Chandigarh Consumer Commission Holds Star Health Liable For Partial Settlement Of Medical Insurance Claim

The District Consumer Disputes Redressal Commission-II, U.T. Chandigarh, comprising President Amrinder Singh Sidhu and Member Brij Mohan Sharma, has held Star Health and Allied Insurance Company Limited guilty of deficiency in service and unfair trade practice for partially settling a medical insurance claim without proving that the policy exclusion clauses were duly disclosed to or accepted by the insured. The Commission observed that an insurer cannot claim the benefit of exclusion clauses unless it establishes that such terms formed part of the contract and were communicated to the insured. Brief facts:The complainant had obtained a Family Health Optima Insurance Policy from the opposite parties, covering himself, his wife, and daughter. The policy was originally taken in July 2017 and was renewed from time to time. For the relevant period between 25.07.2021 and 24.07.2022, the policy provided a base sum insured of ₹10,00,000, along with additional benefits including bonus and recharge facility. During the subsistence of the policy, the complainant's wife underwent bariatric surgery, which was certified to be medically necessary by the treating doctor. She was admitted to Fortune Hospital, Kanpur from 09.07.2022 to 11.07.2022, and medical expenses amounting to ₹2,25,000 were incurred for the treatment. The complainant submitted a reimbursement claim for the said amount. However, the insurance company approved only ₹69,958, deducting ₹1,55,042 under various heads by citing policy exclusions and limitations. Aggrieved by the partial settlement, the complainant alleged that the deductions were unjustified, and that the detailed terms and conditions of the policy, particularly the exclusion clauses, were never supplied, explained, or accepted by him. Despite making representations seeking clarification and payment of the balance amount, no satisfactory response was received, leading the complainant to approach the Consumer Commission. Contentions of the Insurance Company The Opposite Parties contended that the insurance policy was issued after the Complainant duly understood and accepted all terms, conditions, exclusions and limitations. It was submitted that the claim was assessed strictly in accordance with the policy conditions and that several components of the hospital bill were not payable as per the exclusion clauses of the policy. According to the Opposite Parties, the admissible liability under the policy worked out to ₹69,958, which had already been paid, and the remaining amount was rightly disallowed. They denied any deficiency in service or unfair trade practice and prayed for dismissal of the complaint. Observations and decision of the Commission:The Commission observed that while the insurer relied upon exclusion clauses to justify the deductions, no evidence was placed on record to show that the detailed terms and conditions of the policy were ever signed, supplied, or accepted by the complainant. The Commission observed that the insurer failed to point out any specific policy clause duly acknowledged by the insured that could justify the deductions. Relying on the Supreme Court's decision in Modern Insulators Ltd. v. Oriental Insurance Co. Ltd., the Commission reiterated that exclusion clauses cannot be enforced unless they are clearly disclosed and form part of the contract accepted by the insured. The Commission further criticised the tendency of insurers to honour policies at the time of issuance but resort to technical objections at the stage of claim settlement. The Commission held that the partial disbursement of the claim without proper justification amounted to deficiency in service as well as unfair trade practice. The complaint was partly allowed, and the insurer was directed to: Pay the remaining claim amount of ₹1,55,042 along with interest at 9% per annum from the date of filing of the complaint; Pay ₹20,000 as compensation and litigation costs to the complainant. Case Title: Rama Kant Verma v. Star Health and Allied Insurance Company Ltd.Case No. : DC/AB1/44/CC/406/2023 Click Here To Read/Download Order

Chandigarh Consumer Commission Holds Star Health Liable For Partial Settlement Of Medical Insurance Claim

Praveen Mishra

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