Health insurance claim rejected over hospitalisation? Court rules in policyholder’s favour
A Delhi consumer commission has held that a health insurer cannot reject a mediclaim simply by stating that hospitalisation was not medically necessary when the treating doctors had advised admission and the insurer failed to produce any medical evidence to support its stand. In a recent order, the commission directed Oriental Insurance Company Ltd. to pay more than ₹2.24 lakh to a policyholder after finding the claim rejection amounted to deficiency in service.
The case involved Shivani Tomar, who had been covered under a health insurance policy issued by Oriental Insurance since November 2010. She was admitted to Max Healthcare Hospital, Vaishali, in November 2023 after suffering from chest heaviness, breathlessness, abdominal pain, nausea, headache and low blood pressure. After the insurer declined her request for cashless treatment, she paid ₹1,54,144 towards her treatment and later sought reimbursement.
Why did Oriental Insurance reject the mediclaim?
Oriental Insurance rejected the reimbursement claim on the ground that the policyholder’s vital parameters and investigation reports were normal and that her admission was only for observation and diagnostic evaluation. It relied on a policy clause excluding expenses where hospitalisation is primarily for diagnostic purposes.
The policyholder challenged the rejection, stating that she had undergone several procedures, including a biopsy, endoscopy, MRI and ultrasound, besides receiving intravenous fluids and antibiotics during her stay. According to the discharge summary, she was diagnosed with severe acute gastritis, hypothyroidism and an ovarian cyst.
What did the consumer commission say?
The District Consumer Disputes Redressal Commission observed that Oriental Insurance neither appeared before the commission nor filed a written defence. It also failed to produce any medical evidence to contradict the treating doctors’ assessment.
After examining the medical records, the commission noted that the policyholder had received active treatment and that the hospitalisation was not solely for diagnostic purposes. It held that the exclusion clause would apply only when diagnostic evaluation was the primary purpose of admission.
The commission further observed that an insurance company cannot substitute its own assessment for the clinical judgment of treating doctors, particularly when it has no contrary medical opinion to support its decision.
Accordingly, the commission directed Oriental Insurance to reimburse the medical expenses of ₹1,54,144 with 6% annual interest from December 29, 2023 until payment. It also awarded ₹50,000 as compensation for mental agony and harassment and ₹20,000 towards litigation costs. If the insurer fails to comply within 30 days, the entire amount will carry interest at 9% per annum until payment.
