Wellpoint Inc. subsidiary Anthem Blue Cross Life & Health Insurance Co. was slapped with a proposed false advertising class action in California court on Tuesday alleging the insurer misled consumers regarding details of individual health plans offered under the Affordable Care Act.

The insurer falsely represented that certain doctors and hospitals would be considered "in-network" when in 2013 they informed customers enrolled in individual plans that their existing coverage would be canceled and they needed to sign up for new ACA-compliant plans, the complaint filed in Los Angeles Superior Court says.

Based on information provided by Blue Cross, many customers thought they were enrolling in a "preferred provider organization" plan, or PPOs, during the ACA open enrollment period, when in fact they were sigbning up for "exclusive provider organization" plans or EPOs, the complaint says. EPOs carry far greater restrictions on the number of doctors and hospitals considered "in-network".

"Blue Cross has a clear incentive to conceal its reduced network during the open enrollment period in order to increase salses of its health service plans," the complaint states. "As a result of these practices, Blue Cross significantly increases its share of the California individual health service plan market, while offering inferior products."

The lawsuit also claims Blue Cross delayed enrollment for consumers, resulting in patients being unable to use their coverage despite the insurer already collecting premium payments, in addition to concealing the actual amounts for deductible payments for services obtained from out-of-network providers.

Blue Cross acknowledged to Law360 that there were inaccuracies in their provider database but said they've since taken steps to correct them, in addition to adding more than 3,800 doctors to their statewide exchange network since the start of the year.

"In the process of updating our provider database earlier in the year, we dound that while the vast majority of the listings were correct, there were some providers inadvertently listed," Blue Cross spokesman said. "Many of the doctors inadvertently listed decided to join Anthem's network for individual members."

The proposed class action consists of "thousands of persons" and is made up of California residents enrolled in an individual Blue Cross health insurance plan between October 1, 2013 and March 31, 2014, who experienced interruptions in receiving health care services because of enrollment delays or whose physician provider network was misrepresented, the complaint says.

Monetary damages could reach hundreds of millions if the class is certified, Jerry Flanagan of Consumer Watchdog, an attorney for the plaintiffs, told Law360.

Flanagan said the injunctive relief the suit seeks is even more significant because California regulators have so far failed to act, despite Blue Cross' ACA enrollment problems already drawing scrutiny from the state's Department of Managed Health Care.

Flanagan said the named plaintiffs in the suit did their due diligence in educating themselves on the details offered in the new Blue Cross ACA plans, and the fact that some of these informed consumers didn't know about their lack of coverage until getting a bill demonstrates how widespread Blue Cross' misrepresentations were.

"These are folks who did their homework," Flanagan said.

Similar allegations have also been raised in a calls action in Nevada federal court agains Xerox Corp., which managed that state's troubled ACA insurance exchange, in which customers faced many of the same enrollment difficulties described in the California state court case.

Flanagan said the size of the individual insurance market in California means the case could have widespread implications for Blue Cross and other insurers offering individual plans in other states.

"California is often the first place for a lot of the bad things insurance companies try," Flanagan.

The plaintiffs are represented by Michael J. Bidart and Travis M. Corby of Shernoff Bidart Echeverria Bentley LLP and Jerry Flanagan and Laura Antonini of Consumer Watchdog.

Defense counsel information was not immediately available.

The case is Betsy Felser, et al. v. Blue Cross of California, case number BC550739, in the Superior Court of the State of California, County of Los Angeles.

–Additional reporting by Kat Greene and Chelsea Naso. Editing by Philip Shea.