Major Insurance Company Faces Lawsuit For Allegedly Tricking Customers Into Canceling Their Policies

http://thinkprogress.org/health/2013/11/07/2906861/major-insurance-company-lawsuit/

By Sy Mukherjee on November 7, 2013

A major California insurance company is being sued by two consumers alleging that they were tricked into dropping their health coverage when they could have remained on their preferred plans under Obamacare, the Los Angeles Times reports.

Obamacare allows insurance policies that were issued before the law was signed in 2010 to remain in place as long as they don’t change their benefits in a way that harms consumers, such as by increasing their out-of-pocket costs or dropping benefits. Customers who have these so-called “grandfathered plans” can keep them for however long the insurance company continues to offer it.

For customers who don’t have “grandfathered plans,” things are a little different. Their insurance providers must comply with Obamacare’s more robust benefit requirements. Some companies have been canceling millions of individual policies either in an effort to meet those new requirements, or because they want to change the plans in a way that would make them illegal under the health law. Most customers who shop for new individual policies under Obamacare will be eligible for tax subsidies to help them afford their coverage.

California’s Anthem Blue Cross may have convinced their customers that they fall into the second category — even though they’re actually in the first.

“Blue Cross successfully enticed tens of thousands of its individual policyholders to switch out of their grandfathered health plans and forever lose their protected grandfathered status,” states the lawsuit. “Blue Cross concealed information about the consequences of switching plans and intentionally misled its policyholders to encourage the replacement of grandfathered policies.”

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California’s Anthem Blue Cross has regularly come under fire for shoddy business practices. Last year, the company requested a double-digit rate hike on customers’ premiums despite the fact that employers and other health insurers said that only modest adjustments were necessary in order to keep up with health care inflation.