A district consumer commission in Noida has directed Star Health and Allied Insurance to settle a medical insurance claim of ₹1.2 lakh, ruling that an insurer cannot reject a policyholder’s claim over alleged non-disclosure of a pre-existing illness without sufficient evidence of deliberate concealment.
The commission ordered the insurer to pay the claim amount with 6% annual interest calculated from the date the complaint was filed in March 2023. It also directed the company to pay ₹5,000 towards litigation costs within 30 days.
In its October 13 order, the commission held that the mere mention of a medical condition in treatment records does not establish that the policyholder knew about the illness before purchasing the policy or intentionally withheld that information.
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Claim Denied After Hospitalisation
The complaint was filed by Kamlesh Choudhary against Star Health and Allied Insurance and Punjab National Bank’s Greater Noida branch on March 27, 2023.
According to the complaint, Choudhary purchased a family health insurance policy with coverage of ₹5 lakh through the bank in April 2022. On June 8, 2022, she developed acute vomiting and diarrhoea and was admitted to Kailash Hospital, where she was diagnosed with a liver-related ailment.
The hospital raised a bill of ₹1.2 lakh and approached the insurer for approval. However, the claim was rejected, leaving Choudhary to pay the entire hospitalisation expense herself.
The complaint stated that the hospital could not provide previous medical records relating to the illness because she had reportedly not experienced similar problems or received earlier treatment for the condition.
Insurer Cites Diabetes and Kidney Disease
Star Health contested the complaint, arguing that Choudhary had failed to disclose a history of Type 2 diabetes mellitus when purchasing the policy.
The insurer also referred to her discharge summary, which recorded a diagnosis of acute viral enteritis, an inflammation of the stomach or intestines caused by a virus. It further cited an ultrasound report that reportedly indicated chronic kidney disease.
The company maintained that the medical documents submitted for reimbursement were insufficient to settle the claim.
However, the commission found that references to diabetes or other medical conditions in treatment records were not, by themselves, adequate proof that the policyholder had knowingly concealed a pre-existing illness when purchasing the insurance policy.
Commission Finds Deficiency in Service
Commission president Anil Kumar Pundir and member Anju Sharma ruled that an insurer must establish the alleged non-disclosure with evidence before rejecting a claim on that ground.
The commission concluded that rejecting a claim without sufficient proof of deliberate concealment amounted to deficiency in service and an unfair trade practice. It consequently directed Star Health to settle the outstanding claim with interest and litigation costs.
The complaint against Punjab National Bank was dismissed.
What This Means For You
Health insurance policyholders should retain their policy documents, hospital bills, medical records and claim-rejection letters. If an insurer alleges non-disclosure of a pre-existing illness, consumers can challenge the decision where the insurer cannot substantiate its allegations with adequate evidence.
The420 Insight
The ruling highlights the importance of evidence-based claim assessment in health insurance disputes. While policyholders must disclose relevant medical information accurately when purchasing coverage, insurers cannot automatically treat a diagnosis recorded during hospitalisation as proof of deliberate concealment. The decision reinforces consumer protection against unsupported claim repudiations.
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