'Pre-existing diseases get cover from 5th year of mediclaim policy'

The General Insurance Council has given a uniform definition for pre-existing diseases. These get covered from the fifth year of the policy. Yet, insurance companies and their third-party administrators (TPAs) try to avoid paying legitimate claims. Similarly, when a policy can be interpreted in different ways, or two clauses are inconsistent, then the one which favours the insured is applicable.

Jimmy Bharucha was insured for Rs 2 lakh under a Parivar Mediclaim Policy issued by National Insurance Company. The policy was in force since February 27, 2007, and Bharucha renewed each year without a break. On May 15, 2011, during the fifth year of the policy, Bharucha developed certain symptoms, later diagnosed to be a coronary heart disease, through an angiography. He was admitted in Hinduja Hospital from August 15 to 18, 2011, where he underwent an angioplasty. The treatment and hospitalisation expenses came to Rs 2,25,751.

When Bharucha lodged a claim, it was repudiated by Heritage Health TPA, on the ground that there was medical history of hypertension and diabetes for the past 10 years, and was not payable as the policy was still within its fourth year. This was incorrect, as the policy had already completed four years and the problem arose during the fifth year. Bharucha challenged the repudiation by filing a complaint before the Consumer Forum for South Mumbai District.

The insurance company was forced to admit the claim had been wrongly repudiated through oversight. Now, it came up with another excuse that the claim, though admissible, could not be processed as the claim file had been returned to Bharucha since it had been repudiated. But the insurer could not show the file had been returned.

During the arguments, the insurance company informed the Forum that the claim had been processed and 50 per cent of the sum insured had been sanctioned. Bharucha refused to accept this amount. He insisted his medical expenses had exceeded the sum insured, so his claim would be restricted to the sum insured of Rs 2 lakh, and there was no reason to accept 50 per cent of the amount.

In its judgment of July 15, 2014, delivered by S G Chabukswar for the bench with presiding officer S M Ratnakar, the Forum observed the insurance firm had admitted a coverage of Rs 2 lakh and agreed to pay the claim in accordance with the policy conditions. Accordingly, it directed the insurance company to pay the entire claim up to the sum insured of Rs 2 lakh, along with nine per cent interest from December 10, 2011. It also awarded Rs 10,000 as compensation and Rs 3,000 as costs.

The insurance firm challenged this order before the Maharashtra State Commission. The only contention was that under the policy, the total sum insured was Rs 2 lakh but would be limited to 50 per cent for each claim.

The State Commission, in its judgment of May 6, 2015, delivered by presiding member Shashikant Kulkarni for the bench along with member Khamatkar observed the clause restricting the claim to 50 per cent of the sum insured was a note added to one of the clauses of the policy, whereas the policy schedule stated the claim payable would not exceed the sum insured.

The Commission concluded the note restricting the claim was not enforceable, since it was contrary to the policy schedule. Accordingly, the Commission rejected the insurance company's appeal and upheld the order passed by the District Forum.

The author is a consumer activist