Noida Consumer Commission Orders Insurance Company to Pay Claim with Interest
A district consumer disputes redressal commission in Noida has issued a significant order against Cholamandalam MS General Insurance Company. The commission directed the insurer to settle a health insurance claim worth Rs 60,000. It also mandated payment of 6% annual interest from January 2021.
Key Ruling on Medical Decision Authority
The commission delivered a clear verdict on medical decision-making. It stated that insurance companies cannot determine whether a patient requires home isolation or hospital treatment. This decision rests solely with qualified doctors. The commission labeled claim rejection on such grounds as arbitrary and unjustified.
Cholamandalam MS General Insurance must also pay Rs 5,000 in litigation costs. The company has thirty days from the order date to complete these payments.
Background of the Consumer Case
Noida resident Girish Sharma filed the application with the district commission on January 27, 2021. He named multiple parties in his complaint. These included Oriental Bank of Commerce, Punjab National Bank, Cholamandalam MS General Insurance Company, the insurer's Noida branch office, and JP Hospital.
Sharma sought relief after the insurance company rejected his valid health insurance claim on October 20, 2020.
Details of the Insurance Policy and Treatment
Girish Sharma purchased a health insurance policy from Cholamandalam MS General Insurance in May 2019. He obtained the policy through his bank, OBC or Punjab National Bank. The sum assured value was Rs 3 lakh.
The policy covered his mother, Darshan Sharma. It renewed automatically the following year through premium auto-debit from his bank account. The policy remained valid until May 15, 2021.
Darshan Sharma fell ill on August 17, 2020. Family members took her to JP Hospital for consultation. Doctors initially kept her in an isolation ward. They later admitted her and shifted her to another ward. She received treatment for a low platelet count.
Claim Rejection and Subsequent Proceedings
Girish Sharma immediately informed the insurer's third-party administrator. He requested cashless treatment as per policy provisions. The company refused this request.
The insurance company sent a letter dated September 18, 2020. It stated that reimbursement would occur upon submission of documents within one month. Sharma followed these instructions but received no reimbursement.
The commission issued notices to all opposite parties. OBC and Punjab National Bank denied accountability. They clarified that the bank did not issue health insurance. The insurance contract existed directly between the account holder and Cholamandalam.
Counsel for the insurance company presented their defense. They argued that examination of cashless documents showed the patient's stable condition. According to Ministry of Health and Family Welfare guidelines, the insured required treatment under home quarantine. Therefore, the company rejected the cashless claim.
The counsel further stated that inpatient treatment violated policy terms when home quarantine treatment was possible. This made the insurer not liable for payment.
Commission's Final Decision
The commission dropped JP Hospital from the case through an order dated April 22, 2025. It then heard the matter concerning the remaining respondents.
Commission President Anil Kumar Pundir and Member Anju Sharma delivered their conclusion on January 6. They determined that the insurance company rejected Sharma's reimbursement claim solely because treatment was possible at home under quarantine.
The commission ruled this action constituted deficiency in service under the Consumer Protection Act. This formed the basis for their order favoring the consumer.
