Supreme Court Holds Insurance Company Liable for Reimbursement of Medical Expenses in Health Insurance Policy Renewal Dispute

07 May 2024 8:19 AM

By: Admin

In a significant judgment, the Supreme Court of India has ruled in favor of the policyholder, Mr. Om Prakash Ahuja, holding Reliance General Insurance Co. Ltd. responsible for reimbursing the medical expenses incurred by Mr. Ahuja for his late wife's ovarian cancer treatment. The judgment, delivered by Justice Rajesh Bindal, highlights the importance of disclosure in insurance policies and upholds the rights of policyholders to claim reimbursement for valid medical expenses.

The dispute arose when Mr. Ahuja's wife was diagnosed with ovarian cancer, and he sought reimbursement for the treatment expenses under the health insurance policy provided by Reliance General Insurance. The insurance company repudiated the claim, citing non-disclosure of the wife's pre-existing rheumatic heart disease at the time of policy purchase. However, Mr. Ahuja contended that the non-disclosure was immaterial as the ovarian cancer was unrelated to the pre-existing condition.

The case was initially heard by the District Consumer Disputes Redressal Forum, which directed the insurance company to reimburse the expenses and renew the policy. The State Commission upheld this decision, but the National Commission set aside the direction for policy renewal while affirming the reimbursement of expenses. Mr. Ahuja then appealed to the Supreme Court.

Justice Bindal, in the judgment, observed that once the insurance company accepted the claim for expenses incurred during the valid policy period, it could not refuse renewal based on the non-disclosure of the pre-existing condition. The Court emphasized that the insurance company's repudiation of the claim had already been set aside in previous proceedings. Thus, the insurance company could not raise the same defense to deny renewal to Mr. Ahuja.

The Supreme Court further noted that the Insurance Regulatory and Development Authority guidelines allowed refusal of renewal on grounds of fraud, moral hazard, or misrepresentation. However, in this case, the non-disclosure of the pre-existing condition could not justify the refusal to renew the policy, especially after accepting the claim for expenses incurred during the valid policy period.

Supreme Court allowed Mr. Ahuja's appeals, setting aside the National Commission's order. The Court restored the orders of the lower authorities, directing the insurance company to renew the policies and reimburse the medical expenses incurred by Mr. Ahuja.

This landmark judgment highlights the need for insurance companies to consider valid claims and honor policyholders' rights. It provides clarity on the issue of policy renewal and emphasizes the importance of fair treatment and transparency in the insurance industry.

Date of Decision: July 04, 2023

Om Prakash Ahuja vs Reliance General Insurance Co. Ltd. etc.