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The District Consumer Disputes Redressal Commission, Kurukshetra, comprising President Neelam Kashyap and Members Sunil Mohan Trikha and Neelam, has held Star Health and Allied Insurance Company Ltd. liable for deficiency in service after it wrongfully repudiated a medical insurance claim on the ground that the complainant's hospitalization was not medically necessary.

The Commission observed that the insurer failed to produce documentary evidence or an independent medical opinion to justify the repudiation, particularly when the treating doctor had advised hospitalization considering the complainant's medical condition.

Facts:

The complainant's mother, Sunita Yadav, had purchased a family floater health insurance policy (Super Star Policy), from the opposite parties for a sum insured of ₹15 lakh. The policy was valid from April 24, 2025, to April 23, 2027, and the complainant was also covered under the said policy.

On July 8, 2025, the complainant suffered from severe stomach pain, high-grade fever, persistent vomiting, bloody stools and extreme dehydration. She was taken to Verma Hospital, Ladwa, where she was provisionally diagnosed with Acute Gastroenteritis with Septicemia. Considering her medical condition, she was admitted to the hospital on July 8, 2025, and discharged on July 10, 2025, after receiving treatment. She incurred medical expenses amounting to ₹11,730 during her hospitalization.

Thereafter, a claim for reimbursement of the medical expenses was submitted to the insurance company. However, the insurance company repudiated the claim through letters dated August 7, 2025, and September 9, 2025, on the ground that hospitalization was not medically necessary and that the complainant's condition could have been managed through outpatient treatment. The insurance company relied upon Exclusion Clause 36 of the policy while repudiating the claim.

Aggrieved by the rejection of her insurance claim, the complainant approached the District Consumer Commission and filed a consumer complaint under section 35 of Consumer Protection Act, 2019, alleging that the insurance company's action amounted to deficiency in service and had caused her financial loss and mental harassment.

Contentions of the Parties:

The insurance company argued that the complainant's condition could have been managed through outpatient treatment and that hospitalization was not warranted. It justified the repudiation under Exclusion Clause 36 of the policy and further contended that the complainant had not submitted the requisite supporting documents for reimbursement.

Verma Hospital submitted that the complainant was brought in a medically serious condition and was advised indoor admission considering her clinical condition. It maintained that the hospitalization from July 8 to July 10, 2025, was medically necessary and in accordance with medical protocol.

Observation and decision:

The Commission observed that the insurance company failed to produce any documentary evidence or independent medical opinion to establish that the complainant's hospitalization was unnecessary. It held that the insurer could not override the clinical judgment of the treating doctor without contrary medical evidence.

Accordingly, the repudiation of the claim amounted to deficiency in service. The Commission allowed the complaint and directed Star Health and Allied Insurance Company to pay ₹11,730 towards the medical claim along with 7% annual interest, ₹10,000 as compensation for mental agony and harassment, and ₹5,000 towards litigation expenses.

However, the complaint against Verma Hospital was dismissed, as no deficiency in service was established against it.

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