Health insurance rights upheld: Consumer Forum rules surgery was not ‘Cosmetic’

In a significant victory for policyholders, a consumer forum in Vadodara ruled that surgery to remove a pre-cancerous growth was medically necessary, and not a “cosmetic” procedure, as claimed by the insurer.

The insurer had rejected the claim on the grounds that the treatment fell under a standard cosmetic exclusion. The consumer challenged the decision. After reviewing the medical evidence and policy terms, the forum directed the insurer to honour the claim.

This ruling is more than just a single payout dispute. It highlights a recurring issue in India’s health insurance landscape: when insurers classify legitimate medical treatment as cosmetic to deny coverage.

For policyholders, the case offers both reassurance and practical lessons on how to argue a claim successfully.

The Case: When “Cosmetic” Becomes a Contested Description

The dispute arose after a policyholder underwent surgery to remove a pre-cancerous growth. The procedure had been recommended by doctors to prevent potential progression into a more serious condition.

When the insured submitted the hospital bills for reimbursement  the insurer rejected the claim, stating that the procedure was cosmetic in nature and therefore excluded under the policy terms.

Like many health insurance policies, the contract included a clause excluding cosmetic or aesthetic procedures, except where medically necessary due to injury or disease.

The insurer relied on this exclusion.

The consumer, however, argued that:

• The growth was medically significant. 
• Doctors had advised removal to prevent further health risks. 
• The procedure was preventive and therapeutic, not aesthetic. 

The matter was taken before the consumer forum and after examining the medical records, treatment notes and policy wording, the forum ruled in favour of the policyholder, holding that the surgery was medically necessary and not cosmetic. The insurer was directed to pay the admissible claim amount.

Why This Decision Matters

The definition of “Cosmetic” cannot be applied arbitrarily

Health insurance policies commonly exclude treatments undertaken purely for appearance enhancement, such as elective cosmetic surgeries.

However, the key legal and medical distinction lies in intent and necessity. A procedure is typically considered cosmetic if it is done solely to improve appearance, and there is no underlying medical need.

By contrast, procedures aimed at removing abnormal growths, preventing disease progression, addressing potential malignancy, reducing medically recognised risk may qualify as medically necessary even if they involve visible or minor surgical intervention.

This ruling reinforces that insurers cannot apply the “cosmetic” label loosely or as a matter of course.

Medical evidence carries significant weight

Consumer forums assess claim disputes based on documentation. In this case, medical records and professional recommendations played a decisive role.

Key documents that often influence such decisions include:

• Doctor’s written advice recommending surgery 
• Diagnostic and pathology reports 
• Hospital discharge summaries 
• Clinical notes explaining medical necessity 
• Risk assessment if the condition remained untreated 

If medical professionals clearly state that treatment is required to prevent further harm, it becomes difficult for insurers to justify rejection on cosmetic grounds.

Insurers do not have the final word

Many policyholders assume that once a claim is rejected, there is little they can do, but under the Consumer Protection Act, 2019, health insurance falls within the definition of “service.” If an insurer unfairly denies a valid claim, it may amount to deficiency in service.

Consumer commissions can direct the insurer to settle the claim, award compensation and order payment of litigation costs. In some cases, forums may also criticise arbitrary claim-handling practices.

What policyholders should learn from this case

Do not accept a rejection at face value

A claim denial is not a final verdict. It is a decision that can be reviewed, challenged and overturned.

Documentation is critical

Strong documentation can make or break a claim. Before filing or appealing a claim, ensure you have:

• A detailed medical certificate explaining why the procedure was required 
• Supporting diagnostic evidence 
• A clear statement that the treatment was not for aesthetic reasons 

If necessary, request your doctor to clarify that the procedure was preventive or therapeutic.

Understand your policy wording

Many of us do not read the exclusions section until a dispute arises. Pay attention to definitions of cosmetic procedures, exceptions to exclusions, waiting periods, any pre-existing disease clauses, coverage for preventive or minor surgeries as sometimes exclusions are narrower than insurers suggest.

Use the escalation channels available

If your claim is rejected:

1. File a written complaint with the insurer’s grievance redressal officer. 
2. Escalate to the insurer’s nodal officer if unresolved. 
3. Approach the Insurance Ombudsman if internal escalation fails. 
4. Consider filing a complaint before the District Consumer Disputes Redressal Commission. 

The consumer dispute system is designed to be accessible and many cases are decided based on documentary evidence.

What are the broader implications for health insurance 

With increasing policy uptake, claim disputes have also risen.

Common rejection grounds include:

• “Cosmetic” classification 
• Alleged pre-existing conditions 
• Waiting period restrictions 
• Non-disclosure allegations 
• Technical documentation deficiencies 

However, regulatory oversight and consumer awareness are also increasing.

Consumer forums are taking a more balanced approach by examining whether exclusions are fairly applied, assessing whether insurers have acted reasonably and reviewing the substance of medical necessity

This case is part of a broader pattern where forums are willing to scrutinise insurer decisions closely. Behind every insurance dispute is a person dealing with medical stress. Health insurance is purchased for financial protection during uncertain times. 

When a medically recommended procedure is denied, the financial burden can compound emotional strain.The Vadodara ruling restored confidence that the system can correct unfair outcomes.

Health insurance policies are contracts, but they are also regulated consumer services. When insurers interpret exclusions unfairly, consumer law provides redress.

This ruling serves as a reminder that policyholders are not powerless and that with persistence and proper documentation, legitimate claims can succeed.

If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk

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