Delhi High Court: Insurance Policies Must Also Cover Mental Illness; No Discrimination Between Physical & Mental Illness

Delhi High Court: Insurance Policies Must Also Cover Mental Illness; No Discrimination Between Physical & Mental Illness

The Delhi High Court (HC) in the case Shikha Nischal (Petitioner) v. National Insurance Company Limited & Anr. (Respondents) held that all insurance companies are liable to give effect to Section 21(4) of the Mental Health Act, 2017 (MHA, 2017). It added that there cannot be any discrimination between mental and physical illness.

The HC single-judge Justice Pratibha M. Singh held that "The MHA, 2017 and the provisions are absolutely relevant for a person who was suffering from Schizoaffective Disorder. The Petitioner was entitled to reimbursement of her claim as per the provisions of the MHA, 2017."

The factual matrix of the case is that the petition raised an important issue relating to insurance coverage for mental illnesses and the provision of non-discrimination qua such illnesses as enshrined in Sections 21(1)(a) and 21(4) of the Mental Healthcare Act, 2017.

The Petitioner regularly obtained health insurance policies from Respondent No. 1 - M/s National Insurance Company Limited since 2016. The last policy was purchased by her on 29 May 2020, named as 'National Mediclaim Policy'. The said Healthcare Policy is valid for one year 28 May 2021. The sum insured was Rs 3,95,000/-.

In June 2020, the Petitioner developed a certain illness for which she obtained treatment from Sukoon Hospital, Gurugram. She was admitted to the hospital and was discharged after a month of treatment. The total expenses incurred by her was Rs 5,54,636/- for the said period of hospitalization. She was diagnosed with Schizoaffective Disorder- a mental illness.

She then applied for reimbursement of the expenses incurred in her treatment, amounting to Rs 5,54,636/-, from NICL in terms of Clause 1.1 of the Healthcare Policy. As per the Petitioner, she is entitled to reimbursement in terms of Clause 1.1 of the Healthcare Policy which provides for insurance policy coverage for medical expenses incurred for hospitalization.

Her claim was rejected by National Insurance Company Limited (NICL) on the ground that the Healthcare Policy did not cover psychiatric disorders. The claim was subsequently also rejected by Insurance Ombudsman.

A petition was filed before the HC wherein the petitioner contended thatshe is clearly covered under Section 21(4) of the MHA, 2017 which provides specifically that insurance companies would not make any distinction between mental illnesses and physical illnesses.

Issue before the HC

Can mental illness be treated differently from physical illness for medical insurance purposes?

It was further contended that NICL could not have rejected the claim of the Petitioner on the ground that the condition of the Petitioner was a mental illness.

It was further urged that IRDAI had issued guidelines on 29 July 2016 Guidelines on Product Filing in Health Insurance Business regarding how the medical claim policies were to be issued by the insurance companies.

It approved the NICL's policy and by the 2016 Guidelines, the new product covering mental illness was launched within six months. The petitioner had renewed her Healthcare Policy and it covered mental illnesses.

Analysis and Conclusion of the HC

The HC after a detailed analysis of various legal provisions concluded that protections to be extended to persons with mental illnesses to ensure that they are treated equally with persons who have physical illnesses. It is clear from a reading of Section 21(4) of the MHA, 2017 that there cannot be any discrimination in providing medical insurance between mental and physical illnesses or conditions.

The Court added that it is the IRDAI's function to ensure that laws that are enacted for the benefit of policyholders are fully given effect to by the insurance companies. It said that a perusal of the provisions of MHA, 2017 clearly shows that insurance companies had to make provision for mediclaim insurance for treatment of mental illnesses on the same basis as treatment available for physical illnesses.

In its detailed judgment, the HC stated that mental illnesses cannot be treated differently from physical illnesses. Insurance policies also cannot discriminate between these two types of illnesses. While physical illnesses are manifested in the human body in some form, mental illnesses do not always have visible physical manifestations. However, mental illnesses can also be debilitating and destructive.

The Court added, "Availability of insurance for mental disabilities or conditions is, therefore, not only important but is an essential need. It is in recognition of the importance of a healthy mental state for a human being that both the Convention and the provisions of the MHA, 2017 discussed above, have been introduced."

Decision of the HC

Justice Singh held, "The Insurance Ombudsman's order failed to consider the fact that the MHA, 2017 recognized 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."