ss. 12DA, 12DB, 12DF of the ASIC Act (equivalent to ss. 52, 53 and 55A of the Trade Practices Act). False, misleading or deceptive advertising of the price and benefits of health insurance products
26 October 2000: The ACCC, through its Chief Executive Officer and under a delegation from the Australian Securities and Investment Commission, instituted proceedings against Medibank Private in the Federal Court, Melbourne.
At the time health insurance was regulated under the ASIC Act as a ‘financial product’. However, the Australian Securities and Investments Commission had formally delegated the regulation of all consumer protection aspects of health insurance to the ACCC through the use of nominated ACCC officers as delegates. After the proceedings were commenced, the definition of ‘financial product’ was amended and health insurance contracts are now regulated under the Trade Practices Act.
13 September 2002: On an appeal to the Full Federal Court, Medibank was successful in having a number of paragraphs of the ACCC’s application struck out. The relevant paragraphs sought compensation for members misled by the allegedly misleading representations. The ACCC unsuccessfully sought special leave to appeal the Full Court’s decision to the High Court (20 June 2003). As a consequence, the ACCC sought leave to further amend the application to require Medibank to make good the allegedly misleading representations under an injunction granted under s. 80 (as distinguished from paying compensation).
6 November 2003: Justice Ryan heard arguments on the notice of motion regarding the further amendment of the application and reserved his decision. As a result of the negotiated settlement given effect in consent orders, no decision was made on ACCC notice of motion.
14 May 2004: The Federal Court made orders by consent against Medibank Private Limited declaring two advertising campaigns run in relation to the introduction of lifetime health cover in March–June 2000 and August 2000 to be misleading and deceptive.
As part of the resolution of the proceedings, Medibank Private agreed to pay $5 million to establish a special fund. The fund will benefit Medibank Private members by providing benefits to be paid for leading edge clinical intervention procedures normally ineligible for claims under Medibank Private and which would not be likely to be funded from another source.
The Federal Court also ordered that Medibank Private Limited publish corrective advertising in 13 national and metropolitan newspapers.
