Medibank’s incomplete training manuals have allegedly resulted in staff not knowing to tell customers about key changes to their policies.
The changes would see customers face expenses from in-hospital diagnostic services, such as blood tests and MRI scans.
Medibank is now facing action in the Federal Court, with the Australian Competition and Consumer Commission alleging the company misled customers when it did not inform them of changes to 11 policies.
The court heard that suggested scripts provided to Medibank call centre staff said that if a customer asked if they were covered for "all costs", the employees were recommended to respond that doctors may charge above the rate.
It is alleged Medibank and its subsidiary AHM altered its policies to no longer cover the gap between Medicare payments and the hospital charge of the diagnostic services, returning only up to 25% of out-of-pocket expenses. Subsequently, Medibank allegedly failed to inform its 3.8 million policy holders.
The court also heard Medibank was set to save $24 million from the policy changes, which happened only a few months before its float.
Lachlan Armstrong QC, the lawyer representing the ACCC, told the court “you deal with disclosure obligations as an insurer by sending out notifications to the consumer”, according to The Australian Financial Review.
"Candid disclosure, that's what they should have done.”
He also claimed staff were told to tell customers "we (Medibank) cover you for in hospital medical services".
Armstrong said customers were often not informed of the changes until they called the insurer about a specific diagnostic service claim or once they showed up at the hospital.
"Medibank would provide cover for any items that were covered by the Medicare schedule, unless a particular item was identified in the policies as a restricted or an excluded item," said Armstrong.
However, Medibank denies it misled and deceived consumers or that it acted in an unconscionable manner.
Justice David O'Callaghan told the court he was concerned over the definition of "cover" the ACCC was using, and said if he had taken out a health insurance policy he would have asked: "To what extent am I covered?".
Medibank chief executive Craig Drummond said that whatever the result of the court proceedings, the company wanted to do more to educate consumers about their policies.
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