Panipat District Commission Holds Muthoot Finance And Liberty General Insurance Co. Liable For Wrongful Repudiation Of Medical Claim

Brief Facts:

The Complainant was employed with Muthoot Finance Ltd. (“Muthoot”) as a Branch Manager and was enrolled in a Group health insurance policy of Liberty General Insurance Co. (“Insurance Company”). During his tenure, the Complainant fell ill with a high-grade fever and was admitted to Raj Hospital, Madlauda. Despite informing the insurance company and Muthoot about his hospitalization, they failed to cover the incurred expenses amounting to Rs. 1,13,765/-. The Complainant bore the cost personally and later submitted the requisite documents for reimbursement. However, the insurance company purportedly denied the claim. The Complainant made several communications with the insurance company but didn't receive a satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Panipat, Haryana (“District Commission”) and filed a consumer complaint against Muthoot and the insurance company.

In response, Muthoot clarified that it neither issues nor deals with insurance policies, stating that the insurance company is the entity responsible for issuing the insurance policy. According to Muthoot, there existed no direct relationship or liability between it and the insurance company, apart from being the holder of the insurance policy. Consequently, Muthoot contended that it cannot be held liable for any alleged deficiency in service regarding the insurance claim.

The insurance company didn't appear before the District Commission for the proceedings.

Observations by the District Commission:

The District Commission referred to the medical records and held that the Complainant was hospitalized at Raj Hospital from July 19, 2021, to July 26, 2021. Despite Muthoot's status as an agent, the District Commission held that liability could be imputed to Muthoot since it acted on behalf of the insurance company. Further, the medical records substantiated the severity of the Complainant's illness and the treatment received from qualified medical professionals. Consequently, the District Commission held that the repudiation was unjustified and there was a deficiency in service on the part of the insurance company. It also held Muthoot vicariously liable for its actions.

Therefore, the District Commission directed Muthoot and the insurance company to reimburse the Complainant the sum of Rs. 1,13,765/- along with interest at a rate of 9% per annum from the date of filing the complaint until full payment. Additionally, recognizing the mental anguish and harassment endured by the Complainant, the District Commission directed Muthoot and the insurance company to pay Rs. 5,000/- as compensation and Rs. 5,500/- as litigation costs to the Complainant.

Case Title: Brahma Nand vs Muthoot Finance Ltd. and Anr.