Insurance Company Ordered Pay 2 Lakhs Denying Cashless Treament Emergency

cardiac emergency despite having a continuously renewed health insurance policy for nearly a decade, holding that the insurer acted unfairly by rejecting the cashless facility and subsequently cancelling the policy. Justice Dr G Radha Rani (president), Meena Ramanathan (member, non-judicial) and R S Rajeshree (member, non-judicial) were hearing an appeal by a policyholder who alleged that HDFC ERGO wrongly denied cashless treatment and cancelled the man's health insurance policy when he was hospitalised with a critical heart condition in 2020. “The trauma and angst undergone by the complainant can never be adequately compensated nor quantified monetarily. The core advantage of a cashless facility is to manage hospital expenses during emergency conditions without having to scramble for cash. The complainant was denied this facility despite being a policy holder for many years and had to claim reimbursement which was also initially denied on unfair grounds," the commission said on May 11. A medical emergency turned into an insurance dispute after the policyholder was denied cashless hospitalisation benefits. (Image generated by AI) Unilateral cancellation policy grave injustice On the approval/authorisation of the insurance company, the treatment is normally initiated unless it is an emergency situation, as in the present case, the state commission noted. The complainant is seeking to address the denial of this service, which he is entitled to at a critical time. The fact that he received the amounts as per the ombudsman’s award after many months does not translate to being adequately compensated for the trials and tribulations he has suffered. The ignominy of the rejection and the unilateral cancellation of the policy is a grave injustice and we are of the considered view that the district commission did not address this important aspect. The complainant is not re-opening a complaint but he is seeking justice for being treated in this unethical and unjust manner. When a policy is conditionally being renewed, it implies the continuation of the original contract. The insurers and hospitals are meant to co-ordinate and simplify the claims process in cashless health insurance policy. On one hand, they accept the cashless request for RUSH Hospital and the patient was shifted on an emergency basis to KIMS for the same complaint and denying the service citing non-disclosure of diabetes is a deliberate and damaging intent on the part of the opposite parties and such negligence cannot be condoned, the panel held. Background The complainant, a 69-year-old advocate, had been insured under a health insurance policy since 2011. The policy provided cashless treatment benefits and had been renewed regularly without interruption. In February 2020, he suffered a cardiac emergency and was first admitted to Rush Hospital before being shifted to KIMS Hospital. While the insurer settled the claim relating to the first hospitalisation, it denied cashless treatment at KIMS Hospital, alleging non-disclosure of diabetes for 20 years. The insurer also terminated the policy and forfeited the premium during the treatment period. The complainant later approached the insurance ombudsman, which directed settlement of the claim amount and reinstatement of the policy. Cashless facility denied during emergency The commission noted that the complainant was shifted from one hospital to another for continuation of treatment arising from the same medical emergency. Despite this, the insurer denied cashless authorisation at KIMS Hospital. According to the insurer, medical records revealed a history of diabetes that had allegedly not been disclosed at the time of obtaining the policy. The cashless request was, therefore, rejected and the complainant was asked to seek reimbursement after completion of treatment. Pre-existing disease clause ignored Examining the policy terms, the commission observed that pre-existing diseases were covered after a waiting period of three years. The complainant had been continuously insured under the policy since 2011. The commission found that the insurer failed to consider this crucial policy condition while rejecting the cashless request in 2020. It held that denying the facility on the basis of diabetes after nearly nine years of uninterrupted coverage was unjust and unfair. Cancellation of policy held unreasonable The commission further found fault with the insurer's decision to terminate the policy while the complainant remained hospitalised. It observed that the cancellation was carried out without adhering to the policy conditions regarding prior notice and migration options. According to the commission, the insurer not only denied the complainant an important benefit under the policy but also exposed him to uncertainty at a time when he was battling a life-threatening medical condition. “On the approval/authorisation of the Insurance Company, the treatment is normally initiated unless it is an emergency situation as in the present case. The complainant was denied this facility despite being a policy holder for many years and had to claim reimbursement which was also initially denied on unfair grounds.” the commission said. The insurer argued that it had already complied with the award passed by the insurance ombudsman by reimbursing the admissible claim amount, along with interest and reinstating the policy. However, the commission held that the dispute was not merely about reimbursement. The real grievance concerned the wrongful denial of cashless treatment and the hardship suffered by the complainant and his elderly wife during a medical emergency. Commission awards compensation The commission concluded that the district consumer commission had failed to address the serious consequences of denying cashless treatment and wrongly focused only on compliance with the ombudsman’s award. Setting aside the district commission’s order, the state commission directed the insurer to pay Rs 2 lakh as compensation, which also included the interest component claimed by the complainant. It additionally awarded Rs 10,000 towards litigation costs, with a further cost of Rs 10,000 in case of non-compliance within 30 days. Written by Aparajita Prasad. She is an intern with The Indian Express.