The Ernakulam District Commission, led by Shri. D.B. Binu, Shri. V. Ramachandran, and Smt. Sreevidhia T.N., held Oriental Insurance responsible for a deficiency in service due to the improper denial of a legitimate claim.
Case Summary
The complainant, who was insured under a Happy Floater Mediclaim Policy with Oriental Insurance, had his claim partially settled. Although he incurred Rs. 95,410 for his wife’s eye surgeries, the insurer reimbursed only Rs. 61,200, as deemed reasonable by the Third-Party Administrator (TPA). Dissatisfied, the complainant approached the Insurance Ombudsman, who upheld the insurer’s decision. He then filed a complaint with the District Commission, arguing that the deduction of Rs. 34,210 was unjustified and sought reimbursement with 12% interest, plus Rs. 10,000 for mental agony and legal costs.
Insurer’s Arguments
The insurer contended that the insurance contract was governed by specific terms and conditions binding both parties, and their liability was limited to these terms. They disputed the complainant’s claim that hospital expenses were reasonable compared to other hospitals in Kerala, asserting that the deduction was neither illegal nor indicative of service deficiency. They emphasized that the policy covered only “reasonable and customary charges” and that they had already paid Rs. 61,200 after applying policy-based deductions. The insurer also noted that expenses for lenses were excluded from coverage. The Insurance Ombudsman had previously dismissed the complainant’s case, supporting the insurer’s stance. The insurer argued there was no deficiency in service or unfair practice and requested the dismissal of the complaint with costs.
District Commission’s Observations
The District Commission noted that the insurer’s main defense was that the deductions were in accordance with the policy’s “reasonable and customary charges” clause. However, the insurer failed to provide evidence supporting these deductions. The Commission observed that relying on this clause without evidence constituted a deficiency in service, contrary to the Supreme Court’s ruling in Canara Bank vs United India Insurance Co. Ltd., which mandates interpreting policies in favor of the insured and resolving ambiguities in their favor. Given the complexity of insurance contracts and the challenges policyholders face in understanding all clauses, the complaint was deemed valid. The Commission found that the insurer’s refusal to fully reimburse the complainant, despite lacking justification for the deductions, amounted to a deficiency in service and unfair trade practice.
The Commission directed the insurer to pay the complainant Rs. 34,210 as the outstanding claim amount. Additionally, the insurer was ordered to provide Rs. 5,000 as compensation for mental agony, financial loss, and hardship caused by the deficiency in service and unfair trade practices, along with Rs. 5,000 for legal costs.
Posted and reproduced in Public Interest by
Adv. Sulaiman Bhimani Legal Consultant
Expert in RERA & Consumer Matters, Co-operative Scty Matters,
Deem Conveyance, Family Matters, and Property Disputes.
Human and Civil Rights Campaigner
President Citizens Justice Forum https://citizensjusticeforum.in
YouTube Channel https://tinyurl.com/CitizensJusticeForum
NEW CHANNEL FOR STOCK MARKET https://tinyurl.com/GreenWa