The Full Federal Court today affirmed a decision of Justice Hill that Medical Benefits Fund of Australia Ltd had used misleading television advertising and billboard posters to entice consumers to join their health fund prior to the introduction of the Federal Government's 'Lifetime Health Cover' initiatives in the middle of 2000.
The decision also left in place orders requiring MBF to publish corrective advertisements in major metropolitan newspapers. The Full Federal Court confirmed Justice Hill's view that corrective advertisements "will not merely remind the public that MBF has engaged in conduct which was misleading but also alert consumers to the importance of questioning advertisements and the insurance industry of the importance that their advertising not mislead or deceive consumers".
The ACCC alleged the television advertisements contained fine print disclaimers that stated members only received health insurance coverage for pregnancy-related services after they had served a 12-month waiting period and these were screened for less than five seconds at the end of the commercial. The ACCC alleged that the fine print did not correct the misleading impression created by the main images.
The Full Federal Court confirmed the earlier decision that the disclaimers were inadequate and unlikely to come to the attention of consumers. Justice Stone stated, and Justices Moore and Mansfield agreed,: "Even an astute and observant viewer may not have sufficient time to peruse the fine print with sufficient care to notice the qualification and it is not unlikely that even a reasonably careful viewer might have been misled".
MBF had submitted to the court that even if the advertisements were misleading, later information disclosure prior to a customer joining the health fund would have dispelled any misapprehension. On this point the Full Federal Court said: "[T]he submission that there is room under the TPA [Trade Practices Act 1974] or its analogues for publication of misleading or deceptive advertising so long as it is corrected by later material is not sustainable".
"With the huge increase at the time in ordinary Australians taking out private health insurance or switching health funds, we are concerned to ensure that consumers are given complete and accurate information", ACCC Chairman, Mr Graeme Samuel, "Advertising plays an important role in informing and educating consumers, however, it is imperative that the information provided be readily understood, free from technical jargon and contain sufficient information to allow consumers to make an informed choice".
As part of the original decision John Bevins Pty Ltd, the agency which managed MBF's advertising campaign, was found to be knowingly concerned in, or a party to, the contraventions by MBF.
The Full Federal Court overturned the original decision that the advertising agency was knowingly concerned in the contraventions by virtue of its role in creating the misleading advertisements. Justices Stone, Mansfield and Moore agreed that John Bevins Pty Ltd was not knowingly concerned in MBF's contravention. Justice Stone found that in order to have been knowingly concerned, the advertising agency would have to have known the advertisements were misleading or deceptive. Justices Moore and Mansfield did not agree with this approach. The respective approaches to the interpretation of what is required to prove accessorial liability in the context of section 52 of the Act and its analogues is being further considered.