The Punjab and Haryana High Court has affirmed that insurers cannot reject health insurance claims based on speculative inferences about pre-existing conditions when no medical documentation supports such inferences at the time of denial. This ruling reinforces the principle that exclusion clauses must be explicit, and denial of coverage must be grounded in objective evidence available at the time of claim rejection.
Background & Facts
The Dispute
The petitioner, M/s Star Health & Allied Insurance Company Limited, denied reimbursement of medical expenses amounting to Rs. 72,617/- incurred by the respondent for treatment of NASH-related Chronic Liver Disease (CLD) with jaundice. The denial was based on an alleged pre-existing condition under Exclusion Clause 2(f) of the policy, which excludes specified diseases for 24 months from the policy’s inception. The respondent, the insured, challenged this denial before the Insurance Ombudsman, who allowed his claim. The insurer then filed a writ petition under Articles 226/227 of the Constitution seeking to set aside the Ombudsman’s award dated 15.09.2025.
Key Facts
- The respondent was admitted to hospital on 08.03.2024 and discharged on 17.03.2024.
- On 09.03.2024, the insurer denied cashless treatment, citing "Inferential - indicative of PED less than four years policy".
- The discharge summary dated 17.03.2024, issued eight days after denial, first recorded the final diagnosis of NASH-related CLD with jaundice (recovered).
- The insurer did not produce any medical report, diagnostic record, or clinical note dated 09.03.2024 to substantiate its inference of a pre-existing condition.
- On 10.04.2024, the insurer requested additional documents, including a letter from the treating doctor specifying the duration of the liver disease.
- The respondent submitted a letter from the hospital dated 15.04.2024 stating: (i) the patient had no prior history of liver disease; (ii) the diagnosis of NASH-related CLD was made during the hospitalization beginning 08.03.2024.
- The exclusion clause (2(f)) lists 14 specific diseases or procedures subject to a 24-month waiting period. NASH-related CLD is not among them.
Procedural History
- 08.03.2024: Respondent admitted to hospital for treatment.
- 09.03.2024: Insurer denies cashless treatment based on speculative inference.
- 17.03.2024: Discharge summary issued, first documenting diagnosis of NASH-related CLD.
- 10.04.2024: Insurer requests additional documentation from respondent.
- 15.04.2024: Respondent submits hospital letter confirming no prior liver disease history.
- 15.09.2025: Insurance Ombudsman issues award allowing claim, holding denial unjustified.
- 20.04.2026: Writ petition dismissed by High Court.
Relief Sought
The petitioner sought quashing of the Insurance Ombudsman’s award dated 15.09.2025 and a declaration that the claim was rightly denied under the policy’s exclusion clause.
The Legal Issue
The central question was whether an insurer may lawfully deny a health insurance claim based on an inferential assumption of a pre-existing condition, when no medical documentation supporting that inference existed at the time of denial, and the condition in question is not explicitly listed in the policy’s exclusion schedule.
Arguments Presented
For the Petitioner
The petitioner argued that the respondent’s condition fell within the ambit of Exclusion Clause 2(f), which excludes certain diseases for 24 months from policy inception. It contended that the timing of diagnosis - within four years of policy inception - suggested a pre-existing condition, and that the insurer’s inference was reasonable under industry practice. It further submitted that the Ombudsman erred in disregarding the policy’s terms and that judicial intervention was warranted.
For the Respondent
The respondent argued that the insurer’s denial was arbitrary and unsupported by evidence. He emphasized that the diagnosis of NASH-related CLD was first documented on 17.03.2024, eight days after denial, and that the hospital’s letter confirmed no prior history of liver disease. He further noted that NASH-related CLD is not among the 14 diseases listed under Exclusion Clause 2(f), rendering the insurer’s reliance on the clause legally untenable.
The Court's Analysis
The Court undertook a meticulous review of the insurer’s reasoning and the Ombudsman’s findings. It observed that the denial on 09.03.2024 was based solely on an "inferential" assertion that the condition was pre-existing, without any medical record, diagnostic report, or clinical note from that date. The Court emphasized that the insurer’s inference was retrospective and speculative, lacking any contemporaneous evidentiary basis.
"Neither has the Insurer placed any medical report/document as existing on 9/3/2024 on record in support of reasons given for denial of the cashless treatment claim of the insured."
The Court further noted that the exclusion clause explicitly lists 14 diseases, none of which include NASH-related CLD. The insurer’s attempt to apply the clause by analogy or inference was therefore legally invalid. The Court held that exclusion clauses must be construed strictly against the insurer, and any ambiguity must be resolved in favor of the insured.
The Court also relied on the Supreme Court’s decision in Central Council for Research in Ayurvedic Sciences v. Bikartan Das, which affirmed that insurers must act fairly and transparently, and cannot deny claims on grounds not clearly stipulated in the policy. The Ombudsman’s award was found to be well-reasoned, factually grounded, and legally sound.
The Verdict
The writ petition was dismissed. The Court upheld the Insurance Ombudsman’s award dated 15.09.2025, directing the petitioner to pay the claim amount of Rs. 72,617/- to the respondent. No further directions were issued as the award was already complied with in substance. The Court declined to interfere under writ jurisdiction, finding no illegality, irrationality, or perversity in the Ombudsman’s findings.
What This Means For Similar Cases
Exclusion Clauses Must Be Explicit, Not Inferential
- Insurers cannot rely on speculative inferences about pre-existing conditions without contemporaneous medical evidence.
- Denials based on timing alone - e.g., "within four years of policy inception" - are legally insufficient if the condition is not listed in the exclusion schedule.
- Practitioners should challenge denials where the insurer fails to produce medical records from the date of claim rejection.
Conditions Not Listed in Exclusions Are Not Excludable
- If a disease or condition is not explicitly named in the policy’s exclusion list, it cannot be excluded by implication or analogy.
- Insurers must draft exclusion clauses with precision; courts will not allow broad interpretations to defeat legitimate claims.
- Policyholders should scrutinize exclusion schedules for specificity and challenge any attempt to extend exclusions beyond their stated terms.
Ombudsman Awards Are Presumptively Valid Unless Perverse
- Writ petitions against Insurance Ombudsman awards face a high threshold for interference.
- Courts will not substitute their view unless the award is irrational, illegal, or based on no evidence.
- Practitioners should treat Ombudsman decisions as binding unless a clear legal error is demonstrable.
