A Delhi consumer commission directed a public sector general insurance company and its third-party administrator (TPA) to pay nearly Rs 2.06 lakh to a Covid-19 patient after his health insurance claim was rejected over the hospital’s alleged failure to meet a 15-bed requirement, according to the court order obtained by The Indian Express.
The commission ordered payment of Rs 1,85,700, along with 7 per cent annual interest from May 9, 2022, until the amount is paid. It also awarded Rs 20,000 as compensation for mental agony, harassment and litigation expenses. The total award, excluding interest, comes to Rs 2,05,700.
The District Consumer Disputes Redressal Commission-I (North Delhi) held that an insurer could not reject a genuine Covid-19 treatment claim solely because of a dispute over the hospital’s bed strength, particularly when special regulatory arrangements were in force during the coronavirus pandemic.
Rejection of claim over hospital bed count
The case was filed by a Delhi man against a government-owned public sector general insurance company and a private, non-government TPA. The complaint arose from medical treatment he received during the second wave of the Covid-19 pandemic in April 2021.
He was covered under a family medicare policy valid from February 18, 2021, to February 17, 2022. On April 22, 2021, he developed breathing difficulties and began experiencing bleeding from his nose. A Covid-19 test subsequently confirmed that he was infected.
As his breathing problems worsened, he first visited a diagnostic centre in the national capital on April 23. The man was later admitted to a hospital in Narela area of Delhi, where he received treatment from April 24 to April 30, 2021.
His discharge summary recorded that he was Covid-positive. Even after being discharged, he continued to experience breathing difficulties and numbness in his left leg, prompting him to seek further medical consultations.
He submitted the documents supporting his reimbursement claim to the TPA on June 14 and June 17, 2021 and also responded to additional queries raised by the TPA during July and August. However, the insurer rejected the claim on October 15, 2021.
Insurer relied on 15-bed condition
The insurer relied on the policy’s definition of a hospital. Under that clause, a hospital was required to have at least 10 inpatient beds in towns with a population below 10 lakh and at least 15 inpatient beds in other areas, in addition to meeting other conditions.
According to the insurer, the hospital had only 10 beds. Since the hospital was located in an area where the 15-bed requirement applied, the company treated the treatment as inadmissible under the policy. The rejection letter stated that the hospital was “only 10-bedded instead of at least 15 beds as per policy clause.”
The Indian Express news report added that the man challenged the decision before the consumer commission. In support of his case, he produced a certificate from the hospital stating that it was a 15-bedded place and that its registration process was under way.
He also argued that the insurer should have considered the extraordinary circumstances of the Covid-19 pandemic. During the second wave, hospitals were under severe pressure and patients often had to seek treatment wherever beds and medical care were available.
Commission examines Covid-era rules
The commission examined the regulatory framework that applied to Covid-19 treatment during the relevant period. It considered directions issued by the Insurance Regulatory and Development Authority of India (IRDAI) concerning treatment in makeshift or temporary hospitals permitted by the central or state governments. Under the Covid-era framework, certain facilities could be treated as hospitals for the purpose of settling Covid-19 claims, provided they met the conditions specified by the authorities.
The commission also considered an IRDAI circular dated March 4, 2020, which required insurers to settle admissible expenses related to coronavirus treatment in accordance with the relevant policy terms and applicable regulations, The Indian Express report further stated.
After considering these directions, along with the hospital’s certificate stating that it had 15 beds, the commission concluded that the claim could not be rejected merely on the basis of the disputed bed count.
‘Flimsy ground’ for rejection
The commission strongly criticised the insurer and the TPA for relying solely on the hospital’s alleged non-compliance with the bed requirement. “The rejection of the claim by OPs on the flimsy ground that the treating hospital was not having 15 beds does not hold any ground,” the commission said in its order dated September 9.
The commission held the insurer and the TPA jointly and severally liable for deficiency in service. This means that both parties were responsible for complying with the order, and the Delhi man could recover the awarded amount from either or both of them, subject to their respective liability.
The commission directed the insurer and the TPA to pay Rs 1,85,700, with interest at 7 per cent per annum from May 9, 2022—the date on which the consumer complaint was filed—until realisation. It further awarded Rs 20,000 as compensation for the mental agony and harassment suffered by him. This amount also included litigation expenses. The insurer and the TPA were directed to pay the amount within 30 days of receiving the order.
Higher interest for delayed payment
The commission also specified consequences in case the payment was delayed. If the awarded amount was not paid within the prescribed 30-day period, it would carry interest at 9 per cent per annum from September 9, 2026, the date of the order, until the amount was realised. The award of Rs 1,85,700 and compensation of Rs 20,000 together amount to Rs 2,05,700, excluding the applicable interest.
What the ruling means for policyholders
The ruling of court underscores that insurers must assess Covid-19 treatment claims in the context of the regulatory conditions prevailing during the pandemic. A claim should not automatically be rejected solely because of a technical dispute over a hospital’s bed capacity, particularly where the hospital has provided supporting certification and the applicable Covid-era rules allowed flexibility.
The decision does not mean that every claim involving a hospital with fewer beds must automatically be paid. Insurers can still examine whether the medical treatment was necessary, whether the policy was active, whether the expenses are covered and whether the documents are genuine.
However, the ruling makes clear that a technical condition cannot be applied mechanically without considering the extraordinary circumstances of the coronavirus pandemic and the directions issued by the regulator.
Where consumers can seek help?
Consumers facing insurance-related grievances may approach the appropriate consumer commission or seek assistance through consumer helplines. In Delhi, consumers can contact the state consumer helpline at 1800-11-4000. They may also contact the National Consumer Helpline at 1915 for assistance with consumer complaints.