Private health insurance giant Medibank has been taken to court over claims it had made false representations to clients, leading to patients delaying major surgeries.
The Australian Competition and Consumer Commission (ACCC) today claimed Medibank falsely told members on Medibank-owned ahm ‘lite’ or ‘boost’ policies that they could not claim cover for reconstruction procedures or joint investigations.
The consumer watchdog alleged that 800 members had their claims and eligibility inquiries incorrectly rejected, despite having paid for that level of cover.
“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,” ACCC chair Rod 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, when they were in fact entitled to insurance cover.”
In a transcript submitted to the court, one member described their pain as “absolutely excruciating”.
“There's no way in hell I'm going to be able to wait 12 months,” the member said.
“I need the surgery to be done ASAP, at this stage I can't even walk which means I'm not at work."
However, the member was told they would be required to upgrade their cover and then serve out the waiting period.
The ACCC estimates 60 ahm members also upgraded their policies to access the reconstruction and joint investigation procedures, despite already being covered.
“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,” Sims added.
The Commission claims these alleged misrepresentations occurred between February 2013 and July 2018 for those on ahm ‘lite’ policies, and between February 2017 and July 2018 for those on ahm ‘boost’ policies.
The issue arose due to Medibank’s allegedly flawed claiming system, which did not include 186 joint investigation and reconstruction services for its ‘lite’ policy, and 26 procedures for its ‘boost’ policy.
Medibank flagged the alleged misrepresentations to the ACCC in August 2018, with a compensation scheme already underway. The ahm website also issued a notice on its website in September 2018.
Ahm members who believe they are due compensation should contact the insurer directly.
The ACCC is after penalties, refunds, costs and the establishment of a compliance program in addition to publication orders, injunctions and declarations.
Medibank reported a $458.7 million net profit after tax for the 2019 financial year, with ahm membership growing by 7.9 per cent.
Ahm is Medibank’s low-cost brand, and currently has more than 900,000 members.
Yahoo Finance has contacted Medibank for comment.