Case-Title: National Insurance Co. Ltd. Vs Jammu and Kashmir State Consumer Disputes Redressal Commission & ORS, 2025
Summary of the Case:
The Jammu and Kashmir High Court ruled that if hospitalization is deemed necessary by medical experts, insurance companies cannot deny claims solely based on exclusion clauses without proper justification. The case involved a respondent who was denied reimbursement for medical expenses incurred due to major depressive disorder and schizophrenia under a Mediclaim policy by National Insurance Co. Ltd. The insurer argued that psychiatric treatments were excluded and that the respondent could have been treated as an outpatient. However, the court found that the insurer failed to provide substantive evidence to support its claim, while medical experts confirmed the necessity of inpatient care. The High Court upheld the State Consumer Commission’s order to reimburse ₹2,26,322 with 8% interest but relieved the insurer from paying additional damages.
Detailed Explanation:
The respondent had purchased a Mediclaim insurance policy from National Insurance Co. Ltd. for the period from February 24, 2005, to February 23, 2006. During this time, the respondent was hospitalized multiple times for major depressive disorder and schizophrenia, incurring medical expenses of ₹2,26,322. When the respondent filed for reimbursement, the insurer rejected the claim citing Clause 4.8 of the policy, which excluded psychiatric and psychosomatic disorders and stated that outpatient treatments were not covered. The Divisional Consumer Forum, Jammu, initially ruled in favor of the insurance company and dismissed the respondent’s complaint. However, on appeal, the Jammu & Kashmir State Consumer Disputes Redressal Commission overturned the forum’s decision and ordered the insurer to reimburse the medical expenses along with 8% interest and ₹30,000 in damages. The insurer then challenged the decision in the High Court under Article 226 of the Constitution. The High Court ruled that since medical experts had determined hospitalization was necessary, the insurer could not deny the claim without substantial proof that the treatment could have been handled on an outpatient basis. Consequently, the court upheld the reimbursement order but excluded the ₹30,000 awarded as damages.
