Blue Cross Can’t Shake CLRA Claim In Health Plan Suit

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Law360, Los Angeles (August 09, 2013, 3:46 PM ET) — A California state judge Friday refused to trim a putative class action accusing Anthem Blue Cross of using “bait and switch” strategies to increase annual deductibles and premiums, ruling that the plaintiffs adequately pled that health plans are services recognized by the Consumer Legal Remedies Act.

At a hearing, Los Angeles County Superior Court Judge Jane L. Johnson overruled Anthem Blue Cross' demurrer seeking to toss the CLRA claim in the lawsuit filed by Janet Kassouf and two other plaintiffs, ruling that it still needed to be factually determined whether the statute applied to health service plans.

“At the outset, this may be a factual determination,” she said. “For that reason alone, I think I have to overrule the demurrer.”

Jerry Flanagan, a lawyer representing the Kassouf plaintiffs, argued that the California Supreme Court previously held that health service plans are subject to the CLRA.

“By raising co-pays and deductibles, the defendant raises a financial barrier to the very services the consumers thought they were purchasing,” Flanagan said. “Consumers have to think twice about whether they can afford to go to the doctor. This is an issue that deserves more discovery.”

Amir Shlesinger, a lawyer representing Anthem Blue Cross, argued that the California State Legislature chose not to apply the CLRA to insurance or insurance-like products.

“The nature of the issue here that plaintiffs allege has everything to do with insurance-like component of the transaction,” he said.

Judge Johnson gave Anthem Blue Cross 45 days to answer Kassouf's complaint, but asked for additional briefing on whether she should allow the health insurer to appeal her demurrer decision.

The Kassouf complaint, filed in November 2011, alleges that Blue Cross’ strategies involved roping policyholders into plans and then increasing deductibles and premiums by roughly 20 percent, in addition to hiking up other annual out-of-pocket costs in May — the middle of the deductible year.

The Kassouf plaintiffs' lawsuit was later consolidated with that of Eric Taub. Taub originally filed suit in March 2011 after the insurer notified him — two months into the policy year — that it was increasing his deductible from $1,500 to $1,750, raising his premium by 21.1 percent and increasing the prescription drug deductible from $250 to $275. He was enrolled in the PPO Share 1500 plan.

Blue Cross breached the duty of good faith and breached its health insurance contract by “unilaterally changing annual deductibles and other benefits before the end of the calendar year,” according to Taub's complaint.

The Kassouf plaintiffs are represented by Harvey J. Rosenfield, Pamela M. Pressley and Gerald S. Flanagan of Consumer Watchdog.

Taub is represented by Michael J. Bidart, Steven Messner and Ricardo Echeverria ofShernoff Bidart Echeverria Bentley LLP.

Blue Cross of California is represented by Amir Shlesinger, Kurt C. Peterson, Kenneth N. Smersfelt and Brett B. Goodman of Reed Smith LLP.

The cases are Eric Taub v. Blue Cross of California, case number BC457809; and Janet Kassouf et al. v. Blue Cross of California, case number BC473408, both in the Superior Court for the State of California, County of Los Angeles.

–Additional reporting by Matthew Heller and Sindhu Sundar. Editing by Melissa Tinklepaugh.

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