Insurance policies have to cover mental illness, cannot discriminate between physical illnesses and mental illnesses: Delhi High Court

The Delhi High Court has ruled that insurance policies cannot discriminate between physical illnesses and mental illnesses (Shikha Nishcal vs NICL)..The order was passed by a single-judge Bench of Justice Prathiba M Singh. "All insurance companies are liable to give effect to Section 21(4) of the MHA, 2017 with effect from the date when it has come into force i.e., 29th May, 2018. Mental illnesses ought to be covered without any discrimination," the order said. .Emphasizing on the importance of availability of insurance for mental illnesses, the Court said,."..mental illnesses can also be debilitating and destructive. The recent pandemic also highlights this beyond any doubt. Circumstances leading to patients requiring isolation, healthy persons being subjected to lock-downs, work from home conditions, loss of employment leading to lack of confidence for long durations have led to several mental problems. Such mental conditions need to be dealt with immediately. Availability of insurance for mental disabilities or conditions is, therefore, not only important but is an essential need.".The Court further stated that it was the duty of the Insurance Regulatory and Development Authority of India (IRDAI) to fully supervise and ensure that the provision of the Mental Health Act, 2017 are implemented by all the insurance companies for the benefit of the persons who obtain mediclaim policies..In the present case, the petitioner was diagnosed with Schizoaffective Disorder and sought for reimbursement of the expenses incurred in her treatment..National Insurance Company Limited (NICL) rejected her claim on the ground that the Healthcare Policy did not cover psychiatric disorders..The claim was subsequently also rejected by Insurance Ombudsman. .Counsel for the petitioner argued that her claim could not have been rejected as her case was clearly covered under Section 21(4) of the MHA, 2017 which provided specifically that insurance companies would not make any distinction between mental illnesses and physical illnesses..Counsel for IRDAI also said that there was an obligation on the insurer to cover mental illnesses. NICL counsel submitted that it had already been directed by IRDAI to pay the claim. .It was explained that IRDAI had issued guidelines on July 29, 2016 namely, Guidelines on Product Filing in Health Insurance Business in respect of the manner in which the mediclaim policies were to be issued by the insurance companies. Subsequently, the new product covering mental illness was launched on July 1, 2020. .Since the Petitioner renewed her Healthcare Policy in May, 2020, she was bound by the terms of the Healthcare Policy availed by her, which did not include mental illness..After analysing the Mental Health Act, the Court opined that it was IRDAI’s function to ensure that laws that were enacted for the benefit of policy holders were fully given effect to by the insurance companies..It further noted that while the 2016 Guidelines merely prescribes the maximum time within which a new product approved by IRDAI had to be launched by the company, there was no shelter to NICL for not having implemented the provisions of the MHA 2017.."The fundamental premise is that the non-implementation of the provisions of the MHA, 2017 for a period of two years is not permissible. Moreover, the fact that the 2016 Guidelines are being used in order to postpone the implementation of the provision of Section 21(4) of the MHA, 2017, would result in an incorrect interpretation of the Guidelines itself. Once the law has been enacted, in respect of all policies issued thereafter, the provisions ought to have been implemented by NICL and all other insurance companies," the Court said. .The Court, therefore, held that the Insurance Ombudsman's order was untenable. "The Insurance Ombudsman’s order failed to consider the fact that the MHA, 2017 recognised the rights of the Petitioner and the conclusion of the Insurance Ombudsman that the provisions of the MHA, 2017 are not relevant, is completely contrary to law and is untenable. The MHA, 2017 and the provisions thereof, are absolutely relevant for a person who was suffering from Schizoaffective Disorder. Thus, the Petitioner was entitled for reimbursement of her claim as per the provisions of the MHA, 2017," the Court ruled..In view of the fact that the petitioner had to resort to litigation, NICL was directed to pay Rs 25,000 as costs to her. .Advocate Shahrukh Ejaz, Nilotpal Bansal appeared for the Petitioner. .Advocate Pankaj Seth appeared for NICL. Advocate Abhishek Nanda appeared for IRDAI..[Read Order].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.