If you are stuck in such a situation, here is what to do.

Mr. Alok Sharma found himself in a distressing situation with his health insurance provider, Apex Health Assurance. He was scheduled for a necessary surgical procedure at Sunrise Multispecialty Hospital in Nagpur, a hospital listed within his insurer’s network. Following the proper procedure, he applied for a cashless claim, which was promptly approved by Apex Health Assurance. Relieved, Mr. Sharma began preparing for his surgery.

To his shock, just a day later, he received a notification that his approved claim had been revoked. The reason provided by the insurer was vague and confusing, stating an issue with the “doctor’s tariff not being covered under the standard schedule of charges,” despite the doctor and hospital both being part of the insurer’s network and the claim amount being well within his policy’s sum insured. This last-minute reversal left Mr. Sharma in a state of panic, facing both a medical emergency and a significant financial crisis. This act by the insurance company is a clear instance of deficiency in service and potentially an unfair trade practice.

Advice in such cases

• Document Everything: Keep a record of all communication with the insurance company. This includes emails, reference numbers for phone calls, approval letters, and the revocation message.
• Official Complaint: Immediately send a formal written complaint or email to the insurance company’s grievance redressal officer. Clearly state the sequence of events, attach the approval and revocation proofs, and demand an immediate resolution.
• Escalate to IRDAI: If the insurer does not resolve the issue satisfactorily, you can file a complaint with the Insurance Regulatory and Development Authority of India (IRDAI) through their Integrated Grievance Management System (IGMS).
• Consumer Court: You have the right to file a complaint in the appropriate Consumer Disputes Redressal Commission for deficiency in service and seek compensation for financial loss and mental anguish.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Such cases are primarily governed by civil and consumer protection laws rather than criminal statutes. The key legal provisions are:

• The Consumer Protection Act, 2019: This is the most relevant law. The insurer’s actions amount to a “deficiency in service” (Section 2(11)) and an “unfair trade practice” (Section 2(47)). The policyholder can seek relief from the Consumer Commission.
• The Indian Contract Act, 1872: A health insurance policy is a contract. The initial approval of the claim can be seen as an acceptance of liability. Revoking it without a valid, contractual reason constitutes a breach of contract.
• IRDAI (Protection of Policyholders’ Interests) Regulations, 2017: These regulations mandate that insurers must process claims in a fair and transparent manner. Regulation 27 specifies timelines for claim settlement. Arbitrary revocation of an approved claim violates these regulatory principles.
• Bharatiya Nyaya Sanhita, 2023 (BNS): While primarily a civil matter, if it can be proven that the insurance company acted with a dishonest intention from the outset to cause wrongful gain for itself or wrongful loss to the policyholder, a case of cheating under Section 318 of the BNS could potentially be argued. However, this is a high threshold to prove and is not the typical legal route.

If you are the complainant

As the policyholder (complainant), you are the aggrieved party. Your goal is to enforce the contract and get the service you paid for.

• Gather all Evidence: Systematically arrange your policy document, premium receipts, all communications with the insurer, the hospital’s cost estimate, and the doctor’s recommendation for the surgery.
• Send a Legal Notice: Through a lawyer, send a formal legal notice to the insurance company. This notice will detail the breach of contract and deficiency in service, demanding the reinstatement of the cashless approval within a specific timeframe, failing which you will initiate legal proceedings.
• File a Consumer Complaint: If the legal notice does not yield results, file a complaint before the appropriate District or State Consumer Commission, depending on the claim value. You can claim the surgery cost, plus compensation for mental harassment and litigation costs.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

Being a victim in this scenario means you have been wronged by the insurer’s unethical actions. Your focus should be on immediate relief and holding the company accountable.

• Prioritize Health: If the surgery is urgent and you can afford it, you may choose to pay for it yourself and then file for reimbursement and compensation. Ensure you collect all original bills and payment receipts.
• Lodge a Formal Grievance: Immediately use the insurer’s highest grievance redressal channel. Mention the approval and subsequent illegal revocation, and mark a copy to the IRDAI.
• Seek Legal Recourse: Do not delay in seeking legal help. The insurer is banking on you being overwhelmed and giving up. Taking swift legal action shows you are serious about defending your rights.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police are generally reluctant to intervene in such matters. They will rightly identify the dispute as civil in nature, pertaining to a breach of contract and deficiency of service. They will not typically register an FIR under Section 318 (Cheating) of the BNS unless there is compelling and direct evidence of a pre-planned fraudulent scheme. Their usual advice will be to approach the Consumer Court or the IRDAI, which are the specialized forums for resolving such insurance disputes.

FAQs people normally have

• Can an insurance company legally revoke an already approved cashless claim?
  No, not without a very strong and valid reason that is explicitly covered in the policy terms and conditions, such as the discovery of fraud or non-disclosure of material facts by the policyholder. Arbitrarily revoking an approval after due diligence is illegal and constitutes a deficiency in service.
• Should I proceed with the surgery by paying from my own pocket?
  This depends on the urgency of the medical procedure and your financial situation. If you can afford it, it may be better to proceed with the surgery for your health’s sake. Keep all original bills and reports meticulously, as you can then file a claim for reimbursement along with compensation for the insurer’s failure to provide cashless service.
• What is the role of the Insurance Ombudsman?
  The Office of the Insurance Ombudsman is another effective forum for redressal. It is a quasi-judicial body that resolves complaints from policyholders against insurance companies. You can approach the Ombudsman if your complaint is not resolved by the insurer’s grievance redressal mechanism within 30 days. The process is cost-effective and time-bound.

What evidence is required?

To build a strong case, you will need the following documents:

• The Health Insurance Policy document.
• Proof of premium payments.
• All medical records, doctor’s prescriptions, and diagnostic reports recommending the surgery.
• The pre-authorization request form submitted to the insurer.
• The initial communication from the insurer approving the cashless claim (email, SMS, or letter).
• The subsequent communication revoking the claim, along with the reason provided.
• Any further email or written correspondence with the insurer’s grievance cell.
• A copy of the legal notice sent to the insurer.

How long will the investigation take?

The timeline can vary depending on the path you choose:

• Insurer’s Grievance Cell: They are typically required to respond within 15 days.
• IRDAI (IGMS): The process can take a few weeks to a couple of months.
• Insurance Ombudsman: A decision is usually given within 1 to 3 months.
• Consumer Court: This is a longer process. While there are statutory timelines under the new Act for faster disposal, a case can take anywhere from 6 months to over a year, depending on the complexity and the workload of the commission.

Advocate Sudhir Rao, Supreme Court of India