Insurance Company Must Prove Pre-existing Disease Existed at the Time of Proposal: NCDRC Reaffirms Legal Principle

Background

A recent decision by the National Consumer Disputes Redressal Commission (NCDRC) in case titled Mahipal Chaudhary vs Max Bupa Health Insurance Co. Ltd. & Ors. has reaffirmed a crucial legal principle in insurance law: when an insurance company repudiates a claim on the ground of non disclosure of a pre-existing disease, the burden lies squarely on the insurer to prove that the pre existing disease actually existed at the time the proposal form was filled and the policy was issued.

Key Facts of the Case

The complainant’s wife was insured under a mediclaim policy. The claim was denied by the insurer, citing that the insured had a history of tremors since 2006, which was not disclosed at the time of obtaining the policy. The insurer relied solely on a hospital discharge summary from 2014, which mentioned the onset of symptoms in 2006, as told by the patient/family at the time of hospitalization.

Legal Issue

The central question was whether the insurer had sufficiently proved that the insured was suffering from a pre-existing disease (Parkinson’s disease) at the time of filling the proposal form, and whether there was suppression of material facts justifying repudiation of the claim.

NCDRC’s Reasoning and Findings

Burden of Proof on Insurer

The NCDRC, relying on Supreme Court precedent of Mahakali Sujatha Versus Branch Manager, Future Generali India Life Insurance Company Limited & Anr. (2024) 8 SCC 712, reiterated that the burden of proving suppression of material facts or pre-existing disease is on the insurance company. Mere allegations or statements in medical records, without cogent evidence, are not enough.

“The cardinal principle of burden of proof in the law of evidence is that 'he who asserts must prove', the onus cannot be shifted on the insured to deal with the issues that have merely been alleged by the insurer without producing any evidence to support that allegation.” - Mahakali Sujatha case

Scrutiny of Evidence

The only evidence produced by the insurer was the discharge summary, which recorded symptoms as narrated by the patient/family in 2014. The NCDRC noted that this document did not establish that the insured was diagnosed with or aware of Parkinson’s disease in 2006. There was no evidence that the insured was undergoing treatment or had medical knowledge of the disease at the time of policy inception.

“A careful perusal of this document shows that this records the symptoms of the patient at the time of admission, as told by the patient/their family members. There is no other document/evidence on record which will show that the insured was suffering from pre-existing ailment of Parkinson disease at the time of filling the proposal form.”

Benefit of Doubt to Insured

The Commission observed that if the family had known about the disease in 2006, it was unlikely they would have delayed treatment until 2014 merely to avail insurance benefits. Thus, in absence of cogent proof, the benefit of doubt must go to the insured.

Legal Principles Reaffirmed

Onus on Insurer: The insurer must prove, with cogent evidence, that the insured had a pre-existing disease at the time of proposal and that there was conscious suppression of material facts.

Nature of Evidence: Hospital records or discharge summaries based on patient/family statements at a later date are insufficient unless corroborated by contemporaneous medical records or evidence of treatment before policy inception.

No Retrospective Justification: The insurer cannot introduce new grounds for repudiation beyond what was stated in the original repudiation letter.

Conclusion

This NCDRC decision reinforces the protection available to policyholders against arbitrary repudiation of claims on alleged non-disclosure of pre-existing diseases. Insurers must undertake thorough due diligence and present solid evidence to establish such allegations. In the absence of clear proof that a pre-existing disease existed and was known to the insured at the time of filling the proposal form, the benefit of doubt will favor the insured, and the claim cannot be denied merely on suspicion or retrospective statements.