The Telangana State Consumer Disputes Redressal Commission has directed HDFC ERGO General Insurance Company to pay Rs 2 lakh as compensation to a man who was denied cashless treatment during a cardiac emergency despite having a continuously renewed health insurance policy for nearly a decade, holding that the insurer acted unfairly by rejecting the cashless facility and subsequently cancelling the policy.

Justice Dr G Radha Rani (president), Meena Ramanathan (member, non-judicial) and R S Rajeshree (member, non-judicial) were hearing an appeal by a policyholder who alleged that HDFC ERGO wrongly denied cashless treatment and cancelled the man’s health insurance policy when he was hospitalised with a critical heart condition in 2020.

“The trauma and angst undergone by the complainant can never be adequately compensated nor quantified monetarily. The core advantage of a cashless facility is to manage hospital expenses during emergency conditions without having to scramble for cash… The complainant was denied this facility despite being a policy holder for many years and had to claim reimbursement which was also initially denied on unfair grounds,” the commission said on May 11.

The commission noted that the complainant was shifted from one hospital to another for continuation of treatment arising from the same medical emergency. Despite this, the insurer denied cashless authorisation at KIMS Hospital.

According to the insurer, medical records revealed a history of diabetes that had allegedly not been disclosed at the time of obtaining the policy. The cashless request was, therefore, rejected and the complainant was asked to seek reimbursement after completion of treatment.

Examining the policy terms, the commission observed that pre-existing diseases were covered after a waiting period of three years. The complainant had been continuously insured under the policy since 2011.

The commission found that the insurer failed to consider this crucial policy condition while rejecting the cashless request in 2020. It held that denying the facility on the basis of diabetes after nearly nine years of uninterrupted coverage was unjust and unfair.

The commission further found fault with the insurer’s decision to terminate the policy while the complainant remained hospitalised.

It observed that the cancellation was carried out without adhering to the policy conditions regarding prior notice and migration options.

According to the commission, the insurer not only denied the complainant an important benefit under the policy but also exposed him to uncertainty at a time when he was battling a life-threatening medical condition.

“On the approval/authorisation of the Insurance Company, the treatment is normally initiated unless it is an emergency situation as in the present case. The complainant was denied this facility despite being a policy holder for many years and had to claim reimbursement which was also initially denied on unfair grounds.” the commission said.

The insurer argued that it had already complied with the award passed by the insurance ombudsman by reimbursing the admissible claim amount, along with interest and reinstating the policy.

However, the commission held that the dispute was not merely about reimbursement.

The real grievance concerned the wrongful denial of cashless treatment and the hardship suffered by the complainant and his elderly wife during a medical emergency.

The commission concluded that the district consumer commission had failed to address the serious consequences of denying cashless treatment and wrongly focused only on compliance with the ombudsman’s award.

Setting aside the district commission’s order, the state commission directed the insurer to pay Rs 2 lakh as compensation, which also included the interest component claimed by the complainant.

It additionally awarded Rs 10,000 towards litigation costs, with a further cost of Rs 10,000 in case of non-compliance within 30 days.

Written by Aparajita Prasad. She is an intern with The Indian Express.