Courts Must Favour Complainant In Case Of Presence Of Two Interpretations Of Same Clause: Ernakulam District Commission

Brief Facts of the Case

The complainant had a health insurance policy from Star Health & Allied Insurance/insurer, covering Rs. 2,00,000. After an accident, he was admitted to a network hospital and expected cashless treatment but was asked for additional documents, such as an initial consultation report, MRI, and X-ray, which were not taken as deemed unnecessary by the doctor. Despite submitting all required medical bills and records, the insurer rejected the claim, citing non-submission of these documents.

The complainant filed a complaint before the District Commission and sought Rs. 2,20,000, including Rs.1,20,000 for hospitalization expenses and compensation of Rs. 50,000 for the inconvenience caused, along with the cost of litigation.

Contentions of the Insurer

The insurer argued that the complainant's claims were incorrect. They confirmed the complainant had a health insurance policy for Rs. 2,00,000 and was informed of the need to provide necessary documents for claims. When a pre-authorization request for cashless treatment was received, the insurer requested documentation, including an initial consultation paper and MRI report. The complainant did not provide these, leading to the denial of the cashless facility. Post-discharge, the complainant's claim was rejected due to missing documents, as required by policy Condition No. 4. The insurer maintained there was no deficiency in service or unfair trade practice, contested the ₹1,20,000 hospitalization expenses, and argued any liability should be limited to ₹95,286, excluding non-medical expenses. They asserted the complaint was frivolous and aimed at unlawful enrichment.

Observations by the District Commission

The District Commission observed that the insurer's refusal to process the claim, despite receiving substantial documentation and the treating doctor's certification, demonstrated a clear deficiency in service. The complainant's mental agony and physical inconvenience further supported this conclusion. In the case of Canara Bank vs. United India Insurance Co. Ltd. & Ors., the Supreme Court held that insurance policies should be interpreted as a whole to fulfill the reasonable expectations of all parties, especially the insured. Coverage clauses should be construed broadly, ambiguities resolved in favor of the insured, and exclusion clauses interpreted narrowly. Applying this principle, the insurer's denial of the claim based on technicalities and unnecessary documentation requirements was unjustified and constituted unfair trade practices. Despite discrepancies in records regarding the accident date, the Commission determined that the discrepancy should not be given undue importance. The commission emphasized that the courts must carefully examine all documents and make prudent decisions based on overall evidence, favoring the consumer when two interpretations are possible. The Commission concluded that the insurer was liable for deficiency in service and unfair trade practices. The insistence on unnecessary documents added undue stress and hardship to the complainant, showing a lack of compassion and fairness.

Consequently, the District Commission allowed the complaint against the insurer and directed them to pay the complainant Rs. 1,72,696 towards the insurance claim. It further directed the insurer to pay Rs. 20,000 for the deficiency in service, unfair trade practice, and mental agony, along with Rs. 15,000 towards the cost of the proceedings

Case Title: Saneesh M.S. Vs. Star Health & Allied Insurance Company Ltd.

Case Number: C.C. No. 153/2020