Homestoryhealth insurance › Health Net Accused Of ACA Plan 'Bait And Switch'

News Story

Health Net Accused Of ACA Plan 'Bait And Switch'

LAW 360

Law360, New York (December 22, 2014, 5:26 PM ET) -- Managed health care company Health Net of California Inc. was hit with a putative class action in California state court Friday alleging the company breached its individual health plan contracts by misprepresenting doctor availability in its Affordale Care Act plans.

Plaintiffs allege that Health Net has misrepresented to consumers that certain physicians and hospitals are participating in its health plans when they are not and are seeking an order enjoining the health care company's alleged violations.

In addition to saying the alleged transgressions violate California Health & Safety Code and Insurance Code provisions and the Consumers Legal Remedies Act, they also claim Health Net has breached its individual health plan contracts as well as the implied covenant of good faith and fair dealing.

"Plaintiffs bring the action to challenge Health Net's deceptive 'bait and switch' misrepresentations, inadequate physician and hospital networks, and grossly mishandled administration of individual health plans," the complaint states.

According to the suit, Health Net canceled its existing non-ACA-compliant health plans in late 2013 and made new health plans available to California consumers on Jan. 1 to coincide with the commencement of federal health reform.

Named plaintiffs Rebecca Lehman and Heather Womick say that they were both fraudulently induced into purchasing a Health Net plan with a drastically reduced network of providers. They say Health Net represented and marketed its health plans as having specific physicians and hospitals but that they discovered after enrolling in the new plans that their provider networks did not include the providers that the company had represented as in-network, and that the provider networks were much more limited than Health Net had represented.

They say they did not become aware of the reduced provider networks until after the open enrollment period closed, which caused them to be locked in the plans until the next open enrollment period the following year.

Lehman says she was unable to find a doctor to treat her because of Health Net's misrepresentations and inadequate physician network and Womick alleges she incurred more than $12,000 in charges for a procedure that she says should have been available to her in-network.

"Health Net had a clear incentive to conceal its networks: as a result of these practices, Health Net significantly increased its share of the California individual health plan market, while offering inferior products," the complaint states.

In addition, the plaintiffs say that Health Net will no longer offer preferred provider organization plans inside the California exhange as of Dec. 31 and that customers enrolled in the cancelled PPO plans must seek new coverage for 2015, including new exclusive provider organization plans sold by Health Net. Also, Health Net's EPO plans offer 54 percent fewer doctors than its PPO plans, they say.

The proposed class includes current California residents who are enrolled in, or who were enrolled in, a Health Net individual health plan contract purchased on or after Oct. 1, 2013.

Attorneys from Shernoff Bidart Echeverria Bentley LLP and Consumer Watchdog, representing the plaintiffs, filed a similar suit against Blue Shield of California and Cigna Health and Life Insurance Co. in September.

"Consumers who purchased Health Net plans last year feel misled," Travis Corby, an attorney for plaintiffs, told Law360. "They have had problems accessing timely health care due to network misrepresentations and limited provider networks. In many instances, plan members have to go out-of-network and pay out-of-pocket just to see a doctor. What is the point of having health insurance if there are not enough doctors in the network to use it?"

A representative for Health Net said they had not yet had an opportunity to evaluate the lawsuit and therefore could not comment.

Plaintiffs are represented by Michael J. Bidart and Travis M. Corby of Shernoff Bidart Echeverria Bentley LLP and by Harvey Rosenfield, Jerry Flanagan and Laura Antonini of Consumer Watchdog.

Counsel information for defendants was not immediately available.

The case is Rebecca Lehman & Heather Womick v. Health Net of California Inc. et al., case number BC567361, in California Superior Court, Los Angeles County.

--Additional reporting by Kurt Orzeck. Editing by Ben Guilfoy.