Hospital delay no ground to deny claim: Bengaluru consumer court orders Rs 2.6 lakh payout

Bengaluru: Observing that a delay in paperwork on the part of the treating hospital cannot be a ground to deny a genuine claim, the Additional District Consumer Disputes Redressal Commission, Bangalore Urban II, rebuked Aditya Birla Health Insurance Company and directed it to pay Rs 2.6 lakh claim filed by the mother of a patient.

The history of the case dates back to July 4, 2023, when the complainant, from Judicial Layout, north Bengaluru, was admitted to KK Hospital, Yelahanka, following a road accident. He was treated for a fracture of the face.

The patient's mother (51) was the primary insured under the Insurance Company's Group Activ Health' policy. It was claimed by the primary insurer that the delay by the hospital in informing the insurer resulted in the denial of their cashless claim.

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As per the latest media report by the Times of India, unable to avail the cashless service, the patient's mother was forced to pay more than Rs 2.6 lakh even though her insurance plan had a Rs 5 lakh cover. Following this, on July 17, she filed a reimbursement claim. However, the insurer raised the tariff-related queries and rejected the claim on September 14. The insurer cited "bill pendency" as the reason for rejecting the claim.

Later, the treating hospital admitted its delay in notifying the insurance company. Allegedly, despite visits, calls, emails, and fresh documents including a hospital letter confirming full payment, the insurance firm did not issue any reimbursement.

As per the complainant, who is a widow with two children, she had to borrow money to clear the hospital bill and was facing mental agony and trauma due to repeated rejections. In March 2024, she filed a consumer complaint, alleging a deficiency in service and unfair trade practices.

On the other hand, the insurance firm and the treating Hospital submitted before the Commission that they followed procedure after the complaint was filed and notices were issued.

It was submitted by the Insurer that the policy benefits were strictly governed by terms and declarations made at the time of purchase, and the cashless request was denied only because the patient's admission at the treating hospital was not reported in time. It further submitted that the later reimbursement claim was rejected after finding a mismatch in the hospital tariff. The insurer also insisted that the denial of cashless service was not a final refusal.

Meanwhile, the treating hospital argued that it was not a necessary party as the contract of insurance existed solely between the complainants and Aditya Birla Health Insurance. It also submitted that its role was limited to treating the patient, who was admitted on July 4, 2023, after a road accident and underwent surgery on July 7 and was discharged on the next day. Therefore, the hospital argued that any liability laid entirely with the insurer, and not the hospital.

After reviewing all the documents and considering the arguments by both sides, the Consumer Court observed that the insurance firm unjustly delayed the settlement of a genuine medical insurance claim.

It was further noted by the Commission that there was no dispute over the issuance of the 'Group Activ Health' policy covering the patient with a sum insured of Rs 5 lakh. Observing that as per the documents, the family had to pay more than Rs 2.6 lakh for the treatment and that the insurer repeatedly denied the claim citing late intimation by the hospital, the consumer court observed, "There is a deficiency in service as OPs (opposite parties) have not settled the genuine claim without valid reasons."

Accordingly, the District Commission bench comprising President Vijaykumar M Pawale and member Anuradha V, ordered Aditya Birla Health Insurance to pay Rs 2.6 lakh along with 6% interest from Sept 19, 2023, and Rs 20,000 for mental agony. With this order, the Commission dismissed the complaint against the hospital.

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