$6 Million Settlement in California Insurance Lawsuit

Los Angeles, CAThe Los Angeles City Attorney announced a settlement in a California Insurance lawsuit filed against Anthem Blue Cross. The California insurance law claim alleged the insurance company illegally canceled coverage for more than 6,000 policyholders.

According to The Associated Press (6/20/13), the lawsuit was filed in 2008 and initially sought more than $1 billion from Anthem Blue Cross. The Los Angeles City Attorney at the time, Rocky Delgadillo, alleged in the lawsuit that Anthem Blue Cross was involved in false advertising and fraud. The insurer was accused of illegally canceling policies for people who were diagnosed with serious medical conditions, such as cancer, that often come with high medical costs.

Back in 2008, the Los Angeles Times (4/17/08) reported on one patient who had her coverage canceled after she had a hysterectomy for endometrial cancer. She was told her coverage was canceled because she did not inform the company that she had breast cancer 11 years prior, even though the application only asked for 10 years of medical information and she was told by an agent she did not have to include that information.

Delgaldillo’s lawsuit alleged that Anthem Blue Cross used secret internal units to identify and target policyholders who became ill. Furthermore, the lawsuit alleged 500,000 consumers were tricked into buying ultimately worthless insurance policies because of the company’s false advertising.

In 2010, the Los Angeles city attorney Carmen A. Trutanich followed up the lawsuit with a news release announcing the City Attorney's Office filed an amended complaint against Anthem Blue Cross and its parent company WellPoint Inc., to stop the companies from illegally rescinding health care coverage and alleging WellPoint issued three press releases that were “false and misleading.” This, the city attorney alleged, amounted to unlawful, unfair and fraudulent business practices.

Among the allegedly false and misleading claims made in WellPoint’s press releases were that the company would change its rescission (canceling policies) practices by May 1, 2010, which the city attorney alleged the company failed to do.

“WellPoint sold approximately 1.8 million policies to California Consumers that, because of their undisclosed rescission practices, provided largely illusory health care coverage,” the city attorney argued.

The lawsuit was People v. WellPoint, Inc. et al., Los Angeles Superior Court, Case No. BC389110.