Medibank fined $5m over rejected claims by ahm Health Insurance

The Federal Court has ordered Medibank Private to pay $5m in penalties for denying claims that customers were covered for.

ACCC chairman Rod Sims: ‘Medibank’s false statements to consumers were a serious breach of our consumer law.’ Picture: AAP

The Federal Court has ordered Medibank Private to pay $5m in penalties for denying claims that customers were covered for.

The health insurer’s fully owned ahm Health Insurance business incorrectly rejected at least 1396 enquiries or claims for joint investigations or reconstruction procedures on ahm “lite” or “boost” policies.

“Medibank’s false statements to consumers were a serious breach of our consumer law,” ACCC chairman Rod Sims said.

“These representations were made for more than five years in many cases, and affected hundreds of customers who were denied the cover they were entitled to under their existing Medibank policies for joint procedures that they required.

“Some Medibank policyholders incurred extra out of pocket expenses for major medical procedures, some delayed having these joint procedures and managed their pain, while others ‘upgraded’ their Medibank policies at an additional cost when they didn’t have to.”

Medibank reported the conduct to the consumer watchdog in August 2018 and has since notified about 130,000 current and former ahm policyholders, inviting them to make a complaint or seek compensation. It has paid more than $775,000 in compensation to 175 affected members.

Ahm Health Insurance senior executive Kate Williams apologised to customers affected by the error, which stemmed from a system error. “We have agreed to resolve this matter and offer this EU as a demonstration of how seriously we take our obligations,” she said.

Shares in Medibank Private closed 1.3 per cent lower at $2.94.