The ACCC institutes Federal Court proceedings against Bupa

The Australian Competition and Consumer Commission (ACCC) and Bupa HI Pty Ltd (Bupa) have agreed to jointly ask the Federal Court to order Bupa to pay a total penalty of $35 million and make other orders. In a statement, the ACCC said, “Bupa has admitted to engaging in misleading or deceptive conduct and making false or misleading representations by advising members they were not entitled to private health insurance benefits for their entire claim, when in fact this was not the case. Bupa has also admitted to engaging in unconscionable conduct in connection with its assessment of 388 Mixed Coverage Claims.”

ACCC action and findings

It was in contravention to Australian Consumer Law that the ACCC’s Bupa action relates; specifically, for incorrectly assessing, in some instances, two subcategories of hospital and medical claims — ‘mixed coverage’ and ‘uncategorised items’ — and related eligibility checks. For a mixed coverage claim, this includes both treatment that is covered under a customer’s policy and treatment that is not covered under their policy; for uncategorised item claims, this includes at least one item for which a member was eligible for benefits under their policy and at least one item which was not linked to a clinical category in the Bupa system.

“Bupa’s conduct affected thousands of members over more than five years and caused harm to consumers, some of whom delayed, cancelled or went without treatment for which they were, at least partially, covered under their health insurance policies,” ACCC Chair Gina Cass-Gottlieb said. “Consumers purchase private health insurance to provide peace of mind, certainty of coverage, and the ability to choose where and when to undertake their procedures. Bupa’s conduct denied certain members benefits to which they were entitled to under their private health insurance policies.”

The ACCC said that some consumers were left thousands of dollars out of pocket and had to personally finance expenses for some medical treatments that Bupa was in fact obliged to pay, at least in part, under its policies. Some policyholders also upgraded to more expensive policies to ensure coverage. The ACCC also noted that medical providers and hospitals were impacted by the conduct as well, including by not receiving the payments to which they were entitled in respect of certain claims.

Also noted by the ACCC is that most of the claims impacted by Bupa’s admitted conduct were claims for hospital treatment, in which two or more procedures were performed at the same time. In cases where part of the treatment was covered by a member’s policy and part of the treatment was not covered, Bupa incorrectly rejected the entire claim, the ACCC said.

Apology and compensation

“We are deeply sorry for failing to get things right for our customers and are saddened by the impact this has had on them and their families. This should never have happened,” Bupa APAC CEO Nick Stone said in a statement. “Our priority has been to communicate and compensate our affected health insurance customers and providers, along with putting in place measures to help ensure this does not happen again.”

Bupa said that the errors occurred because of “inaccurate or unclear instructions, training or guidance which meant Bupa didn’t always make correct assessments of these claims and eligibility checks or act quickly enough to fix these issues”. Stone explained, “That’s why our team has been focused on fixing these issues, including making changes to the way we work and improving our systems and processes.”

Affected customers and providers have begun receiving compensation from Bupa, including interest and customer goodwill payments, Stone said, with Bupa having paid a total of $14.3 million for around 4100 affected claims and eligibility checks to date. “We take great pride in being trusted by our 4.4 million health insurance customers and we know that in this instance we did not meet the standards that our customers, providers and people expect of us,” Stone added.

In its statement, Bupa said it pays out around 20 million customer claims each year, which includes six million hospital and medical claims. Stone said the mixed coverage claims relating to this matter represent less than 0.02% of all hospital and medical claims that were assessed between May 2018 and August 2023, while the uncategorised item claims represent less than 0.004% of claims.

“We know this isn’t good enough and we’re committed to doing better,” Stone said. “This doesn’t reflect the hard work our people put in every day to support our customers and meet their healthcare needs.”

Bupa actions and penalty

Actions Bupa said it is taking are as follows:

• Resolving system issues and how the company processes claims.
• Establishing a dedicated team that has manually reviewed almost 20,000 historical mixed coverage and uncategorised item claims to ensure they were assessed and paid correctly.
• Introducing manual assessments in circumstances where automation is not suitable.
• Improving education and training for customer-facing teams.
• Strengthening governance and internal processes.
   

Bupa said it has agreed with the ACCC to jointly propose to the Federal Court a penalty of $35 million and an enforceable undertaking to continue its work to compensate affected customers and providers. The settlement will be considered by the Federal Court for approval.

“Private health insurance is complex, and consumers should be able to trust their health insurer to assess and pay health insurance claims accurately,” Cass-Gottlieb said. “Bupa’s conduct is very serious and fell well short of what is expected of one of the largest health insurers in Australia. Bupa should have invested in the necessary systems, processes and training to prevent this from happening, and address it promptly when it occurred.”

A copy of the undertaking relating to the compensation is available at Bupa HI Pty Ltd.

In its statement, Bupa asked health insurance customers and providers to make contact if they believe they may have had a mixed coverage claim, eligibility check or uncategorised item claim incorrectly assessed between 1 May 2018 and 31 August 2023.

Customers and providers can visit the Bupa website here, call 134 135 or visit one of its stores to request a review of a historical claim or eligibility check. Bupa said that it will support enquires and, if needed, pass cases on to its specialist team.

More information is available at www.bupa.com.au/health-insurance/mixed-coverage.

Image credit: iStock.com/EyeOfPaul