Supreme Court Allows Appeal in Health Insurance Claim Repudiation Case — Ovarian Cancer Treatment Reimbursement Ordered. Insurance Company's Repudiation Based on Pre-existing Disease Exclusion Held Invalid as Policy Did Not Define 'Pre-existing Disease' and Treatment Commenced After Policy Inception.

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2026-05-19 00:07:08

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Case Note & Summary

The appellant, Om Prakash Ahuja, had taken a health insurance policy from Reliance General Insurance Co. Ltd. for his family, valid from 7.7.2007 to 6.7.2008, with coverage of ₹2 lakhs for health problems and ₹4 lakhs for critical illness. The policy was renewed up to 6.7.2009. His wife was diagnosed with ovarian cancer and underwent treatment from 19.1.2008 to 23.8.2008. Claims of ₹91,496 and ₹4,14,464 were lodged but repudiated by the insurance company on 1.10.2008 and 8.12.2008 on the ground of pre-existing disease. The District Forum allowed the complaint, directing reimbursement. The State Commission dismissed the appeal, but the National Commission allowed the revision petition, setting aside the orders. The Supreme Court held that the insurance company failed to prove that the disease was pre-existing, as the policy did not define 'pre-existing disease' and the treatment commenced after the policy inception. The Court restored the orders of the District Forum and State Commission, directing the insurance company to pay the claim amount with 9% interest per annum from the date of repudiation.

Headnote

A) Insurance Law - Health Insurance - Pre-existing Disease Exclusion - Interpretation of Policy Terms - The insurance company repudiated a claim for ovarian cancer treatment on the ground that the disease was pre-existing. The policy did not define 'pre-existing disease'. The Supreme Court held that the burden to prove that the disease was pre-existing lies on the insurer. Since the policy was silent on the definition and the treatment commenced after the policy inception, the repudiation was unjustified. (Paras 1-10)

B) Consumer Protection - Health Insurance - Repudiation of Claim - Deficiency in Service - The appellant's wife was diagnosed with ovarian cancer after the policy was taken. The insurance company repudiated the claim without evidence of pre-existing condition. The Supreme Court held that this amounted to deficiency in service and directed reimbursement of the claim amount with interest. (Paras 2-12)

Issue of Consideration

Whether the insurance company's repudiation of a health insurance claim on the ground of pre-existing disease was valid when the policy did not define 'pre-existing disease' and the treatment commenced after the policy inception.

Final Decision

The Supreme Court allowed the appeals, set aside the order of the National Commission, and restored the orders of the District Forum and State Commission. The insurance company was directed to pay the claim amount with 9% interest per annum from the date of repudiation.

Law Points

Insurance contract interpretation
pre-existing disease exclusion
burden of proof on insurer
consumer protection
health insurance claim repudiation

Case Details

2023 LawText (SC) (7) 26

Civil Appeal Nos. 2769-2770 of 2023

2023-01-01

Rajesh Bindal

Om Prakash Ahuja

Reliance General Insurance Co. Ltd. etc.

Nature of Litigation

Consumer complaint against insurance company for repudiation of health insurance claim

Remedy Sought

Reimbursement of medical expenses incurred for treatment of ovarian cancer

Filing Reason

Insurance company repudiated claim on ground of pre-existing disease

Previous Decisions

District Forum allowed complaint; State Commission dismissed appeal; National Commission allowed revision petition and set aside orders

Issues

Whether the insurance company's repudiation of the health insurance claim on the ground of pre-existing disease was valid when the policy did not define 'pre-existing disease' and the treatment commenced after the policy inception.

Submissions/Arguments

Appellant argued that the policy did not define 'pre-existing disease' and the treatment commenced after the policy inception, so repudiation was unjustified. Respondent argued that the disease was pre-existing and thus excluded under the policy.

Ratio Decidendi

The burden to prove that a disease is pre-existing lies on the insurer. When the policy does not define 'pre-existing disease' and the treatment commences after the policy inception, the insurer cannot repudiate the claim on that ground.

Judgment Excerpts

The claim was repudiated by the insurance company vide letters dated 1.10.2008 and 8.12.2008, respectively on the ground of pre-existing disease. The policy did not define 'pre-existing disease' and the treatment commenced after the policy inception.

Procedural History

The appellant filed a complaint before the District Forum, which was allowed. The insurance company appealed to the State Commission, which dismissed the appeal. The insurance company then filed a revision petition before the National Commission, which allowed it and set aside the orders. The appellant then appealed to the Supreme Court.