ACCC lodges Full Federal Court appeal against Medibank

Another court case against insurance provider NIB remains ongoing.

The Australian Competition and Consumer Commission (ACCC), having had its case against Medibank Private dismissed by the Federal Court late last month, has lodged a notice of appeal to contend the decision.

The competition watchdog is alleging Medibank Private contravened Australian Consumer Law by making false, misleading or deceptive representations, and by acting unconscionably.

The allegations stretch back to 2014 when Medibank, along with its subsidiary brand ahm, failed to notify members that a limit had been placed on radiology and in-hospital pathology benefits, even though the marketing material claimed they were covered.

A reasonable customer would believe no out-of-pocket expenses would have to be paid for these benefits based on the marketing and communications material, says Rod Sims, chair of the ACCC.

"It is important that the ACCC seeks clarity from the Full Federal Court on this case," he says.

"In particular, the extent to which it was acceptable for Medibank not to fully inform vulnerable consumers about changes to their private health insurance."

Medibank, which is Australia's largest health insurance provider, will defend the claims made by the ACCC, says Craig Drummond, the company's chief executive.

"Medibank defended the case because we firmly believed that we had not acted unconscionably nor did we mislead or deceive our customers," he says.

"We are disappointed that the ACCC has decided to appeal the decision, after none of the ACCC's allegations were substantiated and the matter was dismissed with costs."

In dismissing the case last month, the Federal Court found the use of the word "cover" in marketing did not imply full coverage, and that Medibank did not mislead customers because it never pledged to notify them of upcoming changes.

The court concluded that, by not engaging in misleading or deceptive conduct, Medibank could not have acted unconscionably to its members.

The legal action was originally launched by the ACCC against Medibank in June 2016.

Another court action was launched in May 2017 by the ACCC against health insurance provider NIB, after it stopped covering the costs of certain hospital procedures without notifying members.

The court actions are part of the ACCC's enforcement and compliance priorities for 2017, as it focuses on unfair contract terms, cartels, and misconduct in the health, construction and agriculture sectors.

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