The consumer watchdog has launched civil proceedings against Medibank, accusing the health insurance heavyweight of incorrectly telling customers they were not eligible for some benefits.
The Australian Competition and Consumer Commission claims Medibank told some “lite” or “boost” policy holders with its AHM subsidiary they were not eligible to cover for joint investigations or reconstruction procedures when in fact they were.
“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 on Tuesday.
Sims said it is estimated roughly 60 members upgraded their policies “needlessly” to access coverage they had already paid for.
“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,” he added.
The alleged misrepresentations had “serious consequences” for those needing expensive medical surgeries and reconstructions, 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,” Sims said.
Breaches are alleged to have taken place over more than a five-year span from February 2013 to July 2018, when Medibank self-reported to the regulator.
Medibank said the issue stemmed from an “internal process failure”, as item codes relating to the relevant category were not entered into their claims assessment system.
Complaints led to the inconsistency being identified in 2017, with the private health insurer since contacting 130,000 customers and paying out $745,691 in compensation.
“We apologise unreservedly to our customers who have been impacted by the error,” a statement from AHM senior executive Jan O’Keefe read.
The ACCC is seeking wide-ranging penalties in the federal court as a result of the alleged consumer law breaches.