Doctor’s testimony exposes ‘fake’ evidence: National consumer body orders insurance firm to pay Rs 49 lakh to kin of deceased

“This entire testimony unravels the manner in which the Insurance Company has attempted to procure evidence in order to defeat a valid claim.

“We thoroughly deprecate the practice of the Insurance Company and we find that the Insurance Company through this dubious method had succeeded in repudiating the claim which is clearly based on a fake and procured evidence. It is not only uncreditworthy but is also unethical,” said the national consumer commission on March 11.

Why this ruling matters

This judgment is significant for multiple reasons, including raising the bar on claim rejection, calling out investigative malpractices, strengthening consumer protection and clarifying evidentiary standards.

Justice A P Sahi (NCDRC president) and Bharatkumar Pandya (member) was hearing an appeal against the state commission by the wife of a man who died within nine months of purchasing the insurance policy.

Death within 8 months, claim denied

• The dispute traces back to March 28, 2009, when the family took out a life insurance policy of Rs 48.92 lakh.
• However, the insured man died on December 2, 2009, within 8.5 months of taking the policy.
• On March 4, 2010, the insurer rejected the claim, alleging non-disclosure of pre-existing ailments (hypertension, vertigo) and overstatement of income in the proposal form.
• The Chhattisgarh State Commission upheld this repudiation on April 30, 2014, prompting the appeal before the NCDRC.

NCDRC: Insurer’s case built on ‘no evidence’

• The consumer commission found that the entire case of the insurer collapsed under scrutiny.
• Applying the principles of any prudent rule of evidence, this entire testimony unravels the manner in which the insurance company has attempted to procure evidence in order to defeat a valid claim.
• The doctor’s own affidavit contradicted his certificate.
• No medical records supported the allegation of illness.
• No tests, prescriptions, or hospitalisation records existed.
• The investigator’s conduct raised serious ethical concerns.
• It concluded that the findings of the state commission on pre-existing disease were “perverse and based on no evidence.”

Burden of proof lies on insurer

• Reaffirming settled law, the NCDRC held that the burden to prove suppression of material facts lies on the insurer.
• Rejection cannot rest on suspicion or unreliable documents.
• The commission relied on Supreme Court precedents to underline that insurers must meet strict evidentiary standards before denying claims.

Income ground falls flat

• The insurer’s second argument that the deceased had overstated his income was also rejected.
• The commission noted that monthly premiums of Rs 1,460.85 were regularly paid.
• The insured belonged to a business family.
• There was no evidence of financial incapacity.
• Calling the state commission’s reasoning an ipse dixit (unsupported assertion), the national consumer commission held that suspicion alone cannot invalidate a policy.

Doctor’s testimony exposes fabrication

• At the centre of the case was a medical certificate dated February 17, 2010, which the insurer relied upon to allege that the deceased, Saurabh Selarka, suffered from hypertension and vertigo before taking the policy.
• However, under oath, the issuing doctor dismantled the insurer’s case.
• He never treated or examined the deceased.
• No diagnostic tests, prescriptions, or records existed.
• The certificate was issued to a person impersonating the deceased.
• He later admitted the certificate had “no legal value” and was false.
• The commission noted that these admissions “belie the certificate itself” and conclusively establish that it was procured by the insurer’s investigator.
• The admission that the certificate was obtained through impersonation was described as the “last nail in the coffin” of the insurer’s case.

Strong words against insurance practices

• In unusually strong language, the commission condemned the insurer’s conduct.
• The claim was rejected “on a fake and procured evidence, not only uncreditworthy but also unethical.”
• It also rejected the insurer’s argument that such disputed facts could not be examined in consumer proceedings, noting that consumer forums have inquisitorial powers and can assess evidence, including affidavits and witness testimony.

Relief granted: Full sum with interest

• Allowing the appeal, the NCDRC ordered payment of Rs 48.92 lakh (full sum assured) with 6 per cent interest from March 4, 2010 (date of repudiation).
• This payment has to be done within two months with 9 per cent interest in case of delay.
• The amount is to be deposited with the state commission for disbursal to the claimants.