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Ouch! Hefty penalty awarded against HealthEngine for Breach of Australian Consumer Law

Malcolm Campbell, ||

The integrity and reputation of many businesses today are formed by the reviews that consumers give them online. If you are a business owner, read on to find out what you need to be aware of when it comes to consumer information.

The Penalty

On 20 August 2020, the Federal Court of Australia (FCA) found that HealthEngine had engaged in conduct that breached sections 18, s29(1)(b), s29(1)(e) and section 34 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (ACL) and ordered it to pay $2.9 million in pecuniary penalties.

HealthEngine operates an online health marketplace, with an online directory listing 70,000 health practices across Australia. It is also involved in facilitating bookings by consumers for services provided by those practices. HealthEngine conducts its business through its website and mobile phone app.

The Conduct that caused the issue

HealthEngine engaged in the following conduct which was found to breach the ACL:

Review Conduct

During the period 31 March 2015 to 1 March 2018, HealthEngine conducted a survey to determine whether patients would recommend a Health Practice. It also provided the opportunity for patients who had booked a consultation through one of its platforms to provide feedback or comments.

HealthEngine did not consider every review or automatically publish such reviews. HealthEngine also made alterations to reviews so that the reviews appeared more positive than they really were.

HealthEngine disclosed to patients from March 2016 that reviews were published and may have been modified but did not go into any further detail.

HealthEngine accepted that it represented that the patient reviews it published were an accurate reflection of the reviews it had received, which was not the case. HealthEngine also accepted that by publishing such reviews, it made a representation that the review purported to be a testimonial by a patient in relation to services provided by Health Practices, when it was not.

Ratings Conduct

This related to the review conduct. The survey HealthEngine conducted also included a question, designed to ascertain whether a patient would recommend a Health Practice. HealthEngine used this information to calculate a rating for Health Practices that opted to participate.

If 80% or more patients answered “yes” to the Ratings Question for a Health Practice, HealthEngine published the rating for that practice either as a percentage or as a star rating. If less than 80% of patients answered “yes” to the Ratings Question, HealthEngine did not publish a practice rating for that Health Practice, instead it represented that there was no rating.

For Health Practices that had a no-rating notation, HealthEngine on its website attached a hover link to the no-rating notation which displayed the phrase: “There is currently insufficient data to calculate a patient satisfaction level”. In the app HealthEngine published the statement: “This practice does not have a customer satisfaction score”.

HealthEngine accepted that it represented that it had not received sufficient feedback from patients when in fact HealthEngine had received sufficient feedback and was able to publish a practice rating but chose not to do so.

The Referral Conduct

During the period 30 April 2014 to 30 June 2018, HealthEngine had arrangements with different insurance brokers for which it received fees for patient referrals. HealthEngine provided the Insurance Brokers with patients’ personal information.

As part of the booking process, HealthEngine asked patients whether they had private health insurance and whether they wished to receive a call about health insurance comparison services or to assess the patient’s private health insurance needs. If a patient answered “yes” to receiving a call, and then booked an appointment with a Health Practice, HealthEngine provided the patient’s non-clinical personal information to an Insurance Broker.

HealthEngine did not make it adequately clear that a third party would provide the relevant services to patients. HealthEngine accepted that this conduct was liable or likely to cause patients to believe that HealthEngine provided the relevant services.

The Court’s Orders

1.            HealthEngine was ordered to pay $2.9 million in penalties by way of instalments:

(a)    the amount of $750,000, within 6 months of the date of the court order;

(b)    the amount of $750,000, within one year of the date of the court order;

(c)    the amount of $700,000, within 18 months of the date of the court order; and,

(d)    the amount of $700,000, within 24 months of the date of the court order.

2.            HealthEngine was also subject to non-punitive orders including:

  1. Arranging at its own expense and for a period of three years an annual review of its existing ACL compliance program by an independent compliance professional. This review also involves implementing changes identified as necessary as part of that review;
  2. Contacting all patients whose personal information was provided to an insurance broker.

3.            HealthEngine was ordered to pay $50,000 towards the ACCC’s costs.

A Timely Reminder

This case serves as a timely reminder that businesses need to be upfront, clear and open with how they deal with consumers and their information or they risk being in breach of the ACL. It also demonstrates that the Court will impose pecuniary orders when warranted and to protect the consumer from conduct in breach of the ACL.

If you have any questions or concerns relating to any of the information above or you require assistance, please do not hesitate to get in touch with a lawyer in Coleman Greig’s Commercial Advice Team, who would be more than happy to assist you.

Disclaimer; This article is for general information purposes only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice.


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