A landmark ruling by the West Bengal State Consumer Disputes Redressal Commission has clarified that insurers cannot repudiate health insurance claims arising from ported policies merely on allegations of non-disclosure of pre-existing conditions without proving deliberate fraud. The decision reinforces the principle that continuity of coverage and statutory portability mechanisms impose reciprocal duties on insurers to conduct due diligence.
Background & Facts
The Dispute
The dispute centers on the repudiation of a mediclaim claim by Religare Health Insurance Co. Ltd. (now Care Health Insurance Ltd.) after the complainants ported their health insurance policy from Max Bupa Health Insurance Co. Ltd. in 2017. The insurer denied cashless authorization and later rejected reimbursement for hospitalization expenses incurred by Complainant No.2 in February 2018, alleging suppression of hypertension during the portability process.
Key Facts
- Complainants obtained a health insurance policy from Max Bupa Health Insurance Co. Ltd. on 19.10.2011, renewed annually.
- Policy No. 30595006201600 issued by Max Bupa (valid 19.10.2016 to 18.10.2017) explicitly listed hypertension as a pre-existing disease for Complainant No.2.
- On 06.10.2017, the policy was ported to Religare Health Insurance Co. Ltd. under Policy No. 11617154, with a one-time premium of Rs. 1,07,578/- covering the period until 05.10.2020.
- On 12.02.2018, Complainant No.2 was hospitalized at the Institute of Neurosciences, Kolkata, for neurological symptoms including slurred speech, vomiting, and reduced sensation. She was discharged on 20.02.2018 with medical expenses of Rs. 1,49,148/-.
- Cashless authorization was denied on 15.02.2018 on grounds of "non-disclosure of material fact/pre-existing ailment."
- Reimbursement claim No. 90529376 filed on 21.02.2018 was repudiated by letter dated 12.03.2018.
- The complainants approached the Insurance Ombudsman and submitted representations, but received no redressal.
- The insurer produced a version of the prior Max Bupa policy (Annexure III) showing "none" in the pre-existing disease column, contradicting the version submitted by the complainants.
- No affidavit or certified data from Max Bupa or the IRDA portability portal was produced by the insurer to substantiate its claim of non-disclosure.
Procedural History
- 12.02.2018: Hospitalization of Complainant No.2
- 15.02.2018: Cashless authorization denied by insurer
- 21.02.2018: Reimbursement claim filed
- 12.03.2018: Claim repudiated by insurer
- 2018-2019: Complaints filed with Insurance Ombudsman and insurer - no resolution
- 2019: Original complaint filed before State Consumer Disputes Redressal Commission (SCDC), West Bengal (No. SC/19/CC/379/2019)
- 18.12.2024: Commission accepted amended cause title reflecting change of insurer name to Care Health Insurance Ltd.
- 01.06.2026: Final order passed by the Commission
Relief Sought
The complainants sought:
- Reimbursement of Rs. 1,49,148/- for hospitalization expenses
- Compensation for mental agony and harassment
- Refund of all premiums paid
- Litigation costs
The Parties' Positions
- Complainants: Argued that hypertension was disclosed in the prior policy, portability transferred medical history, and insurer’s failure to verify records during underwriting precludes repudiation.
- Opposite Parties: Contended that the proposal form submitted during portability did not disclose hypertension, and the insurer relied on IRDA portal data and internal records showing no prior disclosure.
The Legal Issue
The central question was whether an insurer can repudiate a health insurance claim under a ported policy solely on the ground of non-disclosure of a pre-existing disease, when the prior insurer’s policy records indicate such disease was disclosed, and no conclusive evidence of fraudulent suppression is established?
Arguments Presented
For the Appellant/Petitioner
The complainants relied on the fact that hypertension was explicitly recorded as a pre-existing condition in the Max Bupa policy (No. 30595006201600) valid from 19.10.2016 to 18.10.2017. They submitted that portability under IRDA guidelines inherently involves transfer of medical history, and the insurer accepting the ported policy is bound by the continuity of disclosures. They argued that the insurer’s failure to seek clarification or conduct independent verification during underwriting, coupled with acceptance of a substantial premium, estops it from later denying liability. Reliance was placed on the principle that insurance contracts are contracts of uberrima fides, but this duty is mutual and requires insurers to exercise due diligence.
For the Respondent/State
The insurer contended that the proposal form submitted during portability contained no declaration of hypertension, and the IRDA portability portal records allegedly showed no prior disclosure. It relied on Satwant Kaur Sandhu v. New India Assurance Co. Ltd., Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, and LIC v. G.M. Channabasamma to assert that suppression of material facts vitiates the contract. It argued that the burden of disclosure lies with the proposer and that the complainants’ failure to declare hypertension in the proposal form justified repudiation under Clause 7.1 of the policy.
The Court's Analysis
The Commission acknowledged the settled legal principle that insurance contracts are governed by uberrima fides, requiring full disclosure of material facts. However, it emphasized that mere existence of a pre-existing disease does not justify repudiation - the insurer must prove deliberate and fraudulent suppression at the time of proposal.
"The distinction between existence of a pre-existing disease and fraudulent concealment thereof is legally significant and cannot be overlooked."
The Commission noted a critical contradiction: the insurer produced a version of the prior Max Bupa policy showing "none" in the pre-existing disease column, while the complainants produced a version showing hypertension. This discrepancy undermined the insurer’s claim of accurate record-keeping and cast doubt on the reliability of its internal assertions.
The Commission further observed that the policy was not a new issuance but a continuation of coverage since 2011. Portability under IRDA regulations presupposes exchange of underwriting data. The insurer, having accepted the premium and issued a three-year policy without seeking clarification, could not later rely on mechanical non-disclosure in the proposal form while ignoring the context of continuity.
"An insurer cannot selectively rely upon proposal form omissions while simultaneously claiming benefit of portability without demonstrating due underwriting diligence expected in such transactions."
The Commission held that the insurer failed to produce certified records from Max Bupa or the IRDA portal, and no affidavit from the prior insurer was submitted. Mere reliance on internal documents and unverified proposal forms was insufficient to establish fraudulent intent. The medical records confirmed hypertension but did not prove concealment - particularly where the claim arose within months of portability and involved neurological complications, not solely hypertension.
The Commission also applied the principle of strict construction to exclusionary clauses, citing Modern Insulators Ltd. v. Oriental Insurance Co. Ltd., and held that forfeiture of benefits requires clear and convincing evidence - which was absent here.
The Verdict
The complainants succeeded in part. The Commission ordered:
- Reimbursement of Rs. 1,49,148/- for hospitalization expenses within 45 days from the date of judgment;
- Interest at 7% per annum on the above amount from 12.03.2018 until realization;
- Compensation of Rs. 1,00,000/- for mental agony and harassment within 45 days;
- Litigation costs of Rs. 25,000/- within 45 days;
- In default, the order shall be executable as per law.
The claim for refund of all premiums was rejected, as coverage was operative during the policy term.
What This Means For Similar Cases
Portability Transfers Disclosure Obligations
- Insurers accepting ported policies must treat prior medical disclosures as part of the underwriting record - failure to verify or request clarification precludes later repudiation.
- Practitioners should insist on certified portability data from IRDA portals and prior insurer affidavits before accepting non-disclosure defenses.
Burden of Proof Lies with the Insurer
- Allegations of fraud require clear, cogent, and corroborated evidence - internal proposal forms alone are insufficient.
- Where contradictory documents exist, the insurer’s failure to resolve them weighs against its position.
Strict Construction of Exclusion Clauses
- Clause 7.1 and similar forfeiture clauses cannot be invoked mechanically; insurers must prove intentional concealment.
- Claims arising shortly after portability, especially for conditions previously disclosed, demand heightened scrutiny of the insurer’s due diligence.
No Automatic Disqualification for Pre-Existing Conditions
- Pre-existing diseases are not per se grounds for repudiation - only fraudulent suppression is.
- Continuous coverage over years, with renewal and portability, creates a presumption of good faith on the insured’s part.
