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Anthem Blue Cross Sued by Consumer Watchdog

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By Tanya Roth, Esq. on March 03, 2010 1:50 PM

Much has been written of late about the activities of health insurance provider Anthem Blue Cross in California. First, the insurer announced a rate hike of 39 percent, resulting in hearings in Washington and Sacramento. Then, California Insurance Commissioner Steve Poizner announced an investigation into possible violations by the company of California regulations and law. Now, according to The Los Angeles Times, Anthem is being sued by Consumer Watchdog for claimed violations of the state's health and safety and business codes. 

The L.A. Times reports that the consumer group's suit, filed in Ventura County Superior Court on Monday, claims Anthem Blue Cross closes "blocks of health insurance business" without offering comparable options. This action comes on the heels of the proposed rate hike.

The Times writes that Plaintiff Randy Freed, and wife, Donna, were informed in September that their policy would be closed to new members. When a block of insurance is closed, it drives up premiums for remaining members, who must divide the costs among a smaller number of policy holders. The Freeds tried to find another Anthem policy, but all the options had higher deductibles and fewer benefits.

According to an article on the Consumer Watchdog website, the suit alleges that Anthem's actions of closing certain health plans like the Freed's to new customers without providing comparable coverage to existing members, trap those existing customers in their too-expensive policies and lead to the dreaded insurance "death spiral." The group claims a 1993 California law prohibits insurance companies from putting customers in this situation.

It may be these kinds actions by the company, and its parent WellPoint, that draw questions like the one Democratic California Assemblyman Dave Jones asked an Anthem executive last week at a hearing in Sacramento, "How much profit is enough?"

The company had no comment at on the lawsuit at this time.

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