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Watchdog Files Class Action Suit Against Insurance Provider

SANTA MONICA DAILY PRESS

Anthem poised to raise rates, lower benefits through new contract, lawsuit alleges

OCEAN PARK BLVD — Santa Monica-based nonprofit Consumer Watchdog filed a class action lawsuit in Los Angeles Superior Court Monday accusing insurance giant Anthem Blue Cross of changing the terms of existing contracts to charge its clients more.

The suit also targets another new provision which allows the company to change how much it charges its clients with only 60 days notice beginning May 1.

At the press conference held Tuesday in Sunset Park, Consumer Watchdog staff attorney Jerry Flanagan told reporters that Anthem’s move was a “bait and switch” on customers that had agreed to pay for specific plans only to see the company prepare to simultaneously raise rates and cut benefits.

In the new terms of policy renewal, Anthem gives itself the ability to change benefits as well as the amount that its customers pay in out-of-pocket costs six times each year.

The group estimates that the allegedly dirty practices may affect more than 100,000 people.

The real losers are clients like Janet Kassouf of Hayward, Calif., a 13-year breast cancer survivor locked into coverage with Anthem because no other insurer will take her with a pre-existing medical condition, Flanagan said.

“What other industry is allowed to change the cost of a contract and what the client is getting out of it?” Flanagan asked. “None.”

Anthem characterized the changes to its clients’ contracts as a way of keeping premiums low.

“Anthem Blue Cross works diligently to slow the increase in medical costs so we can keep health insurance affordable for as many Californians as possible,” said Darrel Ng, spokesperson for Anthem. “Health plans are highly regulated in the state, and all changes were made with the knowledge and approval of state regulators.”

Still, consumers enrolled in certain plans, specifically those policed by the California Department of Health Care Management, saw their premiums jump by over 20 percent.

There are two California departments that regulate the various kinds of personal insurance. Those that fall under the Department of Health Care Management rose, while those overseen by the California Department of Insurance remained unchanged, according to the suit.

The Department of Health Care Management had no comment on the litigation, said spokesperson Denise Schmidt.

Pamela Pressley, Consumer Watchdog’s litigation director, told reporters that even though Department of Health Care Management hadn’t specifically denied Anthem’s proposal to change plans, that didn’t mean it had a stamp of approval.

Plaintiff’s are seeking a court order preventing Anthem from breaching future contracts, payment of damages to members of the class for failure to provide benefits under contracts, punitive damages and other fees.

The class action suit has three main plaintiffs: Kassouf, Santa Monica resident Dave Jacobson, and Alison Heath of San Francisco.

All three purchased plans with different deductibles — $2,500, $1,500 and $500 respectively. Those deductibles jumped by $450, $250 and $50.

Kassouf now pays $27,000 per year for her health coverage, or what she equates to tuition, room and board for a public university student.

“I’m speaking for the silent voices, the hundreds of thousands of people in California that have been trapped by this,” Kassouf said.

This is the second time that Consumer Watchdog has gone after Anthem for issues regarding contracts, Flanagan said.

“It’s the market leader in bad practices,” Flanagan said. “Because it is the largest, it is one of the most abusive.”

Contact the author at: ashley@smdp.com