East Godavari District Commission Holds Aditya Birla Health Insurance Co. Accountable for Unjustified Denial of a Valid Claim

July 31, 2024

The District Consumer Disputes Redressal Commission, East Godavari (Andhra Pradesh), led by President Sri D. Kodanda Rama Murthy, Member Sri S. Suresh Kumar, and Member Smt. KS.N. Lakshmi, found Aditya Birla Health Insurance Company Ltd. liable for the wrongful denial of a valid health insurance claim related to pre-existing conditions. The Commission noted that the complainant had fully disclosed all relevant pre-existing conditions and paid an additional premium for coverage.

Case Summary:

The complainant had secured a health insurance policy from Aditya Birla Health Insurance Co. Ltd. for Rs. 10,00,000, covering himself and his wife. Before purchasing the policy, the complainant informed the insurer about his diabetes, and the company charged an additional premium of Rs. 41,229 with a 20% loading.

The complainant renewed the policy each year, paying premiums of Rs. 41,229 for the 2nd and 3rd years, Rs. 45,262 for the 4th year, and Rs. 48,276 for the 5th year. The insurer consistently noted the pre-existing condition in the policy schedules.

During the policy term, the complainant fell ill and incurred medical expenses totaling Rs. 1,00,888 at several hospitals. Despite submitting all required bills and medical documents to the insurer for reimbursement, the claim was unjustly rejected via email without explanation.

Following this, the complainant issued a legal notice to the insurer’s CEO, who responded with incorrect allegations. After further attempts at resolution, the claim was formally repudiated. Aggrieved, the complainant filed a consumer complaint with the District Commission.

The insurer argued that the complaint was fraudulent and aimed at damaging its reputation. They claimed the policy was issued based on the information provided in the proposal form, and that the complainant had failed to disclose hypertension, thus breaching Section 45 of the Insurance Act of 1938. The insurer also claimed that the complainant had not utilized his right to a cashless claim.

Commission’s Findings:

The District Commission observed that the complainant had consistently paid premiums for the Active Assure-Diamond plan since 2018 and had disclosed all relevant health conditions, including diabetes, high blood pressure, high cholesterol, and anemia. Despite submitting a claim form on 25-02-2023, the insurer rejected the preauthorization request, incorrectly stating that the claim had been withdrawn by the insured.

The Commission noted that the insurer initially failed to cite pre-existing conditions as the reason for rejection, later shifting to a claim of undisclosed hypertension. The inconsistency suggested that the insurer was prepared to honor the claim, contrary to their earlier denial.

The Commission concluded that the complainant had acted in good faith by disclosing his health conditions and paying the additional premium. The insurer’s failure to provide credible evidence of any undisclosed pre-existing condition constituted a deficiency in service. Therefore, the Commission ordered the insurer to pay Rs. 1,00,888 with 6% interest from the date of the complaint until payment, along with an additional Rs. 10,000 towards costs.
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