For the second time in eight months, California health insurer Anthem Blue Cross is being sued over allegations that it has breached contracts with individual policyholders for hiking annual insurance deductibles in the middle of the year.
The latest lawsuit, filed Monday by the group Consumer Watchdog, says that California’s largest for-profit health insurance company used “bait and switch” tactics to raise deductibles and other out-of-pocket costs for some customers May 1.
Anthem, the consumer group contends, violated state law by misrepresenting the cost of its coverage for more than 100,000 customers.
The lawsuit says the Woodland Hills insurer improperly changed policy renewal periods Aug. 1 from one year to one month, allowing the company to alter its benefits, co-pays and other costs repeatedly throughout the year.
“When Blue Cross changes annual deductibles and other costs and coverage at [a] whim, the result is a moving target,” said Jerry Flanagan, staff attorney for Consumer Watchdog. “Consumers are left with no certainty about what they will have to pay and what coverage they’ll receive.”
Anthem spokesman Darrel Ng said the company could not comment on pending litigation. But Ng said that Anthem works diligently to keep insurance affordable and that its business decisions are closely monitored by state officials.
“Health plans are highly regulated in the state, and all [deductible] changes were made with the knowledge and approval of state regulators,” Ng said.
The insurer, a subsidiary of Indianapolis-based WellPoint Inc., initially faced criticism over its deductible hikes earlier this year. Consumer advocates and California Insurance Commissioner Dave Jones assailed the increases as part of an uproar over Anthem’s plans to raise insurance premiums July 1.
In response to the outcry, Anthem announced in March that it would scale back average premium increases — to 9.1% from 16.4% — for more than 500,000 policyholders and hold off changing deductibles and co-pays for medical services until January.
At the time, Anthem said that delaying its plans would contribute to millions of dollars in losses in the individual market.
“We are pleased with the resolution of this matter, but feel all stakeholders in the healthcare market in the state must do more to control the unrelenting rise of underlying healthcare costs,” Anthem President Pam Kehaly said at the time.
But only Anthem’s policyholders regulated by the Department of Insurance got a break on deductibles. Customers with policies overseen by a second regulator, the California Department of Managed Health Care, did not get the same break, consumer advocates say.
Some of those Anthem customers have seen their annual deductibles rise in the middle of the year to $550 from $500, according to the consumer lawsuit. Other deductibles have gone to $1,750 from $1,500 and to $2,950 from $2,500.
Dave Jacobson of Santa Monica, an Anthem policyholder for more than a decade and a plaintiff in the new lawsuit, called the changes to his Individual PPO Share 500 policy unfair.
Jacobson said he used up his $500 deductible earlier this year when he sought medical treatment for lower abdominal pain. When he returned for follow-up care in July, he said that he had to pay an additional $50 for medical care because his deductible had been raised.
His deductible went up even as his insurance premium rose 17% on July 1.
“I’m upset that they can do anything they want in pursuit of profit,” Jacobson, one of three plaintiffs in the lawsuit, said of Anthem. “For the deductible to increase midyear, it’s as if they moved the finish line after I finished the race.”
The Consumer Watchdog lawsuit, which seeks class-action status, mirrors a civil complaint filed in March by an Anthem customer from Westlake Village.
The initial lawsuit, which also seeks class-action status, accused Anthem of raising deductibles midyear for medical care and prescription drugs, along with increases in maximum out-of-pocket expenses. It is pending in Los Angeles Superior Court, according to court records.