Delhi High Court held insurance companies liable; cover mental illness without discrimination



The Delhi High Court emphasized the importance of the availability of insurance for mental illnesses and ruled that insurance policies cannot discriminate between physical illness and mental illness.

A Single Judge Bench comprising Justice Prathiba M Singh ordered, “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 Court asserted that it is 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 is implemented by all the insurance companies for the benefit of the persons who obtain Mediclaim policies.

The Court also linked the pandemic and its effect on mental health which led to severe mental problems.

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.”

In the present case of Shikha Nishcal v. NICL, the petitioner was diagnosed with Schizoaffective Disorder and sought for reimbursement of the expenses incurred in her treatment but her claim rejected on the ground that the Healthcare Policy did not cover psychiatric disorders by National Insurance Company Limited (NICL).

The claim was subsequently also rejected by the Insurance Ombudsman.

Provisions of the Mental Health Act (MHA), 2017 were not implemented using the shelter of 2016 Guidelines issued by IRDAI 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. 

The Court 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 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 to reimbursement of her claim as per the provisions of the MHA, 2017,” the Court further ruled.

The Court directed NICL to pay ₹25,000 as the cost to the petitioner in view of the fact that she had to resort to litigation.

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