Kannur District Commission Holds Aditya Birla Health Insurance Co. Liable For Wrongful Repudiation Based On Unsubstantiated Pre-Existing Disease

Brief Facts:

The Complainant purchased a medical insurance policy from Aditya Birla Health Insurance Co. (“Insurance Company”). This policy was intended to cover the medical needs of his entire family. In May 2022, the Complainant experienced bleeding and sought medical care from Dr. Sabu at MIMS Hospital in Kannur. After treatment, he recovered without further ailments. However, in September 2022, he developed severe stomach pain and was treated at Payyanur Anamaya Hospital which referred him to MIMS Hospital for a colonoscopy. Following the procedure, the Complainant was diagnosed with a condition requiring surgery and was admitted to MVR Cancer Institute, Kozhikode. A surgery was performed the next day, and he was discharged while incurring an expense of Rs. 1,65,000/-.

Expecting the insurance company to settle his bills under the cashless facility, the Complainant was assured by an insurance company representative that the bill would be processed promptly after discharge, but this did not happen. The insurance company denied his claim stating a pre-existing condition clause and stating that his symptoms were known before the policy's inception. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Kannur, Kerala (“District Commission”) against the insurance company.

In response, the insurance company argued that at the time of policy purchase, it explicitly warned the Complainant about the consequences of not disclosing pre-existing medical conditions. It stated that the Complainant failed to provide adequate documentation proving that his condition was diagnosed only recently and argued that similar complaints were documented over the past decade. According to the policy's terms, failure to disclose such information rendered the policy void. It contended that it acted within its rights and that there was no deficiency in service or unfair trade practice on its part.

Observations by the District Commission:

The District Commission noted that the insurance company argued that the Complainant suppressed material facts regarding pre-existing conditions spanning a decade. However, it noted that the insurance company failed to substantiate this claim with medical records or expert testimony.

The District Commission referred to the decision of the Supreme Court in Satwant Kumar Sandhu vs New India Assurance Co. Ltd. [Civil Appeal No. 2776 of 2002] and emphasized the insured's obligation to disclose accurate and complete information on relevant aspects within their knowledge during policy application. Given that the Complainant's disease was diagnosed only on 6/10/2022, well into the policy period, and considering the absence of evidence proving pre-existing conditions, the District Commission found the insurance company responsible for the medical expenses incurred during the treatment.

Consequently, the District Commission held that there was a deficiency of service and unfair trade practice on the part of the insurance company. Therefore, it directed the insurance company to remit the sum of Rs. 1,39,421/- for medical expenses to the Complainant. It was also directed to pay a compensation of Rs. 25,000/- to the Complainant along with Rs. 10,000/- for the litigation costs incurred by the Complainant.

Case Title: Ajesh Kumar V.V. vs Adithya Birla Health Insurance Company Ltd.

Case Number: CC/51/2023

Date of Pronouncement: 14th June 2024