Can health insurance claim be rejected for no hospitalisation? Karnataka HC ruling explained

A health insurance claim cannot necessarily be rejected merely because a particular treatment did not require hospitalisation, especially when the treatment is part of the continuing management of a disease covered by the policy.

A recent Karnataka High Court ruling is significant for policyholders as more treatments, including injections and other procedures, are increasingly administered without an overnight hospital stay.

The ruling was delivered by Justice Suraj Govindaraj of the Karnataka High Court on 1 September 2026 in W.P. No. 14682 of 2024 (GM-RES), M/s National Insurance Co Ltd & Anr. v. Padmanabha Shetty G & Ors.

The court was hearing a challenge by National Insurance Company against a Permanent Lok Adalat order directing the insurer to reimburse ₹2.85 lakh towards Zoladex and Xgeva injections given to a policyholder undergoing treatment for Stage IV prostate cancer.

Why was the health insurance claim rejected?

The policyholder was covered under a health insurance scheme for retired employees of member banks. The policy provided annual coverage of ₹9 lakh for the period from 1 November 2021 to 31 October 2022, according to the Karnataka High Court order.

He was undergoing treatment for Stage IV carcinoma of the prostate and had received chemotherapy at HCG Hospital in Bengaluru. His doctors subsequently advised Zoladex and Xgeva injections once every three months as part of his continuing treatment.

The insurer reimbursed several medical expenses but refused to reimburse ₹2,85,470 spent on the two injections.

National Insurance argued before the court that the injections did not require hospitalisation and amounted to outpatient treatment. The insurer relied on the policy provisions relating to hospitalisation and day-care treatment.

What did Karnataka High Court say?

The High Court rejected the insurer's argument in the circumstances of the case.

Justice Suraj Govindaraj noted that the policyholder was suffering from Stage IV prostate cancer and that the insurer had already reimbursed expenses relating to his hospitalisation and treatment for the same disease. The court found that the two injections had been prescribed as part of the continuing management of the cancer.

The court observed that hospitalisation is a means of administering medical treatment and not an end in itself. Medical advances can allow treatments that previously required hospital admission to be administered without hospitalisation.

The court therefore held that the fact that treatment was administered without hospitalisation could not, by itself, determine whether it was connected with the disease covered by the policy.

Does this mean every outpatient treatment is covered?

No. The judgment does not mean that every outpatient treatment will automatically qualify for reimbursement.

The High Court considered the specific medical treatment, the underlying disease and the language of the insurance policy. It also noted that exclusion clauses must be considered in the context of the policy as a whole.

In this case, the court found that the injections were medically prescribed and formed part of the continuing treatment for the policyholder's covered disease. It rejected the insurer's attempt to deny reimbursement solely because hospitalisation was not required.

What does the ruling mean for health insurance policyholders?

The ruling could be relevant for policyholders whose treatment involves injections, procedures or other medical care that can be administered without an overnight hospital stay.

The key takeaway is that non-hospitalisation alone may not be enough to reject a health insurance claim where the treatment is demonstrably connected with the disease covered by the policy. However, the exact terms, conditions and exclusions of the individual policy will continue to matter.

The Karnataka High Court dismissed the insurer's writ petition and upheld the Permanent Lok Adalat's order directing payment of ₹2,85,470 with applicable interest.

The court also directed the insurer to pay ₹50,000 as costs.