By ELIZABETH WARMERDAM
LOS ANGELES (CN) – Anthem Blue Cross deceptively lured tens of thousands of policyholders out of their protected, grandfathered health plans “to eliminate as many of its grandfathered plans from the marketplace” as possible as Obamacare takes effect, customers claim in two lawsuits.
Paul Simon and Catherine Coker sued Anthem Blue Cross Life and Health Insurance Company in similar, separate claims in Superior Court.
Blue Cross’s scheme to entice policyholders to drop their grandfathered plans is known as “twisting,” and is prohibited in California, according to the complaint.
They claim that since March 23, 2010, “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.”
Blue Cross began its “deceptive marketing scheme” upon enactment of the Affordable Care Act (ACA), also known as Obamacare, on March 23, 2010.
People who purchased plans before then that meet the law’s minimum essential coverage may keep their grandfathered plan. After Jan. 1, 2014, all non-grandfathered plans must be ACA-compliant.
That’s why Blue Cross began “deceptively luring policyholders out of their protected ‘grandfathered’ health plans, in effort to eliminate as many of its grandfathered plans from the marketplace,” Simon says in his complaint.
“From March 23, 2010 through September 2013, 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. Blue Cross concealed information about the consequences of switching plans and intentionally misled its policyholders to encourage the replacement of grandfathered policies.”
Blue Cross failed to tell customers about the many consequences of replacing a grandfathered plan, but concentrated on unpredictable rate increases to which policyholders might be subject under their grandfathered plans. It misrepresented that certain ACA-required benefits – such as no pre-existing condition limits for dependent children – would be available only in non-grandfathered health plans, though they actually must be incorporated into grandfathered and non-grandfathered plans, according to the complaint.
After encouraging its policyholders to switch to unprotected plans, Blue Cross announced that all non-grandfathered plans would be canceled by Jan. 1, 2014, and policyholders would have to purchase an ACA-compliant plan to replace their coverage, according to the lawsuits.
“Blue Cross has refused to allow policyholders affected by this scheme to be reinstated back into their old grandfathered policies. Blue Cross had a financial incentive to eliminate grandfathered plans from the marketplace. Blue Cross has drastically limited the network of providers available on its new ACA plans in order to save a significant amount on administrative costs,” Simon says in his complaint. Policyholders who gave up their grandfathered plans will be forced to join these “extremely limited provider networks and in many cases discontinue care with their regular providers,” according to the complaint.
Simon and Coker seek punitive damages and Blue Cross enjoined from canceling any policies without allowing policyholders to switch back to their grandfathered plans.
Both are represented by William Shernoff with Shernoff Bidart Echeverria Bentley in Claremont.
Blue Cross declined to comment.