The Commerce Commission has settled court action against Southern Cross Medical Care Society and Aetna Health (NZ) Limited after the health insurance companies agreed to pay reimbursements of more than one hundred thousand dollars to affected policy holders, rewrite the relevant policies and pay $5,000 towards the Commission's legal costs.

Commission Chairman John Belgrave said that the action in the Auckland High Court involved Southern Cross' "KiwiCare", "RegularCare" and "RegularCare Plus" policies, and Aetna's "Essential" and "Essential 100" policies.

"The companies claimed that these policies would pay 100 percent or 80 percent of patients' reasonable medical costs, but some people got less than 20 percent," Mr Belgrave said.

"All the people who did not get what they were promised will be reimbursed and the policies will be changed so that no more people are disadvantaged.

"This is an excellent result for consumers."

In a signed Deed of Settlement Southern Cross has acknowledged that people who joined the "KiwiCare", "RegularCare" and "RegularCare Plus" polices between July 1, 1996 and August 20 this year were likely to have been misled about the level of reimbursement for the costs of angioplasty and cardiac surgery.

Under the Deed, Southern Cross will reimburse the people who bought those policies in the three years and who claimed for cardiac surgery or angioplasty. The people involved will receive a total of $145,223.20 in reimbursements.

Mr Belgrave said that the Fair Trading Act, which the Commission alleges Southern Cross breached, has a three-year statutory limit. The Commission cannot take action against behaviour that occurred more than three years ago.

Aetna has acknowledged that statements made in its "Essential" and "Essential 100" policies may have conveyed a misleading impression about the level of reimbursements for angioplasty, cardiac surgery, lithotripsy and hospital accommodation.

Under the Deed, Aetna will reimburse people who bought these policies in the five years from September 1994 and who did not receive reasonable reimbursement for angioplasty, cardiac surgery, lithotripsy or hospital accommodation.

Mr Belgrave said that Southern Cross and Aetna are writing to all people who bought these policies and claimed for these treatments, and will explain how they will pay the reimbursements.

The Commission monitors all its settlements. If any are not honoured, it can take further action.

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz