The Raipur District Consumer Disputes Redressal Commission has directed Star Health and Allied Insurance Company to refund an amount wrongfully deducted from a policyholder’s insurance claim. The order also includes interest and compensation, citing deficiency in service and unfair trade practice by the insurer.
Case Background
In December 2022, complainant Mohit Gandhi was admitted to Raipur Stone Clinic for kidney stone treatment. His total medical expenses were ₹74,600. When he filed a claim under his Star Health policy, the insurer reimbursed only ₹62,470, deducting ₹12,000 under the head “professional and procedure charges not reasonable and necessary.”
Unhappy with the deduction, Mohit Gandhi filed a complaint before the Raipur Consumer Commission. Despite receiving notices, Star Health did not appear in the proceedings, and the matter went ex parte.
Commission’s Findings
The Commission observed that Star Health failed to produce any specific clause in the insurance policy allowing such a deduction. The deduction reason provided in the assessment sheet was vague and lacked justification.
The order stated that charges for professional fees and procedures vary across hospitals and cannot be deemed “unreasonable” without solid proof. By making arbitrary deductions without clarity, the insurer committed deficiency in service and unfair trade practice under the Consumer Protection Act.
Order Details
The Raipur Consumer Commission directed Star Health to:
- Refund ₹12,000 deducted from the claim amount.
- Pay 6% annual interest on the amount from the date of filing the complaint until realization.
- Provide ₹3,000 as compensation for mental agony.
- Pay ₹2,000 towards litigation costs.
Why This Ruling Matters
This decision reinforces the rights of policyholders and sets a precedent for transparency in insurance claim settlements. Insurance companies cannot arbitrarily deduct amounts without providing a valid reason supported by policy terms.
The judgment also encourages consumers to approach consumer forums if they face unfair practices by insurers. Such legal remedies are effective and accessible, especially in cases of delayed or partial claim settlements.
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Key Takeaways for Policyholders
- Always demand a written explanation for any deductions from your insurance claim.
- If the insurer fails to provide justification, you can file a complaint with the Consumer Commission.
- Compensation and interest can be awarded for delays and unfair practices by insurers.
Conclusion
The order in Mohit Gandhi vs. Star Health and Allied Insurance Company is a significant victory for consumer rights. It reminds insurance companies of their obligation to maintain transparency and fairness while settling claims.