Star Health ordered to pay compensation for wrongful deduction in medical claim

The Raipur District Consumer Disputes Redressal Commission has found Star Health and Allied Insurance Company guilty of deficiency in service and unfair trade practice. The company had arbitrarily deducted ₹12,000 from a customer’s health insurance claim. The Commission ordered the insurer to refund the amount with interest.

Case Background

Mohit Gandhi had purchased a health insurance policy from Star Health Insurance. The policy was valid from 15 December 2022 to 14 December 2023. Just a week after, on 22 December 2022, he was admitted to Raipur Stone Clinic for kidney stone treatment. His medical expenses came to ₹74,600.

When Mohit filed a claim, the insurance company reimbursed only ₹62,470. They deducted ₹12,000 under “professional fees and procedure charges,” claiming these were not “reasonable and necessary.” Dissatisfied with this arbitrary deduction, Mohit approached the Raipur Consumer Commission for justice.

Commission’s Decision

Even after being served notices, Star Health did not appear before the Commission, and the case was heard ex parte (in their absence).

The Commission found that the insurance company had not pointed to any policy terms or conditions that justified the ₹12,000 deduction. Their assessment sheet only mentioned that the expenses were not “reasonable and necessary” without providing any explanation or evidence.

The bench further observed that hospital charges such as professional fees and procedure charges naturally vary, and the insurer is bound to clearly state the grounds for any deduction in a claim.

The Commission ruled that the unjustified deduction amounted to deficiency in service and unfair trade practice. It directed Star Health to refund the deducted ₹12,000 with 6% interest (from the date of filing), pay ₹3,000 as compensation, and pay ₹2,000 as litigation costs.

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