Consumer group sues Anthem Blue Cross

A consumer watchdog group filed a lawsuit Monday against California's largest for-profit health insurer on behalf of policyholders, claiming they were pushed to take coverage with fewer benefits and higher deductibles.

In the case filed in Ventura Superior Court, Anthem Blue Cross is accused of violating a California law requiring health insurers to offer new, comparable coverage or minimize premium increases when they close a policy.

According to the lawsuit, plaintiffs Mary Feller and Randy Freed received similar form letters from the Woodland Hills-based insurer, stating their policies were closed and they could "switch to any Anthem Blue Cross individual health plan with no underwriting required."

The lawsuit alleges that the few plans Anthem would allow Feller and Freed to switch into had higher premiums, higher deductibles, less coverage, or a combination of those undesirable traits.

Anthem Blue Cross spokeswoman Peggy Hinz said the insurer hasn't yet reviewed the case, declining further comment.

Consumer Watchdog, a Santa Monica-based consumer advocacy group, filed the case on behalf of Feller and Freed. The lawsuit seeks class action status.

When the practice was outlawed in 1993, legislative analysts called it a "death spiral" because rates inevitably increased until policyholders could no longer afford coverage. As the coverage pool shrank over time, rates went up and up.

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