Health insurer Bupa hit with $35m fine over misleading, unconscionable conduct

One of Australia’s biggest health insurers has admitted it fell short in some of its claims handling processes, and has agreed to pay a $35m fine following court action by the competition regulator.

Private health insurer Bupa has agreed to pay a $35m fine after conceding it engaged in misleading and unconscionable conduct. 

The Australian Competition & Consumer Commission revealed on Monday that Bupa admitted to the breaches, after advising members they were not entitled to private health insurance benefits for their entire claim when this was not true.

Most of the claims were for hospital treatment, where two or more procedures were performed at the same time.

Bupa incorrectly rejected the entire claim in some cases where part of the treatment was covered by a member’s policy, and part of it was not.

The conduct occurred between May 2018 and August 2023.

Misrepresentations happened before the medical treatment took place, when consumers were checking their coverage and entitlements with Bupa staff, as well as after a procedure due to automatic claims handling.

ACCC chair Gina Cass-Gottlieb. Picture: Jane Dempster/The Australian

Bupa also admitted between June 2020 and February 2021, it stopped manually reviewing some mixed coverage claims that which were automatically incorrectly assessed as having no benefits payable.

This was unconscionable in certain circumstances, Bupa admitted, including when it knew a manual review was necessary to ensure it paid benefits for those claims.

Bupa’s local chief executive Nick Stone has apologised to customers.

“We are deeply sorry for failing to get things right for our customers and are saddened by the impact this has had on them and their families. This should never have happened,” he said in a statement.

“Our priority has been to communicate and compensate our affected health insurance customers and providers, along with putting in place measures to help ensure this does not happen again.”

The ACCC said Bupa’s conduct occurred because Bupa staff did not have clear instructions and training for assessing mixed coverage claims, and because its systems were programmed to incorrectly reject mixed coverage and uncategorised item claims.

Some consumers were left thousands of dollars out of pocket and were forced to personally finance some of their medical treatments that Bupa was obliged to pay at least in part under its policies, the ACCC said in a statement. Some policyholders also upgraded to more expensive policies to ensure coverage, the regulator said.

Bupa APAC CEO Nick Stone. Picture: Supplied

The regulator and Bupa will jointly ask the Federal Court to order the health insurer to pay a penalty of $35m, according to an ACCC statement.

ACCC chair Gina Cass-Gottlieb said “private health insurance is complex, and consumers should be able to trust their health insurer to assess and pay health insurance claims accurately.”

“Bupa’s conduct affected thousands of members over more than five years, and caused harm to consumers, some of whom delayed, cancelled or went without treatment for which they were, at least partially, covered under their health insurance policies,” ACCC chair Gina Cass-Gottlieb said.

“Consumers purchase private health insurance to provide peace of mind, certainty of coverage and the ability to choose where and when to undertake their procedures. Bupa’s conduct denied certain members benefits to which they were entitled to under their private health insurance policies,” she said.

“Bupa’s conduct is very serious and fell well short of what is expected of one of the largest health insurers in Australia. Bupa should have invested in the necessary systems, processes and training to prevent this from happening, and address it promptly when it occurred.”

Bupa has agreed to pay $35m in fines in a joint case filed with the ACCC. Picture: Monique Harmer/NCA Newswire

The health insurer admitted to engaging in misleading or deceptive conduct and making false or misleading representations by telling the customers they could not make a claim at all when part of it could be covered.

As well, Bupa admitted to engaging in unconscionable conduct in connection with its assessment of 388 mixed coverage claims.

Bupa has started compensating affected members, medical providers and hospitals, before it kicked off civil proceedings in the Federal Court.

To date, it has paid $14.3m to parties for more than 4,100 affected claims.

The ACCC said it has accepted a court-enforceable undertaking from Bupa to continue compensating affected parties under an existing remediation program.

Some consumers faced potential medical risks or complications, physical pain and distress after they were falsely told they were not covered for certain procedures and therefore decided not to proceed with treatment or as a result of undergoing multiple treatments.

Medical providers and hospitals did not receive payments for which they were entitled in respect of certain claims, the ACCC said.

The ACCC said Bupa co-operated during its investigation, including by agreeing to jointly seek declarations, penalties, an injunction, costs and other orders.

The Federal Court will consider whether to make the orders sought.