The Australian Competition & Consumer Commission (ACCC) has taken teledentistry company SmileDirectClub Aus Pty Ltd (SmileDirectClub) and its parent company SmileDirectClub LLC to the Federal Court over alleged false and misleading statements about private health insurance reimbursement.
The ACCC alleged that, between May 2019 and October 2020, SmileDirectClub informed thousands of its customers via email, text messages, flyers, and its website that they might be eligible for reimbursement for SmileDirectClub clear teeth aligners and associated treatment from their health fund despite most Australian private health funds refusing to cover the teledentistry company's aligner treatment.
At least 26,300 consumers ordered aligners from SmileDirectClub during the period in which the representations are alleged to have been made, the ACCC said.
“We allege that consumers could not make a fully informed decision about the total cost of the aligner treatment because SmileDirectClub's statements left them with the understanding that part of it would be covered by their private health insurer,” ACCC Chair Rod Sims said.
“It is a breach of Australian Consumer Law for companies to make false or misleading statements about the benefits or rights associated with products and services.”
The ACCC claimed that SmileDirectClub allegedly told consumers to check if their aligner treatment was covered by their health fund using item numbers 825 and 811.
However, the ACCC claimed that the item numbers cover only treatments provided following face-to-face consultations with dentists registered with the health fund. Therefore, the teledentistry company might have advised consumers who checked the items that their health insurance covered them for the treatment when it was not the case.
The regulator also claimed that consumers who filled in an insurance inquiry form provided by SmileDirectClub received emails showing that the company had contacted their health insurer, and the “good news” was they were entitled to reimbursement for the aligner treatment, which could be claimed after they had paid SmileDirectClub in full.
“We allege SmileDirectClub's statements that it had contacted the health fund of individual consumers, or that consumers could get reimbursement for treatment under item numbers 825 and 811, were false and misleading because most Australian health insurers did not cover those treatments unless they had been provided by a dentist or orthodontist in a face-to-face consultation,” Sims said.
The SmileDirectClub treatment takes several months and generally costs around $3,000. However, the company did not give consumers the documents needed to claim a reimbursement from their health insurer until after full payment.
“We consider that the alleged misleading representations about eligibility for a health fund reimbursement for these aligners and treatment are particularly concerning because affected consumers did not discover that they would not receive any health insurance reimbursement until after the SmileDirectClub treatment had been paid for in full,” Sims said.
