Kannur District Commission Holds Star Health And Allied Insurance Co. Liable For Wrongful Repudiation Of Medical Claim

Brief Facts:

The Complainant and her husband obtained a Star Comprehensive Insurance policy from Star Health and Allied Insurance Company (“Insurance Company”) and paid a premium of Rs. 16,922/-. The policy provided basic coverage of Rs. 5,00,000/- for the first year. The Complainant disclosed her condition of Polycystic Ovarian Disease (PCOD) at the time of taking the policy. The terms of the comprehensive policy stated that if no claims were made for two years, the coverage would increase to Rs. 10,000,000/-, including the bonus. Following the advice of her endocrinologist, the Complainant underwent tests which led to a clinical diagnosis of 'pituitary macroadenoma Acromegaly.' She was admitted to Aster Medicity, Kochi for surgery related to this condition and was discharged. Upon admission, she informed the Insurance Company through its agent, expecting the hospital bills to be covered. However, despite submitting the necessary documents for cashless treatment, she was presented with a hospital bill of Rs. 7,02,420/- upon discharge. The hospital informed her that the Insurance Company denied the cashless facility. Her husband managed to pay the bill through extreme efforts, and they submitted all relevant documents to the Insurance Company for reimbursement.

The Insurance Company repudiated the claim, stating non-disclosure of the disease. The Complainant argued that the disease was diagnosed on 12th January 2023 and was not pre-existing. Later, the Insurance Company sent a letter threatening to cancel the policy due to alleged misrepresentation, fraud, moral hazard, and non-disclosure. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Kannur, Kerala (“District Commission”).

In response, the Insurance Company stated that the T&Cs of the policy were explained to the proposer and the Complainant and served along with the policy schedule. The Insurance Company issued the policy based on the proposal form submitted by the insured, wherein the husband of the Complainant declared no pre-existing diseases for the Complainant except for a history of Fibroid Uterus. Consequently, it argued that it endorsed 'Diseases related to the Female Genital System and their complications' as pre-existing conditions. It claimed that medical records showed that the Complainant was undergoing treatment for pituitary macroadenoma Acromegaly for three years before the policy inception, a fact not disclosed in the proposal form.

Observations by the District Commission:

The District Commission referred to medical evidence presented during the proceedings and noted that the symptoms initially observed, such as changes in facial features and physical characteristics, could not conclusively be linked to a prior awareness of Acromegaly by the Complainant. The District Commission held that for an insurance claim, a disease must be clinically diagnosed and confirmed by competent medical professionals. The District Commission held that since 'Acromegaly' was diagnosed and treated only after the two years stipulated in the policy from the date of proposal submission, any assertion of pre-existing condition by the Insurance Company was not substantiated.

Therefore, the District Commission held the Insurance Company liable for deficiency in services. It held that as per the terms of the policy, the Complainant was entitled to an increase in coverage to Rs. 10,00,000/- after two claim-free years, and the hospital bill amounted to Rs. 7,02,420/-. Therefore, it directed the Insurance Company to pay Rs. 7,02,420/- to the Complainant along with an interest rate of 4% per annum. Additionally, it directed the Insurance Company to pay a compensation of Rs. 25,000/- to the Complainant, along with Rs. 5,000/- towards the cost of proceedings.

Case Title: Naseera Abdul Hameed vs Star Health and Allied Insurance Company Ltd.

Case Number: CC/233/2023

Date of Order: 31 May 2024