ACCC Takes NIB Health Funds to Court over Misleading Conduct
The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against NIB Health Funds Limited (NIB), alleging it contravened the Australian Consumer Law (the ACL) [contained in Sch 2 to the Competition and Consumer Act 2010 (Cth] by engaging in misleading or deceptive conduct, unconscionable conduct and making false or misleading representations.
Since at least 2000, NIB has operated a “MediGap Scheme”. The MediGap Scheme had two main characteristics:
- doctors who chose to participate in the MediGap Scheme would receive an additional payment from NIB to cover their fee; and
- consumers did not incur any out-of-pocket expenses for that service.
From 17 August 2015, NIB removed the eye procedures from the MediGap Scheme (along with some other services). Patients who receive these eye procedures are often elderly and require the procedures regularly to prevent further loss of eyesight.
The ACCC Allegations
The ACCC alleges that NIB failed to notify members in advance of its decision to remove certain eye procedures from its “MediGap Scheme” (MediGap Change) in 2015. Under the MediGap Scheme, members had previously been able to obtain these eye procedures without facing out-of-pocket costs when doctors participated in the scheme.
The ACCC alleges that between June 2011 and October 2016, NIB represented to members that several of its policies covered eye procedures and members would not pay any out-of-pocket expenses, when in fact members could incur out-of-pocket costs. The ACCC also alleges that NIB made this representation by paying gap amounts on behalf of members for these eye procedures prior to August 2015.
It is also alleged that NIB represented to members that it would give members prior notice of any changes that detrimentally affected their entitlement to benefits under the policies. The ACCC also alleges that NIB’s failure to provide direct advance notice to its members of the MediGap Change was unconscionable in all the circumstances, including where:
- NIB had identified over 400 members who had received two or more eye procedures in the previous financial year, in circumstances where NIB’s management considered that it “probably ought to proactively communicate” with these members about the MediGap Change; and
- after a doctor employed by, or associated with, Newcastle Eye Hospital sent a letter to his patients who were NIB members informing them of the MediGap Change and their right to move to another insurer, NIB contacted the hospital to request a commitment that its medical practitioners not communicate with NIB members or the media about the MediGap Change.
The ACCC Chairman Rod Sims said:
“Consumers have a right to be informed of important changes to their insurance cover in advance, as these changes can result in very large financial consequences at a time when consumers are at their most vulnerable. Private health insurers must ensure their disclosure practices are in line with the Australian Consumer Law. Insurers should not expect consumers to bear the responsibility of making independent enquiries to find out about important changes made unilaterally by insurers.”
Potential Penalties against NIB
The ACCC Chairman said that while insurers are bound by rules under the Private Health Insurance Act 2007 (Cth), they still have obligations under ACL. Mr Sims said:
The representations are alleged to have been made by NIB in relation to the following 10 policies: Basic Plus, Family Basic Saver, Family Plus, Hospital Plus, Just Hospital, Mid Plus, Premier Plus, Top Cover, Young at Heart Mid and Young at Heart Top.
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