Kurnool Consumer Commission Holds HDFC ERGO, Continental Hospitals Liable For Wrongful Mediclaim Rejection
The District Consumer Disputes Redressal Commission, Kurnool, comprising Sri Karanam Kishore Kumar (President), Sri N. Narayana Reddy (Member) and Smt. S. Nazima Kausar (Member), held HDFC ERGO General Insurance Company liable for deficiency in service for wrongfully repudiating a mediclaim based on a medical observation later clarified by the treating hospital. The Commission also held Continental Hospitals liable for recording the observation without proper verification.
Brief Facts:
The complainant, Atal Harshavardhan Reddy, had obtained an “Energy Silver Insurance Policy” from HDFC ERGO General Insurance Company covering the medical expenses of his father, Late Atla Vijaya Bhaskar Reddy. The policy was valid from 25.03.2024 to 24.03.2025.
On 25.06.2024, the complainant's parents were allegedly attacked by certain relatives and unidentified persons, during which his mother died on the spot and his father sustained grievous injuries. After initial treatment at Government Hospital, Allagadda, his father was shifted to Continental Hospitals, Hyderabad, where he underwent prolonged treatment. The complainant incurred medical expenses of over ₹10 lakh.
When the complainant submitted a cashless insurance claim, HDFC ERGO raised objections based on a reference to “Alcohol Withdrawal Psychosis” mentioned in the discharge summary. The complainant denied any history of alcohol consumption and furnished clarification letters from the treating doctor and hospital stating that the reference was only a provisional diagnosis and not a confirmed medical condition. Continental Hospitals subsequently issued a revised discharge summary removing the said reference.
Despite these clarifications, the insurance company repudiated the claim, alleged fraud and forgery, and cancelled the policy. Aggrieved by the repudiation and cancellation, the complainant approached the District Consumer Commission alleging deficiency in service against both the insurer and the hospital.
Contentions of the Parties:
HDFC ERGO contended that there was no privity of contract between the complainant and the insurer and argued that insurance contracts are governed by the principle of utmost good faith. It submitted that it was entitled to repudiate the claim and cancel the policy in cases involving fraud, misrepresentation, or suppression of material facts.
Continental Hospitals contended that the mention of “Alcohol Withdrawal Psychosis” in the discharge summary was only a provisional differential diagnosis made on the basis of the patient's symptoms such as drowsiness and confusion. The hospital stated that after verification and upon learning that there was no history of alcohol consumption, it promptly corrected the record and issued a clarification letter and revised discharge summary. The hospital denied any negligence or deficiency in service and maintained that the treatment was provided in accordance with standard medical protocols and due care.
Observation and Decision:
The Commission observed that the insurance policy was valid at the relevant time and that the insured's injuries due to the assault were covered under the policy. The Commission noted that both the treating doctor and Continental Hospitals had clarified that the reference to “Alcohol Withdrawal Psychosis” in the discharge summary was only a provisional diagnosis and that the patient had no history of alcohol consumption.
The Commission held that HDFC ERGO wrongly repudiated the claim and cancelled the policy without any cogent evidence of fraud or suppression of facts, amounting to deficiency in service and unfair trade practice. It also observed that Continental Hospitals failed to exercise due caution while recording such a sensitive observation in the medical records.
Accordingly, the Commission partly allowed the complaint and directed HDFC ERGO to pay ₹6 lakh towards medical expenses with 9% interest, while Continental Hospitals was directed to pay ₹1 lakh as compensation for mental agony and ₹25,000 towards litigation costs.
Case Title: Atal Harshavardhan Reddy v. HDFC ERGO General Insurance Co. Ltd. & Anr.
Case No.: 82/2025