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 The Australian Competition and Consumer Commission (ACCC) said
Medibank decided not to give advance notice about the policy change
in 2014 because its members might have opted to switch to other
providers and that might have hurt its initial public offering.
"Consumers are entitled to expect that they will be informed in
advance of important changes to their private health insurance
cover," ACCC Chairman Rod Sims said in a statement. "These changes
can have significant financial consequences at a time when consumers
may be vulnerable," Sims said.
Medibank shares fell as much as 7 percent while the broader market
was up 0.7 percent.
The company said it "refutes claims by the ACCC related to
activities that took place in 2014", adding in a statement that it
had cooperated with the commission throughout its investigation. The
company declined to comment further given the matter was now before
the court.
The insurer faces potential penalties of A$1.1 million ($816,000)
per breach of Australian consumer law, a commission spokeswoman
said, however it was too early to say what the maximum fine would be
if the consumer watchdog won its case.
(Reporting by Sonali Paul; Editing by Kenneth Maxwell)
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