The consumer watchdog has filed a lawsuit against Medibank, alleging the health insurance giant incorrectly told customers they were ineligible 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 entitled 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 ACCC estimated about 60 members upgraded their policies unnecessarily 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,” Sims said.
The alleged misrepresentations had “serious consequences” for those needing expensive medical operations 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 added.
Breaches are said to have happened over more than a five-year span beginning February 2013 to July 2018, when Medibank self-reported to the regulator.
Medibank said the issue originated from an “internal process failure”, as product codes relating to the relevant bracket were not entered into their claims assessment system.
Complaints resulted to the inconsistency being identified in 2017, with the private health insurance firm since calling 130,000 consumers 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 considering wide-ranging penalties in the federal court because of the alleged consumer law violations.