Insurer Must Honour Claims For Sudden Sickness Not Expressly Excluded Under Policy, Karur District Commission Holds Star Health & Allied Insurance Co. Liable

The District Consumer Disputes Redressal Commission, Karur (Tamil Nadu) bench of N. Pari (president) and A.S. Rathinasamy (Member) held Star Health and Allied Insurance Company liable for failure to honour a genuine insurance claim by citing pre-existing illness as a reason. The bench held that the treatment sought by the Complainant was not related to the preexisting illness and was also not excluded under the insurance policy. 

Brief Facts:

Ms S. Sridevi and Mr B. Siddheswaran (“Complainants”) held a joint Family Health Optima Insurance Plan with Star Health and Allied Insurance Co. Ltd (“Insurance Company”). The policy provided coverage of Rs. 10,00,000/- with an additional recharge benefit of Rs. 5,00,000/-. The Complainants asserted that they had continuously renewed the policy until 2022, with the validity expiring on 09/09/2023.

During the period of coverage, one of the Complainants received treatment at G. Kuppusamy Naidu Memorial Hospital, Coimbatore (“Hospital”), for which a claim for cashless treatment was made on 24/09/2022. However, the Insurance Company requested certain documents to approve the claim and eventually denied it based on documents not being produced, suggesting the Complainants could seek reimbursement.

Later, despite providing the requested documents, the Insurance Company repudiated the claim on 11/11/2022 due to alleged misrepresentation of facts regarding the Complainant's medical history of Psoriasis. Subsequent communications between the parties failed to resolve the issue. Feeling aggrieved, the Complainants filed a consumer complaint in the District Consumer Disputes Redressal Commission, Karur, Tamil Nadu (“District Commission”). 

Observations of the District Commission:

The District Commission noted that the Complainants had availed a Family Health Optima Insurance Plan, renewing it regularly without interruption. However, when they sought cashless treatment for Basilar Dissection at the Hospital, the Insurance Company rejected the pre-authorization request, citing insufficient documents. Despite subsequent submissions, the Insurance Company repudiated the claim, alleging misrepresentation regarding the duration of pre-existing Psoriasis.

Upon scrutiny, the District Commission found that while the Complainant indeed had Psoriasis, the treatment sought was for 'Basilar Dissection', not Psoriasis. The District Commission emphasized the purpose of disclosing pre-existing conditions to prevent unlawful claims, noting that Basilar Dissection wasn't listed as a pre-existing condition in the policy. Additionally, the District Commission held that it is the obligation of the insurance companies to honour claims for sudden sickness not expressly excluded under the policy.

Consequently, the District Commission directed the Insurance Company to pay Rs. 6,93,642/- for the medical expenses, Rs. 2,00,000/- for compensation and Rs. 10,000/- for litigation costs to the Complainant. 

Case Title: S. Sridevi and Anr. vs The Manager, Star Health and Allied Insurance Co. Ltd. and Anr. 

Case No.: Consumer Complaint No. 35/2023

Date of Order: 13.05.2024

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