Mental Health Insurance : Bombay High Court Stays Insurer's Rejection Of Bipolar Person's Policy Proposal

Observing that there was prima facie merit in the petitioner's case, a division bench of Justices SC Gupte and MS Karnik admitted the petition and expedited the hearing of the case "considering the nature of the controversy" and "in the interest of justice."

In an order passed on June 24, just four days before the petitioner's health insurance policy was due to expire, the bench observed that it would cause grave prejudice to him if no relief was granted.

The bench also noted that the two insurance companies had failed to appear before the court despite a notice.

The issue involved in the petition (name withheld by the court keeping in mind the provisions of Mental Healthcare Act, 2017) pertains to a circular issued by the regulator Insurance Regulatory and Development Authority of India (IRDAI) on August 16, 2018. A single page circular signed by IRDAI's General Manager (Health) instructs all the insurers to follow section 21(4) of the Mental Healthcare Act.

The section reads –

21. Right to equality and non-discrimination.— Every person with mental illness shall be treated as equal to persons with physical illness in the provision of all healthcare which shall include the following, namely:

Every insurer shall make provision for medical insurance for treatment of mental illness on the same basis as is available for the treatment of physical illness.

The petitioner had a policy with public health insurer – Oriental Health Insurance Company Ltd (existing insurer). He, however, sought to port his policy to a private insurer – Star Health and Allied Insurance Company Ltd (new insurer). The new insurer rejected his proposal citing mental health issues, saying the petitioner was suffering from Bipolar Disorder Type II, a neurological disease. He then wrote to IRDAI, but the regulator failed to intervene. Keeping in mind that the policy with the existing insurer was due to expire on June 28, the petitioner approached the HC on June 17.

The Bombay HC division bench relied on a Delhi High Court judgment in the case of Shikha Nischal vs. National Insurance Company from earlier this year.

In that case, the Delhi HC had observed that the crux of the provisions of the Mental Healthcare Act as also the circular issued by IRDAI, was that mental illnesses cannot be treated differently from physical illnesses and that insurance policies cannot discriminate between these two types of illnesses.

The Bombay HC bench then observed, "Every insurance company was bound to comply with the provisions of law as well as circulars issued by IRDA and that the IRDA could turn a blind eye on any non-compliance. "It (IRDAI) has a statutory duty to fully supervise and ensure that the provisions of the Mental Healthcare Act are implemented by all insurance companies for the benefit of persons suffering from mental health issues seeking to obtain medical policies." The bench will now hear the case on July 28.

The court has kept open the petitioner's options on seeking extension/renewal of his policy from the existing insurer, without any changes in conditions, citing policy portability in the 2016 Regulations issued by the IRDAI. The relevant clause says –

Where the outcome of acceptance of portability is still awaited from the new insurer on the date of renewal

a. the existing policy shall be allowed to be extended, if requested for by the policyholder, for a short period of not less than one month by accepting a pro-rata premium for such short period and

b. existing insurer shall not cancel existing policy until such time a confirmed policy from new insurer is received or there is a specific written request of the insured

c. the new insurer, in all such cases, shall reckon the date of the commencement of risk to match with the date of expiry of the short period policy issued based on the request of the policyholder. If for any reason the insured intends to continue the policy before the expiry of the policy or before the expiry of the short-period policy referred to under Clause (5) (a) above, with the existing insurer, it shall be allowed to continue by charging regular premium and without imposing any new condition.