Oriental Insurance Told To Pay Rs 2.24 Lakh After Rejecting Hospitalisation Claim As ‘Unnecessary’

A Delhi consumer commission has directed Oriental Insurance Company to pay more than Rs 2.24 lakh after rejecting a woman’s health insurance claim on the ground that her hospitalisation was not medically necessary.

Shivani Tomar, a Ghaziabad resident, had been covered under an Oriental Insurance health policy since November 2010. On November 25, 2023, she was admitted to Max Healthcare Hospital in Vaishali after experiencing chest heaviness, palpitations, breathlessness, severe abdominal pain, nausea, headache and low blood pressure.

The insurer declined cashless authorisation, forcing Tomar to pay Rs 1,54,144 for treatment. Her subsequent reimbursement claim was also rejected.

Why The Insurer Rejected The Claim

Oriental Insurance said the investigation reports and vital parameters were normal, no active line of treatment had been given, and the admission was primarily for observation and diagnostic evaluation, according to a recent report by The Economic Times.

The insurer relied on Clause 5.2 of the policy, which excludes expenses where admission is primarily for diagnostic and evaluation purposes.

Tomar, however, submitted that she underwent a biopsy, endoscopy, MRI, ultrasound and other procedures during hospitalisation. She also received IV fluids and IV antibiotics and was later diagnosed with severe acute gastritis, hypothyroidism and an ovarian cyst

The District Consumer Disputes Redressal Commission-VIII (Central), Delhi, examined her medical records after Oriental Insurance failed to appear or file its written version. The insurer’s right to file a defence had been closed in December 2024.

The commission found that the medical records showed active evaluation and treatment and that the procedures could not be treated as a routine outpatient consultation.

“Insurance company cannot substitute its own assessment in place of the clinical judgment of medical professionals, particularly when no contrary medical evidence has been produced,” the commission observed.

Doctors Decide Whether Hospitalisation Is Necessary

The commission said the word “primarily” in the exclusion clause was important. For the exclusion to apply, diagnostic evaluation had to be the dominant purpose of admission. In this case, Tomar had been admitted with specific medical complaints and had received treatment alongside investigations.

It held Oriental Insurance deficient in service for denying cashless treatment and rejecting the reimbursement claim.

The commission directed the insurer to pay Rs 1,54,144 with interest at six per cent per annum from December 29, 2023, the date of rejection, until payment. It also awarded Rs 50,000 for mental agony, harassment and financial hardship and Rs 20,000 as litigation costs.

The insurer was given 30 days from receipt of the order to comply. In case of default, the entire awarded amount of Rs 2,24,144 will attract interest at nine per cent per annum until realisation.

FAQs

1. Can an insurer reject a health claim saying hospitalisation was unnecessary?

Yes, but the rejection must be supported by policy terms and medical evidence. An insurer cannot simply override the treating doctor’s clinical judgment.

2. Are diagnostic tests during hospitalisation automatically excluded from health insurance?

No. An exclusion may apply if admission is primarily for diagnosis or evaluation, but not where the patient also receives necessary treatment.

3. What can policyholders do if a health insurance claim is wrongly rejected?

They can seek reconsideration from the insurer and, if unresolved, approach the insurance ombudsman or consumer commission with medical records and claim documents.