Consumer forum slams Star Health for unfair claim denial, orders Rs 25 lakh payout

The case concerned the late Sarita Dutta, also known as Sarita Sharma, a Chandigarh resident who had purchased a Star Health policy in 2018 with a cover of Rs 25 lakh. The policy was renewed without break, most recently for the period from September 22, 2023, to September 21, 2024.

In 2024, Dutta was diagnosed with peritoneal mucinous adenocarcinoma with lung involvement. She underwent chemotherapy, surgery for intestinal obstruction, and treatment for pulmonary artery thrombosis, incurring medical expenses exceeding Rs 35 lakh. She passed away on September 6, 2024, at Max Super Speciality Hospital, Mohali.

Her family filed a claim for reimbursement, which Star Health rejected, citing “non-disclosure of material facts.” The insurer claimed Dutta had undergone ovarian cyst removal in 2017 and failed to disclose it when buying the policy, leading to its cancellation.

Represented by advocate Prashant Kumar, the complainants argued that the 2017 procedure was for a benign cystadenoma, not cancer, as confirmed by biopsy reports from Army Hospital (R&R), Delhi. They said the 2024 illness was unrelated and accused the insurer of violating Insurance Regulatory and Development Authority of India (IRDAI) guidelines.

The Commission, presided over by Pawanjit Singh with member Suresh Kumar Sardana, agreed. It found Star Health guilty of “deficiency in service” and “unfair trade practice,” holding that medical records showed no malignancy in 2017 and no nexus between the two conditions.

The forum noted that Star Health repudiated the claim after more than six years of uninterrupted coverage, violating the IRDAI’s moratorium rule. As per IRDAI regulations and its 2024 master circular, once a health policy has run continuously for 60 months, insurers cannot dispute claims on the grounds of non-disclosure or misrepresentation unless there is proven fraud.

The forum held that Star Health had “misinterpreted policy terms,” ignored mandatory IRDAI protections, and unfairly denied the family their due.

The commission ordered Star Health to pay the full insured amount of Rs 25 lakh, to be shared equally among the heirs, along with 9 per cent simple interest from June 6, 2024. It also awarded Rs 15,000 for mental agony and Rs 10,000 towards litigation costs. Failure to comply within 45 days will attract 12 per cent penal interest.

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