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Claims handlers rejected covered claims.

BIScom Subsection: 
Author: 
Editorial Staff

 

 

 

 

 

This morning, Australia's Medibank has learned that it is being prosecuted after self-reporting its discovery that some of its claims handlers had rejected claims that were both covered and valid, despite already having identified cases and arranged compensation and called for any policyholders who think they may have had claims improperly dismissed to contact the company for assistance.

The Australian Competition and Consumer Commission has commenced proceedings in the Federal Court against MediBank in respect of conduct relating to its low-cost brand "ahm (sic) lite (sic) and boost policies.

Existing policyholders making claims and possible customers making enquiries were given false information as to the cover provided by the policies. The specific information related to joint investigations and reconstruction procedures where claims handlers said that these were not covered when, in fact, they were.

“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..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,”” ACCC Chairman Rod Sims said.

Some of the cases were serious the ACCC alleges: "Medibank’s alleged misrepresentations had serious consequences for members requiring procedures including spinal surgery, pelvic surgery, hip surgery and knee reconstructions, which often cost thousands of dollars..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 Medibank involve alleged misrepresentations in relation to ahm ‘lite’ policies from February 2013 to July 2018, and ahm ‘boost’ polices from February 2017 to July 2018.

‘ahm’ is Medibank Private’s low-cost brand which currently has over 900,000 members across health, life, travel and pet insurance. In the relevant period, the ‘lite’ and ‘boost’ policies had around 130,000 members.

The conduct at issue in the ACCC’s proceedings arose from Medibank’s failure to include 186 joint investigation and reconstruction services in its claiming system for the ‘lite’ policy, and 26 joint investigation and reconstruction services for the ‘boost’ policy from the time each policy was offered for sale until July 2018.

Medibank reported this conduct to the ACCC in August 2018. A notice was published on the ahm website about the conduct in about September 2018.