Exclusion of genetic disorders in insurance contracts is illegal and unconstitutional. IRDA directed to ensure that insurance companies do not reject such claims-High Court
ABCAUS Case Law Citation:
ABCAUS 2226 (2018) (02) HC
The Respondent/Plaintiff (“Plaintiff‟) had taken a medi-claim insurance policy for himself along with his wife and daughter, from the Appellant/Defendant Insurance Company (“Insurance company”). The sum insured under the said policy was Rs. 5 lakhs per individual. The Plaintiff had first taken a medi-claim in 2000 with another company. The said policy was shifted to the Defendant insurance company in 2004, after which the policy was renewed continuously year to year without break till 2012.
The Plaintiff was suffering from HOCM i.e. Hypertrophic Obstructive Cardiomyopathy. He was hospitalised in 2004 and 2006 and his claims for the said periods had been honoured and payments were made by the Insurance Company.
The Plaintiff was again hospitalised for treatment in 2011 for five days . However his claim was rejected on the ground that genetic diseases were not payable as per the genetic exclusion clauses.
The Plaintiff‟s case was that the exclusion of genetic disorders was not a part of the initial policy which was availed by him but was added as part of the `Exclusions’ in a later policy document, without specific notice to him and hence the said exclusions do not bind him.
The Trial Court held that there cannot be a discriminatory clause against those persons who suffered from genetic disorders and they are entitled to medical insurance. The Trial Court decreed the suit in favour of the plaintiff.
The Hon’ble High Court noted that as per the terms of the renewed policy, the Insurance Company was to pay the sum insured in the policy “subject to” the exclusion clause and if the medical condition was covered by any of the exclusions, the claim was liable to be disallowed. “Genetic disorders” was one such listed exclusions.
The Hon’ble High Court observed that the fact 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 Hon’ble High Court observed the global scenario on applicability of insurance to genetic disorders and observed that though there is lack of uniformity in the nature of regulation, the unanimous opinion appears to be that discrimination based on genetic heritage and disposition is contrary to human rights and in the context of insurance, exclusions relating to genetic disorders is heavily regulated. Even the collection of genetic data, preservation and maintenance of confidentiality of the data is a subject matter of grave concern.
The Hon’ble High Court noted the findings of the Universal Declaration of Human Rights, 1948, the prevalent practices in European Union (E.U.), Austria, Estonia, Finland, France, Ireland, Spain, Sweden, United Kingdom, USA, Australia, Canada. It was observed that several countries across the world have enacted laws in respect of genetic discrimination by insurance corporations. The said laws regulate and govern exclusion of genetic medical conditions from insurance policies as also the collection, preservation of genetic data.
Whether the exclusion in relation to `genetic disorders’ is valid and legal in India?
The Hon’ble High Court observed that Article 14 of the Constitution of India prohibits discrimination of any kind and would include discrimination based on genetic heritage of an individual. It is well settled that Right to Health is a Fundamental Right, as an integral part of Article 21 and Right to Healthcare is also a Fundamental Right.
The Hon’ble High relying on number of judgment of the Hon’ble Supreme Court opined that right to Healthcare is a part of Right to Life. Medical care and health facilities are part of Right to Healthcare. With spiralling medical costs, health insurance has to be an integral part of medical care and health facilities. Healthcare without health insurance is a challenge. The individual’s Right to avail health insurance is an inalienable part of the Right to Healthcare. Health insurance with the exclusion of “genetic disorders” hits at the basic right of an individual to avail of insurance for prevention, diagnosis, management and cure of diseases. Excluding any particular category of individuals i.e., those with genetic disorders, from obtaining health insurance or having their claims honoured, based on genetic disposition would be per se discriminatory and violative of the citizen’s Right to Health.
The Hon’ble High Court observed that the clause in an insurance policy has to stand the test of `reasonableness’. It is a means of social security. The principles laid down by the Supreme Court in respect of life insurance equally apply with greater vigor to health insurance. Thus, the fact that a particular consumer’s genetic heritage could lead to higher risk ought not to be used against the said person for exclusion of the person from availing medical insurance.
The Hon’ble High Court regretted that that insurance companies, like in the present case, have not asked for higher premium based on a genetic disposition but completely refused to honour a claim based on a broad understanding (or misunderstanding) of the term “genetic disorders”.
The Hon’ble High Court noted that Insurance Regulatory Development Authority (IRDA) in 2013 had issued guidelines on standardization in health insurance which inter alia had a specific exclusion in respect of “genetic conditions”. These guidelines have now been superseded by 2016 guidelines wherein only “congenital anomalies” have been defined and genetic conditions do not find a mention. Thus, “genetic conditions” can no longer be excluded.
Also the Hon’ble High Court opined that it is also a settled proposition that once an insurance policy has been issued, the conditions of the same cannot be altered.
The Hon’ble High Court observed that exclusions relating to genetic disorders do not remain merely in the realm of contracts but overflow into the realm of public law. The reasonableness of such clauses is subject to judicial review. The broad exclusion of “genetic disorders” is thus not merely a contractual issue between the insurance company and the insured but spills into the broader canvas of Right to Health.
The Hon’ble High Court opined that there appears to be an urgent need to frame a proper framework to prevent against genetic discrimination as also to protect collection, preservation and confidentiality of genetic data. Insurance companies are free to structure their contracts based on reasonable and intelligible factors which should not be arbitrary and in any case cannot be “exclusionary”. Such contracts have to be based on empirical testing and data and cannot be simply on the basis of subjective or vague factors. It is for lawmakers to take the necessary steps in this regard.
The Hon’ble High Court opined that a cause based exclusion in insurance contracts of reasons such as war, damage due to natural disasters, disorders caused due to nuclear material, etc. cannot be equated with genetic disorders.
The Hon’ble High Court held that the manner in which the genetic disorder exclusion was inserted in the policy document for the year 2011-2012 was a violation of good faith between the Plaintiff and the insurance company.
Conclusions & Relief given:
(i) Right to avail health insurance is an integral part of the Right to Healthcare and the Right to Health, as recognised in Art. 21 of the Constitution;
(ii) Discrimination in health insurance against individuals based on their genetic disposition or genetic heritage, in the absence of appropriate genetic testing and laying down of intelligible differentia, is Unconstitutional;
(iii) The broad exclusion of “genetic disorders” is thus not merely a contractual issue between the insurance company and the insured but spills into the broader canvas of Right to Health. There appears to be an urgent need to frame a proper framework to prevent against genetic discrimination as also to protect collection, preservation and confidentiality of genetic data. Insurance companies are free to structure their contracts based on reasonable and intelligible factors which should not be arbitrary and in any case cannot be “exclusionary”. Such contracts have to be based on empirical testing and data and cannot be simply on the basis of subjective or vague factors. It is for lawmakers to take the necessary steps in this regard.
(iv) The Exclusionary clause of `genetic disorders’, in the insurance policy, is too broad, ambiguous and discriminatory – hence violative of Art. 14 of the Constitution of India;
(v) Insurance Regulatory Development Authority of India (IRDA) is directed to re-look at the Exclusionary clauses in insurance contracts and ensure that insurance companies do not reject claims on the basis of exclusions relating to genetic disorders
