Bupa: Health insurance company fined $35 million for duping patients, hospitals

Private health insurance giant Bupa has been fined $35 million after wrongly rejecting thousands of members’ hospital claims.

The Federal Court on Thursday found Bupa misled thousands of consumers about benefits they were entitled between May 2018 and August 2023.

In most cases, claims were for hospital treatment in which two or more procedures were performed at the same time.

Where part of the treatment was covered by a member’s policy and another part was not, Bupa rejected the claim in whole.

Justice David O’Callaghan found the health insurer had engaged in “unconscionable conduct” between June 2020 and February 2021 for rejecting mixed coverage claims of two or more procedures at hospitals.

The contravening conduct was allowed to continue even after Bupa’s senior managers became aware that system changes were necessary to avoid incorrectly rejecting claims, the court found.

The consumer watchdog which took the case to court said Bupa’s conduct forced many patients to cancel, delay or forgo necessary treatment.

“We heard from Bupa members who suffered significant harm, including financial harm as well as pain, suffering and emotional distress as a result of Bupa’s conduct,” ACCC deputy chair Catriona Lowe said.

“Private health insurance can be a significant expense for consumers and people rightly expect to receive the level of coverage they pay for.”

The unconscionable conduct, affecting 388 people, occurred after Bupa removed a safeguard in mid-2020.

That safeguard - a weekly report - told staff when its automatic claim assessment system had wholly rejected certain hospital claims.

Medical providers and hospitals were also impacted by Bupa’s conduct, including by being fleeced out of payments they were entitled to for claims.

The value of the benefits denied or delayed averaged $900 and in one case amounted to about $103,000, the court found.

The second biggest health insurer in Australia controls more than a quarter of the market with about 4.5 million customers.

It struck a remorseful tone on Thursday saying it had accepted the breaches.

“We remain deeply sorry for these errors and have apologised to our affected customers for the impact this has had on them and their families,” the company said in a statement.

Bupa said $14.3 million in compensation had been paid to impacted customers for more than 4100 claims.

“The amount paid in remediation provides one numerical yardstick by which the court may be satisfied that the penalties totalling $35 million ... will have the necessary deterrent effect,” Justice David O’Callaghan said.