India: Insurance – "Mental Illness" Be Included Without Discrimination – Delhi High Court

Subhash Khandelwal v. Max Bupa Health Insurance Company Limited

In a petition filed against Max Bupa Health Insurance Company Limited ("Max Bupa"), the Bench of Justice Pratibha M. Singh of the Delhi High Court¹ ("Court") held that there can be no discrimination between insurance provided for mental illness and physical illness. The Petitioner had an insurance policy from Max Bupa for the sum assured of INR 35 lakhs and paid premium regularly. The Petitioner contended that when he raised his claim in respect of mental illness, he was informed of a clause in the policy, restricting the sum assured to INR 50 lakhs with certain additional conditions. The Petitioner argued that most prevalent mental conditions were restricted under the policy to an assured sum of INR 50 lakhs; which was contradictory to Section 21 (4) of the Mental Healthcare Act, 2017 ("Act").

Section 21 of the Act mandated "every insurer shall make provision for medical insurance for treatment of mental illness on the same basis as is available for treatment of physical illness." Recognizing the principle of right to equality and non-discrimination enriched in Section 21 of the Act, the Court noted that the policy excludes a large number of mental conditions from full coverage. The Court observed that this matter requires consideration as a large number of people stood affected by such policies. It was further noted that the Insurance Regulatory and Development Authority of India ("IRDAI"), tasked with regulating and promoting the insurance and re-insurance sector in India, ought to place on the record the basis on which approval has been granted to policies.

Shikha Nischal v. National Insurance Company Limited and Anr.

In another relevant judgment, Justice Pratibha M. Singh of the Delhi High Court², once again reemphasized and held that all insurance companies must recognize and give effect to Section 21(4) of the Act.

In this case, the Petitioner had obtained the National Mediclaim Policy from National Insurance Company Limited ("NIC"). The Petitioner was diagnosed with schizoaffective disorder and incurred expenses for hospitalization. NIC rejected the Petitioner's claim citing an exclusion clause from the policy. The exclusion clause stated that no coverage would be provided for, in relation to 'Psychiatric disorder, intentional self-inflicted injury'. Against the rejection, the Petitioner filed a complaint with the Insurance Ombudsman which rejected the claim as well.

Recognizing that this matter raises grave issues of public importance, the Court rightly observed that in the modern world, mental health is as importance as physical health. It is in recognition of this fact that the United Nations Convention on Rights of People with Disabilities ("Convention") prohibits any form of discrimination in respect of mental illnesses or any other disabilities and enshrines in itself the principle of 'non-discrimination.' India ratified the Convention in 2007 which specifically refers to 'non-discrimination' qua medical insurance. The Court therefore observed that in order to bring the domestic law in line with the Convention, the Act was enacted.

The objective of the Act is "to provide for mental healthcare and services for persons with mental illness and to protect, promote and fulfil the rights of such persons during delivery of mental healthcare and services and for matters connected therewith or incidental thereto." The Court held that Section 21 of the Act provides mental illness are to be treated 'equally' with physical illness. Section 14 of the IRDAI Act, 1999 provides that IRDAI's function is to protect the interest of policy holders in respect of all kinds of policies including settlement of insurance claims. IRDAI is the regulatory watch-dog on all insurance products being issued by insurance companies, with power to 'control' and 'regulate' the rates, advantages, terms and conditions that are offered by insurers. IRDAI also has the duty to protect the interest of policy holders and ensure that they are not disadvantaged in any manner, thereby giving effect to the laws enacted for the policy holders. IRDAI's circular of August 2018 confirms that every insurer must ensure compliance of Section 21(4) of the Act. The Court thus held that the Insurance Ombudsman erred in rejecting the claim of the Petitioner.

A perusal of the provisions of the Act shows that insurance companies had to make provision for treatment of mental illnesses as for physical illnesses. IRDAI itself filed an affidavit in the present matter recognizing the principles enriched in Section 21 of the Act, and stated that the repudiation of the claim by NICL is in violation of the Act.

Further, even NICL did not dispute that mental illness is to be covered under Mediclaim policies. NICL relied upon Guidelines on Product Filing in Health Insurance Business ("2016 Guidelines") which prescribes the maximum period within which a new product approved by IRDAI has to be launched; beyond 6 months, the insurance company having to re-seek the approval. However, the Court held that this provision does not provide shelter to NICL for not implementing the provisions of the Act. The Court thus held that the fundamental premise is that the non-implementation of the provisions of the Act 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 Act, would result in an incorrect interpretation of the Guidelines itself. The Court therefore held that IRDAI has an 'absolute duty' to ensure implementation of the Act.

The Court emphasized that whilst mental illness does not always have physical manifestations, it can be debilitating and destructive, and the current Covid-19 pandemic highlights this fact. Thus, "availability of insurance for mental disabilities or conditions is, therefore, not only important but is an essential need." Coming down heavily upon the IRDAI, the Court held - IRDAI cannot turn a blind eye towards NIC's non-compliances of the existing laws. Upon the Act coming into force, all insurance products ought to have extended the same treatment to mental and physical illnesses, thereby removing any discrimination. The exclusionary clause in NIC's product that was launched in 2020, two years after the Act came into force, is contrary to law, untenable and is against the spirit of the Act.

Observing that the provisions of the Act are absolutely relevant for a person suffering from schizoaffective disorder, the Court held that the Petitioner was entitled to reimbursement of the claim along with costs for litigating the claim. The Court re-emphasized that all insurance companies are liable to give effect to Section 21(4) of the Act, with effect from the date when the Act came into force, i.e., 29 May 2018 and mental illness ought to be covered without any discrimination.

Footnotes

1. W.P.(C) 4010/2021

2. W.P.(C) 3190/2021

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.