Insurance company rejected Rs 3 lakh mediclaim saying it was an obesity treatment; court found the surgery also treats high BP, weight gain, knee pain; insurer ordered to pay Rs 3.5 lakh

A consumer court in Kerala has ordered an insurance company to pay a policyholder the full cost of a surgery it had refused to cover, after the company tried to pass off the treatment as one meant only for obesity.

The Ernakulam District Consumer Disputes Redressal Commission ruled that the surgery was carried out to treat a mix of health problems, not obesity alone, and that the insurer had no medical proof to say otherwise. The commission has directed the company to pay a total of Rs 3,50,266, made up of the treatment cost, compensation for mental agony and the cost of the case.

The claim and the rejection


The complainant had bought a health insurance policy from National Insurance Company in February 2020, covering the family for a year starting mid March 2020. The policy carried a premium of about Rs 22,000, including taxes.

A few months into the policy, the complainant's spouse was admitted to Lakeshore Hospital in Kochi for four days in June 2020 and underwent a procedure called Laparoscopic Sleeve Gastrectomy, a type of weight loss surgery. The treatment cost came to Rs 3,20,266, and a claim was filed with the insurer for this amount.

The insurer rejected the claim two months later. It said the treatment fell under an exclusion clause in the policy that rules out coverage for obesity or any condition arising from it, along with any weight control programme or related treatment.

The complainant then approached the insurer's own grievance officer, who also turned down the claim. Following this, the matter went to the Insurance Ombudsman, and that too ended in dismissal. It was only after these three rejections that the case was taken to the consumer commission.

What the medical records showed

At the commission, the complainant argued that the surgery was not done for obesity by itself. Medical certificates placed on record showed the patient had been dealing with weight gain for a year and a half, high blood pressure for two years, breathlessness during physical activity and knee joint problems. According to these records, the surgery was carried out to address this combination of conditions and to improve the patient's overall mobility and quality of life, not simply to reduce weight.

The commission noted that the insurance company had not produced any expert medical opinion of its own to support its claim that the treatment was purely for obesity. It observed that a claim cannot be rejected on the basis of an exclusion clause alone, without any medical evidence backing that conclusion.

The insurer's defence

The insurance company also raised a separate argument during the hearing, pointing to a 2019 circular issued by the Insurance Regulatory and Development Authority of India that dealt with standardising exclusions in health insurance policies. The company said this circular meant policies issued afterward came with wider coverage in exchange for a higher premium.

The commission rejected this argument as well. It noted that the circular itself specified 1 October 2020 as the date from which its provisions would apply to new policies. Since the complainant's policy was issued on 3 February 2020, well before that date, the circular had no bearing on the case at all.

The order

The commission held that the rejection of the claim amounted to an unfair trade practice and ruled in favour of the complainant. In its order, it directed the insurance company, along with its co-respondents, to jointly pay Rs 3,20,266 towards the treatment cost, Rs 20,000 as compensation for the mental agony and hardship caused, and Rs 10,000 towards the cost of the proceedings.

The company has been given 45 days from the date of the order to make the full payment. If the payment is delayed beyond this period, the treatment cost portion will attract interest at 7.25 percent per year, calculated from the date the original complaint was filed.

The order was passed by a bench comprising President D.B. Binu along with members V. Ramachandran and Sreevidhia T.N.