Rejecting the contention of Star Health & Allied Insurance Co Ltd about concealment of pre-existing disease, the national consumer disputes redressal commission (NCDRC) directed the insurer to pay Rs15 lakh as expenses for medical treatment and Rs30,000 costs.
In an order, the NCDRC bench of Subhash Chandra (presiding member) and air vice-marshal (AVM) J Rajendra (retd) (member) says, "It is in common amongst children of tender age to have convulsions during high fever conditions and recover after high temperature recedes. Therefore, a mere isolated event of such an incident cannot constitute knowledge of an entirely independent medical condition that may be revealed at a subsequent stage. The stated facts and records reveal that, while the complainant clarified the circumstances under which he discovered the medical condition of his child, Star Health & Allied Insurance failed to establish that the child was suffering from this disease by birth and there was concealment of fact at the time of taking the insurance policy. Therefore, the claim is liable to be allowed."
Lucknow-based Atul Kumar Rai bought a health insurance policy for himself, his wife and his son from Star Health & Allied Insurance after paying a premium of Rs18,719. The Rais received identity cards from the insurer; however, no policy document was issued. The policy was renewed every year between 28th February and 27 February 2018.
In June 2016, Mr Rai noticed some spots on his son's back and consulted Medanta Global Health Pvt Ltd. The medical examination revealed the presence of café-au-lait spots and a tuft of hair on his back. After that, an electroencephalogram (EEG) and magnetic resonance imaging (MRI) were conducted, and the impression was diagnosed as neurofibromatosis. On 13 July 2016, Mr Rai subsequently consulted Primus Super Specialty Hospital, and after confirming the child's condition, surgery was advised. He requested cashless treatment at the hospital, which was denied by the insurer, leading to him spending Rs14.75 lakh in Primus Super Specialty Hospital and Rs29,510 in Medanta Global Health.
He contacted Star Health & Allied Insurance for reimbursement and submitted all required documents. However, the claim was rejected without clear communication. Mr Rai alleged that the rejection was arbitrary and violated the principles of natural justice.
Mr Rai alleged that this disease was not a genetic or birth defect, as it was not present in any family member, and he only became aware of it during the consultation at Medanta Global Health Hospital. The insurance policy's terms and conditions did not exclude pre-existing conditions, and he believes the denial of the claim by the insurer is unjust.
Being aggrieved by the repudiation of mediclaim and deficiency in service on the part of Star Health & Allied Insurance, he filed a consumer complaint before the Uttar Pradesh state consumer disputes redressal commission. He also prayed to continue the health policy or health insurance of his son. He also prayed that the insurer be directed to pay Rs15.05 lakh spent on the treatment and Rs34 lakh towards mental agony and harassment.
In its response, Star Health & Allied Insurance denied Mr Rai's claim, stating that they issued a star comprehensive insurance policy covering Mr Rai, his wife and son for Rs7.50 lakh. The insurer asserted that Mr Rai failed to disclose the pre-existing disease of his son in the proposal form. Consequently, the insurer repudiated the claim vide letter on 20 March 2017 and cancelled the policy of the child from 27 May 2017, in terms of condition no14 of the policy and refunded Rs3,852.
Star Health & Allied Insurance further contended that café au lait macules is a type of birthmark present since the insured child's birth. These marks, characterised by hyper-pigmented skin patches with sharp borders and diameters of less than 0.5cm (centimetres) , are considered congenital anomalies. They can be present at birth or appear in early infancy, sometimes associated with systemic diseases. As per the insurer, the insured child has had these marks since birth. The insured child was two years and six months old at the policy's inception, and the Rais were aware of it. The insurer contended that the failure to disclose this significant medical history in the proposal form amounted to misrepresentation and non-disclosure of material facts, violating condition number nine of the insurance policy.
However, the state commission rejected the contention by the insurer and asked Star Health & Allied Insurance to pay Rs15 lakh towards hospital charges with an interest of 6%pa (per annum), Rs5 lakh for mental agony, harassment and Rs20,000 as cost of litigation. It also directed the insurer to extend the term of the policy till its validity for the child.
Star Health & Allied Insurance challenged the order before NCDRC.
During the hearing, the Rais contented that the history of febrile seizure mentioned in the discharge summary from Primus Super Specialty Hospital is unrelated to the café-au-lait spots, and the insurer has misinterpreted this medical history. "The disease in question is neither genetic nor present at birth. Neither the parents nor any family members had such a history. They first became aware of their son's condition during a consultation at Medanta Global Health Hospital. Star Health & Allied Insurance unjustly and arbitrarily rejected the claim and condition no14 of the policy cited does not apply to the case."
The counsel for Star Health & Allied Insurance argued that after an MRI on 12 July 2012 and further episodes of febrile convulsion and antiepileptic treatment of the child, Mr Rai realised expensive future treatment and obtained insurance on 28 February 2014 for himself, his wife and child, deliberately concealing the medical condition of the child. He signed a proposal form on 28 February 2014 misrepresenting material facts and misleading the insurers relating to the child that he was in good health and free from physical and mental disease or infirmity; no consultation, treatment and admission for any illness was done, the counsel added.
After hearing both sides, examining the pleadings and going through associated documents placed on record, NCDRC observed that there is no dispute about the existence of the policy, the medical condition of the child, treatment given to the child, as well as the amount of claim that Mr Rai preferred to the insurance company. "The whole controversy thus revolves around the fact whether the child's medical condition was at the stage of his birth and was it known to Mr Rai, who failed to inform Star Health & Allied Insurance while making a proposal for insurance."
The bench says it is a fundamental principle in the insurance contracts that the party claiming the exemption clause needs to establish the same. "However, Star Health & Allied Insurance failed to substantiate that the insured child had such a medical condition by birth and that, while being aware, the complainant failed to notify the same to insurer the stage of making the proposal. On the other hand, the complainant, the father of the child, repeatedly asserted the absence of knowledge of such medical condition, if any, and that the first discovery of the same was made much after the insurance contract was entered into and, therefore, he is entitled to reimbursement of medical expenses under the scope of the policy."
The bench directed Star Health & Allied Insurance to pay Rs15.30 lakh to Mr Rai. It also set aside the Rs5 lakh compensation awarded by the state commission for mental agony and harassment.
(First Appeal No150 of 2021 Date: 9 October 2023)
They have RUINED OUR LIVES making us do paperwork’s when my father was in emergency critical situation without leaving any time for us to concentrate on our father.
Thanks
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