Wrongful Repudiation Of Claim Based On Hyper Technical Grounds, Punjab State Commission Holds Star Health And Allied Insurance Liable

Brief Facts:

Mr Rohit Thakur (“Deceased”) had purchased a Medi Classic Insurance Policy from Star Health and Allied Insurance Co. (“Insurance Company”). The nominee was the Deceased's wife (“Complainant”). The policy was valid from 31.12.2016 to 30.12.2017 and assured a sum of Rs. 4,00,000/-. Allegedly, while availing of the policy, only the cover note was provided.

On 28.12.2017, the Deceased experienced breathlessness and cold sweating. He sought medical help at EMC Super Speciality Hospital, Amritsar (“Hospital”), where his blood pressure was not recordable. Subsequently, he passed away in the hospital on 05.01.2018. The treatment expenses amounted to Rs. 2,99,438/-. Following his death, the Complainant lodged a claim with the Insurance Company, which was repudiated on 18.04.2018. The rejection cited that the Deceased's Hepatobiliary disease was not covered during the first year of the policy.

Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Amritsar, Punjab (“District Commission”).

In response, the Insurance Company submitted a written statement asserting that the Deceased was admitted to the hospital on 28.12.2017 for breathlessness and was diagnosed with CLD with Hypoglycemia, a liver-related issue. It contended that the policy's exclusion clause stated that such conditions were not covered in the first two years. As the Deceased's illness and subsequent death occurred within the first year of the policy, the claim was rendered non-payable. Additionally, the Insurance Company mentioned that if it were liable to pay, the maximum amount would be Rs. 2,66,327/- according to the policy terms.

The District Commission ruled in favour of the Complainant and directed the Insurance Company to disburse Rs. 2,66,327/- and pay Rs. 10,000 in compensation and Rs. 5,000 for litigation expenses. Dissatisfied with the decision of the District Commission, the Insurance Company filed an appeal before the State Consumer Disputes Redressal Commission, Punjab (“State Commission”).

Observations by the Commission:

Upon examining the medical records, the State Commission observed that the Deceased's breathlessness and cold sweating were sudden medical issues, not pre-existing conditions. These issues arose during the policy period. The Insurance Company did not provide evidence of any pre-existing disease.

The State Commission noted that 'Exclusion Clause No. 3' of the policy dealt with pre-existing diseases until 48 consecutive months, diseases contracted within the first 30 days of the policy, and conservative treatments. However, it did not cover emergent medical conditions encountered within the first two years of the policy. The Deceased's condition was sudden, leading to emergency admission and treatment.

The Deceased was insured from 31.12.2016 to 30.12.2017, nearly a full year. His claim was denied based on the exclusion clause, stating that the Insurance Company was not liable for chronic liver disease treatment expenses during the first two years of continuous coverage.

The State Commission concluded that Rohit Thakur's medical condition was acute and not chronic. The Insurance Company failed to provide evidence that he had been treated for chronic liver disease before hospitalization. It also could not explain why a sudden medical condition would not be reimbursable. Therefore, the State Commission found that the denial of the claim was based on conjectures and frivolous grounds. The exclusion clause cited by the Insurance Company did not apply to this sudden medical issue.

The State Commission noted that insurance companies often reject claims on technical grounds, which undermines the purpose of insurance — to provide security against sudden medical problems. As a result, the State Commission dismissed the appeal and upheld the order of the District Commission.

Case Title: Star Health and Allied Insurance Company Limited and Anr. vs Anita Kumari

Case No.: First Appeal No. 508 of 2022

Advocate for the Appellant (Insurance Company): Shri Neeraj Khanna

Advocate for the Original Complainant/Respondent: Shri Neeraj Yadav