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Undercover investigators posing as customers were offered sexual services and saw staff strip naked at massage parlours offering private health insurance rebates, as HBF cracked down on providers suspected of billing insurers while operating as brothels.
In one case, a male investigator who had been offered sexual services turned around to find a staff member had removed her top.
The covert operations are part of a years-long effort by HBF, one of Australia’s largest health funds, to police the sector. The fund has issued compliance notices, deregistered providers and confiscated HICAPS machines used to process instant health insurance rebates.
HBF said it had investigated 14 remedial massage providers over the past year, issued seven compliance notices and deregistered three providers.
‘While only registered remedial massage therapists can receive payments from HBF, it remains a service we closely monitor as each year we see a small number of providers act in a way that falls outside the standards set by the accrediting body,’ a spokesperson said.
‘We commence investigations either due to red flags in claims data or from receiving member complaints, which we encourage.
‘Where concerns are substantiated, we take swift action ranging from compliance notices through to deregistration and, in the most serious cases, referrals to police.’
The fund has battled the issue for years, deploying undercover operatives to test whether suspect businesses were providing legitimate remedial massage services.
Undercover investigators were offered sexual services and saw staff strip naked at massage parlours offering private health insurance rebates, as HBF investigated providers suspected of operating as brothels
In one case, a male investigator who had been offered sexual services turned around to find a staff member had removed her top. The covert visits form part of HBF’s years-long crackdown
HBF investigated 14 remedial massage providers over the past year, issued seven compliance notices and deregistered three providers. The fund says claims data and member complaints trigger investigations, with the most serious substantiated cases referred to police
The issue has raised concerns across the industry, which paid $27.8 billion in benefits to members in 2025-26.
Rachel David, chief executive of the Australian Health Funds Council, said health funds took fraud seriously because it increased premiums for the 15 million Australians who relied on private health insurance.
‘If you become aware of a provider inappropriately claiming health insurance rebates, report it directly to your health fund so it can be investigated,’ she told Daily Mail Australia.
‘These matters are not just about protecting members’ money. They can also raise serious concerns about consumer safety and the potential exploitation of workers.’
Dr David said health funds can take action against providers who misuse the system and refer serious concerns to the appropriate authorities, including police.
‘Where there are concerns about coercion, human trafficking or exploitation, the safety and wellbeing of potentially vulnerable workers must come first,’ she said.
It is the responsibility of insurers to regulate and manage how benefits are paid for services provided under extras policies.
Massage therapists are self-regulated but must comply with the national code of conduct for healthcare workers.
Lachlan Henderson (pictured) is the chief of HBF, one of Australia’s largest health funds that is cracking down on providers suspected of billing insurers while operating as brothels
Australian Health Funds Council chief Rachel David (pictured) said health funds took fraud seriously because it increased premiums for the 15 million Australians who relied on it
The code stipulates that practitioners should ‘not engage in behaviour of a sexual or close personal nature with a client’. Complaints and breaches are regulated by State and Territory health complaints entities.
Daily Mail Australia contacted HICAPS, a wholly-owned subsidiary of National Australia Bank and the country’s largest provider of instant private health insurance rebate processing services, for comment but did not receive a response.
