On March 1, 2010, two individuals filed a class action lawsuit on behalf of themselves and all similarly situated persons affected by what they allege is Blue Cross of California’s “manipulation of blocks of health insurance business with the intention of illegally decreasing policy benefits to enrollees while escalating the premiums they must pay”, which they allege in the Complaint violates California Health and Safety Code Section 1367.15 and other consumer protection laws.
This practice is referred to in the Complaint as a “death spiral”, as it is a practice “in which a health plan organization announces that it is closing a book of business (i.e., will no longer offer a certain type of plan contract to new enrollees, or has priced that plan contract to make it uncompetitive) and raises the rates paid by those remaining in the now closed book of business until they can no longer afford coverage…. Over time, rates increase dramatically for those who retain the older coverage, as they become older and more likely to file claims. Eventually many enrollees are priced out of coverage and frequently left uninsured.”
The Complaint seeks relief on behalf of current residents of California who have been or who are threatened with being subjected to this practice, and is on file in Ventura County Superior Court. The Complaint states that the plaintiffs seek injunctive relief, disgorgement and restitution.
For more information about this action, and to review a copy of the Complaint, please go to www.consumerwatchdog.org