Consumer panel slams Star Health for rejecting Covid-19 claim, orders reimbursement of Rs 50,000

In a significant ruling, the district consumer commission on Friday clarified that an insurance company has no authority to decide how a patient should be treated. 

 The judgment came while addressing a complaint filed against Star Health and Allied Insurance for denying a Covid-related reimbursement claim. The insurer has been ordered to pay nearly Rs 50,000 with 6% annual interest, along with Rs 2,000 towards litigation expenses, within 30 days.

 Claim Turned Down for ‘Home Isolation’

 The dispute arose when a COVID-19 claim was rejected on the grounds that the patient was asymptomatic and could have been managed under home isolation. Dadri resident Nitu Nagar approached the District Consumer Disputes Redressal Commission (DCDRC) on September 1, 2022, after her husband's claim was denied.

 Nagar’s husband, Ajay Nagar, had been insured under Star Health’s Family Health Optima Insurance Policy since 2018, and the policy had been renewed consistently every year.

 Hospitalisation in Fourth Policy Year

 In January 2022, during the fourth year of the policy, Nagar developed a high fever and difficulty breathing. She was admitted to Yatharth Hospital, Greater Noida, as her family felt urgent medical supervision was required. The insurer was informed prior to admission, and the family was assured that the cashless claim would be processed soon.

 Reimbursement Also Declined

 However, after the patient was discharged, Star Health refused to settle the hospital bill amounting to Rs 49,423. The family paid the bill themselves and later filed for reimbursement, but the claim was again not approved. A legal notice issued in August 2022 elicited no reply from the insurance company, prompting the consumer complaint.

 Insurer Defends Its Stand

 Star Health argued before the commission that, according to the medical records, the patient showed only mild symptoms such as fever and body ache. The company contended that the Covid case was asymptomatic and did not justify hospitalization, citing government guidelines recommending home care for such patients.

 Commission Rejects the Insurer’s Argument

 The consumer panel observed that the choice of treatment lies solely with qualified medical professionals—not with the insurer. It ruled that the company had wrongfully denied the claim and directed Star Health to reimburse the full hospital expense along with interest and litigation costs.

 The order reinforces that insurance companies cannot interpret medical conditions in a way that overrides a doctor’s judgment on necessary treatment.