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Alan Bardwell, Chairman
 

rt health members have recently received communications from our Chairman and from the RTBU about the future of your fund. Here we answer your questions about these communications. If you’ve missed any recent messages, you can find links to them below. We will continue to update this information as needed, and if you have any questions in the meantime, please email us at help@rthealthfund.com.au.  

Important information you should know

What is happening with rt health fund?

As set out in the letter sent by rt health’s Chairman to all members on 17 August, the Board has been exploring opportunities to guarantee a strong future for rt health, including the possibility of a merger with another health fund.
 

The private health insurance industry is facing a number of economic challenges. These include escalating health care costs, increasing demand from members for a wide range of health care services, and a concerning decline in the number of younger people holding health insurance. All of these issues impact members through increased premiums and lack of scale to invest in member services and facilities such as dental and optical clinics. Ultimately, these issues put the viability of smaller funds at risk. The Board is acting properly and in the best interests of members as a whole to seek out realistic solutions to the long-term challenges facing rt health. 

Who is the RTBU?

The RTBU is the “Rail, Tram and Bus Union”. The RTBU is a trade union which is a separate and distinct entity from rt health. The RTBU and rt health are certainly “not one of the same”.


rt health has had a long association with the RTBU, both because of our shared transport industry history, and as the preferred health cover provider for RTBU members. However, only around 11% of rt health’s current members are also currently members of the RTBU.

How and why did the RTBU get my contact details?

If you have a health insurance policy with rt health, you are also a corporate “member” of rt health. As a result of being an rt health “member”, you have various rights, including a right to vote on certain matters.
 
Given rt health is an unlisted public company, it is subject to some of the same rules as listed public companies under the Corporations Act. The Corporations Act allows any member or shareholder of a public company to request and be provided with a copy of the company’s “register of members”, provided that they intend to use the register for a proper purpose.

Section 249X(1A) of the Corporations Act sets out a mandatory rule which applies to public companies (such as rt health). This rule provides that a person who is appointed as a member’s proxy can be an individual or a body corporate. The RTBU is a body corporate.

The National Secretary of the RTBU, Mark Diamond, recently became a member of rt health. In that capacity, he made a request for the register of members and was provided with the information that rt health is required by law to supply. This included the name, address and date of joining of all current members, as well as anyone who has been a member in the past seven years.

While the kind of information set out in the register of members is “personal information” as defined in the Privacy Act, the provision of this information is not a breach of members’ privacy, because the Privacy Act permits an organisation to disclose information where it is required to do so under Australian law. Accordingly, there was nothing that rt health could do to stop Mr Diamond from obtaining the members’ register. If you object to receiving correspondence from the RTBU, you should email (rtbu@rtbu.org.au) and tell them that you have no interest in receiving any material from them or any of their officers.

It would have been our strong preference to alert you to the fact that you were going to receive a communication from the RTBU before it was sent, but regrettably this wasn’t possible because the RTBU gave us no prior warning that they were planning to distribute material to rt health’s members. 

Why is the RTBU asking for me to sign a proxy form?

The RTBU is seeking to disrupt the process that is being undertaken by the Board to ensure the ongoing sustainability of rt health.
 
As part of these disruptive efforts, the RTBU has asked you to provide it with a legal instrument called a “standing proxy” to enable it to call a general meeting of members and exercise your vote (either at that meeting or at rt health’s next annual general meeting) to sack six of your deeply experienced and independent rt health directors and replace them with its own nominees.
 
The RTBU nominees comprise four senior RTBU officials, one former long-term BUPA consultant and two nominees who are also directors of Employers Mutual Limited (EML) or its subsidiaries. EML is a company that provides workers compensation insurance claims management services on an “outsourcing” basis to icare, the NSW Government’s workers compensation insurance provider. icare is currently the subject of highly critical media and political attention, some of which extends to its claims manager, EML.

If you elect to give the RTBU your standing proxy, you are providing them with the permanent right to exercise your vote in relation to any matters you would otherwise be entitled to vote on as an rt health member. In other words, unless you revoke your proxy, you will no longer have a say and the RTBU will be free to pursue its own agenda when it comes to votes of rt health’s members.
 
The RTBU has never explained why it wishes to nominate individuals associated with EML to rt health’s Board. Clearly, the RTBU has a business relationship with EML, but the nature of that relationship and any joint future plans the RTBU and EML have for rt health have never been disclosed. EML is a workers compensation claims management provider, and is neither a health insurer nor a recognised provider of health insurance services. However, here is what the NSW State Insurance Regulatory Authority (SIRA) review of EML’s performance found with respect to its claims management services for icare:

  • EML has produced ‘deteriorating’ performance trends, including poor file management and poor understanding of, and skills for achieving, better outcomes.
  • EML had an ‘alarming’ rate of staff turnover and was losing 22.7% of its employees every year.
  • EML’s governance, IT models and processes contributed to a deteriorating quality of claims management and outcomes, promoting further errors, delays and poor decision making.

And here is what some of EML’s own customers had to say about their dealings with them in confidential submissions to the SIRA review:

  • “EML have been horrendous to deal with. Having a call centre look after the claims until four weeks is not ideal, and not having a dedicated case manager is ridiculous.”
  • “EML are the worst agent/insurer we have ever dealt with …”
  • “…There has been a significant deterioration in the claims service in NSW since 1 January 2018 when icare enforced the new claims model and EML commenced management of all new claims.”
  • “The EM system has had a negative effect on the experience for customers, both employers and employees. With no one specific to talk to you feel like a number.”

Being workers’ compensation insurance, most of EML’s customers would probably only experience one claim with EML in a lifetime. rt health, on the other hand, delivers a lifetime of service to members. Many of our members have been a member with us for more than 50 years – and often their parents before them – and many of them have never had any cause for a single complaint against rt health.

Why would anyone trust anyone associated with EML to form part of the Board that looks after their private health insurance? 

What if I've already signed the form and sent it?

If you’ve already completed the RTBU’s proxy form and want to revoke it, please urgently contact or email the RTBU (rtbu@rtbu.org.au) telling them that you would like your standing proxy revoked and asking them to confirm that it has been revoked.

Why am I only hearing about this process now?

Usually in a process like this, the Board would ‘test the waters’ with other parties to see what potential opportunities might exist, before engaging with members.
 
We understand that you likely have many questions about the process being undertaken by the Board regarding the identity of the funds being considered, what their proposals might look like and what this means for you. We are still in discussions with some funds and are in the early stages of the process, so we do not have clear answers to these questions yet.
 
The RTBU has suggested that we are withholding information from members. This is simply incorrect and baseless. We have kept members informed with respect to the process, but have not shared information where there is insufficient certainty regarding possible outcomes. That said, because of the RTBU’s communications to members, we’ve decided to share these insights into this process with you now, even though there are many questions that we’re not able to answer yet. We will continue to keep you informed of major developments as and when information becomes available. 

Which funds are you talking to and will I get to have a say?

The Board has now received non-binding proposals from a range of health funds (including other mutual funds), which can deliver substantial benefits to rt health members. The funds that have given those proposals are not ready yet to either finalise them or to make their discussions with rt health public.
 
The purpose of the preliminary proposals is to determine which fund or funds we might want to enter into a more detailed discussion with, and that may lead to a final proposal. If any such final proposal is attractive and in the best interests of members as a whole, the Board would then make it known to you. However, at this stage, there is no guarantee or assurance that any proposal moves forward.
 
The Board is considering the proposals it has received, but what is already clear is that there is great potential for an arrangement to be entered into that could provide many tangible benefits to you as a member. Examples of these include lower premiums, lower ongoing premium increases, and access to more benefits and services.
 
Importantly, at the forefront of this process has been the Board’s commitment to preserving the fund’s 130-year history, legacy and heritage, and achieving an outcome that results in equal or better benefits and services, at lower premiums for you.
 
Our greatest concern is that without even knowing what the opportunities for members and the organisation are, the RTBU is trying to prevent you from ever finding out the details or being able to participate in that decision. 

The RTBU is talking about some matters concerning Transport Health and a "technology project". Has something gone wrong in the fund?

The Board has been completely transparent about some of the recent issues in the business, including the technology project. The RTBU doesn’t have any special information, and is in fact relying on information that the Board itself reported to all members in the 2018 annual report. All this information has always been and remains publicly available through materials that can be accessed by all rt health members. Any suggestion or inference from the RTBU that this suggests some deeper issue regarding rt health’s finances has been “hidden from plain sight” by the Board is, once again, simply incorrect.
 
Over a significant period of time, the Board has been committed to investing in projects that are targeted at having a positive effect on the outcomes for the fund. As is the case with any business, some of these succeed, some do not, and some succeed for a period of time. The Board has taken accountability for the two projects the RTBU is highlighting, has implemented steps to remedy the write-downs associated with them and has made changes within the organisation as a result. The private health insurance regulator, APRA, has been well aware of these matters and members have been properly informed about them. 

All of these communications are confusing, what should I do now?

There is no action you need to take at the moment. Ignore the letter and proxy form from the RTBU, as well as anything else they might send you. If you don’t wish to hear from the RTBU again, simply email them (rtbu@rtbu.org.au) and tell them to stop sending you correspondence.
 
If you have already provided your proxy, you can simply email the RTBU (rtbu@rtbu.org.au) to say you would like your standing proxy revoked and asking them to confirm that it has been revoked.
 
You’ll hear from us when there is an action for you to take. For now, just be alert to this process and ready to participate in making sure we get the best outcomes for the fund and for you as a member. Even if you’ve told us what your thoughts are via email, when the time is right, we will likely need you to cast a vote in the proper format with respect to rt health’s Board composition. But don’t worry, we’ll make that all very clear and simple for you at the time. 

How can I find out more and stay informed?

17 August 2020: Please see the email here, which was sent to rt health members.
3 September 2020: Please see the letter here, which was sent to rt health members.
11 September 2020: Please see the additional email here, which was sent to rt health members.

 
If you have a question you’d like us to address, please email us at help@rthealthfund.com.au