NCDRC Holds Oriental Insurance Liable For Deficiency In Service Over Denial Of Legitimate Medical Insurance Claim

The National Consumer Disputes Redressal Commission, presided by AVM J. Rajendra held Oriental Insurance liable for deficiency in service and reiterated that the burden is on the insurer to show that the case falls within the exclusion clause.

Brief Facts of the Case

The complainant's wife was hospitalised at Hinduja Hospital for treatment of diabetes, hypertension, and obesity, resulting in medical expenses of Rs. 4,75,184. His claim for reimbursement was denied by the insurer, citing that the treatment was for weight reduction, which was not covered. After obtaining clarifications from Dr. Raman Goel stating the treatment was primarily for hypertension and diabetes, the insurer still rejected the claim. Despite repeated requests for reconsideration, the insurer did not respond. The complainant alleged deficiency in service and filed a consumer complaint with the District Forum, which dismissed the complaint. Aggrieved, the complainant filed an appeal before the State Commission, which directed the insurer to pay Rs.4,75,184 along with payRs.10000 towards litigation expenses. Consequently, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer rejected the complainant's claims, arguing that the treatment received by the complainant's wife was for a chronic condition not covered by the policy. They referenced Policy Condition No. 4.19, which excludes treatments for obesity and related complications, specifically citing sleeve gastrectomy as a non-covered procedure. Therefore, the insurer maintained that their decision to deny the claim was appropriate and in accordance with the policy terms.

Observations by the National Commission

The National Commission observed that the key issue was whether the complainant was entitled to reimbursement for medical expenses related to his wife's Laparoscopic Sleeve Gastrectomy at Hinduja Healthcare under the insurance policy. The insurer denied the claim, stating the procedure was for treating obesity, which is excluded under General Exclusion Clause 4.19 of the policy. The Supreme Court has clarified that insurance is a contract for indemnification covering specific losses, as noted in United India Insurance Co. Ltd. v. M/s Hyundai Engineering & Construction Co. Ltd. (2024 LiveLaw 409) and Oriental Insurance Co. Ltd. v. Sony Cheriyan ((1999) 6 SCC 451). Exclusion clauses are interpreted strictly against the insurer, as established in New India Assurance Co. Ltd. v. Rajeshwar Sharma ((2019) 2 SCC 671) and Canara Bank v. United India Insurance Co. Ltd. ((2020) 3 SCC 455). Furthermore, the burden of proof regarding the applicability of exclusion clauses lies with the insurer, as highlighted in Texco Marketing P. Ltd. v. TATA AIG General Insurance Company Ltd. ((2023) 1 SCC 428) and National Insurance Company Ltd. v. Vedic Resorts and Hotels Pvt. Ltd. (2023 SCC OnLine SC 648). In this case, it was established that the complainant's wife had significant medical conditions and was covered under the policy during the treatment. The insurer failed to prove that the surgery was solely for obesity-related treatment, as reiterated in Civil Appeal No.10671 Of 2016 between Narsingh Ispat Ltd. v. Oriental Insurance Company Ltd. (2022 LiveLaw (SC) 443), which states that the burden is on the insurer to show that the case falls within the exclusion clause. Thus, the National Commission found no reason to overturn the State Commission's decision, dismissing the insurer's revision petition.

Case Title: Oriental Insurance Co. Ltd. Vs. Kamleshbhai Udani

Case Number: R.P. No. 1658/2019

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