Ernakulam Consumer Commission Holds Aditya Birla Health Insurance Liable For Wrongful Claim Rejection

Brief Facts of the Case:

The complainant, Joy Paulose, filed a complaint against M/s Aditya Birla Health Insurance Company Ltd. under Section 35 of the Consumer Protection Act, 2019.

The complainant had obtained a health insurance policy from the opposite party, which came into effect on January 17, 2024. On February 1, 2024, he suffered an accidental fall of approximately 10 feet at his residence, resulting in blunt chest trauma, fractures of the 6th and 7th ribs, mild pneumothorax, subcutaneous emphysema, and a fracture of the left fifth metacarpal. He was admitted to MOSCMM Hospital, Kolenchery, where he incurred medical expenses totaling ₹81,042.

The complainant submitted a cashless claim to the insurance company, which was rejected on the grounds of alleged non-disclosure of pre-existing diseases, namely varicose veins and dyslipidemia. Subsequently, his reimbursement claim was also repudiated on the same grounds.

The complainant contended that his hospitalization and medical expenses were solely due to the accidental injury and had no connection with any pre-existing conditions. He argued that the repudiation of his claim was arbitrary, unjustified, and amounted to deficiency in service and unfair trade practice, causing him financial hardship and mental distress.

Accordingly, he approached the District Consumer Disputes Redressal Commission, Ernakulam, seeking reimbursement of medical expenses, compensation for mental agony, and costs of the proceedings.

Contentions of the Parties:

The complainant submits that the insurance company's argument is completely irrelevant and incorrect, as his hospitalization was solely due to a sudden accident and not any chronic or pre-existing illness. The hospital's Discharge Summary clearly states that his condition arose from a “fall from 10 feet height,” confirming that the treatment was entirely accident-related. The complainant further contends that pre-existing conditions such as varicose veins and dyslipidemia have no connection with the accident or the treatment and did not contribute to or aggravate his hospitalization. He argues that the insurance company's reliance on these pre-existing ailments to deny his legitimate claim constitutes a deficiency in service and an unfair trade practice under Sections 2(11) and 2(47) of the Consumer Protection Act, 2019. Additionally, he submits that the arbitrary and unfair actions of the insurance company caused him significant financial loss, mental stress, distress, and economic hardship.

The insurance company initially contended that the complainant had failed to provide accurate information regarding his pre-existing health conditions while obtaining the policy. According to the company, ailments such as varicose veins and dyslipidemia were pre-existing and had been undisclosed, which formed the basis for rejecting the claim. The company further argued that, under the terms of the policy, expenses arising from any pre-existing illness are not covered. However, despite being duly served with notice by the Commission, the insurance company neither filed its written reply within the stipulated time nor participated in the hearing. Consequently, the proceedings were conducted ex parte in the absence of the insurance company.

Observation of The Commission:

The Commission observed that a notice had been issued to the insurance company regarding the complaint, but the company failed to submit its written reply within the stipulated time. As a result, the case proceeded ex parte. The complainant submitted five key documents—the policy certificate, discharge summary, medical bills, cashless rejection letter, and the insurance company's reconsideration letter—which provided clear evidence supporting the claim.

The discharge summary explicitly recorded the cause of hospitalization as an accident and did not indicate any chronic illness. The Commission found that the rejection of the claim by the insurance company, solely on the grounds of pre-existing ailments, was arbitrary and unreasonable. Such conduct falls under the definition of Deficiency in Service and Unfair Trade Practice. The insurance company's actions caused the complainant mental anguish, stress, and financial loss.

Citing earlier judgments, the Commission emphasized that it is not appropriate to deny a claim arising from an accident solely on the basis of pre-existing illnesses. Accordingly, the Commission held that the complainant's claim was valid and justified.

The insurance company was found liable and directed to provide the following relief:

1. Reimbursement of ₹81,042 towards medical expenses.
2. Compensation of ₹10,000 for mental agony and stress.
3. Payment of ₹5,000 towards the costs of the proceedings.

The insurance company is required to comply with this order within 45 days. In case of non-compliance, interest at the rate of 9% per annum will be payable to the complainant from the date of filing the claim (16.03.2024) until full payment is made.

Case Title: Joy Paulose vs. M/s Aditya Birla Health Insurance Company Ltd.

Case No.: CC.No. 300 of 2024

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