Health Insurance : Insurer cannot deny claims based on ambiguous or trivial grounds
Kerala High Court Quashes LIC's Rejection of Health Insurance Claims, Upholds Right to Medical Treatment. Insurance Repudiation on Technical Grounds Violates Fundamental Rights, Court Rules
In a significant judgment, the Kerala High Court has quashed the Life Insurance Corporation of India's (LIC) rejection of health insurance claims filed by Dr. A.M. Muraleedharan, citing violations of fundamental rights and principles of natural justice. The court ruled that LIC's repudiation of claims on trivial and ambiguous grounds amounted to a denial of medical treatment, infringing on the right to life under Article 21 of the Constitution of India.
The case revolved around the rejection of health insurance claims submitted by Dr. Muraleedharan for the hospitalization and treatment of his wife. The petitioner had subscribed to LIC's Health Plus Plan in 2008, which covered his family and was valid until 2024. The claims were submitted for expenses incurred during two hospitalizations in 2016, but LIC repudiated the claims citing reasons such as pre-existing conditions and policy limitations.
Justice P.M. Manoj, hearing the petitions WP(C) No. 13244 of 2017 and WP(C) No. 40088 of 2017, emphasized that the insurer's actions were contrary to Section 45 of the Insurance Act, 1938, which restricts repudiation of claims based on non-disclosure of unrelated past medical conditions unless fraudulent suppression is proven. The court also highlighted the principle of 'contra proferentem,' which mandates that any ambiguity in insurance contracts should be interpreted in favor of the insured.
The judgment underscored the importance of insurers fulfilling their duty to disclose all material aspects of coverage clearly to policyholders. The court criticized LIC for relying on technicalities and ambiguities to deny legitimate claims, noting that such actions undermine public trust in insurance contracts and defeat the very purpose of providing security against unforeseen medical contingencies.
In its verdict, the court directed LIC to honor the claims without further delay, setting a precedent for similar cases where insurance claims are unjustly denied. The judgment reinforces the judiciary's role in protecting fundamental rights and ensuring fairness in insurance practices.
Bottom Line:
Health insurance claims - Maintainability of writ petition under Article 226 of the Constitution for repudiated insurance claims - Insurer cannot deny claims based on ambiguous or trivial grounds that do not substantially relate to the risk covered under the policy.
Statutory provision(s): Article 226, Article 21 of the Constitution of India, Section 45 of the Insurance Act, 1938
