Insurer Can't Restrict Stem Cell Therapy Claim Using 'Modern Treatment' Clause: Ernakulam Consumer Commission
The District Consumer Disputes Redressal Commission, Ernakulam, comprising President D.B. Binu and Members V. Ramachandran and Sreevidhia T.N., has held that National Insurance Company Ltd. cannot arbitrarily restrict reimbursement for recognised life-saving procedures such as stem cell transplantation by mechanically invoking "Modern Treatment" sub-limits.
The Commission observed that the purpose of health insurance is to indemnify genuine hospitalisation expenses and that the applicable regulatory framework issued by the Insurance Regulatory and Development Authority of India (IRDAI) must be followed to ensure policyholders are not deprived of benefits through restrictive policy wording
Facts
The complainant, Ravivarma V., had been continuously renewing a mediclaim policy issued by National Insurance Company Ltd. since 2005. During the policy period from June 10, 2024 to June 9, 2025, he was diagnosed with Multiple Myeloma and underwent chemotherapy and autologous stem cell transplantation at Amrita Institute of Medical Sciences, Kochi. He incurred medical expenses of ₹4,62,350 and submitted a reimbursement claim under the policy.
However, the insurer reimbursed only ₹37,500 by treating stem cell transplantation as a "Modern Treatment" covered under Clause 3.5 of the policy, which restricted reimbursement to 25% of the total sum insured. Since the complainant's total eligible sum insured, including cumulative bonus, was ₹1,50,000, the insurer maintained that ₹37,500 represented the maximum amount payable under the policy. Aggrieved by the partial repudiation, the complainant approached the Consumer Commission seeking payment of the balance insurance claim of ₹1,12,500 along with compensation for mental agony and litigation costs.
Contentions
National Insurance Company Ltd. contended that the claim had been processed strictly in accordance with the approved terms and conditions of the mediclaim policy. It argued that stem cell therapy was expressly categorised as a "Modern Treatment" under Clause 3.5 of the policy and reimbursement was therefore limited to 25% of the sum insured. The insurer further submitted that the IRDAI Master Circular merely encouraged insurers to accommodate technological advancements and did not invalidate contractual sub-limits or alter policies issued before the revised regulatory framework came into force.
Observations & Decision
The Commission rejected the insurer's reliance on the policy's "Modern Treatment" sub-limit, observing that the IRDAI Master Circular was issued to strengthen policyholder protection and ensure coverage for technologically advanced medical procedures, including stem cell therapy for specified haematological conditions. It noted that the insurer had not produced any medical evidence to show that the complainant's treatment was experimental, unnecessary or outside accepted medical protocol.
The Commission held that insurance policy terms cannot be interpreted in a manner that defeats the object of a mediclaim policy. It observed that the complainant underwent a recognised life-saving procedure during the currency of the policy and that the applicable IRDAI regulatory framework governed the claim. Applying the doctrines of contra proferentem and generalia specialibus non derogant, the Commission held that the insurer could not rely on the policy's restrictive sub-limit to curtail reimbursement where the IRDAI Master Circular did not prescribe any such monetary ceiling.
Holding that the insurer had arbitrarily restricted reimbursement, the Commission concluded that the partial repudiation amounted to deficiency in service and an unfair trade practice under the Consumer Protection Act, 2019. Accordingly, it partly allowed the complaint and directed National Insurance Company Ltd. to pay the complainant the balance insurance claim of ₹1,12,500, along with ₹25,000 as compensation for mental agony and hardship and ₹10,000 towards litigation costs.
The complaint against the Divisional Manager was dismissed, as no independent personal liability was established against him. The Commission directed compliance within 45 days, failing which the amounts awarded towards the insurance claim and compensation would carry interest at 9% per annum from the date of filing of the complaint until realisation.
Case Title: Ravivarma V. v. National Insurance Company Ltd. & Anr.
Case No.: CC No. 542 of 2025
Advocate for Complainant: Complainant appeared in person
Advocate for Opposite Parties: Adv. P.E. Thomas