The ACCC has continued its enforcement focus on consumer issues in the health insurance industry, with two key actions this month.
1. The operator of a comparator service pays an infringement notice
Last week, the operator of the website finder.com.au (Finder) paid a penalty of $10,800 in relation to false or misleading claims about the number of health insurance policies it compares on its website.
The ACCC had issued Finder with an infringement notice, in which it alleged that Finder had represented on its website, for a period of 3 months earlier this year, that its health insurance comparison service allowed consumers to "compare roughly 65,000 policies", when the number of policies compared was actually substantially less.
As well as paying the penalty, Finder has removed the representation from its website.
The ACCC Deputy Chair stated in the ACCC's press release that:
"Operators of comparator websites must ensure that the claims they make about market and product coverage are accurate so that consumers can make fully informed decisions."
2. Australian Unity offers a court-enforceable undertaking to settle an ACCC investigation
Earlier this month, the ACCC accepted a court-enforceable undertaking from Australian Unity. The ACCC was concerned that the fund had misled consumers about the level of dental benefits that could be claimed under a couple and family policy sold in early 2015. The policy included an overall limit for dental benefits and specified that the limit could be split between individual family members in any proportion. The fund also represented to members that the benefits were fixed and would not change for that year. However, in September 2015, Australian Unity introduced a limit on the proportion of dental benefits claimable per person, limiting each person to a maximum of half of the total annual limit. The fund provided one month's notice of the change.
While the ACCC acknowledged that the Australian Unity terms and conditions stated that the insurer could make changes to the policy at any time by providing written notice and that the changes did not contravene the private health insurance legislation, the regulator did not accept that these factors protected the insurer against breaching the Australian Consumer Law. ACCC Commissioner Sarah Court stated:
"The health insurers tell us that so as long as they're compliant with the private health insurance legislation and the black and white letters of those requirements, there are no consumer issues, or the ACCC shouldn't be concerned. But we're saying, 'No, you can comply with all that legislation and still engage in conduct that is misleading to consumers'."
Australian Unity's court-enforceable undertaking includes a number of commitments over a period of three years, including that:
- It will not make a detrimental change to any benefits that are represented as benefits provided for a 12 month period, during that 12 month period
- It will improve the information it provides to consumers about Australian Unity’s ability to change benefits, including disclosing that Australian Unity is bound by the Australian Consumer Law when making changes
- It will provide compensation, expected to be at least $620,000, to affected members, including reimbursement for out-of-pocket costs for dental services incurred in 2015, and payment of expenses on ongoing dental plans
- It will notify members about its conduct and Australian Unity’s commitments contained in the undertaking
The ACCC's investigation into Australian Unity's conduct differs from the conduct the subject of the ACCC's current enforcement proceedings against Medibank and nib. In the Australian Unity matter, the ACCC was concerned by notice being given of changes affecting benefits which had allegedly been stated to be fixed for the 12-month term of the policy. In the Medibank and nib actions, the ACCC is concerned by the funds allegedly not informing members at all when new limits were placed on benefits.
Update on the Medibank and nib proceedings
The ACCC has appealed the Federal Court's decision earlier this year to dismiss the ACCC's proceedings against Medibank Private Limited. A date has not yet been set for the hearing.
In the meantime, the ACCC is proceeding with its (very similar) case against nib. Earlier this month, the case was listed for an 8-day hearing in June 2018.
Key message for the health funds
The ACCC's scrutiny of the health insurance industry is continuing. It is critical that funds continue to ensure that their advertising and product information is true, accurate and complete. Further, funds should consider taking steps to ensure they are prepared for an investigation by the ACCC - see our ACCC investigations guide for further information.