In a significant ruling, the District Consumer Disputes Redressal Commission, East Delhi, has held Star Health and Allied Insurance Co. Ltd. guilty of deficiency in service for rejecting a valid insurance claim based on an exclusion clause.
The bench, comprising S.S. Malhotra (President) and Ravi Kumar (Member), ruled in favour of the complainant, stating that the insurer failed to prove that the treatment fell under the policy’s exclusion conditions.
The case involved Anuradha Narang, who had purchased a mediclaim policy valid from 19.01.2023 to 18.01.2024, with an insured value of ₹7.5 lakh. On 18.02.2023, her daughter was admitted to Sir Ganga Ram Hospital with severe stomach pain, continuous vomiting, and dehydration. The insurer initially approved a cashless claim based on a preliminary diagnosis of Acute Gastroenteritis.
However, at the time of discharge on 25.02.2023, the claim was denied after diagnostic reports revealed Hiatus Hernia, Duodenitis, and small Haemorrhoids. The insurer argued that these conditions were covered under a 2-year exclusion clause and therefore not eligible for reimbursement.
The complainant challenged the decision, submitting a certificate from the treating doctor confirming that the patient was treated only for Acute Gastroenteritis and not for the excluded conditions. Despite this clarification, the insurer rejected the claim again.
A legal notice dated 02.03.2023 seeking reimbursement of ₹1,82,000/- was issued, but the claim remained unsettled. The complainant then approached the Commission, seeking reimbursement along with interest at 24% per annum, compensation of ₹20,00,000/-, and litigation costs of ₹51,000/-.
In its defence, the insurer claimed that material facts were not disclosed during policy issuance and maintained that the exclusion clause applied, supported by diagnostic reports.
The Commission observed that while the detected conditions fell under the exclusion clause, the actual treatment was only for Acute Gastroenteritis. It noted that the insurer failed to justify applying exclusions for ailments that were neither treated nor part of the claim.
Holding the insurer liable, the Commission directed payment of ₹1,81,849/- with interest at 9% per annum from the date of filing the complaint. It also awarded ₹20,000/- as compensation for mental agony and ₹12,500/- towards litigation costs. The order must be complied with within 30 days, failing which interest at 12% per annum will apply until realization.
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