On Monday, the not-for-profit consumer advocacy group Consumer Watchdog filed a lawsuit against Anthem Blue Cross, the Los Angeles Times reports.

The lawsuit alleges that the insurer breached contracts with individual policyholders when it increased annual insurance deductibles and other out-of-pocket costs on May 1.

The lawsuit is the second in eight months filed against Anthem for rate increases. An Anthem policyholder filed a similar lawsuit in March, and that case is pending in Los Angeles Superior Court (Helfand, Los Angeles Times, 11/15).

Background

In March, Anthem announced it would adjust a planned premium rate increase from 16.4% to 9.1% for hundreds of thousands of policyholders and delay the date when the increase took effect from April 1 to July 1. Anthem also said it postponed increases to copayments and deductibles scheduled to take effect in April to Jan. 1, 2012 (California Healthline, 3/22).

However, only policyholders who have plans regulated by the state Department of Insurance saw their deductibles scaled back (Los Angeles Times, 11/15).

Anthem's rate hike reductions did not affect the more than 150,000 policyholders who have plans overseen by the Department of Managed Health Care (California Healthline, 4/8).

Details of Latest Lawsuit

Consumer Watchdog's lawsuit alleges that Anthem employed "bait and switch" tactics to raise deductibles and other out-of-pocket costs for policyholders.

The group said the insurer improperly changed policy renewal periods on Aug. 1 from one year to one month, subsequently allowing the company to change benefits, copays and other costs several times during the year.

According to Consumer Watchdog, Anthem violated California law by misrepresenting the cost of plans for some of its policyholders.

The lawsuit seeks class-action status.

Anthem's Response

Darrel Ng, a spokesperson for Anthem, said the insurer would not comment on pending lawsuits, but he said "all [deductible] changes were made with the knowledge and approval of state regulators."

He added that Anthem seeks to keep rates affordable and that state officials closely monitor its business decisions (Los Angeles Times, 11/15).