Judge allows Anthem to continue sales of stripped-down insurance policies

A judge ruled Tuesday against a restraining order that would have stopped Anthem Blue Cross from switching 500,000 Californians to health insurance plans offering no coverage for out-of-network care.

A consumer group had asked the judge for the restraining order after Anthem sent notices saying customers would be automatically switched into plans that paid nothing for doctors and hospitals outside the network if they did not change to another insurer by Dec. 15.

In a lawsuit filed in Los Angeles County Superior Court, Santa Monica-based Consumer Watchdog said that Anthem broke the law by not clearly informing customers that their current coverage in a preferred provider organization, or PPO, was ending.

Instead Anthem has changed those plans into so-called exclusive provider organizations, or EPOs, throughout much of the state for 2017. Those plans only cover out-of-network care in an emergency.

The reduced coverage applies to plans that individuals have purchased from Anthem or from the state’s health insurance exchange, Covered California.

Los Angeles resident Patty Mann, an Anthem customer involved in the case, said the change will disrupt care for her son, who sees doctors outside the insurer’s network. She pointed to the confusing language in Anthem’s notices and said she fears that many people will not notice the switch until they receive surprise medical bills next year.

“We feel they are deceiving the public,” Mann said.

The case will continue. It seeks damages for consumers who are hurt.

In explaining his decision, Judge John Shepard Wiley Jr. said the plaintiffs lacked standing in court for a restraining order because they had not suffered any losses on the policies that begin Jan. 1.

Jerry Flanagan, a lawyer for Consumer Watchdog, said the group had asked for the restraining order to try to prevent customers from being hurt.

Anthem said the lawsuit has no merit.

 “Anthem Blue Cross is pleased with the court's decision,” spokesman Darrel Ng said, “and based on the facts in the case, we believe the decision is appropriate.” 

Melody.petersen@latimes.com

Follow @melodypetersen on Twitter

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