Rejection Of The Health Insurance Claim Cannot Be Based Solely On Assumption Of Pre-Existing Condition: Delhi State Commission

Brief Facts of the Case

The complainant's husband applied for an HDFC Life Group Credit Protect Plus Insurance Plan from the insurer. The insurer issued the policy, covering health benefits, with a sum assured of Rs. 19,42,176. The complainant paid the premium amounting to Rs. 95,652.17. Subsequently, the complainant's husband fell ill, was admitted to Fortis Hospital, and passed away due to Diabetes Mellitus, Chronic Liver Disease, and Portal Hypertension. The complainant submitted a claim form, but the insurer declined the claim, citing the husband's pre-existing Diabetes Mellitus, alleging concealment of facts. The complainant also had a loan insured by the insurer, which was settled upon her husband's death, but the insurer refused to honor the claim for the insurance policy. Despite a legal notice sent by the complainant for the recovery of the sum assured, no resolution was achieved. Consequently, the complainant has approached this commission alleging Deficiency in Service and Unfair Trade Practices by the insurer.

Contentions of the Opposite Party

The insurer raised preliminary objections regarding the suitability of the complaint case. Their counsel argued that the case involves complex legal and factual issues that cannot be adequately addressed through summary procedures. Additionally, they contended that the complaint lacks a valid cause of action. Furthermore, it was asserted that the complainant's husband failed to disclose his pre-existing conditions of diabetes mellitus and hypertension subdural hematoma when obtaining the policy. Therefore, they argued that the rejection of the claim was justified under the policy's terms and conditions regarding pre-existing diseases.

Observations by the Commission

The commission observed that upon examining Section 24A of the Consumer Protection Act, 1986, it is evident that the commission has the authority to accept a complaint if it is submitted within two years from the date when the cause of action occurred. Furthermore, the definition of “deficiency” under Section 2 (g) encompasses any fault or inadequacy in the quality or manner of service provision required by law or contract. In this case, the complainant had purchased an insurance policy from the insurer. However, when she sought the sum assured after her husband's demise, the insurer rejected the claim. The insurer has not presented any compelling evidence indicating otherwise. Therefore, the commission concluded that the complaint fell within its jurisdiction, and there were no legal barriers to addressing the matter of compensation for the repudiation of the claim.

Moreover, concerning the matter of the patient concealing pre-existing conditions, the commission referred to the precedent set in the case of Life Insurance Corporation of India Vs. Sunita & Others. In this case, the National Commission emphasized that denying insurance claims based on common lifestyle diseases like diabetes and high blood pressure would render insurance policies meaningless. It stated that such diseases can lead to various ailments, but they can also occur in individuals without these conditions. Therefore, the commission concluded that insurance claims could not be denied solely on the basis of these common lifestyle diseases. The commission summarized the rulings of the Hon'ble National Commission, emphasizing two key points: Firstly, the insurance company cannot reject a claim if the deceased's death was not caused by a pre-existing disease. Secondly, there is no evidence to indicate that the insured had diabetes at the time of obtaining the policy. Even if it was assumed that there was a pre-existing condition like diabetes, which is a common lifestyle disease, the rejection of the claim cannot be based solely on that. In conclusion, the commission found no valid justification provided by the insurer, consistent with established law, to reject the complainant's claim.

The commission directed the insurer to pay Rs.19,42,176 to the complainant along with interest @6%. The insurer is also directed to pay Rs. 1,00,000 as the cost for mental agony and harassment to the complainant, and as well as Rs. 50,000 towards the cost of litigation.

Case Title: Ms. Anita Gupta Vs. Hdfc Standard Life Insurance Company Limited

Case Number: C.C. No. 696/2018