Health insurance claims can’t be rejected on broad definition of genetic disorders: Delhi HC

The Delhi high court on Monday held that it was illegal for health insurance policies to exclude genetic disorders from their scope of coverage.

Such exclusionary clauses were held to be in violation of Article 14 (Right to Equality) and Article 21 (Right to Life) of the Constitution for being “too broad, ambiguous and discriminatory”.

“The fact (is) that there are different types of genetic disorders and even common diseases like diabetes and cardiac diseases could be included in the broad definition, and makes the exclusion vulnerable. In effect, it would mean that large swathes of population would be excluded from availing health insurance, which could have a negative impact on the health of a country…The broad exclusion of genetic disorders from insurance contracts/claims is illegal and unconstitutional,” the court ruled.

The judgment affirms two things—that the Constitution prohibits discrimination based on the genetic heritage of an individual, and that the ‘right to health’ as well as the ‘right to healthcare’ is a part of right to life.

The court, however, noted that insurance companies were free to structure their contracts based on reasonable and intelligible factors which should not be arbitrary and in any case cannot be ‘exclusionary’. The court said such contracts have to be based on empirical testing and data and cannot be simply on the basis of subjective or vague factors.

The court further observed that the Insurance Regulatory Development Authority (IRDA) ought to have supervised the manner in which the term genetic disorders were being misused by insurance companies. It said genuine claims were rejected by companies that took advantage of the ambiguity in the IRDA guidelines with respect to genetic conditions.

While the 2013 IRDA guidelines on standardization in health insurance had a specific exclusion in respect of congenital and genetic conditions without defining the term itself, the 2016 guidelines which superseded the earlier guidelines had no reference to ;genetic disorders’ and only defined ‘congenital anomalies’. The court, thus, concluded that genetic conditions could no longer be excluded from the scope of health insurance contracts.

The court directed IRDA to ensure that any no claims were rejected by insurance companies on the basis of exclusionary clauses pertaining to genetic disorders, and to ‘re-look’ into the exclusionary clauses in insurance contracts.

“Typically, any health insurance policy excludes latent, unknown diseases and pre-existing disorders. As a result of the judgement, pre-existing medical conditions are excluded except genetic disorders. Only thing, probably, (for the insurance companies to do) is to align with the judgement and continue to make pre-existing conditions as an exclusion..within that exclusion you make an exclusion for genetic disorders. That means you are opening yourself to any kind of genetic disorder ..and the kind of hospitalization costs that follow genetic disorder are extraordinary,” K. Ramchandran, an insurance industry expert said.

Justice Pratibha M Singh delivered the 47-page judgement in a plea brought by Jai Prakash Tayal, who is suffering from Hypertrophic Obstructive Cardiomyopathy, seeking damages from United India Insurance Co. Ltd.

“The judgement is being studied but prima facie it’s significant if it prevents insurers from using the genetic disorder clause to refute claims in future after the policyholder was insured and the policyholder had no prior knowledge of the genetic disorder,” said Sanjay Datta, chief underwriting and claims, ICICI Lombard General Insurance Co. Ltd.

Deepti Bhaskaran contributed to this story.