Insurer fails to prove pre-existing disease led to woman’s illness, court awards Rs 10.5 lakh

Claim rejected despite revised medical opinion

• At the time of filing the complaint, Ravindra Malhotra and his wife Rita Malhotra were both above 60 years of age.
• On January 27, 2025, the complainants purchased a mediclaim policy, with a third-party administrator (TPA) designated for the purpose of processing claims and cashless insurance.
• The policy was valid from January 27, 2015, to January 26, 2016, and on January 12, 2016, the said mediclaim policy was duly renewed till January 26, 2017.
• On January 6, 2016, Rita Malhotra was taken to the emergency ward of Max Hospital, Saket, with a complaint of weakness, fever and shortness of breath from severe cold and cough.
• It was diagnosed that the woman was suffering from Type 1 Respiratory Failure and was moved to the ICU to be placed on ventilator support.
• The doctor had opined that her respiratory failure could be related to her underlying chronic anaemia.
• However, upon further examination and treatment, it was diagnosed by the same doctor that the condition of the woman had no relation to her pre-existing condition of anaemia.
• After going through some procedural surgeries, she was discharged on February 20, 2016, from the hospital.
• However, the TPA denied the cashless facility, placing reliance on the preliminary diagnosis by the doctor stating that the respiratory failure was linked to her chronic anaemia.
• After a short back-and-forth between the daughter and the TPA over email, the cashless facility was rejected by the opposite party.

No proof

• The District Consumer Disputes Redressal Commission noted that the complainant’s claim was rejected on the ground that as per the claim file, the patient was a known case of Hereditary Hemorrhagic Telangiectasia with chronic anaemia for a long time.
• The commission relied on Rita Malhotra’s “hereditary Hemorrhagic Telangiectasia”, but it was certified by the treating doctor that the condition had nothing to do with the treatment.
• It is a settled proposition of law that the burden to prove the nexus of pre-existing disease with the treatment taken by the complainant is upon the person alleging it.
• The commission also noted that the opposite parties had taken the stand that since the sum insured under the policy is Rs 5,00,000, and there are two insured persons, therefore, the entitlement of any one of the insured persons to seek mediclaim shall not exceed Rs 2,50,000.
• However, despite being given multiple opportunities during the proceedings, the opposite parties did not identify from the policy terms and conditions that one person was entitled to only 50 per cent of the policy.
• Therefore, the commission held that the complainant was entitled to seek mediclaim under the policy as per the available limit.

Complainants vs insurer

Advocate Harshita Verma, on behalf of the complainants, averred that the total bill for the woman’s treatment came to Rs 31,28,367.21, out of which the complainants paid Rs 25,38,000 to Max Hospital.

It was submitted that on February 29, 2016, the TPA filed the duly filled claim form on behalf of the complainants with the National Insurance Company. However, the claim was erroneously rejected by the company via letter dated June 6, 2016.

The complainants alleged that the rejection of their claim for reimbursement is totally unlawful and arbitrary, and the same amounted to deficiency in service on the part of the opposite parties.

It was argued that the reason assigned for rejecting the claim is that the complainant’s case is of pre-existing disease of chronic anaemia, which was absolutely wrong, and these serious ailments cannot be wished away by classifying them as pre-existing anaemia.

The complainants submitted that this manipulation of a clause of the policy to suit the convenience of the opposite party was an unfair trade practice and a clear instance of deficiency in service.

Additionally, it was submitted that even otherwise a claim could not be rejected on the ground that the condition suffered was a complication arising from a pre-existing condition, as the stipulation was absolutely vague and unfair, and could not be stretched to deny any claim.

It was contended that the complainants were entitled to reimbursement to the tune of Rs 10 lakh on this count in view of the renewal of the policy in January 2016, prior to discharge of the complainant from the hospital, along with compensation.

It may be noted that during the pendency of this complaint, Rita Malhotra died on February 13, 2018, and her legal heirs were brought on record.

TPA’s stand

Advocate P S Tomar, representing the insurance company and TPA, submitted that there was no deficiency in service on their part.

It was submitted by the OPs that the policy under which the claim was made is the first-year policy and is within a period of 48 months of issuance of the policy and the treatment taken was directly related to the pre-existing disease being suffered by the complainant; therefore, the claim is not payable.

Accordingly, the claim was repudiated. The counsel added that the complainants had concealed material facts from the OPs, and hence they were not “consumers” under the Consumer Protection Act.

The opposite parties denied that the rejection of the claim of the complainant for reimbursement is unlawful and arbitrary.

It was also denied that a claim cannot be rejected on the ground that the condition suffered is a complication arising from a pre-existing condition.