurovascular conflict involving the trigeminal nerve, suggesting the need for Microvascular Decompression (MVD) surgery.

The Complainant and his wife consulted a doctor at P.D. Hinduja National & Medical Research Center in Mumbai via video consultation, where the MVD surgery was recommended again. His wife was admitted to the hospital and underwent the surgery. She was discharged after incurring treatment expenses totalling Rs. 6,71,882/-. The Complainant informed the Insurance Company of the hospitalization and submitted a claim form along with the discharge summary and bills. However, the Insurance Company denied reimbursement without providing any reason. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Kangra, Himachal Pradesh (“District Commission”) and filed a consumer complaint against the Insurance Company.

In response, the Insurance Company argued that the policy was contractual and subject to its terms and conditions, which were explained and provided to the Complainant along with the policy schedule. It noted that before each policy renewal, the insured submits a good health declaration letter, which does not mention the pre-existing condition. It claimed the insured was suffering from trigeminal neuralgia before the policy's inception in 2018 and failed to disclose this in the proposal form and good health declarations. As per the policy's exclusion clause for pre-existing diseases, the Insurance Company was liable for payments related to pre-existing conditions only after 48 months from the policy's start date. Thus, it argued that the claim was rightfully rejected.

Observations by the District Commission:

The District Commission held that the policy was procured on June 15, 2018, and the Complainant first became aware of the trigeminal neuralgia diagnosis on March 6, 2021, with confirmation on October 27, 2021. Thus, it held that the ailment could not be considered pre-existing at the policy's inception.

The District Commission held that the rejection of the claim was without proper investigation, including the absence of affidavits from treating doctors. Therefore, it held that there was a lack of due diligence by the Insurance Company.

The District Commission noted that the Insurance Company accepted premiums from 2018 to 2022. The MRI on January 27, 2021, revealed the neurovascular conflict, establishing the Complainant's knowledge of the disease only from that date. Therefore, the District Commission held that the repudiation of the claim was unjustified and constituted a deficiency in service on the part of the Insurance Company.

The District Commission directed the Insurance Company to pay Rs. 6,71,882/- to the Complainant with 9% interest. Additionally, the Insurance Company was directed to pay Rs. 25,000 in compensation and Rs. 10,000 in litigation costs to the Complainant.

Case Title: Amit Mahajan and Anr. vs Star Health and Allied Insurance Co. Ltd. and Ors.

Case Number: C.C. No. 94/2023

Date of Pronouncement: June 6^th, 2024

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