Why your critical illness claim could be denied: National consumer panel rules in favour of insurance firm over ‘definition’

Medical emergency

• Ravindra Goyal, 40, was admitted to Nidaan Heart & Maternity Hospital in Gwalior on June 19, 2012, with complaints of fever, vomiting and other complications.
• Medical records showed hypertension, Type II diabetes, thrombocytopenia (low platelet count) and rising kidney-related parameters.
• With his urea and creatinine levels increasing and urine output falling, he was referred the next day to Sir Ganga Ram Hospital in New Delhi for advanced care.
• He was admitted to Sir Ganga Ram Hospital on June 21, 2012.
• Dialysis was administered due to increasing creatinine and “nil urine output.”
• Despite intensive treatment, he suffered a cardiac arrest and was declared dead in the early hours of June 23, 2012.
• The death summary recorded multiple complications: pyrexia (fever) with thrombocytopenia, acute kidney injury (AKI), metabolic and respiratory acidosis (excess acid in blood and tissues), septic shock, and multi-organ failure.
• For the grieving family, the insurance policy was meant to provide financial security by clearing an outstanding housing loan in the event of a major medical illness.
• They lodged a claim under the policy.

Rejection

• On October 16, 2012, ICICI Lombard rejected the critical illness claim.
• While expressing condolences, the insurer told the consumer that the death summary and medical records showed “acute kidney injury” and not “end stage renal failure” as defined under the policy.
• The policy defined end stage renal failure as, “chronic irreversible failure of both kidneys to function, as a result of which either regular renal dialysis is instituted or renal transplantation is carried out.”
• According to the insurer, there was no evidence of chronic irreversible kidney failure, nor of regular dialysis prior to hospitalisation.

State commission’s view

• The family approached the Madhya Pradesh consumer commission in 2014, alleging deficiency in service and unfair trade practice.
• The state consumer commission accepted their argument that dialysis had been performed and that nil urine output clearly indicated kidney failure at its terminal stage.
• It concluded that the ailment fell within the definition of a major medical illness and directed the insurer to pay.

Ambiguous terms in insurance contract

• The counsel for the consumer invoked the doctrine of ‘contra proferentem’, arguing that ambiguous terms in insurance contracts must be interpreted in favour of the insured.
• Contra proferentem is a rule of contractual interpretation holding that ambiguous terms are interpreted against the party that drafted or introduced them.
• Known as “against the offeror”, it protects weaker parties from unclear, adhesion, or standard-form contracts by favouring the interpretation that disadvantages the party responsible for the wording.
• Reliance was placed on a 2025 Bombay High Court judgment in Tata AIG General Insurance Co Ltd v. Vinay Sah.
• The national consumer commission distinguished that ruling, noting that it turned on its own facts and involved cardiac arrest during the COVID period.
• The national consumer commission found no ambiguity in the policy language.
• Where the definition is clear and specific, the doctrine of contra proferentem has no application, the bench held.

NCDRC’s re-examination of evidence

• We do not find the findings of the state consumer commission to be supported by medical documents on record.
• The order is of the state consumer commission is unsustainable.
• The only ground for the claim, as per the claim form, is on the basis of “end stage renal failure”.
• The claim was not on any other ground or multiple cirrhosis or myocardial infarction.
• The discussion regarding the nature of the ailment, symptoms and the diagnosis have not been appreciated or analysed by the state consumer commission in the manner it ought to have been done.
• Instead, the state consumer commission has inferred that since the patient had been put on dialysis and there was ‘nil’ urine output, the same was construed to be an end-stage renal failure.
• As noted in the death summary, the cause of death is recorded as septic shock with multi-organ failure with an acute kidney injury.
• When the claim itself was only on the basis of end stage renal failure, we do not see any reason for the state consumer commission to have entered to examine the existence of other alleged diseases which are not even borne out from the medical documents.
• There is no ambiguity either in the terms specified in the policy nor is there any other possible interpretation.
• The definition is exhaustive and therefore cannot be permitted to be read as being inclusive of any other symptom or disease, as contended by the learned counsel for the complainant.
• The death summary nowhere records the existence of multiple cirrhosis.
• The death summary does not record a myocardial infarction as a symptom or diagnosis. The patient developed a sudden cardiac arrest on account of multiple complications, indicated due to septic shock and multiorgan failure.

Final outcome

• Allowing the insurer’s appeal, the NCDRC set aside the state consumer commission’s April 11, 2022, order.
• The national consumer commission also directed that any statutory pre-deposit made by the insurer be refunded along with accrued interest.
• Execution proceedings had earlier been stayed on February 1, 2023.
• The contest between the parties thus ended with the insurer’s repudiation of the claim being upheld.