A Delhi man whose wife died weeks after undergoing treatment was forced to approach a consumer commission after his health insurer reimbursed barely one-third of the hospital expenses by allegedly invoking a vague “reasonable and customary charges” clause. Holding that the insurer failed to justify most of the deductions, the commission directed National Insurance Company to pay Rs 1.65 lakh along with Rs 30,000 as compensation and litigation costs. 

President Sukhvir Singh Malhotra and Ravi Kumar (member) were hearing the plea of one Pravas Mohanty, who lost his wife in 2020 and was facing issues in getting the insurance amount despite having a family policy including himself and his wife, which was effective from April 1, 2020 to March 2021, with a sum insured of Rs 3 lakh.

“The OP (insurance company) is directed to pay Rs 1,65,266 to the complainant along with interest @9% p.a. from the date of filing the complaint along with compensation of Rs 20,000 and litigation charges of Rs 10,000,” the June 1 order read. 

Representing the National Insurance Co Ltd, advocate Shoumik Mazumdar submitted that the complaint case as filed is not maintainable as there is no deficiency in rejecting the claim. 

The insurer argued that the claim was settled in accordance with the policy terms and that only Rs 91,198 was payable, with the remaining amount deducted under the “reasonable and customary charges” clause and the applicable preferred provider network (PPN) rates.

It was further submitted that since the complainant opted for a non-PPN hospital for admission, although the PPN hospital was available in that vicinity in Orissa, deductions have been made by the insurance company as per the policy, and since the deductions have been made as per rules, there cannot be any deficiency on their part.  

This ruling underscores that health insurers cannot make substantial deductions from a mediclaim merely by invoking broad expressions such as “reasonable and customary charges” without clearly explaining and justifying how those deductions were calculated. 

The order reinforces the principle that policyholders are entitled to transparency in claim settlements and that insurers may be held liable for deficiency in service where claim reductions are not adequately supported.

Consumer helpline number of respective state and national consumer commission: For consumer-related grievances, individuals may contact the consumer helpline in their respective states (Helpline: 1800-11-4000) or call the National Consumer Helpline at 1915 for assistance.