Australian Unity Health Limited - s.87B undertaking

The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from Australian Unity Health Limited (Australian Unity) in relation to claims about changes to its annual dental benefit limits that were likely to contravene sections 18, 29(1)(g) and 29(1)(m) of the Australian Consumer Law.

Australian Unity

• Australian Unity is a registered private health insurer in Australia.
• Australian Unity is a subsidiary of Australian Unity Limited, an ASX-listed company which supplies a wide range of services, including health insurance, financial advice, insurance/mortgage broking and trustee services.

The relevant conduct

• Before 12 September 2015, Australian Unity’s Comprehensive Extras product for couples or families included one overall annual limit for dental benefits for each calendar year, which was between $1,600 and $2,400 (Annual Dental Limit). Members could choose how to split the Annual Dental Limit among individual family members. For example, families could decide to put the whole Annual Dental Limit towards braces for one child (subject to lifetime orthodontic limits).
• Australian Unity’s fact sheets, website and terms and conditions in 2015 represented that members’ Comprehensive Extras benefits would not change for the period from January to December of each year. However, this was not the case.
• Instead, in the middle of the year, Australian Unity changed the way the Annual Dental Limit worked. From 12 September 2015, while the total Annual Dental Limit remained the same, each individual family member could no longer claim up to the full limit, but instead could only claim up to half of it. For example, where a family had an Annual Dental Limit of $1,600, an individual family member had previously been able to claim up to the entire $1,600 limit. After 12 September 2015, that family member could claim up to only $800 of the $1,600 limit.
• In August 2015, Australian Unity wrote to Comprehensive Extras members notifying them of the change. However, some members may have already relied on Australian Unity’s previous representations that their benefits were fixed from January to December each year, and planned for individual family members to claim amounts for dental services that exceeded the new per-person limit.

The relevant undertaking

To address the ACCC’s concerns, Australian Unity provided the ACCC with a section 87B undertaking that, among other things:

• it will not make a detrimental change to any benefits which are represented to members or potential members as benefits provided for a 12 month period, during that 12 month period;
• it will improve its information to consumers about Australian Unity’s ability to change benefits, and will also note that Australian Unity is bound by the Australian Consumer Law when making changes;
• it will provide compensation expected to be at least $620,000 to affected members, including reimbursement for out-of-pocket costs for dental services incurred in 2015, and payment of expenses on ongoing dental plans;
• it will notify members about its conduct and Australian Unity’s commitments contained in the undertaking.

Variation to Undertaking

On 31 August 2018 the ACCC accepted a variation to the section 87B Undertaking provided to the ACCC by Australian Unity Health Limited, previously accepted by the ACCC on 2 November 2017.

The purpose of the Variation to the Undertaking is to ensure that Australian Unity can comply with any current and future statutory requirements, including responding to and implementing the private health insurance reforms recently proposed by the Federal Government as and when they come into effect.