₹5 lakh health claim rejected over waiting period: Why Mumbai consumer forum backed policyholder
In a significant ruling for health insurance policyholders, a consumer forum has held that insurers cannot mechanically invoke a waiting-period clause to reject a claim unless they can establish that the illness was pre-existing.
The Mumbai Suburban District Consumer Disputes Redressal Commission passed the order in a case involving a ₹5 lakh health insurance claim for pancreatitis. The commission directed Max Bupa Health Insurance Co. Ltd., now known as Niva Bupa Health Insurance Co. Ltd., to pay the policyholder’s claim after the insurer rejected it by citing a 24-month specific waiting period applicable to pancreatitis.
The ruling highlights an important point for health insurance customers: the presence of a waiting-period clause in a policy does not automatically mean that every claim for the specified disease can be rejected. The insurer may still have to demonstrate that the circumstances of the case fall within the scope of the exclusion.
Background of the rejected ₹5 lakh claim
The deceased policyholder was covered under Max Bupa’s Health Companion Variant 2 policy. The policy was initially purchased in October 2017 with a sum insured of ₹5 lakh and was renewed in October 2018. His wife subsequently filed the consumer complaint.
The policyholder was suddenly hospitalised after experiencing severe abdominal pain and was diagnosed with acute pancreatitis during treatment. He later died on February 7, 2019, due to acute pancreatitis accompanied by multiple organ failure.
His family incurred hospital expenses of ₹1.94 lakh at Criticare Hospital and another ₹4.15 lakh at Lilavati Hospital. Despite the policy offering cashless treatment, the complainant paid the medical bills by borrowing money from relatives, expecting the insurer to reimburse the expenses once the claim was processed.
The family submitted two claims in March 2019. Max Bupa rejected both claims by relying on Clause 5.3 of the policy, which provided for a specific 24-month waiting period for certain illnesses, including pancreatitis.
Since the policyholder developed the condition before completing 24 months from the commencement of the policy, the insurer maintained that the claim was excluded under the waiting-period provision.
Consumer commission examines pre-existing disease issue
The commission examined the purpose of a waiting-period clause and noted that such provisions are generally designed to prevent people from purchasing insurance after a disease has already been diagnosed or when symptoms have already appeared, with the intention of subsequently filing a claim for that condition.
However, the commission found that the insurer had not established that the policyholder had pre-existing pancreatitis.
The policy had been in force since October 2017, while the insured developed acute pancreatitis only in January 2019. The commission noted that neither side had alleged that pancreatitis existed before the policy was purchased. More importantly, the insurer failed to produce evidence demonstrating that the disease had existed before the policy began.
The commission also considered the treating doctor’s opinion that the pancreatitis was a rare case with no apparent cause. This supported the view that the illness had arisen unexpectedly during the period of insurance rather than being a known pre-existing condition.
Cashless treatment assurance also questioned
Another issue before the commission was the policy’s cashless facility. Although the policy provided for cashless treatment, the complainant was required to pay approximately ₹6.10 lakh towards hospital expenses.
The family borrowed money to meet the medical costs on the expectation that the insurer would subsequently reimburse the claim. The insurer later repudiated the claim by relying on the waiting-period clause.
The commission consequently held that the repudiation amounted to deficiency in service and unfair trade practice.
The ruling underlines that insurers cannot rely solely on the existence of a waiting-period clause when rejecting a health insurance claim. Where the insurer’s case depends on the disease being pre-existing, it must be able to substantiate that position with appropriate evidence.