HealthEngine Face Big Fine for Misleading Reviews and Patient Referrals

Australian Competition and Consumer Commission v HealthEngine Pty Ltd [2020] FCA 1203

Introduction

In Australian Competition and Consumer Commission v HealthEngine Pty Ltd [2020] FCA 1203, the Federal Court of Australia fined HealthEngine Pty Ltd (HealthEngine) $2.9 million for breaches of the Australian Consumer Law (ACL). HealthEngine is an online health booking platform and health care directory which allows patients to make a booking with over 70,000 health practices and practitioners, as well as leave reviews and ratings of their experiences. HealthEngine over a period of 3 years manipulated patient reviews and ratings of health practitioners and practices listed on their website, as well as failing to gain the informed consent of patients that their non-clinical data would be disclosed to third parties.

Facts

Between 31 March 2015 and 1 March 2018 HealthEngine engaged in “Review Conduct” by publishing feedback received from patients on HealthEngine’s website. However, in that time, it implemented a practice of not publishing 17,000 negative Patient Reviews, as well editing around 3,253 patient feedback without their knowledge.

In addition, during the same period, HealthEngine engaged in “Rating Conduct”, where it misrepresented to consumers as to why HealthEngine did not publish a rating for some health practices. For example, Health Engine only published ratings for health practices that have received more than 80% positive responses to a survey question about recommending the practise to someone else. For those health practices that received a lower rating, HealthEngine chose not to publish a rating and published a notation on their website for that health practice saying it had no rating because of insufficient data.

From April 2014 and June 2018, HealthEngine had arrangements with various private health insurance brokers and was paid fees in exchange for patient referrals to them. This arrangement earned HealthEngine $1.8 million during this period. HealthEngine failed to adequately disclose to patients how their personal information would be used.

Accordingly, the ACCC alleged that HealthEngine, in trade or commerce:

  • engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL; and
  • made false or misleading representations that the services provided by HealthEngine on the Platforms were of a particular standard, quality, value or grade, in contravention of s 29(1)(b) of the ACL.
  • engaged in conduct that was liable to mislead the public as to the nature, characteristics and/or suitability for their purpose of services provided by HealthEngine, in contravention of s 34 of the ACL.
  • made a false or misleading representation that purported to be a testimonial by Patients relating to services provided by Health Practices, in contravention of s 29(1)(e) of the ACL.

HealthEngine settled proceedings with the ACCC, admitting to engaging in false or misleading conduct in contravention of sections 18, 29 and 34 of the ACL and was referred to the Federal Court for orders.

Orders

For the reasons outlined below, the Federal Court ordered that HealthEngine pay $2.9 million in penalties for engaging in misleading or deceptive conduct and making false or misleading representations about its reviews in breach of the ACL. The Court also ordered HealthEngine to contact affected consumers to provide details of how they can remove their non-clinical personal information (e.g. name, phone number, email, date of birth, etc) held by HealthEngine and insurance brokers. HealthEngine was also ordered to pay a contribution to the ACCC’s legal costs amounting to $50,000 and undergo a review of their compliance program and procedures.

Applicable Principles

Australian Consumer Law

The ACCC relied on 4 provisions of the ACL in its case against HealthEngine, including:

  • Section 18(1) which states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
  • Section 29(1)(b) which provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services make a false or misleading representation that services are of a particular standard, quality, value or grade.
  • Section 29(1)(e) which provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services make a false or misleading representation thatpurports to be a testimonial by any person relating to goods or services.
  • Section 34 which provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

In pursuing a claim under the ACL, the Court applied an objective test of the effect of the representation on the ordinary or reasonable members of the class of consumers to whom the conduct is directed. The relevant class of consumers in this case were patients seeking services from health practices and practitioners.

Evidence

Firstly, the ACCC submitted that HealthEngine’s conduct in manipulating the feedback it received from patients who had attended a consultation at a health practice which they had booked through HealthEngine’s website at www.healthengine.com.au or mobile phone app, misled the public. In determining which patient reviews it would publish, HealthEngine used a practice of not publishing any negative reviews it received, as well as editing patient reviews, which had the effect of making them appear more positive.

By way of example, the ACCC said the following feedback was provided to HealthEngine by a patient on 21 June 2015:

‘Happy with experience although reception needs thorough cleaning. Old chairs need thorough cleaning / scrubbing. I keep thinking how unsanitary they looked.’

Instead of publishing the original feedback received, it is alleged that HealthEngine published ‘Happy with experience’.

Secondly, HealthEngine misled the public by not posting a practice rating as a number and an image of a star, for example, 4.9*) for health practitioners where less than 80% of participants answered “yes” to the ratings question, “Would you recommend others to this practice?”. HealthEngine attached a hover link which stated, “There is currently insufficient data to calculate a patient satisfaction level”.

Contrary to this, HealthEngine had received sufficient feedback and was able to publish a practice rating but chose not to. ACCC submitted that the Review Conduct or the Ratings Conduct, Health Engine engaged in conduct that was liable or likely to create a more positive or favourable impression on consumers who used the website to find a health practice or practitioner. HealthEngine failed to disclose important information about the quality of the services other patients had reported experiencing with Health Practices listed on their website.

Thirdly, ACCC submitted that HealthEngine received an insurance brokers fee for referring patients to private health insurance providers.  As part of this arrangement, HealthEngine provided insurance brokers with patients’ personal information. When patients used its online booking system, they were also asked whether they had private health insurance, and whether they would like to receive a comparison of private health services via telephone. If a patient answered “yes” upon making a booking, HealthEngine provided the patient’s non-clinical personal information to one of the various insurance brokers that paid them the patient referral fees. This occurred over 135,000 times over roughly 4 years.

HealthEngine accepted and admitted to the allegations in the ACCC’s submissions.

Court Findings

The Federal Court found that HealthEngine represented that Patient Reviews published were an accurate reflection of patient reviews received about the health practitioners and practices listed on their website, when negative reviews had in fact not been published and reviews edited to remove negative comments. This had the effect of making reviews “appear more positive than they really were”.

In addition, the Court found that HealthEngine had manipulated consumers as to the reasons why it did not publish a rating for some health or medical practices. Consumers were led to believe practices were not rated due to insufficient data, when HealthEngine did in fact receive ratings for health or medical practises listed on its website but selected to not publish those practice rating.

Further, Justice Yates found that HealthEngine did not make it clear to patients that by clicking “yes” to receiving a health insurance comparison, their personal details would be sent to one of the 9 insurance brokers that had an arrangement with HealthEngine. Additionally, HealthEngine’s conduct was likely to lead patients to believe that they provided the private health insurance.

The Federal Court of Australia handed down a judgment against HealthEngine, finding that they engaged in misleading conduct about the services being provided in contravention of s 18 and s 34 of the ACL.

Compliance Impact

This case demonstrates the ACCC commitment to compliance and enforcement over privacy matters in a competition context, arising from the increasing expansion of the digital economy.

With COVID-19 creating an increased reliance on a digital platform, organisations, particularly those that collect and use consumers’ data, should be aware now more than ever, that their privacy practices and policies, customer disclosure statements and date collection practices must be updated in line with the ACL or they may otherwise face an ACCC investigation and risk hefty fines.

Specifically, organisations should make sure any privacy policies comply with the requirements of all relevant privacy legislation regarding data collection and use. The wording of these policies should be carefully reviewed and considered.

Lastly, organisations should also be careful of making alterations to consumer reviews, as editing reviews or withholding them to prevent the rating system from being impacted, risks contravening the ACL.

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