News & Trends - Medical Technology

Medibank to pay $5 million in penalties for rejecting surgical benefits

Health Industry Hub | July 27, 2020 |
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MedTech News: The Federal Court has ordered major private health insurance provider Medibank Private trading as ‘ahm Health Insurance’ to pay $5 million in penalties for making false representations to members about the benefits offered by health insurance policies, in breach of Australian Consumer Law.

Medibank falsely advised 849 members with ahm’s “lite” or “boost” policies who had lodged claims or enquired about their coverage, that they were not covered for joint investigations or joint reconstruction procedures, when these policies in fact entitled them to coverage for these procedures. At least 1,396 enquiries or claims were incorrectly rejected.

Medibank admitted this breach occurred because it failed to include 186 joint investigation and reconstruction services in its claiming system for the ahm “lite” policy between February 2013 and July 2018, and failed to include 26 such services in its system for the “boost” policy between February 2017 and July 2018.

Despite Medibank identifying in June 2017 that some service codes had not been included, Medibank rejected 370 enquiries or claims over another 13 months, until the conduct ceased in July 2018.

The services involved included critical services, such as spinal surgery, pelvic surgery, hip surgery and knee reconstructions, as well as procedures on fibulas, elbows, heels, wrists, kneecaps and jaws.

“Medibank’s false statements to consumers were a serious breach of our consumer law. These representations were made for more than five years in many cases, and affected hundreds of customers who were denied the cover they were entitled to under their existing Medibank policies for joint procedures that they required,” ACCC Chair Rod Sims said.

“Some Medibank policy holders incurred extra out of pocket expenses for major medical procedures, some delayed having these joint procedures and managed their pain, while others ‘upgraded’ their Medibank policies at an additional cost when they didn’t have to.”

Medibank self-reported this conduct to the ACCC in August 2018 and has since notified about 130,000 current and former policy holders. It invited them to make a complaint or seek compensation. By 22 June 2020, Medibank had paid more than $775,000 in compensation to 175 affected members, including some who upgraded their policies unnecessarily based on the false information.

“Businesses who self-report breaches of the Australian Consumer Law are not exempt from ACCC enforcement action, but the penalties ordered by the court will take their cooperation into account,” Mr Sims said.

Medibank has undertaken to the ACCC that it will contact about 670 policy holders who have not already taken up Medibank’s offer for compensation and provide them with a further chance to claim. Medibank will also pay these members an additional $400 as a one-off payment.

Anyone who may be eligible will be notified by Medibank and will have six months to make a claim.


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