Consumer Commission Holds Star Health Liable For Arbitrary Claim Deductions, Orders Payment Of ₹1.55 Lakh With 9% Interest And ₹20,000 Compensation
The District Consumer Disputes Redressal Commission, Chandigarh, comprising President Amrinder Singh Sidhu and Member B.M. Sharma, has partly allowed the complaint filed by Rama Kant Verma against Star Health & Allied Insurance Co. Ltd., holding the insurer guilty of arbitrary deductions and deficiency in service. Upholding that the insurer failed to prove disclosure of policy exclusions,...
The District Consumer Disputes Redressal Commission, Chandigarh, comprising President Amrinder Singh Sidhu and Member B.M. Sharma, has partly allowed the complaint filed by Rama Kant Verma against Star Health & Allied Insurance Co. Ltd., holding the insurer guilty of arbitrary deductions and deficiency in service. Upholding that the insurer failed to prove disclosure of policy exclusions, the Commission directed Star Health to pay the remaining ₹1,55,042 of the claim along with 9% interest and ₹20,000 as compensation and litigation costs, for wrongful partial settlement and delay.
Brief Facts of the Case:
The complainant, Rama Kant Verma, had obtained a Family Health Optima Insurance Plan from Star Health & Allied Insurance Company in 2017, which was subsequently renewed for the period from 25 July 2021 to 24 July 2022. The policy covered the complainant, his wife Seema Verma, and their daughter Taniya Verma, with a sum insured of ₹10 lakh along with cumulative bonus and recharge benefits.
In July 2022, Seema Verma underwent bariatric surgery at Fortune Hospital, Kanpur, for which the total treatment expenditure amounted to ₹2,25,000. A claim for the said amount was submitted to the insurer. Upon processing the claim, Star Health approved only ₹69,958 and deducted ₹1,55,042, stating that certain expenses fell under excluded items as per the policy.
Aggrieved by the partial settlement, the complainant contended that the detailed terms, conditions and exclusion clauses of the policy had neither been supplied nor explained to him, nor were they ever signed or expressly accepted by him. He also alleged that the insurer failed to give a clear justification for the deductions. The complainant addressed a written communication to the insurer seeking clarification regarding the disallowance, but did not receive any response.
In its written version before the Consumer Commission, Star Health asserted that the claim had been assessed strictly in accordance with the policy terms and exclusions, and that the amount paid represented the maximum admissible liability under the policy.
Contentions of the Complainant
The complainant, Rama Kant Verma, argued that Star Health & Allied Insurance Company never provided or explained the detailed policy terms, conditions, or exclusions to him, and the insurer failed to produce any document bearing his signature to show that he had accepted such terms. He contended that the deductions of ₹1,55,042 from the total hospital bill were arbitrary, unjustified, and unsupported by any specific policy clause. According to him, the insurer approved only ₹69,958 without offering any valid explanation, and despite his written communication seeking clarification, Star Health did not respond. He therefore alleged deficiency in service, unfair trade practice, and financial harassment, and claimed entitlement to the remaining amount with interest along with compensation.
Contentions of the Star Health Insurance
Star Health & Allied Insurance Company contended that the complainant had full knowledge of all policy terms, conditions, and exclusions, and that the deductions made were strictly in accordance with the Health Optima policy provisions. The insurer stated that several expenses claimed by the complainant—such as implants, disposable materials, ECG electrodes, and miscellaneous consumables—fell under non-payable or excluded categories as per the policy. They asserted that the approved amount of ₹69,958 was the maximum admissible reimbursement and that the claim was settled correctly as per applicable rules. The opposite parties maintained that there was no deficiency in service and that the complaint was baseless and devoid of merit.
Observations of the Commission
The Commission observed that although Star Health argued that the deductions were made as per policy exclusions, no evidence was produced to show that the complainant had ever been provided, explained, or had agreed to the detailed policy terms and exclusions. No signed document was filed to prove that the complainant had accepted the exclusion clauses relied upon to deny the claim amount. The Commission noted that the insurer also failed to cite any specific policy clause justifying the deduction of ₹1,55,042 from the total bill. Relying on Supreme Court precedents—including Modern Insulators Ltd. v. Oriental Insurance Co. Ltd. and Dharmendra Goel v. Oriental Insurance Co. Ltd.—the Commission held that the principle of utmost good faith applies equally to insurers, and an insurer cannot deny a legitimate claim on undisclosed or unproven exclusions. The Commission criticised the insurer's conduct as arbitrary, noting a pattern of insurance companies displaying a “take it or leave it attitude” while settling claims. It concluded that Star Health's partial settlement of a genuine claim amounted to deficiency in service and unfair trade practice.
Decision of the Commission
The Commission held Star Health liable for wrongful deductions and deficiency in service. It directed the insurer to pay the complainant ₹1,55,042, along with 9% interest from 09.08.2023 until payment, and an additional ₹20,000 as compensation and litigation costs.
Case No.: CONSUMER COMPLAINT NO. DC/AB1/44/CC/406/2023
Case Title: RAMA KANT VERMA vs. STAR HEALTH AND ALLIED INSURANCE COMPANY LIMITED