ACCC’s Medibank case thrown out of court

The Federal Court has dismissed the ACCC’s high-profile case against private health insurer Medibank.

A Federal Court judge yesterday dismissed the ACCC’s high-profile case against Medibank.

The consumer watchdog has suffered a major blow in its efforts to defend the rights of private health insurance members with a Federal Court judge yesterday dismissing its high-profile case against Medibank.

The Australian Competition & Consumer Commission had ­accused Medibank, the formerly government-owned fund and market leader with 3.9 million members, of making false, misleading or deceptive representations and engaging in unconscionable conduct.

It was somewhat of a test case centred on Medibank’s decision to limit benefits payable for in-hospital pathology and radiology services, and came amid federal government efforts to make the industry more transparent and easier for consumers to navigate.

After considering the evidence, and 12 days of hearings, judge David O’Callaghan concluded there had been no sufficient requirement for, or commitment by, Medibank to notify members before making such changes. Noting the ACCC relied on documentary evidence and “chose not to lead any evidence as to Medibank’s actual interactions with customers,” Justice O’Callaghan also cast doubt over the argument that Medibank knew many of its members were already uninformed about complex policy matters and should have taken more care.

Justice O’Callaghan accepted evidence from Medibank group executive of health care and strategy, psychiatrist Dr Andrew Wilson, that the fund never had agreements with all in-hospital pathology and radiology providers or promised that members would not have out-of-pocket expenses. “Ultimately, that evidence, which I unhesitatingly accept, demonstrates that the decision not to communicate with members (about which the applicant complains) was a decision made in the context of the exercise by the relevant committee of its business judgment,” Justice O’Callaghan found.

“Some may agree with it, some may disagree with it, but, in my view, there was nothing remotely unconscionable about it.”

ACCC chairman Rod Sims said the commission, which has also taken Federal Court action against insurer NIB, was considering its options but maintained “consumers have a right to be informed in advance of important changes to their private health insurance cover”.

“We took this case because we believed Medibank’s failure to advise customers of the changes to their cover for in-hospital pathology and radiology services affected vulnerable consumers,” Mr Sims said. “In particular, we believed Medibank’s changes affected those with chronic medical conditions who required these services regularly.”

Medibank CEO Craig Drummond welcomed the judgment, saying “we firmly believe our actions were not unlawful”.

Mr Drummond said Medibank would continue to drive to meet the needs and expectations of its members and he was “committed to leading that change”.

“Since I joined Medibank a year ago, we have made significant changes to our business to improve the service for all of our customers and provide them with greater value,” he said. ‘‘But there is always more to be done.”