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Blue Shield of California Policy Class Action Lawsuit
By Mike Holter
Blue Shield of California policyholders and consumer advocates have filed a class action lawsuit against the insurer, claiming it used enormous rate hikes, and the threat of rate increases, to force patients into lower-benefit and higher-deductible health coverage in violation of state law.
The Blue Shield class action lawsuit alleges the insurer is illegally gaming the health insurance system by alternately closing older policies and opening new ones in order to push older, sicker consumers who are more expensive to insure into lower benefit, higher deductible coverage that requires consumers to pay more out of pocket.
The class action lawsuit is seeking to stop Blue Shield’s alleged illegal practice of shoving its policyholders into what is known as a “Death Spiral” — the industry term for what happens when a health insurer “closes” certain insurance policies to new customers, and later raises rates to those remaining in the closed policy until those enrollees can no longer afford coverage. Since consumers with preexisting conditions cannot switch to a comparable or better policy, consumers trapped in the closed policies must either accept greatly inferior coverage or face bigger and bigger premium increases.
One of the lead Plaintiffs in the Blue Shield of California class action lawsuit says the company closed his family’s policy and then threatened them with a 23% premium increase, forcing them to switch to “the only bare bones policy Blue Shield offered us.” When Blue Shield canceled the original rate increase, the company refused to allow the Plaintiff to transfer back into his old, higher benefit policy. Then Blue Shield allegedly raised the rate of the new policy by 14.8%.
“It’s just plain unfair. Blue Shield is pushing families like mine with pre-existing health conditions out of their health plans — either into higher deductible coverage or into the ranks of the uninsured,” said the Plaintiff.
California law requires that when health insurers close a policy the insurer must either offer consumers new comparable coverage, or minimize rate increases on the closed policies. The class action lawsuit accuses Blue Shield of illegally closing eight policies regulated by the California Department of Managed Health Care, and announcing it will close 23 policies regulated by the California Department of Insurance on July 2, 2012, without offering consumers comparable policies or limiting rate increases as required by law.
“Instead of providing coverage to loyal customers who have paid their premiums, Blue Shield pushes consumers into skimpier coverage or prices them out of care altogether when they are sick and need insurance the most,” said Jerry Flanagan, staff attorney for Consumer Watchdog.
Updated June 15th, 2012
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3 thoughts onBlue Shield of California Policy Class Action Lawsuit
How do I sign up to be a part of the suit against Blue Shield of CA?
H i w do I sign up t be a art of the suit against Blue Shield of CA?
This company is horrific. I have been fighting them for months to allow me to see a certified nurse midwife which they do not deem as a health professional even though my booklet indicates I have coverage for one. They are putting me through the ringer denying me authorization, then approving it, then finding another reason to deny it again. I have spent countless hours on the phone with them going in circles and not really getting anywhere. No one really knows anything. I am always getting contradictory answers or just completely wrong information. They won’t send me anything in writing unless it’s a letter of approval or denial. I will be 8 months pregnant next week and have only had 4 maternity appointments because I absolutely detest going the “preferred” ob-gyn the 3 times I have been. The 4th appointment was a courtesy of my midwife to make sure everything is ok. On my “insurance days” my baby doesn’t kick and I am in tears after each conversation. Blue Shield of California is infringing on my rights to have a provider of my choice, one that offers the midwifery model of care which is completely different that any offered by a doctor. They are trying to force me to abide my their ideals of what maternity care should be like which includes A LOT of unnecessary procedures and dealing with unkind people that do not care about me or my baby. They are also trying to force me to deliver my second child in a hospital an hour away where I will be inhibited to labor as I am comfortable and at risk for nosocomial infections for both myself and my baby. Because I had such an easy and quick with my first child AT HOME there is also a good chance my baby will be born in our vehicle en route to a hospital. We had our same insurance at the time of my first child’s birth, but opted to pay out-of-pocket in order to receive the care of our choosing. Having the baby at home with a midwife was the absolute best choice for me. My pregnancy, labor and postpartum care was top-notch and I thoroughly enjoyed every second of it. If we could afford to pay out-of-pocket again this time we would, but now we have more financial responsibilities and two children to raise! Out of principal it is also wrong that Blue Shield will not agree to pay $5,000 for complete maternity care (prenatal, delivery and postpartum), but have no problem paying out $30,000 for me to see an ob-gyn and have a baby in a hospital. A rep at their call center in Redding, CA actually told me this! I will keep fighting this company until I can birth my baby at the location and with a provider of my choosing. I will not allow them to violate my rights!