Insurer loses appeal over ₹17.99 lakh dengue claim rejected on waiting-period grounds | What commission said

A health insurance company cannot invoke a waiting-period condition to turn down a hospitalisation claim for a medical condition that is not covered by the policy’s specified exclusions. The Delhi State Consumer Disputes Redressal Commission underscored this while rejecting HDFC ERGO General Insurance’s appeal against a consumer court order that had directed the insurer to compensate a policyholder whose dengue treatment claim was denied, reported The Economic Times.

The controversy arose after HDFC ERGO refused cashless treatment and later rejected the ₹17.99 lakh reimbursement claim, citing a 24-month waiting period prescribed for certain illnesses and medical procedures, including treatment for prolapsed intervertebral disc (PIVD), a spinal disc disorder. However, the policyholder, Mr Kumar, had been admitted to hospital for dengue fever, a condition not mentioned in the relevant list of exclusions.

Finding that the waiting-period provision could not be applied to his diagnosis, the State Commission upheld the District Consumer Commission’s order on October 6.

What happened?

The dispute originated in November 2019, when Kumar tested positive for dengue fever on November 2. Acting on medical advice, he was admitted to Max Super Speciality Hospital in Patparganj, Delhi, on November 3.

HDFC ERGO turned down his request for cashless treatment on November 6. Kumar then transferred to another Max Super Speciality Hospital in Vaishali, hoping to continue treatment there. However, his second cashless authorisation request was also rejected on November 12. He remained hospitalised until November 21.

As he could not avail of cashless treatment, Kumar had to pay the medical bills himself. In his complaint, he stated that the first hospital charged him ₹3.71 lakh, while the treatment at the second facility cost another ₹8.11 lakh. His expenses also included costs incurred before and after hospitalisation.

Kumar said he was compelled to borrow money and sell his wife’s jewellery to arrange funds for the treatment.

He subsequently filed a claim, covering hospital bills and pre- and post-hospitalisation expenses. HDFC ERGO rejected the claim, relying on a two-year waiting-period condition applicable to PIVD treatment.

Kumar contested the insurer’s decision, maintaining that he had been treated for dengue and not the spinal condition cited in the rejection. He also alleged that HDFC ERGO had not furnished the policy’s terms and conditions to him.

What did the consumer commission say?

In its October 31, 2023, order, the District Consumer Commission observed that HDFC ERGO had not established that the policyholder had received the relevant policy terms and conditions.

Vivek Kumar, Advocate, Delhi High Court, explained that the District Commission’s decision was based on the insurer’s failure to demonstrate that the policy documents containing the exclusion conditions had been duly handed over to the policyholder.

“It accordingly held that the exclusionary conditions could not be enforced against him and directed payment of ₹10 lakh, being the sum insured applicable to the relevant policy period, along with interest at 6% per annum, ₹30,000 as compensation and ₹20,000 towards litigation costs,” ET quoted Vivek Kumar, Advocate, Delhi High Court, as saying.

HDFC ERGO subsequently approached the State Consumer Disputes Redressal Commission, challenging the District Commission’s decision. Among its arguments, the insurer maintained that the claim attracted a 24-month waiting period.

ET Wealth Online sought HDFC ERGO General Insurance’s response to the matter and its position on the commission’s findings. However, the insurer had not responded.

Why did the State Commission dismiss HDFC ERGO’s appeal?

During the appeal proceedings, the State Commission scrutinised Clause A(ii) of Section V, titled ‘Special Terms and Conditions’. This provision specified a 24-month waiting period for a list of particular illnesses, diagnoses and surgical procedures.

On examining Kumar’s medical records, the commission established that he had been hospitalised for dengue fever. It also noted that dengue did not feature among the medical conditions specified in the list attracting the 24-month waiting period.

According to Vivek Kumar, the insurer could not apply the exclusionary provision to an illness that was not included in the relevant list. The commission accordingly held that the prescribed waiting period was not applicable to the policyholder’s dengue treatment.

The State Commission also found that HDFC ERGO had not provided any cogent justification for withdrawing the cashless facility. It consequently dismissed the insurer’s appeal on October 6, while affirming the District Consumer Commission’s order.