Medibank Private fined $5 million for misleading members over health policy benefits

Medibank Private has been ordered to pay $5 million in fines for misleading hundreds of its AHM Health Insurance group members over health policy benefits.

Medibank falsely advised 849 members with AHM's "lite" or "boost" policies who had lodged claims or enquired about their coverage for joint investigations or joint reconstruction procedures that they were not covered. In fact, they were covered.

The misrepresentation to members about policy benefits is a breach of Australian Consumer Law.

At least 1396 enquiries or claims were incorrectly rejected.

Today, the Federal Court ordered Medibank Private Limited to pay the multi-million-dollar sum in penalties. 

The Australian Competition and Consumer Commission (ACCC) filed legal proceedings against Medibank Private over the breach in September last year.

"Medibank's false statements to consumers were a serious breach of our consumer law. These representations were made for more than five years in many cases," ACCC chair Rod Sims said in a statement.

"And affected hundreds of customers who were denied the cover they were entitled to under their existing Medibank politics for joint procedures that they required."

Medibank self-reported the conduct to the ACCC in August 2018 and has been notified about 130,000 current and former policy holders.

It called on anyone affected to make a complaint or seek compensation.

The health insurer has since paid more than $775,000 in compensation to 175 affected members.

Medibank has told the ACCC it will contact about 670 policy holders who have not already taken up Medibank's offer for compensation and provide them with a further chance to claim.

It will also pay these members an additional $400 as a one-off payment.

Medibank is one of Australia's largest private health insurers and has approximately 3.77 million members.