ACCC renews pursuit of Medibank over out-of-pocket charges

The consumer watchdog is launching a renewed bid to prosecute thye health fund over coverage of in-hospital services.

The ACCC has ­accused Medibank of making false representations and failing to adequately inform members of changes to their policies.

The consumer watchdog will today launch a renewed bid to prosecute health fund Medibank over changes to its coverage of in-hospital pathology and radiology services, amid an ongoing debate over the value of insurance.

The Australian Competition & Consumer Commission has ­accused Medibank of making false, misleading or deceptive representations and engaging in unconscionable conduct by failing to adequately inform members of changes.

But Federal Court judge David O’Callaghan last year concluded there had been no sufficient requirement for, or commitment by, Medibank to notify members beforehand.

Justice O’Callaghan accepted evidence from Medibank group executive of healthcare and ­strategy, psychiatrist 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 ... (was) 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.”

In a three-day appeal starting today, the ACCC will try to convince the full bench of the court that Justice O’Callaghan got it wrong and that Medibank had an obligation to notify members.

Lawyers for the ACCC have made written submissions arguing Justice O’Callaghan “applied a too-technical construction to the information provided to ­consumers”.

“He should have found that one of the reasonable inferences for consumers upon being told that Medibank would “cover” certain in-hospital services, and the natural inference for them, was that they would not incur any personal costs for those services,” they submitted.

In response, Medibank’s lawyers suggest the ACCC’s appeal does not raise any questions of legal principle, nor challenge any findings of primary fact, focusing instead on Justice O’Callaghan’s conclusions — which he was in the best position to make.

“The primary judge’s conclusions ... took account of a substantial body of affidavit and documentary evidence,” Medibank’s lawyers have submitted.

The Federal Government has embarked on a two year reform program to improve transparency of insurance policies.