A Delhi consumer commission has ruled that health insurers cannot reject claims merely by declaring hospitalisation medically unnecessary without evidence. The commission directed Oriental Insurance Company Ltd. to pay more than ₹2.24 lakh to policyholder Shivani Tomar after finding the claim rejection amounted to deficiency in service. According to the latest ruling, a treating doctor's clinical judgment cannot be replaced by an insurer's assessment, particularly when the insurer fails to produce any medical evidence to support its stand.
The case involved Shivani Tomar, covered under a health insurance policy by Oriental Insurance since November 2010. She was admitted to Max Healthcare Hospital, Vaishali in November 2023 after suffering from chest heaviness, breathlessness, abdominal pain, nausea, headache and low blood pressure. After the insurer declined her request for cashless treatment, she paid ₹1,54,144 towards her treatment and later sought reimbursement. The policyholder underwent several procedures including biopsy, endoscopy, MRI and ultrasound, besides receiving intravenous fluids and antibiotics during her stay.
Oriental Insurance rejected the reimbursement claim on the ground that the policyholder's vital parameters and investigation reports were normal and that her admission was only for observation and diagnostic evaluation. It relied on a policy clause excluding expenses where hospitalisation is primarily for diagnostic purposes. However, the commission observed that Oriental Insurance neither appeared before the commission nor filed a written defence, and failed to produce any medical evidence to contradict the treating doctors' assessment. The commission noted that the policyholder had received active treatment and that the hospitalisation was not solely for diagnostic purposes.
Insurance companies are entitled to reject claims under specific circumstances including material breach of policy conditions, suppression of relevant facts, fraud, or when policy exclusions directly apply to the claimed loss. As reported by Outlook Money, the commission held that unrelated issues such as tax irregularities cannot by themselves justify repudiating otherwise valid claims. The ruling emphasizes that any discrepancy discovered during claim processing must be relevant to the insurance contract, risk nature, or circumstances giving rise to the claim.
The commission directed Oriental Insurance to reimburse the medical expenses of ₹1,54,144 with 6% annual interest from December 29, 2023 until payment. It also awarded ₹50,000 as compensation for mental agony and harassment and ₹20,000 towards litigation costs. If the insurer fails to comply within 30 days, the entire amount will carry interest at 9% per annum until payment. Policyholders should carefully review insurer rejection letters to understand the specific grounds for denial and retain all relevant documents including the insurance policy, premium receipts, claim forms, surveyor reports, and correspondence. Consumers can first seek review through the insurer's internal grievance mechanism before approaching the Insurance Ombudsman or appropriate consumer commission if disputes remain unresolved.
