The consumer watchdog is suing Medibank for allegedly telling customers they could not make claims for spinal, pelvic, hip and knee surgeries even though their policies covered those procedures.

The alleged misleading behaviour meant members were left in unnecessary pain because they delayed the surgery they needed or paid large out-of-pocket expenses for the procedures, the Australian Competition and Consumer Commission said.

The ACCC says Medibank misled customers about what their insurance covered. Credit:AFR

The federal court action launched on Tuesday alleges Medibank's budget brand ahm incorrectly told more than 800 members making claims or inquiries they were not covered for joint investigations or reconstruction surgery between February 2013 and July 2018.

In fact, those members were entitled to make claims under their "lite" or "boost" policies.