COVID-19 Package Rates Are All-Inclusive; Room Rent/ICU Sub-Limits Cannot Deduct Bundled PPE, Consultant Fees : Delhi SCDRC

The Delhi State Consumer Disputes Redressal Commission has dismissed an appeal by National Insurance Company Limited, upholding a District Commission order that held the insurer deficient in service for disallowing Rs. 1,10,000 from a COVID-19 hospitalisation claim. The Commission ruled that hospital package rates for ICU and isolation wards included covered medical expenses such as consultant visits, intensivist charges, nursing charges, PPE kits, and N-95 masks, which could not be disallowed merely because they were bundled within the package rate rather than billed separately under policy sub-limits for room rent and ICU charges.

Background & Facts

The Dispute

The respondent, Mr. Narendra Kumar Jain, was insured under a Group Mediclaim Tailor Made Policy issued by the appellant, National Insurance Company Limited. The respondent had opted for a Super Top-Up cover under the policy. In November 2020, during the COVID-19 pandemic, the respondent contracted severe COVID-19 and required hospitalisation at Navin Hospital, Vaishali, Ghaziabad.

Key Facts

• The respondent was admitted to Navin Hospital on 04.11.2020 and remained hospitalised until 20.11.2020.
• The hospitalisation comprised 12 days in the ICU ward and 04 days in the isolation ward.
• The hospital charged Rs. 15,000 per day for the ICU package (total Rs. 1,80,000) and Rs. 10,000 per day for the isolation ward package (total Rs. 40,000).
• The respondent submitted a claim of Rs. 4,79,270 to the appellant.
• The appellant settled the claim for Rs. 3,64,368 (Rs. 3,58,568 paid on 18.02.2021 and Rs. 5,800 paid on 27.05.2021), disallowing Rs. 1,10,000.
• The disallowed amount comprised: Rs. 90,000 as excess ICU charges (above policy limit of Rs. 7,500/day), Rs. 20,000 as excess room rent (above policy limit of Rs. 5,000/day), and Rs. 4,902 as non-medical items.
• The respondent contended that the hospital's package rates included consultant visits, intensivist charges, RMO charges, nursing charges, PPE kits, and N-95 masks, all covered under the policy.
• Government circulars issued by the Additional Chief Secretary (Medical & Health), Uttar Pradesh, and the Delhi Government prescribed maximum package rates for COVID-19 treatment at NABH-accredited hospitals in Tier A cities: Rs. 18,000/day for ICU with ventilator, Rs. 15,000/day for ICU without ventilator, and Rs. 10,000/day for isolation wards, inclusive of PPE costs.
• The respondent filed a complaint with the Insurance Ombudsman, Delhi, which advised the appellant to review and settle the claim as per government guidelines within 30 days.
• The appellant did not comply with the Ombudsman's direction.
• The medical card issued by the appellant confirmed the respondent had opted for Super Top-Up cover with a sum insured of Rs. 9 lakhs.

Procedural History

• 17.04.2023: Appellant sent an email stating it had already paid Rs. 3,64,368.
• Date not specified in judgment: Complaint filed before the District Consumer Disputes Redressal Commission, North East, Delhi (Complaint details not specified in judgment text).
• 02.07.2025: District Commission passed order allowing the complaint, directing the appellant to pay Rs. 1,10,000 towards balance claim with 9% interest per annum from date of filing of complaint till recovery, and Rs. 45,000 towards compensation and litigation cost with 9% interest from date of order till recovery.
• 30.08.2025: Appellant filed First Appeal No. 407/2025 before the Delhi State Consumer Disputes Redressal Commission.
• 02.09.2026: Date of hearing before the State Commission.
• 28.10.2026: State Commission pronounced judgment dismissing the appeal.

Relief Sought

The respondent sought payment of the balance claim amount of Rs. 1,10,000 and Rs. 1,00,000 as compensation. The District Commission awarded Rs. 1,10,000 with 9% interest from date of filing complaint, and Rs. 45,000 as compensation and litigation cost with 9% interest from date of its order.

The Legal Issue

The central question was whether an insurer can disallow covered medical expenses - such as consultant visits, intensivist charges, nursing charges, PPE kits, and N-95 masks - that form part of a hospital's package rate for ICU and isolation wards, by treating the entire package rate as "room rent" or "ICU charges" and applying sub-limits prescribed under the policy for those heads, where government circulars prescribe inclusive package rates for COVID-19 treatment.

Arguments Presented

For the Appellant

The appellant contended that the claim was settled strictly in accordance with the terms and conditions of the insurance policy. The policy prescribed a limit of Rs. 5,000 per day for room rent and Rs. 7,500 per day for ICU charges. The amount exceeding these limits was not payable. The government circulars relied upon by the respondent merely prescribed maximum package rates chargeable by hospitals for COVID-19 treatment and were not binding upon the insurance company so as to override the policy terms. The appellant further argued that the District Commission wrongly relied upon the Super Top-Up cover, which would become applicable only upon exhaustion of the sum insured under the base policy, and in any event, the room rent and ICU limits under the base policy continued to apply. The claim was restricted on account of the prescribed limits for room rent and ICU charges, not on account of exhaustion of the sum insured. The appellant relied on an order dated 25.02.2021 passed by the State Commission in Appeal No. 1270 of 2013, National Insurance Co. Ltd. vs. Mr. Amit Mittal.

For the Respondent

The respondent denied all contentions of the appellant and submitted that the entire material on record was properly scrutinised by the District Commission before passing the impugned order. The respondent maintained that the hospital's package rates for ICU and isolation wards included not only bed charges but also other medical expenses covered under the policy, and the appellant could not disallow these covered expenses by characterising them as excess room rent or ICU charges.

The Court's Analysis

The State Commission examined the record, particularly Annexure-E annexed to the complaint before the District Commission, which contained the breakup of the ICU and isolation ward packages issued by the hospital. The Commission found that the amounts charged under these packages were not confined to charges for the bed alone but also included other medical expenses. The respondent had specifically claimed that amounts towards consultant visits, intensivist charges, RMO charges, nursing charges, PPE kits, and N-95 masks were not reimbursed despite being covered under the policy.

The Commission held that the appellant was not justified in treating the entire difference between the package rates charged by the hospital and the room rent/ICU limits prescribed under the policy as excess room rent or ICU charges. The room rent and ICU limits prescribed under the policy were applicable to charges falling under those specific heads. However, other medical expenses forming part of the packages and otherwise covered under the policy could not be disallowed merely because they were included in the package charged by the hospital.

Regarding the Super Top-Up cover, the Commission agreed with the District Commission's observation on the sum insured. The appellant had not clearly stated or clarified the sum insured applicable under the policy or whether the Super Top-Up cover opted by the respondent was applicable. Moreover, the claim was not disallowed on the ground of the sum insured having been exceeded but on the ground of the room rent and ICU limits prescribed under the policy. The Commission found no reason to interfere with the District Commission's observation on this issue.

The Commission also distinguished the precedent relied upon by the appellant - the order dated 25.02.2021 in National Insurance Co. Ltd. vs. Mr. Amit Mittal (Appeal No. 1270 of 2013) - holding that the facts and issues involved therein were different from those in the present case.

"In these circumstances, the Appellant was not justified in treating the entire difference between the package rates charged by the hospital and the Room Rent/ICU limits prescribed under the policy as excess Room Rent or ICU charges. More so, the Room Rent and ICU limits prescribed under the policy were applicable to the charges falling under the said heads. However, the other medical expenses forming part of the packages and otherwise covered under the policy could not be disallowed merely because they were included in the package charged by the hospital."

The Commission concluded that the District Commission had rightly held that the appellant wrongly disallowed the balance claim of Rs. 1,10,000 by treating the same as excess room rent and ICU charges without considering the other covered medical expenses forming part of the ICU and isolation ward packages. Accordingly, the Commission found no infirmity in the finding of deficiency in service.

The Verdict

The appellant's appeal was dismissed. The State Commission upheld the District Commission's order dated 02.07.2025 in its entirety. The appellant is directed to pay the respondent Rs. 1,10,000 towards the balance claim with 9% interest per annum from the date of filing of the complaint till recovery, and Rs. 45,000 towards compensation and litigation cost with 9% interest from the date of the District Commission's order (02.07.2025) till recovery. No costs were awarded for the appeal proceedings. The judgment was pronounced on 28.10.2026.

What This Means For Similar Cases

Package Rates Encompass Covered Medical Expenses

Insurers cannot dissect hospital package rates and apply sub-limits for room rent or ICU charges to the entire package amount when the package includes other covered medical expenses. The judgment establishes that where a hospital charges a consolidated package rate for ICU or isolation ward that includes consultant fees, nursing charges, PPE kits, and other medical consumables, the insurer must evaluate each component against the policy coverage rather than applying a blanket sub-limit to the whole package. Practitioners should:

• Obtain detailed breakup of hospital package rates (as Annexure-E in this case) to demonstrate inclusion of covered expenses.
• Argue that policy sub-limits for "room rent" and "ICU charges" apply only to those specific heads, not to bundled medical services.
• Cite government-prescribed package rates (where applicable) as evidence of industry practice for inclusive billing.

Government Circulars Inform Reasonable Charges

While government circulars prescribing maximum package rates for COVID-19 treatment may not be directly binding on insurers to override policy terms, they serve as relevant benchmarks for determining reasonable charges and the composition of package rates. The Commission implicitly recognised that the hospital's charges (Rs. 15,000/day ICU, Rs. 10,000/day isolation) were within the government-prescribed ceilings (Rs. 15,000/day ICU without ventilator, Rs. 10,000/day isolation for NABH-accredited Tier A hospitals), lending credibility to the package structure. Practitioners should:

• Reference applicable government rate circulars to establish that hospital package rates are standard and reasonable.
• Use such circulars to counter insurer arguments that package rates are inflated or unconscionable.

Super Top-Up Cover Does Not Negate Base Policy Sub-Limits - But Sub-Limits Must Be Correctly Applied

The Commission noted that the Super Top-Up cover would apply only after exhaustion of the base policy sum insured, and base policy sub-limits would continue to apply. However, the critical finding was that the claim was not rejected for exceeding the sum insured but for allegedly exceeding sub-limits - and those sub-limits were misapplied. Practitioners should:

• Verify whether claim rejection is based on sum insured exhaustion or sub-limit application.
• If based on sub-limits, challenge the characterisation of bundled expenses as falling within the sub-limited heads.
• Ensure the insurer clarifies the applicable sum insured and Super Top-Up trigger in writing.

Ombudsman Directions Carry Persuasive Weight

The Insurance Ombudsman's direction to the insurer to review and settle the claim as per government guidelines within 30 days, though not binding, was noted in the factual matrix. The insurer's non-compliance supported the finding of deficiency in service. Practitioners should:

• Escalate disputes to the Insurance Ombudsman before or alongside consumer forum proceedings.
• Highlight the insurer's failure to comply with Ombudsman directions as evidence of deficiency.

Precedents Must Be Fact-Specific

The Commission rejected the appellant's reliance on National Insurance Co. Ltd. vs. Mr. Amit Mittal because the facts and issues were different. This reinforces that precedents in insurance disputes are highly fact-dependent, particularly on policy wording, package composition, and claim rejection rationale. Practitioners must:

• Distinguish cited precedents on factual grounds (policy terms, package structure, items disallowed).
• Avoid over-reliance on general propositions without demonstrating factual congruence.