Major Decision: Insurance company cannot set maximum limit on medical expenses, says Consumer court

Vadodara: While dealing with the question concerning a maximum limit of medical expenses set by the Insurance Company, the District Consumer Disputes Redressal Commission (DCDRC), Vadodara recently observed that treatment expenses depend on the doctor, patient, and medicines used during the surgery. Therefore, the cost of every surgery is not the same and the Insurance Company cannot deduct the claim amount of the Insured by the reasoning that it is more than the maximum limit.

With this opinion, the Vadodara consumer court recently directed Oriental Insurance Company to pay Rs 17,368 to the insurance company after observing that the company wrongfully deducted /underpaid the claim of the complainant and committed unfair trade practice or deficiency in service. Further, the Company was ordered to pay Rs 2,000 and Rs 1,000 as compensation for mental torture to the complainant.

The matter concerned the complainant who opted for a happy family floater type mediclaim policy for his family from Oriental insurance company back in 2008. He used to renew this policy every year and the last renewed the policy for the period dated 27.08.2022 to 27.08.2023. As per this policy, the risk of the complainant's family was covered by Rs 3,00,000 policy claim. 

Meanwhile, the complainant's father got admitted to "Drishti Eye Hospital" on 11.04.2023 and underwent a cataract surgery. He was discharged on the same day i.e. 11.04.2023. Accordingly, the cost of this treatment was Rs 43,297. In order to get these expenses from the insurance company, the complainant filed the claim form on 18.04.2023 but the TPNA of the insurance company sent the claim processing sheet dated 19.05.2023 and it stated that out of the treatment expenses of the applicant Rs 21,600 is payable and the remaining amount i.e. Rs 19,297 is deductible.

Accordingly, the company deduced Rs 19,297 out of the claim amount, and therefore, the complainant filed the complaint seeking Rs 19,297 including the interest and Rs 15,000 as compensation for mental torture. He also demanded Rs 15,000 as the cost of appeal. Along with the complainant, the complainant submitted the insurance policy, the discharge summary, the claim form and the claim processing sheet.

On the other hand, the insurance company agreed that the complainant took a mediclaim policy from them. It was further submitted that out of the operational expenses of the applicant's father, the due amount was paid to the applicant and the remaining amount was deducted as per the terms and conditions of the policy.

The counsel for the insurance company submitted in oral argument that the reasonable and customary charges were paid to the petitioner as per the terms and conditions of the policy and therefore, no unethical business practice/defective service was engaged in by the person who paid the amount to the complainant as per the terms and conditions. So, the company's counsel prayed for the dismissal of the complaint with costs.

While considering the matter, the Commission noted that the complainant submitted a claim settlement letter from the list along with the complainant. According to the contract limit, a maximum of Rs 24,000 was payable out of which Rs 21,600 minus 10% co-pay is payable and the remaining amount Rs.19,297 was deduced as not payable.

However, the Commission noted that the claim settlement letter failed to indicate what is called a maximum limit and how to determine it. It observed that the cost of treatment depends on the cost per patient, per doctor, cost of drugs and lenses used in the operation. Therefore, the cost of each operation is not the same. Therefore, the insurance company cannot deduct any amount on the ground that there is a claim for an amount other than the maximum limit, opined the Commission.

It further observed that given the reason cited above, the assessee had not been able to prove that the amount deducted by it was a legal deduction. Therefore, the Commission opined that the Insurance Company wrongfully deducted/underpaid the claim of the complainant and in this way it committed unethical business/deficiency in service.

The Commission noted that the company paid Rs 21,600 out of the treatment cost of Rs 43,297 and the remaining amount of Rs 19,297 was not paid. It was observed that 10% co-pay was mentioned in the policy. Therefore, 10% of the treatment cost had to be paid by the applicant himself. Therefore, out of Rs 43,297 (10%i.e.) Rs 4329 is to be paid by the complainant. So, the Insurance company has to pay Rs 38,968 to the complainant. Out of this, the Company paid Rs 21,600 to the petitioner. So, the company has to pay Rs 17,368 to the petitioner. 

Therefore, the consumer court opined that the Insurance Company engaged in unethical business practice or deficiency in service by wrongfully underpaying Rs 17,368 of the fully payable claim to the complainant. 

With this opinion, the commission ordered the insurance company to pay the balance amount of Rs 17,368 to the complainant along with interest at 9% per annum, along with costs of appeal and compensation for mental anguish.

The consumer court ordered the Insurance Company to pay Rs 17,378 i.e. the balance of the claim from 24.04.2023 with interest at the rate of 9% per annum within two months from the date of the order. Further, the Commission directed the company to pay Rs 2,000 and Rs 1,000 as compensation for mental torture to the complainant.

'The treatment expense depends on the doctor, patient, medicines used during the surgery, and the cost of the lens. The cost of every surgery is not the same,' the commission said.

'So, the opponent (insurer) cannot deduct the claim amount by reasoning that it's more than the maximum limit. The opponent has resorted to unfair trade practice by deducting the claim amount."

To view the order, click on the link below: 

https://medicaldialogues.in/pdf_upload/insurance-limit-gujarati-229039.pdf

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