Incidental relation of chronic illness with death no grounds to reject mediclaims: HC
HC pulls up insurer for repudiating claim on grounds of non-disclosure without independent probe to link death with chronic ailment
The Punjab and Haryana high court has ruled that an insurance firm cannot reject medical claims on “mere proximity” of a chronic ailment to the case of death or any incidental relation to it.
“In the instant case, the fact of the insured suffering from diabetes mellitus and hypertension, said to have been suppressed by him at the time of taking the policies, cannot be termed a material fact, since no relation between the said disease and the cause of death could be established on record. A fact to be material has to be one which has a direct bearing on the cause of death,” said the bench of justice Tribhuwan Dahiya, holding that “suppression” of the chronic disease was taken as a “ruse to reject” the insurance claim by the firm.
The court order came on the plea of Ambala resident Sushma Sareen, who had challenged the April 12, 2017, order of the Insurance Ombudsman in two policies bought by her husband in 2012 and 2013.
The claims were repudiated by the insurer, a decision later upheld by the Insurance Ombudsman on account of suppression of relevant information at the time of taking the life insurance policies.
Sareen’s husband had died in August 2015, following which she submitted a death claim, along with the relevant documents, which as per the insurance company revealed that the deceased was a chronic patient of diabetes and hypertension for the last 15 years.
This showed, at the time of taking the insurance policies he was suffering from pre-existing illness, which was not disclosed to the insurance company, it was claimed.
“..the contract of insurance between the parties was void being in violation of the standard terms and conditions of the policy, and the claim was rightly repudiated,” the firm had claimed.
Sareen had submitted that her husband suffering from hypertension was not in their knowledge at the time of taking the policies. It was also argued that as per Section 45 of the Insurance Act, 1938, the ailment was not reported within two years of buying the policy.
Cause of death: Natural
The high court took note of the fact that the cause of death mentioned in the supporting documents was “natural death”. The certificate by doctor had diagnosed him in May 2015 with pre-existing/coexisting/chronic diabetes mellitus (DM) /hypertension (HTN), apart from other illnesses, for which he was insured.
The court observed that doctor’s certificate only established that the insured was treated for these illnesses.
“The certificate does not, in any manner, indicate that there was any connection between the cause of death and the chronic illnesses diagnosed. Nor could it have done so, since the insured died after more than two and a half months of his discharge from the hospital,” the court observed, adding that he died in August 2015 and medical reports do not, in any manner, indicate any other cause of death.
The court found that the company had not carried out independent investigation to link death with chronic ailment. Hence, as there was no evidence to connect the death with chronic ailment, the repudiation of claim on the grounds of non-disclosure can’t be accepted as valid.
The court also noted that it was not company’s case that the disease disentitled the insured from taking the policy altogether. “This makes the repudiation of claim unwarranted and groundless,” it held, asking the firm to pay the woman claims of both the policies with 9% interest per annum from the due date till actual payment.
The court added that to reject the claim after two years of issuing the policy, the company should have established “materiality of the fact allegedly suppressed” which could not be done in the instant case.