DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, ERNAKULAM
Dated this the 24th day of October 2024
Filed on: 25/10/2018
PRESENT
Shri. D.B. Binu Hon’ble President
Shri. V. Ramachandran Hon’ble Member
Smt. Sreevidhia T.N Hon’ble Member
C.C No. 448 of 2018
COMPLAINANT
Rendeep K.P , Kaipalathil House, Aluva PO, Edayapuram, Ernakulam, Kerala
(Rep. By. Adv. Saji Isaac K.J, Advocate, 311, H.B. Flats, Panampilly Nagar, Kochi- 682036.)
V/s
Opposite Party
Star Health and Allied Insurance Co. Ltd No. 15, Sri Balaji Complex, 1st Floor, Whites Lane Royapettah, Chennai 600014
(OP Rep. by Adv. R.S. Kalkura, Adv. Harish Gopinath, Adv. Najumal Husan,
Adv. Anjali.B. Chandran )
FINAL ORDER
D.B. Binu, President
1. A brief statement of facts of this complaint is as stated below:
The complainant, a businessman, filed a complaint under Section 12 of the Consumer Protection Act, 1986. The complainant purchased a Family Health Optima Insurance Plan from the opposite party, valid from 22.02.2018 to 21.02.2019. At the time of policy inception, the complainant had no known pre-existing medical conditions. On 09.04.2018, the complainant visited Rajagiri Hospital for a routine check-up due to palpitations and was diagnosed with Systemic Hypertension (SHT). The following day, the complainant experienced perspiration and anxiety and returned to the hospital, where he was diagnosed with Bicuspid Aortic Valve, Severe Aortic Regurgitation (AR), and Systemic Hypertension. An aortic valve replacement surgery was performed, and the complainant was discharged on 20.04.2018.
However, the insurance company rejected the complainant's cashless treatment request on 19.04.2018, claiming the condition was pre-existing. After discharge, the complainant submitted a claim for reimbursement, which was denied on the grounds of pre-existing aortic valve disease and hypertension. The insurance company also cited non-disclosure of material facts, asserting that the complainant had a history of these conditions before taking the policy, in violation of policy terms. Additionally, they stated that congenital internal defects, such as the aortic valve condition, were not covered within the first two years of the policy.
The complainant disputes these claims, stating that the diagnoses were first made in April 2018 and that no pre-existing conditions or congenital defects were present. The complainant argues that the rejection of the claim was unjustified and seeks reimbursement of Rs. 3,07,849, compensation for mental agony, and reinstatement of the policy, asserting that the insurance company acted in bad faith.
2. NOTICE:
The Commission issued notices to the opposite party. The opposite party subsequently filed its version.
3. THE VERSION OF THE OPPOSITE PARTY
The complaint is not maintainable due to a lack of cause of action and the non-joinder of necessary parties, specifically the Branch Manager of the Ernakulam office, who they claim should have been included in the litigation.
The insurance policy, purchased by the complainant for the period 22.02.2018 to 21.02.2019, was issued based on a proposal form in which the complainant declared he had no pre-existing medical conditions. They emphasize that the proposal form is the basis of the insurance contract and that non-disclosure of material facts voids the policy.
After the complainant filed a claim for hospitalization on 11.04.2018 due to systemic hypertension and aortic valve issues, the opposite party initiated an investigation. Medical records revealed that the complainant had a history of elevated blood pressure for two years and a congenital condition—Bicuspid Aortic Valve, and a birth defect—both of which were not disclosed in the proposal form.
The complainant’s conditions are pre-existing, with congenital defects not covered during the first two years of the policy. They state that the claim was rightfully repudiated and the policy was cancelled as per policy conditions. They also highlight that the complainant was refunded a portion of the premium.
Citing case law, the opposite party stresses the importance of full disclosure in insurance contracts and claims that there was no deficiency in service. They seek compensatory costs, asserting the complaint was filed to unjustly benefit the insurance company.
4. Evidence:
The complainant submitted a proof affidavit along with five documents. The documents in the complaint are marked as Exhibits A1 and A5.
- Exhibit A1: Copy of the Insurance Policy issued by the opposite party to the complainant.
- Exhibit A2: Letter dated 25.05.18 from the opposite party to the complainant regarding cancelling the insurance policy.
- Exhibit A3: A repudiation letter dated 14.06.18 from the opposite party.
- Exhibit A4: A certificate dated 19.04.2018 issued by Dr. Rinett Sebastian.
- Exhibit A5: A summary of the inpatient bill.
The opposite party has submitted a proof affidavit along with six documents to support their case. The documents are marked as Exhibits B1 and B6.
- Exhibit B1: Copy of the Policy Schedule & Conditions of the insurance policy.
- Exhibit B2: Copy of the Proposal Form signed by the complainant when applying for the insurance.
- Exhibit B3: Copy Discharge summary from Rajagiri Hospital, Aluva
- Exhibit B4(series): Copies of Hospital Records from Rajagiri Hospital, Aluva (2 documents).
- Exhibit B5: Copy of Repudiation Letter dated 14/06/2018
- Exhibit B6: Copy of Cancellation Letter dated 23/04/2018
5. Points for Consideration:
i) Whether the complaint is maintainable or not?
ii) Whether there is any deficiency in service or unfair trade practice by the opposite parties?
iii) If so, whether the complainant is entitled to any relief?
iv) Costs of the proceedings, if any?
6. ARGUMENT NOTES FILED BY THE COUNSEL FOR THE COMPLAINANT.
The complainant stated that he took out a Family Health Optima Insurance policy from the opposite party for the period from 22.02.2018 to 21.02.2019. The terms and conditions of the policy were not provided when the policy was issued, and he only became aware of them during the proceedings. He disputes the opposite party's assertion that he had pre-existing conditions, such as hypertension or a bicuspid aortic valve, at the time of taking the policy. He contends that these conditions were diagnosed for the first time on 09.04.2018 and 10.04.2018 after he went for routine check-ups at Rajagiri Hospital.
The complainant refutes the opposite party's claim that medical records indicate he had blood pressure for two years and was treated with anxiolytics, pointing out that the medical notes show uncertainty with the use of a question mark ("?"). He also denies any suppression of material facts or non-disclosure of pre-existing conditions at the time of purchasing the policy.
The complainant references legal precedents, including the Hon’ble Supreme Court's ruling in Sulbha Prakash Motegaonkar v. LIC of India, to argue that even if a pre-existing condition was present but not related to the treatment, the claim should not be denied. He also cites the Satwant Kaur Sandhu case, asserting that there was no intentional suppression of health information as he was unaware of any conditions at the time of the proposal.
Furthermore, the complainant argues that Exhibit B4 does not conclusively prove that they had been managing high blood pressure (BP) for two years with an anxiolytic. The exhibit only notes that during a routine check-up on 09.04.2018, the complainant was found to have elevated BP and there is uncertainty about the use of an anxiolytic (indicated by a "?"). This suggests that the complainant was not aware of having BP before this date.
The complainant references the Hon’ble Supreme Court's ruling in Sulbha Prakash Motegaonkar v. Life Insurance Corporation of India, where it was held that failure to disclose pre-existing conditions that are unrelated to the cause of death does not completely disqualify a claimant from receiving insurance
Even if the complainant had a bicuspid aortic valve from birth (a congenital condition), they were unaware of this condition at the time of submitting the insurance proposal. The complainant emphasizes that the opposite party has not provided any evidence to prove that the complainant knew about the condition beforehand.
The complainant seeks reimbursement of Rs. 3,07,849/- for medical expenses, Rs. 2,00,000/- in compensation for mental agony, and the reinstatement of his policy with continuity benefits, arguing that the opposite party’s rejection of his claim and cancellation of the policy amount to deficiency in service and unfair trade practices.
ARGUMENT NOTES FILED BY THE COUNSEL FOR THE OPPOSITE PARTY
The complainant had purchased a Health Optima Insurance Plan for the period of 22.02.2018 to 21.02.2019, and after being diagnosed with Systemic Hypertension, Bicuspid Aortic Valve, and Severe Aortic Regurgitation, underwent surgery and later submitted a claim for Rs. 3,07,849/-. The opposite party rejected the claim, stating that the conditions were pre-existing and therefore not covered by the policy.
In their defense, the opposite party argues that the complainant’s policy clearly outlined conditions, clauses, and exclusions, including the waiting periods for pre-existing conditions and congenital defects, which were explained at the time of issuance. The policy stated that any pre-existing conditions or congenital diseases were excluded from coverage during the first two years. The medical records obtained from Rajagiri Hospital showed that the complainant had a history of hypertension for two years, predating the policy's inception. Furthermore, the Bicuspid Aortic Valve condition is congenital, making it ineligible for coverage within the first two years as per policy terms.
The complainant did not disclose his health conditions in the proposal form, which was the basis of the insurance contract. Since the complainant’s ailments were both congenital and pre-existing, the policy excluded them. As a result, the opposite party justifies the rejection of the claim and the cancellation of the policy, citing the non-disclosure of material facts. They also argue that the complainant’s lawsuit is frivolous and seeks compensatory costs for being dragged into unnecessary litigation.
The opposite party references the Hon’ble Supreme Court judgment (Reliance Life Insurance Co. Ltd v. Rekhaben Nareshbhai Rathod) to support their stance that the insurance contract relies on good faith and full disclosure, which they claim the complainant failed to maintain.
We have meticulously considered the detailed submissions made by both parties and thoroughly reviewed the entire record of evidence, including the argument notes presented.
In the Revision Petition No. 2513 of 2019 reviewed by the Hon’ble National Consumer Disputes Redressal Commission, referenced a decision by the Hon’ble Supreme Court from the case Canara Bank vs. United India Insurance Co. Ltd. & Ors. [(2020) 3 SCC 455]. Held that:
“9. It was held by the Hon’ble Supreme Court in Canara Bank vs. United India Insurance Co. Ltd. & Ors. (2020) 3 SCC 455 that Insurance Policy must be read holistically so as to give effect to reasonable expectations of all parties, including the insured, coverage clauses to be read broadly, and ambiguity, if any, to be resolved in favour of the Insured, exclusions to be read narrowly. Hence, we do not find any reason to interfere with the order of the State Commission.”
In this cited Supreme Court case, it was held that an insurance policy should be interpreted as a whole to fulfill the reasonable expectations of all parties involved, particularly the insured. This interpretation means that coverage clauses should be construed broadly, while any ambiguities should be resolved in favour of the insured, and exclusion clauses should be interpreted narrowly.
In light of this precedent, the National Consumer Disputes Redressal Commission found no grounds to interfere with the decision of the State Commission of Rajasthan, effectively upholding the earlier ruling.
The legal precedents emphasize the importance of resolving ambiguities in favour of the insured. The Honourable Supreme Court's ruling in United India Insurance Co. Ltd. v. Pushpalaya Printers (2004 KHC 795) established that "If there is any ambiguity or a term is capable of two possible interpretations one beneficial to the insured should be accepted". Similarly, the decision of the Hon'ble High Court of Kerala in M/s. Benz Automobiles Ltd. v. P. D. Thomas and Another (2008 (3) KHC 846) reinforces the principle that "it is the settled law that if there is any ambiguity, it should be interpreted against the person who drafted the terms".
In the case, Care Health Insurance Limited v. Harjinder Singh Sohal (R.P. No. 563/2022), the Hon'ble National Consumer Disputes Redressal Commission (NCDRC) ruled that an insurer cannot repudiate an insurance claim based on non-disclosure of a medical condition after issuing the policy. The commission found Care Health Insurance liable for deficiency in service, emphasizing that it is the insurer's responsibility to assess the proposer’s medical condition and associated risks before issuing the policy.
The Hon'ble NCDRC referenced the Hon'ble Supreme Court’s ruling in Manmohan Nanda v. United India Assurance Co. Ltd., where it was held that once a policy is issued after evaluating the medical details, the insurer cannot later deny a claim based on a pre-existing condition that was disclosed and formed part of the risk assessment.
This judgment reinforces that post-issuance repudiation based on disclosed conditions is unjustified.
i) Maintainability of the Complaint:
The opposite party raised objections regarding the maintainability of the complaint, citing the non-joinder of the Ernakulam branch manager and a lack of cause of action. However, the insurance company, being the principal entity responsible for issuing the policy and repudiating the claim, is the proper party to the complaint. The absence of the branch manager does not affect the maintainability, as the core issue pertains to the insurance contract between the complainant and the opposite party.
In light of these observations, we find that the complaint is maintainable.
ii) Deficiency in Service and Negligence:
The insurance policy in question was issued for the period 22.02.2018 to 21.02.2019, with the complainant declaring no pre-existing conditions at the time of purchase. The opposite party denied the complainant’s claim, alleging that the medical conditions—Systemic Hypertension, Bicuspid Aortic Valve, and Severe Aortic Regurgitation—were pre-existing and congenital, thus excluded from coverage under the policy.
The complainant, however, asserts that the diagnoses were made for the first time in April 2018, after the policy's inception. He further disputes the insurance company’s reliance on medical records indicating a history of elevated blood pressure, noting the uncertainty in Exhibit B4, which includes a question mark regarding the use of an anxiolytic for blood pressure management.
In this context, deficiency in service refers to the opposite party’s failure to handle the claim in good faith and its unjust rejection based on pre-existing conditions that were neither disclosed nor proven to be within the complainant's knowledge at the time of policy issuance. The insurer must thoroughly evaluate the medical risks before issuing the policy, as established in Manmohan Nanda v. United India Assurance Co. Ltd., where it was held that once a policy is issued after medical risk assessment, the insurer cannot repudiate a claim based on a disclosed or unknown condition that was part of the risk evaluation.
Furthermore, the policies should be interpreted broadly in favour of the insured, resolving any ambiguities against the party who drafted the contract, in this case, the insurer. Any exclusions should be interpreted narrowly. The opposite party’s assertion that the congenital condition was not covered in the first two years does not absolve it of the duty to communicate this exclusion to the complainant before policy issuance.
iii) Entitlement to Relief:
Considering the precedents above cited, the rejection of the complainant’s claim by the opposite party constitutes a deficiency in service. The complainant is entitled to reimbursement of the medical expenses incurred, as well as compensation for the mental agony caused by the unjust denial of the claim.
iv) Costs of Proceedings:
In view of the findings and the unnecessary hardship faced by the complainant, the opposite party is liable for the costs of the proceedings.
Liability of the Opposite Party:
The opposite party acted on malafide's intention by repudiating the complainant’s claim based on pre-existing conditions without providing conclusive evidence that the complainant was aware of these conditions when taking the policy. The opposite party’s reliance on medical records, which are inconclusive (notably the question mark regarding anxiolytic treatment), is insufficient to justify the rejection. Additionally, the insurer did not prove that the complainant suppressed material facts.
Applying the principles from Manmohan Nanda v. United India Assurance Co. Ltd. and Canara Bank vs. United India Insurance Co. Ltd., the repudiation of the claim after policy issuance is unjustified and constitutes a clear deficiency in service and negligence. Therefore, the opposite party is liable for the wrongful rejection of the complainant’s insurance claim.
In considering this case, it is important to acknowledge the profound impact that such decisions have on individuals and families who trust insurance companies to be their safety net during difficult times. The complainant, who was facing serious health issues, rightfully expected support from the insurance provider during a period of vulnerability. Instead, they were met with a denial based on ambiguous medical records and technicalities. The emotional and financial strain this situation must have caused cannot be overlooked. Insurers must act in good faith, ensuring that their customers are treated with care and fairness, especially when their well-being is at stake. The rejection of the claim, without conclusive evidence or clear communication, reflects a breakdown of that trust, something this Commission cannot allow to stand.
We determine that issue numbers (I) to (IV) are resolved in the complainant's favour due to the significant service deficiency and unfair trade practices on the part of the opposite party. Consequently, the complainant has endured considerable inconvenience, mental distress, hardships, and financial losses as a result of the negligence of the opposite party.
In view of the above facts and circumstances of the case, we are of the opinion that the opposite party is liable to compensate the complainant.
Hence, the prayer is partly allowed as follows:
- The opposite party is directed to reimburse the complainant a sum of Rs. 3,07,849/- (Rupees Three Lakh Seven Thousand Eight Hundred Forty-Nine only) for medical expenses incurred due to the aortic valve replacement surgery and treatment as per the policy.
- The opposite party is further directed to pay a sum of Rs. 50,000/- (Rupees Fifty Thousand only) as compensation for the mental agony and distress caused to the complainant. This amount is awarded for the deficiency in service and unfair trade practices, as well as for the mental and physical hardships endured by the complainant.
- The opposite party shall also pay the complainant Rs. 10,000/- (Rupees Ten Thousand only) towards the costs of these proceedings.
The opposite party is liable to fulfil the above orders, which must be executed within 30 days from the date of receiving this order. Failure to comply with the payment orders under points (I) and (II) will result in interest at the rate of 9% per annum from the date of filing the complaint (25.10.2018) until full payment is made.
Pronounced on this the 24th day of October 2024.
Sd/-
D.B. Binu, President
Sd/-
V. Ramachandran, Member
Sd/-
Sreevidhia T.N, Member
Forwarded/By Order,
Assistant Registrar
APPENDIX
COMPLAINANT’S EVIDENCE
- Exhibit A1: Copy of the Insurance Policy issued by the opposite party to the complainant.
- Exhibit A2: Letter dated 25.05.18 from the opposite party to the complainant regarding cancelling the insurance policy.
- Exhibit A3: A repudiation letter dated 14.06.18 from the opposite party.
- Exhibit A4: A certificate dated 19.04.2018 issued by Dr. Rinett Sebastian.
- Exhibit A5: A summary of the inpatient bill.
OPPOSITE PARTY’S EVIDENCE
- Exhibit B1: Copy of the Policy Schedule & Conditions of the insurance policy.
- Exhibit B2: Copy of the Proposal Form signed by the complainant when applying for the insurance.
- Exhibit B3: Copy Discharge summary from Rajagiri Hospital, Aluva
- Exhibit B4(series): Copies of Hospital Records from Rajagiri Hospital, Aluva (2 documents).
- Exhibit B5: Copy of Repudiation Letter dated 14/06/2018
- Exhibit B6: Copy of Cancellation Letter dated 23/04/2018
Date of Despatch
By Hand ::
By post ::
AKR/
Order in CC No. 448/18
Date: 24/10/2024
