Health insurance claims cannot be rejected citing time bar clauses in the policy: Bombay HC

The Bombay High Court has held that insurers cannot reject health insurance claims solely on the ground of delay where a policy-imposed time bar effectively extinguishes the insured’s right. [CP Ravindranath Menon v. United India Insurance Company]..A Division Bench of Justices Bharati Dangre and Manjusha Deshpande declared that such time-bar clauses are void under Section 28(b) of the Indian Contract Act, 1872.Section 28(b) renders void any agreement that extinguishes a party’s rights or discharges an insurer from liability upon the expiry of a specified period in a manner that restricts legal enforcement.“An inhibition in insurance policy restricting the period of availing the benefit under the policy, which the insured is otherwise entitled to avail, cannot be sustained and has to be declared as void and non-est in the wake of the decision of the Apex Court (in the case of Oriental Insurance Company Ltd. Vs. Sanjesh & Anr),” the Court held..The Court was hearing a writ petition filed by CP Ravindranath Menon, a retired employee of Export-Import Bank of India, whose group health insurance claim of ₹1.13 lakh was rejected by United India Insurance Company Ltd. as time-barred. .Menon had submitted four reimbursement claims for himself and his spouse for medical treatment between April 2021 and April 2022 under a family floater group mediclaim policy, routed through his employer in May 2022.United India strictly enforced the policy’s contractual timelines, contending that the parties had freely agreed to them. The policy mandated that hospitalisation and pre-hospitalisation claims be submitted within 30 days of discharge, and post-hospitalisation claims within 15 days of completion of treatment, with a further stipulation that no claim would be entertained beyond 90 days. On that basis, the insurer asserted its right to reject any bills submitted more than 90 days after the relevant event..However, the Court found that any such agreement which extinguishes rights or discharges liability on the expiry of a specified period is void to that extent in view of Section 28(b) of the Contract Act. The Bench added that while insurance contracts are to be construed strictly, they cannot override statutory protections under the Contract Act. Allowing Menon’s petition, it directed United India Insurance to reimburse the entire claim amount within eight weeks, with interest at 6 per cent per annum from the date it became due and payable..Advocates Subit Chakrabarti and Khushnumah Banerjee briefed by Vidhii Partners appeared for Menon.Advocate Varsha Chavan appeared for the insurance company..[Read Order]