Cassidy, CEO ACCC v Medibank Private Ltd M176/2002 (20 June 2003)

Case:

The ACCC alleged misrepresentations about the benefits of health insurance cover available from Medibank; advertised no rate increase for 2000; failed to properly disclose that rates would increase for PackagePlus products; then offered consumers switching from other funds ．any waiting periods waived・ and ．get 30 days free・; fine print provided that only the two-month general waiting period and the six-month optical waiting period were waived.

Key Words:

Misleading and deceptive conduct, trade practices, health insurance, misrepresentation

Reference:

ACCC v Medibank Private Ltd [2003] ATPR 41-867

Industry:

Health insurance

Relevant Laws:

Sections 52, 53(c) and 53(e) of the Trade Practices Act 1974

Summary:

The ACCC, under a delegation from the Australian Securities and Investments Commission (ASIC), 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 proceedings were brought under the Australian Securities and Investments Commission Act 1989. The terms of the relevant ASIC, Act sections are not relevantly different to the consumer protection provisions of the Trade Practices Act.

The ACCC sought orders including waiver of waiting periods, provision of 30 days free health insurance and refunds or credits for PackagePlus purchasers.

In March 2002, Medibank・s application for certain remedial orders to be struck out was refused; September 2002 Full Federal Court upheld Medibanks appeal; 20 June 2003 ACCC application for special leave to appeal to the High Court refused.

The High Court refused the ACCC's special leave application to appeal the decision of the Full Court of the Federal Court. The Full Court upheld Medibank Private's appeal from the decision of Justice Ryan refusing to strike out orders sought by the ACCC that would have required Medibank to do what they promised consumers they would do in advertisements published by Medibank in 2000.

The Court decision means that there continues to be a question whether the Federal Court has the power under section 80 of the TPA to make companies do what they say to consumers that they are going to do.

While the Court can order companies to pay compensation to consumers under sections 82 and 87 of the Act, the High Court's decision means that the issue whether the ACCC can seek orders in the nature of specific performance under section 80 will need to be determined at a later date. If the Court does not have power to make such orders, the ACCC or consumers themselves will have to make individual applications to the Court for compensation on behalf of each consumer affected by the conduct of a company that has broken the law. This will mean ensuring that companies do not profit from breaking the law will be more difficult than it might otherwise have been.

Proceedings continue.

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