Bupa case and the impact on additional services

The recent coverage around the Australian Competition and Consumer Commission (ACCC) filing in the Federal Court against Bupa marks a first in the regulation of aged care providers. The ACCC claim that Bupa has contravened the Australian Consumer Law (ACL) by listing extra services in its resident agreements that it did not ultimately provide. 

While the case relates to extra services, many providers may be anxious that it will impact the regulation of additional services. We’ve set out some information around the key questions providers may have below. 

Will extra services and additional services be considered together?

Despite the historical similarity between extra services and additional services, there are key differences between the two regimes. However, additional services were brought in to replace extra services in 2015 and as such, the two are connected. It is our view that while there is the potential that the Federal Court will consider all services provided for an extra charge together, this case really relates to whether or not what was promised was delivered. 

What risk does this case present to additional services? 

The current discussions with regulators about the scope of additional services is different in that those discussions focus on the parameters of what can be provided, not whether or not providers are misleading residents by not offering the services listed in their agreements. 
Naturally, if providers are advertising a list of items that are not available for residents to access and use, they will be charging a fee for something that they won’t actually provide. That is what has happened with Bupa and what they have self-disclosed.  

What regulatory risks does this case pose?

In addition to the potential ACL penalties, a breach of the ACL could arguably be a breach of a provider’s responsibilities. If it is, the non-compliance could lead to sanctions. We have not seen any successful attempts to make a proposed breach of the ACL the basis of regulatory action when reviewed by the aged care regulators in the first instance. However given that this is the first case that the ACCC will test the scope of the ACL on aged care resident agreements, there is a potential that a finding against Bupa will set a new precedent in the aged care regulatory framework. 

Will the ACCC look at all providers?

We note that the ACCC regards “misrepresentations in the aged care sector particularly concerning because, unlike many other services, it’s often difficult for elderly residents to move to another provider”.

It is possible that this may lead to a broader investigation into the industry by the ACCC. It may also lead to more referrals of matters by the Quality and Safety Commission to the ACCC, in the same way that the former Aged Care Complaints Commissioner referred specific matters to the ACCC following complaints. This may be a practice that the new Commission adopts depending on the recommendations of the ACCC or the Federal Court judgment, and indeed, in light of any complaints given the heightened public awareness of these issues. 

It is important to note that many residents will be unlikely to understand the technical differences between extra services and additional services, particularly those who have been grandfathered on old resident agreements from the extra service regime to additional services. This may make it more likely that with the public attention on providers charging for services not delivered, the case will ignite a discussion around additional services such that residents and their representatives will question all services they have been billed for. 

What should you be doing now? 

If you still deliver extra services, consider whether you should conduct an audit of the delivery of those services from 1 January 2011 (the date the Australian Consumer Law came into effect) to ensure residents had access to the items they were charged for. Note that if you determine that extra services were not delivered, you will need to consider self-reporting to the ACCC and the regulators, and whether a refunding/compensation program is appropriate. 

Similarly, any services you have offered under additional services packages should be audited to ensure they were in fact available to residents. We also encourage you to stay up to date with the position of the regulators in relation to additional service requirements. 

Conclusion 

In summary, there may be commentary from the case and increased public discussion which informs how the regulators may reframe additional services. At this stage however it is difficult to predict whether additional services will be re-characterised as a consequence of the ACCC’s claims.

For now, the Bupa case signifies that those providers who charge for extra service items advertised or agreed to in their agreements and/or marketing material will need to ensure they are available to residents or otherwise risk incurring penalties for false and misleading conduct under the ACL. 

If you would like to speak to us about your response, please don’t hesitate to contact Victor Harcourt 03 9609 1693 or Anita Courtney on 03 8602 7211.