'Behind Every File Lies A Person': Consumer Commission Raps MEDISEP, Insurer For Wrongful Claim Repudiation, Orders Reimbursement

The District Consumer Disputes Redressal Commission, Ernakulam recently directed the insurance company and Medisep to jointly compensate a man whose claim for reimbursement of hospital expenses was repudiated.The Bench comprising D.B. Binu (President), V. Ramachandran and Sreevidhia T.N. was considering a complaint preferred by a man covered under the MEDISEP Health Insurance Scheme introduced in collaboration with Oriental Insurance Company.While under coverage, the complainant met with a road accident, resulting in him being trapped between a jeep and a wall. Since he sustained serious injuries, he was immediately admitted to a hospital and he underwent surgery on the same day. He was discharged later with a hospital bill of Rs. 1,11,901.38.He raised a cashless claim with the insurer but it was not settled. So, he raised a reimbursement claim, which was repudiated saying MEDISEP was a cashless scheme and no reimbursement is permitted except in emergency cases. Aggrieved, he preferred a consumer complaint and sought relief against the repudiation stating the opposite parties engaged in unfair trade practice and attributing their action amounted to a deficiency in service.Before the Commission, only the insurer appeared and Medisep was set ex parte. The insurer claimed that the complaint was not maintainable because of existence of alternative grievance redressal provided by MEDISEP at district and state levels. They also argued that since MEDISEP was a cashless scheme, reimbursement is not permitted except in narrowly defined emergencies, including road accidents that result in injuries of a specific severity.The insurer also raised a contention that if the Commission finds the complainant to be entitled to recover any amount, it would not be actual bill amount but only the admissible package rates under MEDISEP.Considering the arguments, the Commission found the complaint to be maintainable since the presence of alternative remedies does not take away the remedies under the Consumer Protection Act.The Commission also noted that MEDISEP scheme, the government circular dated 05.01.2024 as well as the Memorandum of Undertaking between the government of Kerala and the insurance company permit reimbursement for emergency treatments in taken in non-empanelled hospitals in case of roads accidents.Thus, it found that the repudiation of the claim merely stating it to be 'cashless-only' was hyper-technical and ignoring the emergency exception. Therefore, the said unjustified repudiation of a valid claim amounted to a deficiency of service.The Commission further held that Medisep had an independent duty to coordinate the claim processing with the insurer but failed to do so, resulting in unnecessary and avoidable hardship to the complainant.“This Commission observes that behind every file lies a person whose daily life is disrupted when rightful claims are delayed or denied. The complainant's repeated follow-ups, uncertainty, and avoidable anxiety reflect more than a procedural lapse—they erode trust in essential services. Providers must respond with empathy, clear reasons, and timely action so that consumers are not compelled to litigate for what is due. The relief granted is intended not only to compensate for loss but to restore dignity and confidence, and it is hoped the Opposite Parties will review their processes to prevent such hardship in future,” the Bench had observed.However, it found that the complainant is not entitled to full reimbursement of hospital bill and partly allowed the claim with reimbursement ordered, subject to the cap as per the scheme. Finding the parties to be jointly and severally liable to compensate the complainant, the Commission awarded Rs. 94, 276 with 9% interest from date of repudiation until realisation. Rs. 20,000 was awarded as compensation for the mental agony and inconvenience. It also awarded Rs. 5000 as cost of the proceedings.Case No: CC No. 170 of 2024Case Title: Muhiyadeen K.M. v. M/s Oriental Insurance Co. and Anr.Counsel for the complainant: Tom JosephCounsel for the opposite party (Oriental): Saji Isaac K.J.Click to Read/Download Order

'Behind Every File Lies A Person': Consumer Commission Raps MEDISEP, Insurer For Wrongful Claim Repudiation, Orders Reimbursement

K. Salma Jennath

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