Insurer Pre Existing Disease Illness Court Awards Rs 10 5 Lakh

Finding that the insurer had failed to establish that a policyholder’s treatment was linked to a pre-existing disease, the Delhi consumer commission has directed National Insurance Company to reimburse Rs 10 lakh with 7 per cent annual interest and Rs 50,000 as litigation costs to the woman.

Noting that the policyholder, Rita Malhotra, died during the pendency of the case and was represented by her legal heirs, a bench of Sonica Mehrotra (president) and members Richa Jindal and Anil Kumar ruled that the insurer had failed to provide substantial defence for denial of the claim.

“The complaint is allowed, and OP No.1 (insurer) is directed to reimburse to the complainants only the sum insured of Rs 10,00,000/- along with interest @ 7% pa from the date of filing of the complaint till final realisation. Since the complaint is pending for the last ten years, OP No.1 shall also pay a sum of Rs 50,000/- as litigation expenses to the complainants for forcing them to pursue the present litigation,” the commission said on June 6.

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.

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.

Somya Panwar works with the Legal Desk at The Indian Express, where she covers the various High Courts across the country and the Supreme Court of India. Her writing is driven by a deep interest in how law influences society, particularly in areas of gender, feminism, and women’s rights. She is especially drawn to stories that examine questions of equality, autonomy, and social justice through the lens of the courts. Her work aims to make complex legal developments accessible, contextual, and relevant to everyday readers, with a focus on explaining what court decisions mean beyond legal jargon and how they shape public life. Alongside reporting, she manages the social media presence for Indian Express Legal, where she designs and curates posts using her understanding of digital trends, audience behaviour, and visual communication. Combining legal insight with strategic content design, she works on building engagement and expanding the desk’s digital reach. Somya holds a B.A. LL.B and a Master’s degree in Journalism. Before moving fully into media, she gained experience in litigation and briefly worked in corporate, giving her reporting a strong foundation. ... Read More