The ACCC v Bupa decision – Why it is important, what it has highlighted, and what it may mean for aged care providers

18 May 2020


In the case of ACCC v Bupa1 the Federal Court of Australia has ordered Bupa Aged Care Australia Pty Ltd (Bupa) to pay a $6 million pecuniary penalty for contraventions of the Australian Consumer Law (ACL), issue a public notice, undertake a redress scheme and establish a compliance program, with respect to failures to provide extra services to 692 residents (although an estimated 3,000 residents were affected) across four states over 5 years.

However, this case is not just about extra services. This alert should be read by any aged care provider charging additional services. We look beyond the $6 million penalty imposed on Bupa to highlight the potential implications of the decision for approved providers who offer and charge for extra services or additional services which are in addition to the specified care and services listed in the Quality of Care Principles 2014.

Implications for the aged care industry

There has been increased scrutiny of the aged care industry by the media, as part of the Royal Commission into Aged Care Quality and Safety, and by the Aged Care Quality and Safety Commission.

We have seen this increased scrutiny slowly move beyond the traditional clinical focus.

The decision in Regis Aged Care Pty Ltd v Secretary, Department of Health [2018] FCA 117 held that the “asset replacement charge” was prohibited by the Aged Care Act 1997 (Cth) noting that the fees were charged to residents for works and improvements to be conducted which the resident would not derive a benefit from.

The Department of Health’s position is that fees for additional services may only be permitted in circumstances where the resident agrees to the fees, where the agreement is appropriately documented including itemised accounts, and where the resident can access and benefit from the additional services they have agreed to pay for.

The requirement for the additional service to be “itemised” in accounts is currently part of an application before the Federal Court, but the overall landscape indicates that there is now likely to be an increased scrutiny of approved providers by the Australian Competition and Consumer Commissioner (ACCC).


If your organisation has aged care services which have Extra Service Status, or which include additional service offerings, we recommend now is the time to take stock of how your organisation would fare if it was in Bupa’s shoes.

A ‘set and forget’ approach cannot be taken. It is important that you have robust systems in place and that the effectiveness of those systems be monitored by:

  • Reviewing and auditing your end to end processes residents journey as a consumer;
  • Auditing the content of your residents’ agreements against the built form of the specific facility;
  • Considering secret shoppers to test if you say something is provided to a high standard or of a high quality, that it is;
  • Considering expanding the ‘Resident of the Day’ review to include an assessment of the extra or additional services;
  • Reviewing whether your organisation’s complaints handling mechanisms are well known, easy to find, and easy to follow;
  • Considering if staff at all levels of your organisation would benefit from refresher ACL training; and
  • Reviewing the language in your marketing and contract materials, and whether it accurately reflects what you have promised to provide.


The conduct

Bupa self-reported to the regulator and has admitted to contravening various provisions of the ACL.

The conduct included receiving payment for goods and services which were not provided, which were partially provided during the specified period, or where a specified element of a good or service was not provided, including:

  • Specific buildings for designated leisure activities (workshops, garden sheds);
  • Specific superior brands of products offered in addition to those provided as part of the Specified Care and Services;
  • Dedicated areas of the service for specific activities (theatrette and crafts)
  • Services offered less frequently than promised (sessions or activities offered daily and twice weekly);
  • Asserting that goods were maintained to a high standard;
  • Services provided by staff with specified level of training;
  • Excursions and golf lessons; and
  • Descriptions of room sizes of resident rooms.

Federal Court Orders

Bupa admitted contravening various sections of the ACL2, and that some of the failures to deliver the extra services were more serious than others, with some not provided at all. Bupa’s explanation for its failure to provide the extra services was, in effect, there was a “systems error”. Bupa admitted it did not have in place sufficient controls and systems to ensure that the services were provided.

On 12 May 2020, Mortimer J of the Federal Court made orders reflective of the parties’ settlement agreement and joint proposed orders, including the following:

  • Bupa engaged in misleading or deceptive conduct and made false or misleading representations in relation to the provision of “extra services” at certain residential aged care facilities;
  • Bupa breached the ACL by wrongly accepting payment for these extra services;
  • Bupa pays a pecuniary penalty of $6 million within 14 days;
  • Bupa undertakes a scheme for redress of the extra service fees paid by residents within 12 months;
  • Bupa publishes, within 14 days and at its own expense, a Corrective Notice as prescribed by the Court, available on its website and containing the following words:


  • Bupa establishes a Consumer and Competition Compliance Program; and
  • Bupa pays the ACCC’s costs in the amount of $80,000.

Bupa estimated that the total compensation it will pay to residents under the redress scheme will total $18.3 million.

The penalty

Mortimer J considered the parties’ proposed penalty of $6 million to be appropriate, giving weight to the following factors in agreeing:

  • Bupa made no deliberate attempts to mislead or deceive their residents;
  • Bupa self-reported, admitted the contraventions, was cooperative and contrite and had not been the subject of previous orders under the ACL;
  • The conduct extended over a long period of time and was serious; and
  • Those affected by Bupa’s contraventions were vulnerable consumers.

Although the parties did not provide submissions about how they reached a $6 million figure, the ACCC indicated it was prepared to give Bupa a 50% discount because of its cooperation and contrition.

With some misgivings, Mortimer J concluded the amount of $6 million was appropriate and proportionate overall, considering Bupa will need to spend a significant amount to comply with the Court’s orders. In addition, the Court acknowledged the significant deterrence and reputation cost the public notice will cause.

Mortimer J referred to the parties’ joint submissions that the misled residents were likely to have experienced a lower quality of life than they were led to expect. The Court therefore considered these circumstances to be more than a financial loss. The Court also acknowledged that Bupa has taken steps to improve its governance systems and processes and that Bupa is no longer seeking extra services status.

The total cost

The $6 million penalty, whilst a large sum, was determined by the Court to be “unlikely to have a significant impact on Bupa’s financial position“.

Taking into consideration the overall effect of the Court orders, the financial penalty, the commercial and operational costs, and the overall brand damage, the ‘total cost’ of this decision for Bupa will also include:

  • Costs associated with the implementation of the administration to support the remediation program;
  • Costs of changes to and implementation of the Compliance Program, including the recruitment and appointment of staff to three new roles;
  • Costs associated with the engagement of advisory forensic accountants to devise and implement the remediation program;
  • Costs of preparing, delivering and attending staff training in complaints handling and the ACL;
  • The reputational costs associated with the public notice required to be displayed on Bupa’s website and the ACCC’s website, which must remain there for 120 days in addition to any media coverage; and
  • Potential for more affected residents to seek compensation (plus interest) arising from the information contained in the public notice of the breach.

How we can help you?

Please contact any of the authors or a member of our aged care and retirement living or competition and consumer team if you would like to discuss the contents of this alert in the context of your organisation.

This article was written by Sabine Phillips, Partner, Jason Symons, Partner, Tamie Duncan-Bible, Senior Associate and Claudia George, Solicitor.

1 Australian Competition and Consumer Commission v Bupa Aged Care Australia Pty Ltd [2020] FCA 602.
2 Sections 18(1), 29(1)(b) and (g), 36(3) and (4) of the ACL.



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