In a significant ruling upholding consumer rights, the Dharwad District Consumer Disputes Redressal Commission has penalised a major private insurer for unjustly rejecting a medical insurance claim. The commission ordered HDFC Ergo Insurance Company to pay the full claim amount with interest and additional compensation for causing mental agony to the policyholder.
The Case: A Rejected Claim After Cashless Assurance
The complainant, Chouramma Sakri from Hubballi, had secured a health insurance policy worth Rs 5 lakh from HDFC Ergo, covering herself and her mother, Sushila Sakri. She was regularly paying an annual premium of Rs 37,073.
When her mother fell ill and required hospitalisation, she was admitted as an inpatient at Tatvadarsha Hospital in Hubballi for ten days based on medical advice. The total treatment cost amounted to Rs 2,19,367. Following the policy terms, Chouramma approached the insurer for a cashless treatment facility, which was initially approved.
However, in a shocking turn, HDFC Ergo later rejected the insurance claim outright without providing any valid reason. This left the family to bear the substantial hospital bill on their own.
Consumer Commission's Scrutiny and Findings
Aggrieved by the insurer's conduct, Chouramma filed a formal complaint before the Dharwad District Consumer Commission. She argued that the arbitrary rejection constituted a clear deficiency in service under the Consumer Protection Act.
After a thorough hearing, the bench comprising Commission Chairman Ishappa Bhute and Member Vishalakshi Bolashetty examined the facts. They confirmed that Chouramma was a legitimate customer and that the insurance policy was fully valid at the time of treatment.
The commission noted that despite the valid policy and subsequent hospitalisation, the insurance company failed to reimburse the expenses. Records also revealed that the complainant had sent multiple written requests seeking settlement of the claim, which were ignored.
The Landmark Order and Penalty
The commission held that the claim rejection was wrongful and without justification. It directed HDFC Ergo to take the following actions:
- Pay the full insurance claim amount of Rs 2,19,367 to the complainant.
- Add interest at the rate of 8% per annum on this amount from the date of the claim rejection until the actual payment date.
- Pay Rs 50,000 as compensation for the immense inconvenience, mental agony, and hardship suffered by Chouramma Sakri.
- Bear the litigation costs of Rs 10,000.
This order sets a strong precedent, reinforcing that insurance companies cannot arbitrarily deny claims and must adhere to the principles of service fairness. It highlights the effectiveness of consumer forums in providing redressal to common citizens against unfair corporate practices.
