Consumer court raps health insurance firm over ‘wrongful’ claim rejections

4 min readAhmedabadJun 20, 2026 09:16 AM IST

In its observations, the Commission noted that the insurance company had effectively acted as its own medical expert by relying solely on the mention of Rett Syndrome in the discharge records. (Image generated using AI)

Written by Yashaswi Singh

A CONSUMER court in Ahmedabad has ruled against New India Assurance Co Ltd for “wrongfully rejecting” four medical insurance claims of a minor child with Rett Syndrome, holding that insurers cannot deny reimbursement for unrelated illnesses merely because a patient has a genetic disorder.

The District Consumer Disputes Redressal Commission, Ahmedabad (Rural), issued the orders on June 5 in four separate complaints filed by the Consumer Education and Research Society (CERS) and a policy holder.

The Commission directed the insurer to reimburse the claim amounts along with interest, compensation and litigation costs after finding that the claims had been wrongly rejected under a genetic disorder exclusion clause.

The four claims involved reimbursement amounts of Rs 19,049, Rs 20,830, Rs 1,14,360 and Rs 1,14,832. In each case, the Commission directed the insurer to pay the claimed amount along with interest at 8 per cent per year from the date of repudiation. The insurer was also ordered to pay Rs 5,000 as compensation and Rs 5,000 towards litigation costs in each complaint.

The dispute arose after the policy holder’s minor daughter, who was diagnosed with Rett Syndrome, was hospitalised on four separate occasions in 2018 and 2019 for the treatment of pneumonia and lower respiratory tract infections.

Although the family held an active mediclaim policy, New India Assurance rejected all four claims, arguing that the child suffered from a genetic disorder that was excluded under the policy. According to the complaints, the insurer relied on references to Rett Syndrome in the hospital discharge summaries and invoked the policy’s exclusion clause relating to genetic disorders.

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The family, however, maintained that the hospitalisations were not for the treatment of Rett Syndrome but for acute respiratory illnesses that could affect any child regardless of genetic background.

As per the information shared by CERS, during the proceedings, the complainants submitted medical certificates from treating doctors stating that the respiratory infections had no direct connection with Rett Syndrome. The doctors clarified that the child had been treated for bacterial infections, including pneumonia and lower respiratory tract infections, and not for complications arising from the genetic disorder.

The Commission agreed with this argument and criticised the insurer for applying the exclusion clause without establishing any medical link between the genetic condition and the illnesses for which treatment was sought. In its observations, the Commission noted that the insurance company had effectively acted as its own medical expert by relying solely on the mention of Rett Syndrome in the discharge records.

The insurer also attempted to challenge the complaint on procedural grounds. It argued that the policyholder, who was living abroad, had filed the case through his father and that the authorisation documents were not valid.

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The Commission rejected these objections, observing ‘that consumer grievances should not be defeated by technical rules, particularly when the complainant was overseas and had authorised a family member to act on his behalf’. In its ruling, the Commission referred to established legal principles that require a direct connection between a pre-existing condition and the illness for which treatment is claimed before an insurer can rely on an exclusion clause. It held that a background genetic disorder could not automatically be used as a reason to deny claims for unrelated medical conditions.

The ruling is significant for health insurance policyholders because it addresses the growing issue of claim rejections based on broad interpretations of exclusion clauses. By holding that insurers must establish a clear medical connection between an excluded condition and the treatment received, the Commission reinforced the principle that policyholders cannot be denied legitimate claims solely because they have a pre-existing genetic disorder.

(Yashaswi Singh is an intern at The Indian Express, Ahmedabad)