Federal Court denies Medibank Private's motion to strike out ACCC case

In a case brought by the Australian Competition and Consumer Commission against Medibank Private to protect consumers, the ACCC welcomes the decision of the Federal Court on Thursday to refuse an application by Medibank Private that aspects of the ACCC's claims for remedial orders be struck out.

The decision of Justice Ryan, handed down in the Federal Court, Melbourne, stated that the court was not persuaded by Medibank Private's arguments that certain parts of the ACCC's claims should be struck out. Justice Ryan indicated that all the ACCC's claims should move to trial without unnecessary delay.

"The ACCC places priority on achieving timely outcomes for consumers who are alleged to have been misled or deceived, and the fact that his Honour has indicated that the case should be heard as soon as possible means that the ACCC should be able to put the case of affected consumers to the Court in the near future", ACCC Chairman, Professor Allan Fels, said today.

Background

The Australian Competition and Consumer Commission under a delegation from the Australian Securities and Investment Commission instituted proceedings against Medibank Private in the Federal Court, Melbourne, on 26 October 2000 alleging false, misleading and deceptive advertising of its health insurance products.

The first advertising campaign related to Medibank Private’s PackagePlus products. The ACCC alleges that:

• from early March 2000, Medibank Private advertised ‘no rate increase in 2000' when the rates on these products increased on 1 July 2000
• call centre staff also made representations to consumers that the rates for these products would not increase until the end of the year and/or failed to disclose, or adequately disclose that the rates would increase on 1 July 2000
• Medibank Private failed to disclose or adequately disclose on its web site that the rates quoted were promotional rates and would increase on 1 July 2000
• Medibank Private failed to disclose or adequately disclose in inserts into its PackagePlus brochure, and/or in letters and other documents sent to consumers that the rates would rise from 1 July 2000, and/or made representations to consumers that the rates would not rise in the year 2000
• Medibank Private represented in a magazine advertisement that it guaranteed 'no rate rise for the year 2000'.

In a second campaign, the ACCC alleges that Medibank Private advertised an offer to consumers who switched from another fund to Medibank Private that all waiting periods would be waived and consumers would 'get 30 days free if you change to Medibank Private' in newspaper advertisements in August 2000 but:

• failed to disclose, or adequately disclose, that only the 2-month general waiting period and the 6-month optical waiting period were waived
• failed to disclose, or adequately disclose, that conditions applied to the offer of 30 days free health insurance.

A further directions hearing has been set for 10.15 a.m. today in the Federal Court, Melbourne.