Background of the Case
In a significant ruling, the Chandigarh District Consumer Disputes Redressal Commission has directed Oriental Insurance Company Limited and its Third-Party Administrator (TPA) to pay Rs 3.07 lakh to a Mohali resident, Mr. Madan Lal, for a mediclaim that was denied. The insurance company's refusal was based on alleged pre-existing conditions, but the Commission found this stance unjustified and contrary to the terms of the insurance policy.
Details of the Insurance Policy
Mr. Madan Lal had purchased a health insurance policy from Oriental Insurance Company Limited in November 2019. The policy, valid from November 27, 2019, to November 26, 2020, covered both Mr. Lal and his wife, Shobna Rani. At the time of purchasing the policy, Mr. Lal disclosed his pre-existing health conditions, including high blood pressure, diabetes, and heart-related issues. The policy was renewed annually, maintaining the coverage for the pre-existing conditions as disclosed initially.
The Claim and Denial
In June 2023, Mr. Lal experienced a severe health issue and was admitted to Max Hospital, Mohali. Following the hospital's directions, he underwent various tests and procedures, including the insertion of stents. He was hospitalized from June 8 to June 11, 2023, and incurred a total medical bill of Rs 2,87,748.32.
Upon submitting the claim documents to Oriental Insurance, Mr. Lal was met with resistance. The insurance company raised multiple queries and demanded additional documentation from the hospital. Eventually, the claim for a cashless facility was denied on the grounds that Mr. Lal's conditions (Type 2 Diabetes Mellitus, Coronary Artery Disease Post Percutaneous Coronary Intervention, and Left Anterior Descending and Obtuse Marginal branches since 2011) were pre-existing and suspected to be before the inception of the policy.
The Consumer Complaint
Faced with the denial, Mr. Lal filed a complaint with the Chandigarh District Consumer Disputes Redressal Commission. He argued that he had fully disclosed his pre-existing conditions at the time of purchasing the policy and had been paying higher premiums accordingly. Despite this transparency, the insurance company refused to honor the claim when a genuine need arose.
Oriental Insurance Company Limited countered the complaint by asserting that Mr. Lal had concealed information about his pre-existing conditions. They cited Clause 4.1A of the policy, which they claimed justified the denial of the claim as the complications occurred within 48 months of the policy's inception.
Commission's Findings and Ruling
The Commission, upon reviewing the case, found the insurance company's stance to be unfounded. The key points in their ruling included:
Disclosure of Pre-Existing Conditions: The Commission noted that Mr. Lal had disclosed his pre-existing conditions (BP, diabetes, and heart-related issues) before purchasing the policy. The insurance company had accepted these disclosures and issued the policy with higher premiums to cover these conditions.
Unilateral Clause: The Commission criticized the insurance company for inserting a unilateral clause (Clause 4.1A) in the policy terms, which was deemed unfair and illegal. This clause prevented the policyholder from claiming benefits for complications arising within 48 months of policy inception, despite the pre-existing conditions being disclosed and covered.
Unfair Trade Practice: The Commission observed that the insurance company had engaged in an unfair trade practice by accepting higher premiums for covering pre-existing conditions and then denying the claim on the basis of those very conditions.
Order to Pay: Consequently, the Commission directed Oriental Insurance Company Limited and its TPA, Medi Assist Insurance TPA, to pay the full amount of Rs 2,87,748.32 to Mr. Lal. Additionally, they were ordered to pay Rs 10,000 as compensation and Rs 10,000 as litigation costs.
Implications of the Ruling
This ruling has significant implications for policyholders and insurance companies alike. It reinforces the importance of transparency and fairness in insurance practices. Insurance companies are reminded that they cannot refuse claims on arbitrary grounds, especially when policyholders have disclosed their health conditions and paid higher premiums for coverage.
Conclusion
The Chandigarh District Consumer Disputes Redressal Commission's decision to direct Oriental Insurance Company Limited to pay Rs 3.07 lakh to Mr. Madan Lal underscores the need for ethical practices in the insurance industry. Policyholders must be protected from unfair trade practices, and insurance companies must honor their commitments transparently and fairly.
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