Medibank sued for misleading health insurance customers

Medibank sued for misleading health insurance customers | Insurance Business Australia

Medibank sued for misleading health insurance customers

Medibank is being sued by Australia’s consumer watchdog for allegedly making false representations about benefits and rejecting surgery claims covered by its health insurance policies.

The Australian Competition and Consumer Commission (ACCC) alleged in a case filed before the federal court that Medibank incorrectly rejected claims or eligibility enquiries from more than 800 members holding ahm Lite or Boost policies for joint investigations or reconstruction procedures, when these benefits were covered and paid for in their policies. This was in breach of the Australian Consumer Law.

“As part of our case, we estimate about 60 members needlessly upgraded their policies so they could access the joint investigation and reconstruction procedures they were already entitled to under their existing, cheaper insurance policies,” ACCC Chair Rod Sims said.

“In some cases, it is alleged that members who upgraded their policies were also required to serve a further waiting period to access these procedures. Medibank’s alleged misrepresentations had serious consequences for members requiring procedures including spinal surgery, pelvic surgery, hip surgery, and knee reconstructions, which often cost thousands of dollars. Some members were forced to delay surgery due to high out-of-pocket costs for these procedures and to seek alternative remedies to manage pain, when they were in fact entitled to insurance cover.”

Medibank said it voluntarily reported the conduct to the ACCC in 2018 and contacted around 130,000 customers who were insured by ahm Boost and Lite products to ensure that anyone affected by the error was compensated. The company said it has also begun compensating affected members, paying around $745,000 to some 175 customers.

In a statement, Medibank said the issue was caused by an internal process failure, where a number of MBS item codes belonging to the joint and reconstruction category were not entered on the system for the Boost and Lite products.

The ACCC is seeking penalties, consumer redress, declarations, injunctions, publication orders, the implementation of a compliance program, and costs.