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MENTAL ILLNESS TO BE COVERED UNDER INSURANCE POLICIES!  

June 9, 2021

By Nihit Nagpal and Manmeet Singh Marwah

Mental health, as a concept, is often overlooked in India, if not outright denigrated. In todays’ fast paced uber competitive world, mental health is as important as physical health and should not be a taboo – it deserves to be on the same pedestal as that of physical well-being, if not higher. This is been brought to light more than ever before since the onset of the COVID-19 pandemic.

The United Nations Convention on Rights of People with Disabilities (hereinafter referred to as the ‘United Nations Convention’) prohibited any form of discrimination in respect of mental illnesses or any other disabilities. Since the 1800s, there have been various statutes in India which encompass mental health and as recently as 2016, The Mental Healthcare Bill was promulgated in order to bring the domestic law in line with the applicable United Nations Convention. This finally led to the enactment of Mental Healthcare Act, 2017 and the same has been in effect since May 29, 2018. Also, The Insurance Regulatory and Development Authority of India (hereinafter referred to as “IRDAI”) vide its circular dated August 16, 2018, also stated that insurance is liable to be provided for mental illnesses upon the enactment of the Mental Healthcare Act, 2017.

The IRDAI regulates the personal insurance sector. It plays a pivotal role in safeguarding the interests of the policy holders while having a supervisory jurisdiction to keep a check on all the insurance policies being issued by the numerous insurance companies so that that the policy holders are not disadvantaged in any manner. The Section 14[1] of the IRDAI Act, 1999, protects the interest of the policy holders in respect of all kinds of policies, including settlement of insurance claims. Further, the IRDAI has a duty to `control’ and `regulate’ the terms and conditions of insurance policies. Therefore, it is the duty of  IRDAI to ensure that laws are fully given effect by the insurance companies which are enacted for the benefit of policy holders.

CASE FILED BEFORE DELHI HIGH COURT REGARDING INSURANCE AND MENTAL ILLNESS

The High Court of Delhi in its recent judgment of Shikha Nischal Vs National Insurance Company Limited & Anr (W.P.(C) 3190/2021) dated April 19, 2021, addressed issues relating to mental illnesses and their insurance coverage. The High Court observed that insurance companies had to make provisions for mediclaim insurance for treatment of mental illnesses on the same basis as treatment available for physical illnesses and Section 21[2] of the Mental Healthcare Act, 2017 recognizes the right to equality and prohibits discrimination qua mental illnesses.

BRIEF FACTS OF THE CASE

The Petitioner had been regularly obtaining health insurance policies from Respondent No. 1 – M/s National Insurance Company Limited (hereinafter referred to as the ‘NICL’), since 2016. The last policy was purchased by her on May 29, 2020, called ‘National Mediclaim Policy’ (hereinafter referred to as the ‘Healthcare Policy’) and the sum insured was Rs. 3,95,000/-. The said Healthcare Policy was valid for a period of one year i.e. till May 28, 2021.

In June, 2020, the Petitioner was admitted to a hospital on June 28, 2020 and was discharged on  July 28, 2020. She was diagnosed with a mental illness called Schizoaffective Disorder which is a mental health condition having a combination of symptoms of schizophrenia and mood disorder and the total expenses incurred for the hospitalization was Rs. 5,54,636/-. The Petitioner then applied for reimbursement of the said amount from NICL, as she was entitled to reimbursement in terms of Clause 1.1 of the Healthcare Policy, which provides for coverage for medical expenses incurred for hospitalization.

The NICL however, relying upon Clause 4.10 of the Healthcare Policy, rejected the claim vide letter dated September 01, 2020, on the grounds that the said mental illness was specified for exclusion from coverage under the Healthcare Policy.

BEFORE INSURANCE OMBUDSMAN

Being aggrieved by the Insurance Agency’s rejection, the Petitioner then approached the Insurance Ombudsman relying upon the provisions of Mental Healthcare Act, 2017. The Insurance Ombudsman however, rejected the claim of the Petitioner, concluding that the claim of the Petitioner would have to be settled in terms of the Clauses of the Healthcare Policy and not as per the provisions of Mental Healthcare Act, 2017 and held that Clause 4.10 of the Healthcare Policy provided for exclusion of certain conditions from the insurance cover, including Psychiatric and psychosomatic disorders/diseases.

BEFORE THE HIGH COURT

The High Court of Delhi passed a detailed order stating that Insurance policies cannot discriminate between mental illnesses and physical illnesses. The High Court observed that physical illnesses in a human body are visible in some form and the same is not always in the cases of mental illnesses however, mental illnesses can be equally or more debilitating and destructive. 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 Mental Healthcare Act, 2017 have been introduced. Further, the Covid-19 pandemic has aggravated such mental problems due to Coronavirus patients requiring isolation, healthy persons being subjected to lock-downs and not able to lead a normal life, work from home conditions with increasing working hours, loss of employment leading to lack of confidence and financial distress for long period of time. Therefore, availability of insurance coverage for mental illnesses is not only important, but is an essential need as such mental conditions need to be dealt with immediately.

The High Court further held that, the IRDAI has a duty to fully supervise and ensure that the provisions of the Mental Healthcare Act, 2017 are implemented by all the insurance companies for the benefit of the persons who obtain mediclaim policies which has not happened in the present case.

The High Court observed that the Petitioner’s claim has been paid for the covered amount, in view of IRDAI’s direction to NICL after filing of the writ petition. However, the Insurance Ombudsman’s order which holds that the provisions of the Mental Healthcare Act, 2017 are not applicable to the Petitioner is untenable as the provisions of Mental Healthcare Act, 2017 and provisions of the IRDAI Act, 1999 makes it clear that all insurance products ought to have extended the same treatment for mental and physical illnesses and remove any clause that discriminate between the same after Mental Healthcare Act, 2017 came into force. The Mental Healthcare Act, 2017 has come into effect from May 29, 2018, and thus the exclusion in the Healthcare Policy of NICL with respect to all psychiatric and psychosomatic disorders/diseases, under Clause 4.10 of the Healthcare Policy, is contrary to prevalent law and the Mental Healthcare Act, 2017 is completely relevant for a person who is suffering from a disorder such as Schizoaffective Disorder. Thus, the Petitioner was entitled for reimbursement of her claim as per the provisions of the Mental Healthcare Act, 2017.

The High Court concluded by stating that Mental illnesses ought to be covered under insurance coverages without any discrimination and directed NICL and all insurance companies to give effect to Section 21(4) of the Mental Healthcare Act, 2017 from the effective date when it has come into force i.e., May 29, 2018. The High Court further directed IRDAI to insure compliance of this order by all the insurance companies.

CONCLUSION

Mental illnesses may take many forms and it does not discriminate regardless of factors such as sex, age, wealth, race/ethnicity, sexual orientation, income, geography, religion/spirituality, social status or other aspect of cultural identity. Some of mental disorders are mild and only interfere in manageable ways with daily life. However, there are many other mental health conditions, which are so severe that the person cannot carry out any semblance of ‘normal’ life.

Various protections are extended to persons with mental illnesses under Section 21 of the Mental Healthcare Act, 2017 so as to ensure that they are treated equally with persons who have physical illnesses and Section 21(4) of the Mental Healthcare Act, 2017 makes it clear that there cannot be any discrimination in providing medical insurance coverage to the insurance holders between mental and physical illnesses or conditions.

[1] Section 14 of the IRDAI Act, 1999. Duties, Powers And Functions Of Authority.–(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, -(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; (b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organisations connected with the insurance and re-insurance business; (g) levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); (j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f); (p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed.

[2] Section 21 of the of the Mental Healthcare Act, 2017. (1) Every person with mental illness shall be treated as equal to persons with physical illness in the provision of all healthcare which shall include the following, namely:–

(a) there shall be no discrimination on any basis including gender, sex, sexual orientation, religion, culture, caste, social or political beliefs, class or disability; (b) emergency facilities and emergency services for mental illness shall be of the same quality and availability as those provided to persons with physical illness; (c) persons with mental illness shall be entitled to the use of ambulance services in the same manner, extent and quality as provided to persons with physical illness; (d) living conditions in health establishments shall be of the same manner, extent and quality as provided to persons with physical illness; and (e) any other health services provided to persons with physical illness shall be provided in same manner, extent and quality to persons with mental illness. (2) A child under the age of three years of a woman receiving care, treatment or rehabilitation at a mental health establishment shall ordinarily not be separated from her during her stay in such establishment: Provided that where the treating Psychiatrist, based on his examination of the woman, and if appropriate, on information provided by others, is of the opinion that there is risk of harm to the child from the woman due to her mental illness or it is in the interest and safety of the child, the child shall be temporarily separated from the woman during her stay at the mental health establishment: Provided further that the woman shall continue to have access to the child under such supervision of the staff of the establishment or her family, as may be appropriate, during the period of separation. (3) The decision to separate the woman from her child shall be reviewed every fifteen days during the woman’s stay in the mental health establishment and separation shall be terminated as soon as conditions which required the separation no longer exist: Provided that any separation permitted as per the assessment of a mental health professional, if it exceeds thirty days at a stretch, shall be required to be approved by the respective Authority. (4) 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.

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