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Medibank fined $5 million for denying member claims

AHM members were told they weren't covered for certain procedures when they were

medibank logo on front of melbourne building
Last updated: 16 July 2020

Need to know

  • Medibank incorrectly told members that they weren't covered for joint investigations and reconstructive surgery
  • Some members delayed surgery or paid extra out-of-pocket costs as a result of Medibank's advice; others upgraded their cover and even served additional waiting periods
  • If you think you've been affected, you can make a claim for compensation (details below)

Medibank has been fined $5 million for misleading members of its AHM insurance brand about what their policies covered. At least 1396 enquiries or claims from members were incorrectly rejected due to an error in Medibank's claiming system, the Federal Court has found. 

Between 2013 and 2018, the insurer incorrectly told AHM Boost and Lite policy members that they weren't covered for joint investigations and reconstructive surgery - including spinal, pelvic and hip surgery and knee reconstructions.

Affected members had to delay surgery, dealing with considerable pain, while others paid additional out-of-pocket costs for these expensive procedures. Some members unnecessarily upgraded their cover with AHM, with some serving additional waiting periods under their new policies. 

It's vital that health insurers are transparent about what they are going to deliver to people in this confusing market.

Dean Price, CHOICE health campaigner

This occurred over a period of five years, from 2013 to 2018. Medibank identified the error in June 2017 but continued rejecting claims and enquiries for a further 13 months, the Federal Court found. 

Medibank self-reported the error to the ACCC and started to compensate affected members, but there are still about 670 policy holders who haven't been compensated yet. In addition to the compensation, Medibank will also give these members a one-off payment of $400. 

"We're glad to see Medibank cooperating with the ACCC to rectify this problem in the best interests of consumers. We should be able to trust that Medibank, one of Australia's biggest insurers, will honour its own policies," says Dean Price, CHOICE health campaigner.

"It's vital that health insurers are transparent about what they are going to deliver to people in this confusing market."

If you think you've been affected, you can make a claim by:

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