Delhi District Commission Holds Star Health Liable For Deficiency In Service For Wrongful Denial Of Insurance Claim

The District Consumer Disputes Redressal Commission, East Delhi, comprising S.S. Malhotra (President) and Ravi Kumar (Member), held Star Health and Allied Insurance Co. Ltd. liable for deficiency in service for repudiating an insurance claim by relying on an exclusion clause. The Commission allowed the complaint and held that the insurer failed to prove that the treatment for which reimbursement was sought fell within the scope of the exclusion clause. Brief Facts The complainant, Anuradha Narang, had purchased a mediclaim policy from Star Health and Al-lied Insurance Co. Ltd. which was valid from 19.01.2023 to 18.01.2024, with an IDV of Rs. 7.5 lakhs. On 18.02.2023, her daughter was admitted to Sir Ganga Ram Hospital after suffering from severe stomach pain, continuous vomiting and dehydration. The insurance company initially granted provisional approval for a cashless claim based on the preliminary diagnosis of Acute Gastroenteritis. However, during discharge on 25.02.2023, the in-surer denied the claim after endoscopy and colonoscopy reports indicated the presence of Hiatus Hernia, Duodenitis and small Haemorrhoids. The insurer contended that these ailments were sub-ject to a two-year exclusion clause under the policy and therefore the claim was not payable. The complainant disputed the repudiation by submitting a certificate from the treating doctor stat-ing that the patient had not received treatment for the aforementioned diseases and had been treat-ed only for Acute Gastroenteritis, which was unrelated to those conditions. Despite this clarifica-tion, the opposite party again rejected the claim. Subsequently, the complainant issued a legal notice dated 02.03.2023 seeking reimbursement of Rs. 1,82,000/-, to which a reply was sent; however, the claim remained unpaid. Aggrieved, the complainant approached the District Consumer Disputes Redressal Commission, East Delhi, seeking reimbursement of Rs. 1,82,000/- with interest at 24% per annum from the date of payment, along with compensation of Rs. 20,00,000/- and litigation costs of Rs. 51,000/-. Arguments by the Opposite Party Star Health and Allied Insurance Co. Ltd. contended that the complainant had concealed material facts by failing to disclose specific ailments during the proposal stage. It argued that the insurance policy was governed strictly by its terms and conditions, which were agreed to by the complainant at the time of issuance. The insurer relied on the two-year exclusion clause, which excludes conditions such as Hiatus Hernia, Duodenitis and Haemorrhoids, and contended that these ailments were diagnosed within the restricted initial period of the policy. It further submitted that the hospital's colonoscopy and UGI endoscopy reports constituted clinical evidence confirming the presence of these excluded conditions. Observations Of The Commission The Commission observed that although Hiatus Hernia, Duodenitis and Haemorrhoids fall within the exclusion clause of the policy, the complainant had sought treatment for a different ailment, which was the material factor to be considered. Upon examining the discharge summary and the certificate issued by the treating physician, the Commission found that the patient had been treated exclusively for Acute Gastroenteritis and re-lated complications, and not for the excluded ailments that were merely detected during diagnostic tests. The Commission further observed that the insurer had failed to show how the exclusion clause could be invoked for ailments that were not treated or part of the reimbursement claim, particular-ly when the patient had not been admitted for those conditions. Accordingly, the Commission held that the insurer committed deficiency in service by rejecting the claim despite the patient being treated only for Acute Gastroenteritis, which was covered under the insurance policy. The Commission therefore allowed the complaint and directed the insurer to pay Rs. 1,81,849/- to the complainant along with interest at 9% per annum from the date of filing of the complaint, along with Rs. 20,000/- as compensation for mental agony and harassment and Rs. 12,500/- to-wards litigation costs. The Commission further directed that the order be complied with within 30 days, failing which the amount shall carry interest at 12% per annum from the date of filing of the complaint till realisation. Case Title: Anuradha Narang v. Star Health and Allied Insurance Co. Ltd. Case No.: CC No. DC/78/CC/25/2024 Click Here To Read/Download Order

Delhi District Commission Holds Star Health Liable For Deficiency In Service For Wrongful Denial Of Insurance Claim

Muhammed Razik

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