THE Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the federal court against Medibank Private alleging it broke the Australian Consumer Law.
The ACCC suggests Medibank, Australia's largest private health insurer which has around 3.9 million members, engaged in misleading and unconscionable conduct - allegations which Medibank has contested.
"Medibank is committed to acting in the best interests of our members and refutes claims by the ACCC related to activities that took place in 2014," Medibank says in a statement released to media.
"Medibank takes its obligations under the Australian Consumer Law seriously, and has appropriate processes in place to ensure compliance.
"We have been working cooperatively with the ACCC throughout its investigation. We encourage members to contact us if they have any concerns."
The allegations are in relation to Medibank's failure to notify members regarding its decision to limit benefits paid to members for in-hospital pathology and radiology services.
The ACCC alleges that Medibank did not provide members with any advance notice of the change despite previously representing that it would do so, while adopting a strategy of keeping communications about this change contained and reactive.
"Consumers are entitled to expect that they will be informed in advance of important changes to their private health insurance cover, as these changes can have significant financial consequences at a time when consumers may be vulnerable," says ACCC chairman Rod Sims.
The ACCC alleges that additional circumstances in support of unconscionable conduct include Medibank knowing or expecting that many members incorrectly thought all of their in-hospital medical expenses were covered, and that Medibank calculated there was a risk that, if the benefit change was disclosed, members might leave Medibank.
The ACCC is seeking declarations, injunctions, compensation orders, pecuniary penalties, findings of fact, implementation of a trade practices compliance program, corrective notices and costs.
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