The Australian Competition and Consumer Commission has initiated legal action against Medibank, accusing the private health insurer of misleading customers who needed certain types of surgery.
The consumer watchdog says Medibank falsely told hundreds of customers that they were not covered for spinal, hip, pelvic and knee surgeries – causing many to upgrade their cover or delay surgery.
Through its subsidiary AHM, Medibank is alleged to have wrongly told some of its ‘lite’ and ‘boost’ policy holders that they were not eligible for cover for reconstruction procedures and joint investigations.
The deception is alleged to have taken place over more than five years, from February 2013 to July 2018.
“We will allege that Medibank incorrectly rejected claims or eligibility enquiries from over 800 members for benefits that they were entitled to and were paying for,” ACCC Chair Rod Sims said in a statement.
The ACCC estimates that about 60 members of the health fund needlessly upgraded their policies.
“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,” Mr Sims said.
“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.”
Medibank self-reported to the regulator, following numerous complaints. The ACCC is seeking severe penalties in the Federal Court of Australia, as well as orders to compensate affected customers.
Medibank has apologised to its customers and has blamed the issue on an “internal process failure” involving incorrect coding procedures.