Blue Shield of California and Cigna Health and Life Insurance Co. policyholders filed putative class actions in California state court on Tuesday and Wednesday, respectively, alleging the companies engaged in "bait and switch" schemes by misrepresenting doctor availability in their Affordable Care Act plans.
The Complaints accuse Blue Shield and Cigna of delaying customers' enrollment in new health service plans for months, effectively blocking access to physicians and hospital services, and forcing them into inadequate networks after ACA enrollment deadlines had passed.
The similar suits say Blue Shield and Cigna hid their reduced networks during the ACA open enrollment period in order to increase sales of their health service plans. Plaintiffs allege they didn't find out that the networks were reduced until later, and they couldn't change plans until the next open enrollment period.
Defendants are violating California's business and professions code, and false advertising laws, by misleading consumers into believing that their preferred physicians and hospitals are participating in the ACA plans, plaintiffs allege.
Blue Shield and Cigna "had a clear incentive to conceal [their] networks: as a result of these practices, [Blue Shield and Cigna] significantly increased [their] share of the California individual health service plan market, while offering inferior products," the complaints claim.
In late 2013, to coincide with the implementation of the ACA, Blue Shield canceled its non-ACA-compliant health service plans and made available to California consumers new pland effective Jan. 1, 2014, plaintiffs say. Likewise, Cigna started offering new individual health service plans to California consumers as of Jan. 1.
The ACA-complaint plans were made available to consumers during the open enrollment period lasting from Oct. 1 to Mar. 31. Plaintiffs claim that, before buying new plans, they checked with the defendants over the phone or on their websites to make sure that their providers would be in-network.
The complaints say that because of the companies' misrepresentations, negotiated fee schedules aren't available, and payments made to out-of-network providers don't accrue toward the proposed class members' annual deductibles and out-of-pocket limits.
The alleged bait-and-switch practices burden the customers with the cost of medical care, the suits say. For those with Blue Shield PPO plans, the reduced networks can change fixed copayments into percentage-based co-insurance arrangment that can cost enrollees hundreds of additional dollars, whiel those with Blue Shield EPO plans have to pay out of pocket to see out-of-network providers, the suits say.
To make matters worse, customers who call Blue Shield's customer service line asking for information about losses of benefits and limited provider networks "spend hours navigating through a labyrinth of automated phone trees, multiple transfers, average hold times of two to three hours, and disconnections," the complaints say.
The proposed classes consist of California residents who are or were enrolled in Blue Shield or Cigna individual health service plan contracts bought after Oct. 1, 2013. In addition to violations of state laws, the suits allege breach of contract, breach of the implied convenant of good faith and fair dealing, and other causes of action.
Plaintiffs are trying to revover damages, an enjoinder of the companies' continued violations, restitution and other relief.
Representatives for Blue Shield and Cigna and attorneys for the plantiffs didn't immediately respond to requests for comment late Wednesday.
Lead plantiffs in the Blue Shield suit are represented by Harvey Rosenfield, Jerry Flanagan and Laura Antonini of Consumer Watchdog, Michael J. Bidart and Travis M. Corby of Shernoff Bidart Echeverria Bentley LLP and Scott G. Glovsky of the Law Offices of Scott C. Glovsky.
The lead plaintiff in the Cigna suit is represented by Jerry Flanagan and Laura Antonini of Consumer Watchdog and Michael J. Bidart and Travs M. Corby of Shernoff Bidart Eceverria Bentley LLP.
Counsel information for the defendants wasn't immediately available.
The cases are Kevin and Jane McCarthy et al. v. California Physicians' Service d/b/a Blue Shield of California et al., case number BC558549, and Shield Davison et al. v. Cigna Health and Life Insurance Co. et al., case number BC558566, in the Superior Court for the State of California for the County of Los Angeles.
-Editing by Brian Baresch.