Class Action Settlement Forces Big Insurer To Refund $8 Million To California Consumers

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Anthem Blue Cross, one of the state's largest health insurers, has agreed to a class-action lawsuit settlement that requires it to refund $8.3 million to roughly 50,000 policyholders, and refrain from making mid-year changes to consumers' annual deductibles, co-pays and other out-of-pocket costs.

The settlement resolves two lawsuits challenging mid-year changes Anthem made in 2011. The consolidated suits, brought by Consumer Watchdog and Shernoff Bidart Echeverria Bentley LLP, were filed in Los Angeles Superior Court two years ago.

Superior Court Judge Jane Johnson presided over the resolution of the lawsuits, which alleged that Woodland Hills-based Anthem Blue Cross, a subsidiary of giant Indianapolis-based Anthem Inc. (NYSE: ANTM), "illegally" increased deductibles and other "annual" out-of-pocket costs to individual policyholders statewide.

More than $8 million in refunds will be paid to 50,000 enrollees, Consumer Watchdog and the Shernoff Bidart law firm said in an Oct. 27 statement.

For example, plaintiff Dave Jacobson could receive more than $6,400 from Anthem due to mid-year 2011 increases in his deductible, out-of-pocket maximums and prescription drug deductibles, according to Consumer Watchdog.

Consumers don't need to file claims. Anthem will mail checks to consumers who paid more to the insurer as a result of the mid-2011 increases.

"Anthem should be commended for listening to the heartfelt concerns of its policyholders," Jerry Flanagan, Consumer Watchdog's lead attorney, said in its Tuesday statement.

Anthem's statement on the settlement, sent to me Tuesday morning by spokesman Darrel Ng, was short and sweet: "Anthem is pleased that all parties were able to come to an agreement."

J. Brian Ternan has been president of Anthem Blue Cross since last May, when he succeeded Mark Morgan, who left after just a year and a half in the post to take an executive job at Thousand Oaks-based biotech giant Amgen (NASDAQ: AMGN).

Chris covers health care, philanthropy and education.

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