Mumbai Consumer Court Orders Niva Bupa to Pay ₹66.5 Lakh, Rules Insurer Can't Benefit from Its Own Wrongful Act

Mumbai, India – The District Consumer Disputes Redressal Commission in Mumbai Suburban has delivered a significant ruling in favor of a cancer patient, ordering Niva Bupa Health Insurance Company Ltd. to pay a claim of ₹66.5 lakh for overseas treatment. The Commission, presided over by Smt. Samindara R. Surve and Shri. Sameer S. Kamble, held that an insurer cannot deny a reimbursement claim by citing a "cashless only" clause when its own wrongful cancellation of the policy made it impossible for the insured to comply.

The Commission declared the insurer's actions a "deficiency in service" and an "unfair trade practice," highlighting the principle that a party cannot benefit from its own wrongdoing.

Background of the Dispute

The case was filed by Alok Rajendra Bector, who had purchased a "Heartbeat-Family First Platinum Policy" with worldwide coverage from Niva Bupa in 2017. In August 2018, during the policy's term, Mr. Bector was diagnosed with Colo-rectal cancer and informed the insurer of his intent to seek treatment in the United States.

However, Niva Bupa initially repudiated his claim and cancelled the policy, alleging non-disclosure of a pre-existing condition of Asthma. Mr. Bector successfully challenged this cancellation before the Insurance Ombudsman, who ruled that Asthma had no nexus with cancer and ordered the insurer to pay the initial claim of ₹20.47 lakh, which it did.

Despite the policy being reinstated and renewed, when Mr. Bector submitted a subsequent claim of ₹88.34 lakh for his ongoing cancer treatment in New York, Niva Bupa rejected it again. This time, the rejection was based on a different ground.

Arguments of the Parties

Niva Bupa Health Insurance (Opposite Party) raised two primary defenses:

1. Jurisdiction: The insurer argued that the claim amount exceeded ₹1 crore, placing it beyond the pecuniary jurisdiction of the District Commission.

2. Policy Terms: The company contended that Clause 3.5 of the policy mandated that claims for specified illnesses treated overseas must be on a "cashless facility basis only." Since Mr. Bector had paid for the treatment himself and was seeking reimbursement, the claim was not payable under the policy terms.

Alok Bector (Complainant) countered that:

1. The insurer's wrongful cancellation of his policy had made it impossible for him to obtain the necessary pre-authorization for the cashless facility.

2. By creating this impossibility, the insurer could not then use the "cashless only" clause to deny a legitimate claim for treatment covered under the policy.

Commission's Rationale and Key Findings

The Commission systematically dismantled the insurer's arguments, delivering a strongly-worded judgment in favor of the consumer.

On Pecuniary Jurisdiction

The Commission clarified that under Section 34 of the Consumer Protection Act, 2019, its jurisdiction is determined by the "value of the goods or services paid as consideration," which in this case was the insurance premium paid by Mr. Bector. Since the total premium amount was well under the ₹50 lakh threshold, the Commission affirmed its jurisdiction to hear the complaint.

On the Merits: An Insurer Cannot Benefit from Its Own Wrong

The central issue revolved around the insurer's reliance on the "cashless only" clause. The Commission found that this defense was untenable because the insurer's own prior actions had prevented Mr. Bector from complying with this procedural requirement.

The judgment emphasized a crucial legal principle:

> "The Opposite Party cannot rely on its own act of cancellation of the policy to defeat the Complainant’s entitlement to treatment cover. To allow the Opposite Party to do so would amount allowing it, to benefit from its own wrong. Therefore, even if Clause 3.5 normally requires cashless mode, the Opposite Party cannot repudiate liability on that ground when its wrongful cancellation made the cashless option impossible to obtain."

The Commission noted that the initial cancellation based on Asthma was already proven to be unjustified by the Ombudsman's award. This wrongful act directly led to the situation where Mr. Bector was forced to pay for his treatment out-of-pocket.

The Final Verdict

Finding Niva Bupa guilty of deficiency in service and unfair trade practices, the Commission passed the following order:

- Claim Payment: Niva Bupa is directed to pay ₹66,50,000 to Mr. Bector within 60 days. Failure to do so will attract interest at 6% per annum.

- Compensation: An additional sum of ₹30,000 is to be paid as compensation for the mental trauma and financial loss caused.

- Costs: The insurer must also pay ₹10,000 towards the cost of the proceedings.

This judgment serves as a stern reminder to insurance companies that they cannot use procedural technicalities to deny claims, especially when their own wrongful actions have created the non-compliance.