The NIB Holdings Limited (ASX: NHF) share price is up and down after the Australian Competition and Consumer Commission (ACCC) withdrew court proceedings against the health insurer.
Following NIB's update at 3:22 pm AEST yesterday, the company's shares rallied briefly before closing the day 0.16% lower at $6.23. The S&P/ASX 200 Index (ASX: XJO) also ended the day lower by 1.06%.
This morning, the NIB share price opened around 2% lower before partially recovering to its current level of $6.20, down 0.48% for the day so far.
Let's take a closer look at the announcement.
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ACCC drops case against NIB
In a statement to the ASX on Tuesday afternoon, NIB said the ACCC would end court proceedings against the company that began in May 2017.
The case was brought about due to changes in NIB's 'MediGap Scheme', a program in which the company would cover out-of-pocket costs for customers using Medicare services that were not bulk billed.
The ACCC alleged NIB failed to notify customers that it would no longer cover certain eye procedures under the scheme in 2015. The government body further alleged customers then unwittingly undertook these procedures, unaware they were no longer covered by the policy.
The trial was delayed due to a similar case the ACCC had against Medibank Private Ltd (ASX: MPL). It was then further delayed due to the COVID-19 pandemic.
The ACCC said it agreed to drop the charges as NIB had made the necessary changes since the proceedings first began.
ACCC chair Rod Sims commented:
Given the passage of time since this case was commenced, NIB's changed notification practice during that time and the improvements made across the industry as a result of the ACCC's interventions in the sector, we believe it is no longer in the public interest to continue proceedings against NIB.
We are pleased the industry has significantly changed practices since 2015 to ensure greater transparency for consumers, including NIB's change of its approach and commitment to continue informing customers about changes that may affect their out–of–pocket expenses for ongoing treatment ahead of the changes occurring.
In its statement, NIB said it "is committed to acting in the best interests of its members and has denied the ACCC's allegations."
NIB share price snapshot
Over the past 12 months, the NIB share price has increased by around 31%. Only last week, shares in the company were in the green after it sold its digital healthcare advisory platform.
NIB has a market capitalisation of $2.85 billion.
