Health Insurance Claim Rejected for Wrong Date of Birth, Suppressing Pre-existing Ailments
Moneylife Digital Team 06 February 2024
In a judgement that would be an eye-opener for health insurance policy buyers, the national consumer disputes redressal commission (NCDRC) rejected a claim due to the wrong date of birth and suppressing of pre-existing ailments while buying the health insurance policy.
In an order last month, the NCDRC bench of Dr Inder Jit Singh (presiding member) says, "Star Health and Allied Insurance Company Ltd contends that wrong date of birth was deliberately given in the proposal form to avoid pre-insurance medical examination, which is mandatory for persons of above 50 years of age. Further, the insurance company contends that there was material suppression of fact relating to pre-existing ailments...we are in agreement with the contentions of the insurance company that there was a material suppression of fact with respect to pre-existing ailments."
Ajmer, Rajasthan-based Anita Kumar had filed the revision petition challenging an order passed by the Rajasthan state consumer disputes redressal commission. In March 2010, Ms Kumar and her husband bought a family health optima insurance policy from Star Health and Allied Insurance. Additionally, the insurance company did a top-up with another Star Super Surplus (Floater) policy. The top-up policy covered excess expenditures up to Rs10 lakh in case of illness. While filing the proposal form, Vinay Kumar the husband of Ms Kumar, wrongly mentioned his wife's date of birth as 17 December 1960, while her actual date of birth mentioned in her passport was 6 December 1957.
After three years of having the policy, Ms Kumar experienced symptoms such as loss of appetite, swelling on her face, and discolouration of urine (yellow), along with yellowing of the skin. On 16 December 2013, she underwent a check-up at the Institute of Liver and Biliary Sciences in New Delhi, which revealed that she was suffering from chronic liver disease (CLD), jaundice, hypertension, and other diseases. She was admitted and underwent treatment at the hospital from 16 December 2013 to 4 January 2014. 
Following a recurrence of her illness, she sought treatment again at the same hospital from 17 January 2014 to 28 January 2014, incurring Rs2,57,589 in expenses. After completing all formalities, Ms Kumar submitted a claim of Rs4,97,376 to Star Health and Allied Insurance. However, the insurer denied the claim, asserting that Ms Kumar had been suffering from these illnesses since 2009, before obtaining the policy, and had continuously received treatment. 
Ms Kumar filed a complaint before the Ajmer district consumer disputes redressal forum. While allowing the complaint, the district forum on 26 October 2017 directed Star Health and Allied Insurance to pay Rs4.97 lakh with an interest of 9%pa (per annum) and compensation and litigation costs of Rs10,000 to Ms Kumar.
Aggrieved by the district forum order, Star Health and Allied Insurance filed an appeal before the state commission. On 14 August 2018, the state commission set aside the district forum's order and allowed the appeal.
Ms Kumar then approached NCDRC with her revision petition. Her counsel contended that the state commission failed to recognise that the Kumars had sent a letter to Star Health and Allied Insurance, informing them about the correction of her age during the policy renewal on 26 March 2013. "Star Health and Allied Insurance did not object then, accepted the premium amount, and subsequently renewed the policy. This amounts to acceptance, and the grounds for repudiation on 12 August 2014 cannot be valid after more than a year."
"...the discharge summary from the Institute of Liver and Biliary Sciences does not mention any occurrence of the disease in 2009, and therefore, there was no basis for the state commission to assume that the complainant had the disease before obtaining the insurance policy from Star Health and Allied Insurance," he added.
The counsel for Star Health and Allied Insurance contended that "Failure to disclose such material facts may empower the insurer to repudiate the claim. In the present case, the first insurance policy, obtained by Mr Kumar for himself and Ms Kumar, the complainant, involved a deliberate attempt to mislead insurers. The proposal indicated Mr Kumar's age, triggering a pre-insurance medical examination as per the insurer's norms for individuals over 50 years. However, Ms Kumar's date of birth was misrepresented to avoid her examination, constituting a breach of utmost good faith. This intentional misrepresentation renders the policy void ab initio, making the current complaint non-maintainable."
The counsel further argued that the deliberate suppression of the patient's actual age, history of CLD, and past medical conditions constitutes fraud under section 17 of the Contract Act. "Such fraudulent actions, including the breach of conditions specified in the policy, render the insurance contract unenforceable. Star Health and Allied Insurance's invocation of condition no13 of the policy in cancelling it for the patient's name is justified under these circumstances," he added.
After going through the orders of the state commission, district forum, other relevant records of the case and the rival contentions of the parties, NCDRC observed that, as per the date of birth shown in the proposal form, Ms Kumar is shown as under 50 years (49 years 3 months and 13 days). 
It says, "Had her date of birth been correctly shown, which is above 50 years as on the date of filling up the proposal form, the insurance company would have made her undergo for a pre-insurance medical examination. In fact, her husband, Mr Kumar who had shown himself above 50 years even as per the wrong date indicated in the proposal form (1 February 1956), while as per passport his date of birth is 1 February 1953, he being above 50 years, as on the date of proposal form, did undergo such a medical examination." 
"It was only on 26 March 2013 i.e. after three years that the Kumars intimated the insurance company for correction in the dates of birth based on their passports. Star Health and Allied Insurance contends that wrong date of birth was deliberately given in the proposal form to avoid pre-insurance medical examination, which is mandatory for persons of above 50 years of age. Without a satisfactory medical report insurers would not have given insurance," Dr Singh from NCDRC says.
After careful perusal of the documents produced by the insurance company, NCDRC says it is in agreement with the contentions of the insurance company that there was a material suppression of fact with respect to pre-existing ailments. "Hence, they have rightly relied upon the various judgements of the Supreme Court and this Commission that in the case of suppression of material facts by the insured, the insurance company is well within its rights to repudiate the claim."
(Revision Petition No3204 of 2018  Date: 24 January 2024)
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