CONSUMER watchdog the Australian Competition and Consumer Commission is taking health fund Medibank to court for allegedly telling members they could not claim for treatments such as spinal, pelvic, hip and knee reconstruction surgery when their policies did cover the procedures.
The ACCC alleges that Medibank, trading as ahm Health Insurance falsely represented to members holding "lite" or "boost" policies, who were making claims or enquiries, that they were not entitled to cover for joint investigations or reconstruction procedures.
"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," said ACCC Chairman Rod Sims.
"As part of our case, we estimate about 60 members needlessly upgraded their policies so they could access the joint investigation and reconstruction procedures they were already entitled to under their existing, cheaper insurance 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, when they were in fact entitled to insurance cover.
"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."
The ACCC's proceedings against Medicare involved alleged misrepresentations in relation to ahm "lite" policies from February 2013 to June 2018 and ahm "boost" policies from February 2017 to July 2018.
Medibank self-reported this conduct to the ACCC in August 2018 and has begun compensating affected members.
ahm members who believe they have been denied a benefit should contact ahm directly 1300-721-581 or complete a compensation form on the ahm website.
The ACCC is seeking penalties, consumer redress, declarations, injunctions, publication orders, the implementation of a compliance program and costs.
ahm is Medibank Private's low-cost brand which currently had more than 900,000 members across health, life, travel and pet insurance. In the relevant period the "lite" and "boost" policies had around 130,000 members.
A joint Medibank ahm statement said the issue was caused by an internal process failure, where a number of MBS item codes belonging to the joint and reconstruction category were not entered on the system for the "Boost" and "Lite" products.
The statement said the issue was identified as a result of receiving customer complaints, which led to an internal investigation of the matter. A program of compensation was established to ensure affected customers were compensated.
ahm senior executive Jan O'Keefe said:"We apologise unreservedly to our customers who have been impacted by the error.
"We have already notified all customers who are or were insured by the ahm Boost and Lite products since inception of the products. We did that to ensure that any customers affected by this error were compensated.
"While we believed the issue impacted a small number of customers it was the right thing to do to write to all customers who held a Boost and Lite product, to give all customers the opportunity to check whether they were eligible for compensation.
"In conducting the investigation, we also reviewed ahm's process for developing and managing products, to help ensure that this does not happen again."